WYZAX SURROGACY CONSULTANTS vs. ACIT, CEN CIR-28, NEW DELHI

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W.P.(C)/14864/2024HC DelhiDLHC01073014202423 October 2024Bench: HON'BLE MR. JUSTICE VIBHU BAKHRU,HON'BLE DR. JUSTICE SWARANA KANTA SHARMA3 pages
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What did the High Court hold?

The Delhi High Court held that the impugned notice issued under Section 148 of the Income Tax Act, 1961, for the assessment year 2015-16 is barred by limitation. The Court relied on its own decision in Manju Somani v. Income Tax Officer Ward-70(1) & Ors and the Supreme Court's judgment in Union of India & Others v. Rajeev Bansal. The reasoning was that the six-year period for issuing a notice under the old regime, as stipulated in Section 149(1)(b), expired on 31.03.2022 for the assessment year 2015-16. Since the impugned notice was issued after this date, it was beyond the permissible time limit. The Court found that the proviso to Section 149(1)(b) of the new regime limits the retrospective operation of Section 149(1)(b) to protect assessees, ensuring that the new time limit of ten years applies prospectively. Consequently, the impugned notice was set aside. The petition was allowed in these terms, and pending applications were disposed of.

What were the facts?

The petitioner, WYZAX SURROGACY CONSULTANTS, filed a writ petition before the Delhi High Court challenging a notice dated 31.03.2024 issued under Section 148 of the Income Tax Act, 1961, for the assessment year 2015-16. The petition also challenged the notice under Section 148A(b) and the order passed under Section 148A(d) preceding the Section 148 notice. The petitioner argued that the issuance of the notice was barred by limitation. The respondent, ACIT, CEN CIR-28, New Delhi, was represented by its counsel. The Court was presented with submissions regarding the applicability of time limits for issuing reassessment notices.

What were the issues?

1. Whether the notice issued under Section 148 of the Income Tax Act, 1961, for the assessment year 2015-16 is barred by limitation, considering the provisions of Section 149(1)(b) of the old regime and the impact of the first proviso to Section 149(1)(b) of the new regime? Assessee's Contention: The petitioner argued that the issue is covered by the Delhi High Court's decision in Manju Somani v. Income Tax Officer Ward-70(1) & Ors and the Supreme Court's decision in Union of India & Others v. Rajeev Bansal. Specifically, the petitioner contended that the period of six years from the end of the relevant assessment year (2015-16) expired on 31.03.2022, and since the impugned notice was issued thereafter, it is barred by limitation. The petitioner relied on passages from the Rajeev Bansal judgment which interpreted the proviso to Section 149(1)(b) of the new regime, limiting its retrospective operation. Revenue's Contention: The judgment records that the learned counsel for the respondent was unable to counter the submissions made by the petitioner.

Which sections of the Income-tax Act were involved?

Section 148,Section 148A,Section 149(1)(b)

AI-generated summary — verify with the full judgment below

$~97 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 14864/2024 & CM APPL. 62411-12/2024 WYZAX SURROGACY CONSULTANTS .....Petitioner Through: Ms Rano Jain, Mr Venketesh Chaurasia, Ms Sakshi Srivastava, Ms Sakshi Rustagi, Advocates. versus ACIT, CEN CIR-28, NEW DELHI .....Respondent Through: Mr Siddharth Sinha, SSC. CORAM: HON'BLE MR. JUSTICE VIBHU BAKHRU HON'BLE MS. JUSTICE SWARANA KANTA SHARMA O R D E R % 23.10.2024 1. The petitioner has filed the present petition, inter alia, impugning a notice dated 31.03.2024 (hereafter the impugned notice) issued under Section 148 of the Income Tax Act, 1961 (hereafter the Act) for the assessment year 2015-16. 2. The petitioner also impugns the notice issued under Section 148A(b) of the Act, and the order passed under Section 148A(d) of the Act prior to the issuance of the impugned notice. 3. The learned counsel appearing for the petitioner submits that the issue stands covered by the decision of this Court in Manju Somani v. Income Tax Officer Ward-70(1) & Ors: Neutral Citation: 2024:DHC:5411-DB. 4. Ms Jain, also referred to the decision of the Supreme Court in Union of India & Others v. Rajeev Bansal : 2024 SCC OnLine SC 2693 and drew This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 29/10/2024 at 12:10:13

the attention of this Court to the following passages from the said judgment: “46. The ingredients of the proviso could be broken down for analysis as follows: (i) no notice under Section 148 of the new regime can be issued at any time for an assessment year beginning on or before 1 April 2021; (ii) if it is barred at the time when the notice is sought to be issued because of the “time limits specified under the provisions of” 149(1)(b) of the old regime. Thus, a notice could be issued under Section 148 of the new regime for assessment year 2021-2022 and before only if the time limit for issuance of such notice continued to exist under Section 149(1)(b) of the old regime. *** *** *** 49. The first proviso to Section 149(1)(b) requires the determination of whether the time limit prescribed under Section 149(1)(b) of the old regime continues to exist for the assessment year 2021-2022 and before. Resultantly, a notice under Section 148 of the new regime cannot be issued if the period of six years from the end of the relevant assessment year has expired at the time of issuance of the notice. This also ensures that the new time limit of ten years prescribed under Section 149(1)(b) of the new regime applies prospectively. For example, for the assessment year 2012-2013, the ten year period would have expired on 31 March 2023, while the six year period expired on 31 March 2019. Without the proviso to Section 149(1)(b) of the new regime, the Revenue could have had the power to reopen assessments for the year 2012-2013 if the escaped assessment amounted to Rupees fifty lakhs or more. The proviso limits the retrospective operation of Section 149(1)(b) to protect the interests of the assesses.” 5. In the present case, the period of six years for the relevant assessment This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 29/10/2024 at 12:10:13

year 2015-16 expired on 31.03.2022. The impugned notice has been issued thereafter, and the same is, thus, barred by limitation. 6. The learned counsel for the respondent is unable to counter the said submissions. 7. In view of the above, the impugned notice is set aside. 8. The petition is allowed in the aforesaid terms. Pending applications also stand disposed of. VIBHU BAKHRU, J SWARANA KANTA SHARMA, J OCTOBER 23, 2024 M Click here to check corrigendum, if any This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 29/10/2024 at 12:10:13

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