MSS INFRACON PVT LTD vs. ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 26 DELHI & ANR.

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W.P.(C)/16239/2024HC DelhiDLHC01084130202422 November 2024Author: 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 dated 31.08.2024, issued under Section 148 of the Income Tax Act, 1961, for the assessment year 2016-17, is barred by limitation. The Court noted that the period of six years from the end of the relevant assessment year 2016-17 expired on 31.03.2023. As the impugned notice was issued after this date, it is consequently barred by limitation. This finding is based on the interpretation of the proviso to Section 149(1)(b) of the Act, as elucidated by the Supreme Court in Union of India & Others v. Rajeev Bansal. The Court also acknowledged the concurrence of the respondent's counsel on this point. Therefore, the impugned notice was set aside, and the petition was allowed in these terms. The ratio decidendi is that notices under Section 148 for assessment years prior to 2021-22, if issued after the expiry of the six-year period stipulated under the old regime's Section 149(1)(b), are invalid.

What were the facts?

The petitioner, MSS Infracon Pvt Ltd., has filed a writ petition before the Delhi High Court challenging a notice dated 31.08.2024 issued under Section 148 of the Income Tax Act, 1961, for the assessment year 2016-17. The petitioner also challenges the notice under Section 148A(b) and the order passed under Section 148A(d) that preceded the Section 148 notice. The petitioner contends that the issuance of the notice is barred by limitation. The respondent, Assistant Commissioner of Income Tax, has concurred with this view.

What were the issues?

1. Whether the notice issued under Section 148 of the Income Tax Act, 1961, for the assessment year 2016-17, is barred by limitation, considering the provisions of the Act and the Supreme Court's decision in Union of India & Others v. Rajeev Bansal. Assessee's Contention: The petitioner argues that the notice is barred by limitation. They rely on the decision in Manju Somani v. Income Tax Officer Ward-70(1) & Ors. and specifically cite passages from the Supreme Court's judgment in Union of India & Others v. Rajeev Bansal, which states that 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. For AY 2016-17, the six-year period expired on 31.03.2023, and the notice was issued thereafter. Revenue's Contention: The learned counsel for the respondent concurs with the petitioner's view that the notice is barred by limitation.

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

$~43 IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 16239/2024 & CM APPL. 68213/2024

MSS INFRACON PVT LTD.

.....Petitioner

Through: Mr. Vibhu Gupta, Advocate

versus

ASSISTANT COMMISSIONER OF INCOME TAX

CENTRAL CIRCLE 26 DELHI & ANR.

.....Respondents

Through: Mr. Anurag Ojha, SSC with Ms.

Hemlata Rawat and Mr. V.K.

Saksena, JSCs

CORAM:

HON'BLE MR. JUSTICE VIBHU BAKHRU

HON'BLE MS. JUSTICE SWARANA KANTA SHARMA

O R D E R %

22.11.2024 1. The petitioner has filed the present petition, inter alia, impugning a notice dated 31.08.2024 (hereafter the impugned notice) issued under Section 148 of the Income Tax Act, 1961 (hereafter the Act) for the assessment year 2016-17. 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.

The learned counsel appearing for the petitioner also referred to the decision of the Supreme Court in Union of India & Others v. Rajeev Bansal : 2024 SCC OnLine SC 2693 and drew 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 from the end of the relevant assessment year 2016-17 expired on 31.03.2023. The impugned notice has been issued thereafter, and the same is thus barred by limitation. 6. The learned counsel for the respondent concurs with the aforesaid view. 7. In view of the above, the impugned notice is set aside. 8. The petition is allowed in the aforesaid terms. Pending application also stands disposed of.

VIBHU BAKHRU, J

SWARANA KANTA SHARMA, J NOVEMBER 22, 2024 ns

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