Issue
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Whether a reassessment notice issued under Section 148 on 31.08.2024 for Assessment Year 2016-17 is barred by limitation when the six-year statutory period expired on 31.03.2023.
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Whether the order passed under Section 148A(d) and the consequential notice issued under Section 148 are liable to be quashed on account of being time-barred.
Facts
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Context & Assessment Year: The petitioner/assessee filed a writ petition challenging the initiation of reassessment proceedings for Assessment Year 2016-17.
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Impugned Actions: The assessee specifically impugned the order passed under Section 148A(d) and the consequential reassessment notice issued under Section 148 dated 31.08.2024.
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Statutory Limitation Expiry: Under the applicable provisions of the Act, the maximum prescribed time limit of six years for issuing a reassessment notice for AY 2016-17 expired on 31.03.2023.
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Delayed Issuance: The Revenue issued the Section 148 notice on 31.08.2024, which was well beyond the outer limit of 31.03.2023.
Decision
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Bar of Limitation: The reassessment notice issued on 31.08.2024 for AY 2016-17 was issued beyond the statutory period expiring on 31.03.2023 and was therefore barred by limitation. (In favour of assessee)
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Quashing of Proceedings: The order passed under Section 148A(d) and the consequential notice issued under Section 148 dated 31.08.2024 were quashed and set aside. (In favour of assessee)
Key Takeaways
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Strict Outer Limits: Reassessment proceedings must adhere strictly to the maximum statutory limitation periods prescribed under Section 149.
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Expiry of Six-Year Cap: For AY 2016-17, the outer six-year window for issuing notices under Section 148 lapsed on 31.03.2023; any notice issued after this date without statutory extension is void ab initio.
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Invalidation of Reassessment: When a foundational notice under Section 148 is issued beyond the period of limitation, both the Section 148A(d) order and the Section 148 notice become legally unsustainable and are liable to be quashed via writ jurisdiction.
“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.” ”