Tax Notices Quashed: Reassessment Lapsed, Refund with Interest Ordered per SC Ruling in Three Months.

The HC quashed the notices dated 05.11.2020 and 06.11.2020 as they were issued beyond the permissible deadline under Section 153[7] of the IT Act. The reassessment proceedings were deemed lapsed due to non-completion within the stipulated timeframe. The respondents are directed to address the petitioner's refund claims with interest, referencing the SC's decision in CIT v. Shelly Products, within three months of receiving the certified order copy.

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Issues Involved:
1. Validity of the notices dated 05.11.2020 and 06.11.2020.
2. Timeliness of reassessment proceedings under Section 153 of the IT Act.
3. Entitlement to refund claims and interest.

Summary:

1. Validity of Notices:
The petitioner challenged the notices dated 05.11.2020 and 06.11.2020 issued by the first respondent, arguing they were time-barred. The High Court concluded that these notices were issued after the deadline of 31.03.2017, making them impermissible under Section 153[7] of the Income Tax Act, 1961, as amended by the Finance Act 2016. Therefore, the notices were quashed.

2. Timeliness of Reassessment Proceedings:
The Court examined whether the reassessment proceedings were within the permissible time limits. The ITAT's common order dated 31.03.2015 did not set aside or cancel the assessment orders but directed the AO to reconsider specific aspects. The Court determined that the reassessment had to be completed by 31.03.2017, as per Section 153[7] of the IT Act. Since the reassessment was not completed within this timeframe, the proceedings stood lapsed.

3. Entitlement to Refund Claims and Interest:
The petitioner sought refunds for excess tax paid for the assessment years 2007-08, 2008-09, and 2009-10. The Court referred to the Supreme Court's decision in CIT v. Shelly Products, which held that if an assessment is not completed within the permissible time, the tax paid by the assessee must be accepted as it is, and any excess amount must be refunded. The Court directed the respondents to consider the petitioner's representations for refunds, along with interest, within three months from the receipt of the certified copy of the order.

Order:
[A] The petitions are allowed in part, and the impugned notices dated 05.11.2020 and 06.11.2020 are quashed.
[B] The respondents are directed to consider the petitioner's representations dated 29.10.2020 for refunds along with interest, in light of the Supreme Court's decision in CIT v. Shelly Products, within three months from the receipt of a certified copy of this order.

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