Reassessment notices under Section 148 for AY 2013-14 ruled time-barred after 6-year limitation period expired

The Bombay HC ruled that reassessment notices issued under Section 148 for AY 2013-14 dated 28th July 2022 were barred by limitation. The court held that under unamended Section 149(1)(b), the outer time limit to issue notices was 6 years from the end of the relevant assessment year, which expired on 31st March 2021 (extended under TOLA). The amended provisions' first proviso prevents issuance of notices beyond the original time limit. Even considering the Revenue's arguments regarding TOLA protection, the notices remained time-barred. The petition was decided in favour of the assessee on limitation grounds.

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Issues Involved:
1. Validity of the impugned notices issued for the Assessment Year 2013-2014.
2. Application of the amended provisions of the Finance Act, 2021.
3. Limitation period for issuing reopening notices under Section 148 of the Income Tax Act.

Summary:

Issue 1: Validity of the Impugned Notices
The court examined the validity of the impugned notices issued for the Assessment Year 2013-2014. The notices were issued after the amendment to the Finance Act, 2021, but based on the provisions existing before the amendment. The Respondent/Department contended that certain earnings/transactions escaped assessment, warranting the reopening of the assessment.

Issue 2: Application of the Amended Provisions
The court referred to its earlier judgment in "The New India Assurance Company Limited Vs. The Assistant Commissioner of Income Tax and Others," where it was concluded that the reassessment proceedings initiated based on notices issued after the amendment were barred by limitation. It was held that a notice under Section 148 of the Act cannot be issued to reopen an assessment if the right to reopen was already barred under the pre-amended Act.

Issue 3: Limitation Period
The court emphasized that for AY 2013-14, the time limit to issue a notice under Section 148 expired on 1st April 2021. The court cited multiple precedents, including "CIT V/s. Onkarmal Meghraj (HUF)" and "J.P. Jani, Income-tax Officer v. Induprasad Devshanker Bhatt," to support its conclusion that the reopening notice issued in July 2022 was beyond the statutory time limit. The court dismissed the Department's arguments regarding the applicability of the Limitation Act, 1963, and the exclusion of the Covid period under TOLA, stating that these contentions were flawed and contrary to well-established principles of law.

Conclusion:
The court allowed the Writ Petitions and quashed the impugned notices. The order was restricted only to the point of limitation, as the notices were issued for the Assessment Year 2013-2014 after the amendment to the Finance Act on 01.04.2021, under the provisions existing prior to the amendment.

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