2024 (12) TMI 1657 - HC - Income Tax

Reopening under new Section 149(1)(b) barred once old six-year limit lapses; Section 148 notice quashed

HC held that under the first proviso to Section 149(1)(b) (new regime), reopening for AYs up to 2021-22 is permissible only if, on the date of notice, the ... Validity of reopening of assessment - scope of new regime - Extended Period of Limitation as per IT Act read with TOLA - period of limitation - time limits specified under the provisions of” 149(1)(b) of the old regime - HELD THAT:- As in view of the judgment of Rajeev Bansal [2024 (10) TMI 264 - SUPREME COURT (LB)] and of this court in Manju Somani [2024 (8) TMI 129 - DELHI HIGH COURT] 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. In the present case, the period of six years from the end of the relevant (AY) 2017-18 expired on 31.03.2024. The impugned notice has been issued thereafter, and the same is thus barred by limitation. Assessee appeal allowed. Petitioner challenged a notice dated 30.08.2024 issued under Section 148 of the Income Tax Act, 1961 for AY 2017-18, along with the prior notice under Section 148A(b) and order under Section 148A(d). The core contention was that the reassessment notice was time-barred in light of the interpretation of Section 149(1)(b) and its first proviso, as clarified in Manju Somani and the Supreme Court's decision in Union of India & Others v. Rajeev Bansal: 2024 SCC OnLine SC 2693. Relying on Rajeev Bansal, the Court noted 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,' and that the ten-year limit applies prospectively. For AY 2017-18, the six-year period expired on 31.03.2024. Since the impugned notice was issued thereafter, it was held to be barred by limitation and was consequently set aside.