Reassessment notices under Section 148 for AY 2013-14 quashed for exceeding six-year limitation period

The Bombay HC quashed reassessment notices issued under Section 148 for AY 2013-14, ruling they were issued beyond the statutory limitation period. The court held that the reopening notice should have been issued within 6 years from the end of AY 2013-14, with the limitation period extended by TOLA expiring on 31st March 2021. Since the notice was issued in July 2022, it exceeded the time limit. The HC emphasized that the Supreme Court's directions in Ashish Agrawal specifically granted liberty to assessees to raise all available defences, including those under Section 149, which cannot be disregarded.

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Issues Involved:
1. Issuance of impugned notices after the amendment to the Finance Act.
2. Reopening of assessment for Assessment Year 2014-2015.
3. Applicability of the judgment in The New India Assurance Company Limited case.
4. Limitation period for issuing notices under Section 148 of the Income Tax Act.

Issue-Wise Detailed Analysis:

1. Issuance of Impugned Notices After the Amendment to the Finance Act
The court noted that the impugned notices were issued after the amendment to the Finance Act, based on the provisions that existed prior to the amendment. These notices pertain to the Assessment Year 2014-2015. The Respondent Department contended that certain earnings/transactions had escaped income assessment, leading the Assessment Officer to issue notices for reopening the assessment.

2. Reopening of Assessment for Assessment Year 2014-2015
The Department argued that the notices were issued to address purported escaped income for the Assessment Year 2014-2015. The court referred to a previous judgment delivered on 15.01.2024 in the case of 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 a notice barred by limitation were invalid.

3. Applicability of the Judgment in The New India Assurance Company Limited Case
The court extensively cited the judgment in The New India Assurance Company Limited case, which held that a notice issued under Section 148 of the Act cannot reopen an assessment if the right to reopen was already barred under the pre-amended Act. The judgment emphasized that the limitation period for issuing a notice under Section 148 had expired, making any subsequent reassessment proceedings invalid. The court also discussed various legal precedents, including CIT V/s. Onkarmal Meghraj (HUF) and J.P. Jani, Income-tax Officer v. Induprasad Devshanker Bhatt, to support this conclusion.

4. Limitation Period for Issuing Notices Under Section 148 of the Income Tax Act
The court addressed the limitation period for issuing notices under Section 148. It was noted that the limitation period for issuing a notice for the Assessment Year 2013-14 had expired on 31st March 2021. The court rejected the Department's contention that the period could be extended by notifications or the provisions of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA). The court found that the notices issued after the expiration of the limitation period were invalid.

Conclusion
The court concluded that the notice issued for the Assessment Year 2014-2015 was barred by limitation, similar to the notice in The New India Assurance Company Limited case. Consequently, the impugned notices were quashed and set aside. The court clarified that its order was restricted to the point of limitation, as the notices were issued after the amendment to the Finance Act under the provisions existing prior to the amendment.

Final Judgment
The Writ Petition was allowed, and the impugned notices were quashed and set aside based on the limitation issue. The court emphasized that this decision was specific to the point of limitation for the Assessment Year 2014-2015.

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