Court Quashes 2013-14 Tax Assessment Order; Reassessment Exceeded Statutory Timeline Under Income Tax Act.

The HC allowed the writ petition, quashing the assessment order and related notices for the assessment year 2013-14. The court found that the reassessment order dated 12.05.2023 was invalid as it exceeded the statutory timeline stipulated under Section 153(2) of the Income Tax Act, 1961. The court rejected the applicability of the Taxation & Other Laws (Relaxation & Amendment of Certain Provisions) Act, 2020, as it did not extend the timeline for the notice issued on 29.03.2021. The decision underscores the necessity of adhering to statutory timelines in tax assessment proceedings.

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Issues:
Validity of assessment order and subsequent proceedings based on the timeline of notice under Section 148 of the Income Tax Act, 1961.

Analysis:
The petitioner sought various reliefs, including quashing of notices and orders related to the assessment year 2013-14. The main issue was the timeliness of the assessment order dated 12.05.2023 (Annexure-A2) and subsequent proceedings concerning the notice issued under Section 148 on 29.03.2021.

The petitioner's counsel argued that the assessment order exceeded the statutory timeline of twelve months from the notice date, as per the first proviso to subsection (2) of Section 153. The assessment should have been completed by 31.03.2022, but it was passed on 12.05.2023. The counsel contended that this delay rendered the order invalid.

In response, the revenue's counsel contended that since the proceedings were initiated within time under Section 148 on 29.03.2021, the assessment order was also within the stipulated time frame. Additionally, the counsel cited the Taxation & Other Laws (Relaxation & Amendment of Certain Provisions) Act, 2020, claiming that the relaxation provisions applied to the case due to the COVID period.

The court examined Section 153(2) and its proviso, which specified the time limits for assessment, reassessment, or recomputation after a notice under Section 148. The proviso extended the period to twelve months for notices served post 1st April 2019. As the notice in this case was issued on 29.03.2021, the reassessment should have been completed by 31.03.2022. Since the assessment order was passed on 12.05.2023, it exceeded the prescribed timeline.

Regarding the contention on the applicability of the TOLA, the court rejected it, noting that the Act was effective from 01.04.2020 to 30.06.2021, making it inapplicable to the notice issued on 29.03.2021. Consequently, the court held that the reassessment order and subsequent actions were invalid due to non-compliance with the statutory timeline.

In the final order, the court allowed the writ petition and quashed all relevant orders and notices pertaining to the assessment year 2013-14, emphasizing the importance of adhering to statutory timelines in assessment proceedings.

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