Reopening notice under Section 148 for AY 2014-15 invalid beyond ten-year block period under Section 153C

Delhi HC held that reopening notice u/s 148 issued on 06 October 2023 for AY 2014-15 was unsustainable. Following search and seizure operation on third party dated 02 March 2022, action could only be initiated up to AY 2015-16 under proviso to Section 149(1). Since AY 2014-15 fell beyond the ten-year block period under Section 153C read with Section 153A, the notice was held invalid. Petition allowed in favor of assessee.

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The High Court considered a writ petition challenging a notice issued under Section 148 of the Income Tax Act, 1961, seeking to reassess the petitioner for Assessment Year (AY) 2014-15. The key issue was whether the notice for reassessment was valid under the applicable legal provisions.The Court noted that the notice was issued after the amended regime of reassessment came into effect from 01 April 2021. The action for reassessment had to satisfy the provisions of the First Proviso to Section 149(1) of the Act, which set out specific time limits for issuing notices for relevant assessment years.The Court emphasized that any action for reassessment relating to an AY before 01 April 2021 had to comply with the timeframes specified under Section 149(1)(b), Section 153A, or Section 153C as they existed before the Finance Act, 2021.The Court observed that the assessment for AY 2014-15 could not have been reopened based on the facts presented. Despite a notice served to the petitioner following a search operation, the action could have been initiated only up to AY 2015-16 as per the proviso to Section 149(1).Referring to previous decisions, the Court highlighted the computation of the time limit for the relevant assessment year under the Act. It clarified the legal framework regarding the calculation of block periods and the starting point for assessing the relevant assessment year in cases of search and seizure operations.Based on the legal analysis and precedents cited, the Court concluded that the impugned notice issued under Section 148 of the Act on 06 February 2024 was unsustainable. The Court allowed the writ petition, quashing the notice and disposing of the objections raised by the petitioner.In summary, the Court's decision was based on the interpretation of relevant legal provisions, application of established principles, and consideration of the specific facts of the case. The Court's ruling clarified the limitations on reassessment actions and upheld the petitioner's challenge to the notice issued for AY 2014-15.

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