Reassessment limitation and audit objection reopening upheld where Section 148A time was excluded and prima facie escaped income existed.
Reassessment under the amended Income-tax Act regime was treated as time-barred only if the statutory period under Section 149 was exceeded; the Court held that the time consumed between the Section 148A(b) notice and the assessee's reply is excluded for limitation, so the proceedings were within time. On merits, reopening was upheld because the alleged escaped receipts were not included in the return or earlier scrutiny assessment, and prima facie material showed non-disclosure and related discrepancies. Audit-related material did not by itself create a jurisdictional defect where the reassessment machinery was otherwise lawfully invoked. The writ challenge failed and the reassessment notice and order were sustained.
Issues: (i) Whether the reassessment proceedings under Sections 148A(b), 148A(d) and 148 of the Income-tax Act, 1961 were barred by limitation under Section 149 of the Income-tax Act, 1961. (ii) Whether the reopening based on audit objection and the alleged non-disclosure of advance fees and other receipts was jurisdiction or otherwise unsustainable on merits.
Issue (i): Whether the reassessment proceedings under Sections 148A(b), 148A(d) and 148 of the Income-tax Act, 1961 were barred by limitation under Section 149 of the Income-tax Act, 1961.
Analysis: The dispute related to Assessment Year 2015-16. The Court held that the amended regime permits initiation of reassessment within the statutory period under Section 149 of the Income-tax Act, 1961, and that the period between the Section 148A(b) notice and the assessee's reply is to be excluded for computing limitation. Relying on the finality of the law declared in the Supreme Court decisions governing notices issued during the transition from the old regime to the new regime, the Court found the impugned proceedings to be within time.
Conclusion: The limitation challenge failed and the reassessment proceedings were held to be in time.
Issue (ii): Whether the reopening based on audit objection and the alleged non-disclosure of advance fees and other receipts was jurisdiction or otherwise unsustainable on merits.
Analysis: The Court noted that the amount alleged to have escaped assessment had not been included in the return and was not part of the earlier scrutiny assessment under Section 143(3) of the Income-tax Act, 1961. It also recorded prima facie material indicating non-disclosure of certain receipts and other expenditure-related discrepancies. On that basis, the Court found no jurisdictional infirmity in invoking the reassessment machinery merely because the proceedings were triggered in the background of audit-related material.
Conclusion: The challenge on merits and jurisdiction failed, and the reopening was upheld.
Final Conclusion: The writ petition was rejected, and the reassessment notice and order were sustained, with liberty reserved to raise all other issues before the assessing authority.
Ratio Decidendi: Reassessment under the amended regime is valid when initiated within the statutory time after exclusion of the period consumed by the Section 148A process, and audit-related material coupled with prima facie escaped income can lawfully support reopening.
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