SC Refuses to Entertain Time-Barred Tax Reopening Dispute Due to Filing Delay

Chief Commissioner of Income Tax Vs Sheetal International Pvt Ltd (Supreme Court of India)

The dispute concerned the validity of reassessment proceedings initiated for Assessment Year (AY) 2017–18 under the Income Tax Act, 1961. The assessee challenged an order dated 01.05.2024 issued under Section 148A(d) of the Act and the consequential notice under Section 148, contending that the reassessment proceedings were initiated beyond the period of limitation prescribed under the first proviso to Section 149(1) of the Act.

Read HC Judgment: 10-Year Limit Applies Prospectively, Not Retroactively to Expired Six-Year Limit: Delhi HC

Before the Delhi High Court, the assessee argued that the issue was covered by an earlier decision of the same Court. Reliance was also placed on the Supreme Court’s ruling in Rajeev Bansal, where the Court had examined the scope of reassessment time limits under the amended regime.

The High Court noted the Supreme Court’s interpretation of the first proviso to Section 149(1). The Supreme Court had clarified that reassessment notices under the new regime cannot be issued for assessment years beginning on or before 1 April 2021 if, on the date of issuance, such action was already barred under the time limits prescribed in the old regime. In particular, the Court explained that the extended ten-year period introduced under the amended law does not revive cases that had already become time-barred under the earlier six-year limitation period. The proviso was intended to ensure that the new, longer limitation period operates prospectively and does not retrospectively reopen assessments that were already barred.

Applying this legal position, the High Court concluded that the reassessment notice for AY 2017–18 was issued beyond the permissible limitation period. Since the time to reopen the assessment had already expired under the earlier regime, the Revenue could not rely on the amended provisions to revive the case. Accordingly, the High Court allowed the petition and set aside both the order under Section 148A(d) and the notice issued under Section 148.

The Revenue carried the matter to the Supreme Court of India by filing a Special Leave Petition. However, the petition was filed with a delay of 320 days. The Supreme Court found that no sufficient explanation had been provided to justify condonation of this delay. As a result, the Court dismissed the Special Leave Petition solely on the ground of delay. Pending applications, if any, were also disposed of.

With the dismissal of the Special Leave Petition, the decision of the Delhi High Court setting aside the reassessment proceedings on limitation grounds remained undisturbed.

FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER

This special leave petition is reported to be beyond time by 320 days.

2. We do not find sufficient explanation to condone the delay. The special leave petition is, accordingly, dismissed on ground of delay.

3. Pending application(s), if any, shall stand disposed of.