RPC Commercial LLP Vs ACIT (Calcutta High Court)
RPC Commercial LLP has challenged a notice issued under Section 148 of the Income Tax Act for the assessment year 2015-16 and subsequent proceedings based on that notice. The petitioner argues that the assessing officer’s jurisdiction in issuing the notice is barred by limitation under Section 149(1)(a)/(1)(b) of the Act. The assessing officer justifies the initiation of proceedings based on an instruction issued by the Central Board of Direct Taxes (CBDT). The Calcutta High Court has granted a stay on the proceedings pending the disposal of the writ application.
The petitioner contends that the notice and reassessment proceedings are beyond the six-year limitation period prescribed under the old and new amendment provisions of Section 149 of the Income Tax Act. The assessing officer relies on an instruction from the CBDT to justify the initiation of proceedings. The court finds that the matter needs to be heard on its merits after the exchange of affidavits. It observes that if a stay is not granted at this stage, the petitioner would suffer prejudice. Consequently, the court directs the respondents to file an affidavit-in-opposition, and no further proceedings can take place based on the impugned order until the writ application is disposed of.
The Calcutta High Court has granted a stay on the initiation of reassessment proceedings beyond the six-year limitation period in the case of RPC Commercial LLP vs. ACIT. The court found that the jurisdiction of the assessing officer to issue the notice under Section 148 of the Income Tax Act was barred by limitation. The court directed the respondents to file an affidavit-in-opposition, and no further proceedings can take place based on the impugned order until the writ application is disposed of.
FULL TEXT OF THE JUDGMENT/ORDER OF CALCUTTA HIGH COURT
Affidavit of service filed by the petitioner be kept with the record.
Counsel for the respective parties are present. The petitioner has challenged the notice dated 28th July, 2022 issued under Section 148 of the Income Tax Act,1961 relating to the assessment year 2015-16, and all subsequent proceedings based on the impugned notice dated 28th July, 2022 under Section 148 of the Income Tax Act, 1961, mainly on the ground of jurisdiction of the assessing officer in issuance of the impugned notice under Section 148 of the Act being barred by limitation under Section 149(1) (a)/149(1)(b) of the Income Tax Act, 1961. In the impugned order under Section 148(d) of the Act, the assessing officer has tried to justify the initiation of the proceeding by relying on instruction of 01/22 dated 11th May, 2022 issued by CBDT. Admittedly, issuance of notice and initiation of reassessment proceedings are beyond the period of six years and, prima facie, it is barred by limitation – both under old Act as well as under new amendment provisions relating to Section 149 of the Act.
Learned Counsel for the State vehemently opposed the interim order as prayed for by the petitioner on the ground that the limitation is not applicable in the case of the petitioner and the assessment of tax is the fraudulent reversal of the Stock Exchange.
Considered the rival submissions of the respective parties, this Court finds that the matter is required to be heard on merit only after exchange of affidavits and, as such, this Court, prima facie, is of the view that if, at this stage, no stay is granted, the petitioner will be prejudiced. Accordingly, the respondents are directed to file affidavit-in-opposition within eight weeks from date; reply thereto, if any, within three weeks thereafter.
In the meantime, there will be no further proceedings on the basis of the impugned order dated 28th July, 2022, being annexure P-4 of the writ petition till disposal of the writ application.
Let the matter appear before the next available Circuit Bench after completion of the period of 11 weeks.
