Flowmore Limited Vs DCIT (Delhi High Court)
In the case of Flowmore Limited vs. DCIT, the Delhi High Court addressed the validity of a reassessment notice issued under Section 148 of the Income Tax Act, 1961 for Assessment Year (AY) 2013-14. The central issue revolved around whether the notice, issued on 31 March 2023, was within the permissible time limit prescribed under the Act.
The petitioner, Flowmore Limited, challenged the notice primarily on the grounds that it was issued beyond the ten-year block period stipulated under Section 153C of the Act, which incorporates the provisions of Section 153A. Section 153C allows for assessment of income of any other person in consequence of search conducted under Section 132, subject to certain conditions including the timeframe within which such assessments can be initiated.
The court first referenced the amended provisions effective from 1 April 2021, specifically the First Proviso to Section 149(1)(b) of the Act. This proviso restricts the issuance of reassessment notices beyond the specified time limits unless certain conditions are met, particularly for cases where assets or income likely to amount to Rs. 50 lakh or more have escaped assessment.
Considering the facts of the case, Flowmore Limited had been served a notice under Section 153C on 3 March 2022, following a search operation conducted on the Alankit Group on 18 October 2019. Subsequently, an assessment order was passed on 23 March 2023, which was based on the original assessment under Section 143(3) but was contested and partially relieved by the Income Tax Appellate Tribunal regarding certain disallowances under Section 40(a)(ia) of the Act.
