Case Law Details
Ram Babu Agarwal Vs ACIT (Rajasthan High Court)
Rajasthan High Court heard a plea by Ram Babu Agarwal challenging the reopening of his assessment for the Assessment Year (AY) 2012-13 through a notice issued under Section 148 of the Income Tax Act, 1961. The petitioner argued that the reassessment proceedings were time-barred under Section 149(1)(b) and thus beyond jurisdiction. Citing the Finance Act, 2021, he contended that notices for assessments prior to April 1, 2021, could not be issued if they were already beyond the prescribed limitation period under the earlier provisions of Sections 149, 153A, or 153C.
The petitioner relied on various judicial precedents, including the Madras High Court’s ruling in A.R. Safiullah v. ACIT (2021) and Delhi High Court decisions in Filatex India Ltd. v. DCIT (2023) and Alankit Insurance TPA Ltd. v. DCIT (2023), to assert that similar reassessments had been quashed as time-barred. These cases had established that reassessment notices issued under Section 148, after the lapse of the statutory time limit, lacked jurisdiction and could not be sustained.
In response, the Income Tax Department defended the reassessment, arguing that the notice was within the limitation period as per a combined reading of Sections 148, 149(1)(b), and 153C. The department further claimed that the reopening of assessment was based on material discovered during a search at another person’s premises, which allegedly revealed bogus entries linked to the petitioner. The revenue emphasized that, at this stage, the petitioner was not yet reassessed, but rather the assessment was reopened for further examination.
After reviewing the arguments and relevant legal provisions, the High Court acknowledged the petitioner’s strong prima facie case and stayed the final order in the reassessment proceedings. However, it allowed the proceedings to continue, directing that no final order be passed without prior permission of the Court. The Income Tax Department was granted four weeks to file a reply, and the case was listed for final disposal thereafter.
This ruling highlights the ongoing judicial scrutiny over reassessment notices issued post-Finance Act, 2021, and reaffirms the legal position that time-barred reassessments cannot be revived through subsequent amendments. The case’s outcome will further clarify the scope of reassessment powers under the amended Income Tax Act.
FULL TEXT OF THE JUDGMENT/ORDER OF RAJASTHAN HIGH COURT
1. Heard on the prayer for stay.
2. Learned counsel for the petitioner argued that initiation of re-assessment proceedings by issuance of impugned notice under Section 148 of the Income Tax Act, 1961 (for short, ‘the Act’), are time barred and, therefore, without He would submit that though number of grounds have been urged in the petition to challenge the order of re-assessment, as notice under Section 148 of the Act is apparently time barred, the proceedings are without jurisdiction and, therefore, the respondents be restrained from proceeding further with the assessment proceedings. His submission is that by the impugned notice under Section 148 of the Act, the respondents have reopened the assessment for the Assessment Year 2012-13. Referring to the provisions contained in Section 149 (1)(b) of the Act, he would submit that no notice under Section 148 could be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April, 2021, if a notice under Section 148 or 153A or Section 153C could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause (b) of sub- Section (1) of Section 149, or Section 153A or Section 153C, as the case may be, as they stood immediately before the commencement of the Finance Act, 2021.
3. Relying upon the order dated 03.2021 of the Madras High Court in the case of A.R. Safiullah vs. The Assistant Commissioner of Income Tax, Central, Circle-1, Trichy [W.P. (MD) No.4327/2021], the order dated 15.09.2023 of the Delhi High Court in the case of Filatex India Ltd. vs. Deputy Commissioner of Income Tax & Anr. [W.P. (C) No.12148/2023], and the order dated 02.05.2023 of the Delhi High Court in the case of Alankit Insurance TPA Limited vs. Dy. Commissioner of Income Tax Circle 28, Delhi [W.P. (C) No.5643/2023], it is argued that the petitioner has made out a very strong prima-facie case that present is a time barred assessment.
4. On the other hand, learned counsel for the respondent would submit that conjoint reading of the provisions contained in Sections 148, 149 (1)(b) and Section 153C of the Act, clearly shows that assessment is within limitation. The notice under Section 148 of the Act is within limitation and not barred thereunder. He would submit that if the proceedings would have been initiated prior to the commencement of the Finance Act, 2021 i.e. before 01.04.2021, it would have been within limitation, as provided under Section 149, as it existed prior to coming into force of Finance Act, 2021. He would further submit that the material which has been found in the search carried out in the premises of another person, revealed various bogus entries between the present petitioner and the person whose premises were searched and there is enough material to make out a prima- facie case. He would submit that presently the assessee is not being assessed, but only assessment has been reopened.
5. Having considered the submissions of learned counsel for the parties and particularly taking into consideration that the re- assessment is initiated vide impugned notice issued on 03.2023 in relation to Assessment Year 2012-13 and also the provisions contained in Section 149(1)(b) of the Act, as amended vide Finance Act, 2021, pre-existing provisions of Section 149 and Section 153C as also the orders passed by the different High Courts, the petitioner has made out a strong prima-facie case.
6. In that view of the matter, it is ordered that though re- assessment proceedings may go on, final order shall not be passed without the leave of the Court.
7. The respondents are granted four weeks’ time to file reply.
8. List this case after four weeks for final disposal.
Author Bio
