Saroj Mehndi Vs ITO (Delhi High Court)
In a ruling addressing the complex timeline for issuing reassessment notices under the Income Tax Act, the Delhi High Court has set aside a notice issued to Saroj Mehndi for the Assessment Year (AY) 2014-15, finding it was issued beyond the permissible period of limitation. The judgment navigates the impact of legislative changes and pronouncements by the Supreme Court on the reassessment framework.
The petitioner, Saroj Mehndi, challenged a notice dated July 11, 2022, issued under Section 148 of the Income Tax Act, 1961, for AY 2014-15. The primary ground for the challenge was that the notice was time-barred.
The case’s trajectory is rooted in the shift in the reassessment legal framework effective from April 1, 2021. Prior to this date, a notice under Section 148 could be issued if the tax authorities had reason to believe that income had escaped assessment. The Finance Act, 2021, introduced a new scheme, requiring a prior procedure involving a show-cause notice under Section 148A before a notice under Section 148 could be issued.
For AY 2014-15, the original six-year limitation period for issuing a Section 148 notice under the old regime would have expired on March 31, 2021. However, the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA), enacted to provide relaxations during the COVID-19 pandemic, extended this time limit. By virtue of TOLA, the period to issue the notice for AY 2014-15 was extended up to June 30, 2021.
