Kanwaljeet Kaur Vs ACIT Circle (34)(1) (Delhi High Court)
Summary: The Delhi High Court, in Kanwaljeet Kaur Vs Assistant Commissioner of Income Tax Circle (34)(1), Delhi & Ors. and a large batch of connected writ petitions, examined challenges to reassessment proceedings initiated under the Income-tax Act, 1961, for different assessment years. The Division Bench comprising Justice Yashwant Varma and Justice Harish Vaidyanathan Shankar pronounced its judgment on 4 February 2025, after reserving orders on 30 January 2025. The petitioners questioned the legality of reassessment notices and related proceedings on several grounds involving statutory jurisdiction, prescribed approval, limitation, faceless reassessment procedures, document identification numbers and the applicability of special provisions governing search-related assessments. Since numerous petitions raised overlapping legal issues but involved different factual circumstances, the Court considered it appropriate to determine the governing legal principles collectively while leaving the individual application of those principles to the respective Assessing Officers.
The principal controversy concerned the validity of reassessment proceedings under Sections 147, 148 and 148A, particularly after the legislative changes introduced by the Finance Act, 2021. The petitioners challenged the authority of jurisdictional Assessing Officers to issue reassessment notices in light of Section 151A and the E-Assessment of Income Escaping Assessment Scheme, 2022. They contended that the statutory framework contemplated reassessment through the faceless mechanism and that proceedings initiated by jurisdictional officers were consequently without authority. The Court examined this objection in the context of its earlier decision in T.K.S. Builders (P) Ltd. Vs Income Tax Officer. Following that decision, it held that the statutory framework did not completely exclude the jurisdictional Assessing Officer from initiating reassessment proceedings. The Court recognised that information suggesting escaped income could originate from several sources, including audit objections, searches, surveys and other material available to the jurisdictional authorities. Accordingly, the challenge based on the alleged exclusive jurisdiction of the faceless assessment mechanism stood governed by the principles already settled in T.K.S. Builders.
Another important issue related to the requirement of obtaining sanction from the prescribed authority under Section 151 of the Income-tax Act. The petitioners questioned reassessment notices on the ground that the requisite approval had not been obtained from the competent authority or that the statutory requirements governing such approval had not been satisfied. The Court referred to its earlier decisions in Abhinav Jindal and Naveen Kumar Gupta, alongside T.K.S. Builders, and observed that the questions concerning sanction and the authority of jurisdictional Assessing Officers had already been addressed by those judgments. Rather than independently deciding the validity of every notice in the consolidated proceedings, the Bench directed the respective Assessing Officers to examine the notices in accordance with the applicable principles emerging from those decisions. The judgment thus required a case-specific examination of statutory compliance, including whether the relevant approval requirements had been fulfilled, without treating all reassessment notices as either automatically valid or automatically invalid.
The Court also considered the relationship between ordinary reassessment proceedings and the special assessment provisions applicable to search cases. The petitioners argued that where the material forming the basis of reassessment originated from a search, the Revenue was necessarily required to proceed under Sections 153A and 153C rather than invoking Section 148. The Bench examined this contention with reference to the statutory framework and the decisions discussed in the judgment. It observed that the issue had already been resolved by the relevant earlier decisions, which did not support an absolute proposition that every search-related matter must invariably proceed under Section 153C to the exclusion of reassessment under Section 148. The Court therefore declined to reopen the issue in the present batch. Its directions required the Assessing Officers to apply the settled principles while examining the individual reassessment notices, including the legal basis on which the proceedings had been initiated and the statutory provisions applicable to the relevant assessment years.
A substantial part of the dispute concerned the limitation period for issuing reassessment notices, especially notices affected by the transition from the old reassessment regime to the framework introduced in 2021. The Court examined the effect of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, commonly referred to as TOLA, together with the Supreme Court decisions in Union of India Vs Ashish Agarwal and Union of India Vs Rajeev Bansal. The controversy involved identifying the limitation period that remained available to the Revenue after accounting for the statutory extensions, the treatment of earlier notices under the Supreme Court’s directions and the periods liable to be excluded under the applicable provisions. The Bench emphasised that limitation could not be determined merely by considering the date of the subsequent notice in isolation. Instead, the calculation required attention to the original limitation period, the date of the earlier notice, the operation of TOLA, the consequences of the Supreme Court’s directions and the statutory exclusions applicable to the opportunity afforded to the assessee under Section 148A.
In addressing the limitation controversy, the Court particularly considered its decision in Ram Balram, which had applied the principles laid down in Rajeev Bansal. It discussed the exclusion of the relevant period under TOLA, the interval associated with the Supreme Court’s decision in Ashish Agarwal, and the time granted to an assessee to respond to a notice under Section 148A(b). In the circumstances examined in Ram Balram, the Court had determined that the permissible period for issuing the reassessment notice expired on 12 July 2022, rendering the subsequent notice dated 30 July 2022 time-barred. However, the Bench also considered the factual position disclosed in W.P.(C) 6849/2023, where the challenge based on limitation could not succeed when tested against the applicable principles. These examples demonstrated that the outcome depended upon the relevant dates and statutory exclusions in each individual case. Since not all petitioners had supplied the required calculations and supporting particulars, the High Court considered it impractical to undertake a complete notice-by-notice determination in the consolidated proceedings.
Ultimately, the Delhi High Court disposed of the batch of writ petitions by directing the concerned Assessing Officers to reconsider the individual reassessment notices in accordance with the decisions in T.K.S. Builders, Abhinav Jindal, Naveen Kumar Gupta, Rajeev Bansal and Ram Balram. The Assessing Officers were required to pass reasoned and speaking orders determining whether the notices survived or were liable to be recalled, including examination of jurisdiction, sanction and limitation wherever applicable. The petitioners were granted three weeks to submit written representations before their respective Assessing Officers, which were required to be considered before the fresh decisions. The Court further directed that existing interim orders would continue until the Assessing Officers completed the exercise, and that any final assessment orders already passed would remain subject to the fresh determinations. The petitioners retained the right to challenge adverse decisions in accordance with law and to raise additional factual or legal objections not finally adjudicated in the present proceedings. Importantly, the judgment did not quash every reassessment notice or uphold every reassessment proceeding; instead, it established a structured mechanism for their individual reconsideration under the applicable judicial precedents.
List of Cases Discussed
1. Union of India & Ors. Vs Rajeev Bansal (Supreme Court) – Considered as a principal authority governing the limitation consequences of reassessment notices issued during the transition from the earlier reassessment regime to the amended provisions, including the effect of TOLA and the periods to be excluded while computing the surviving limitation.
2. Union of India Vs Ashish Agarwal (Supreme Court), (2022) 444 ITR 1 – Discussed in relation to the treatment of reassessment notices issued under the earlier statutory framework and the consequences of the Supreme Court’s directions for proceedings under the amended reassessment provisions.
3. T.K.S. Builders (P) Ltd. Vs Income Tax Officer (Delhi High Court) – Followed on the interpretation of Section 151A, the E-Assessment of Income Escaping Assessment Scheme, 2022, and the authority of jurisdictional Assessing Officers to initiate reassessment proceedings.
4. Abhinav Jindal (Delhi High Court) – Referred to as one of the controlling decisions addressing questions concerning the statutory requirements for reassessment, including sanction under Section 151 and the authority competent to undertake reassessment proceedings.
5. Naveen Kumar Gupta (Delhi High Court) – Relied upon alongside T.K.S. Builders and Abhinav Jindal for the settled principles governing jurisdictional authority, statutory approval and reassessment-related challenges.
6. Ram Balram (Delhi High Court) – Applied for the computation of limitation in reassessment proceedings following Rajeev Bansal, including the exclusion of relevant periods under TOLA and Section 149 and the consequences where a notice was issued beyond the surviving limitation period.
7. Principal Commissioner of Income-tax, Central-3 Vs Abhisar Buildwell Pvt. Ltd. (Supreme Court) – Discussed in the context of the statutory framework governing assessments following search proceedings and the relationship between search-related assessment provisions and reassessment jurisdiction.
8. Amar Jewellers Ltd. Vs Assistant Commissioner of Income Tax – Examined in connection with the interpretation of the special statutory provisions governing search-related assessments, including the operation and effect of non obstante clauses.
