Ashish Acharatlal Varaiya Vs ITO (Gujarat High Court)
The Gujarat High Court allowed a batch of Special Civil Applications challenging notices issued under Section 148 of the Income Tax Act, 1961, and consequential orders passed under Section 148A(d) seeking to reopen assessments for Assessment Years 2013-14 and 2014-15. Since the petitions involved similar facts and identical issues, they were heard together and disposed of through a common judgment and order.
Read SC Judgment in this case: SC Directs AO to Decide Reassessment Objections as Per Rajeev Bansal
The petitioners challenged the reassessment notices and Section 148A(d) orders primarily on the ground of limitation. The notices and orders in the five petitions were issued in July 2022. The petitioners contended that the notices were beyond the permissible six-year period under the reassessment provisions applicable before the Finance Act, 2021. Reliance was placed on the Gujarat High Court’s decision in Keenara Industries Pvt Ltd. vs. The Income Tax Officer, Special Civil Application No. 17321 of 2021 and allied petitions, decided on 07.02.2023.
The Court examined the reassessment framework before and after the Finance Act, 2021. Under the pre-Finance Act, 2021 regime, Section 149 permitted issuance of a Section 148 notice beyond four years but within six years from the end of the relevant assessment year, subject to the prescribed conditions. With effect from 01.04.2021, the Finance Act, 2021 introduced Section 148A and substituted Section 149, generally providing a three-year period and permitting reopening beyond three years and up to ten years where the specified conditions concerning escaped income represented in the form of an asset were satisfied.
