Kamla Construction Company Vs ITO (Rajasthan High Court, Jodhpur Bench)
Summary: The Rajasthan High Court at Jodhpur allowed the writ petition of M/s Kamla Construction Company challenging a reassessment notice dated 12.03.2001 issued under Section 148 of the Income Tax Act, 1961 for assessment year 1994-95. The petitioner submitted that the four-year limitation prescribed under Section 149 had expired and that its case did not fall within clause (b), which permitted an extended period subject to the specified conditions. The Revenue supported the impugned action. After considering the submissions and record, the Court treated the notice as barred by limitation. Referring to the limitation under Section 149 reproduced in the order, it observed that a notice could not be issued after four years from the end of the relevant assessment year unless the case fell under clause (b). In that view, the Court quashed the notice dated 12.03.2001, made its interim order dated 08.05.2001 absolute, and allowed the writ petition to that extent.
FULL TEXT OF THE JUDGMENT/ORDER OF RAJASTHAN HIGH COURT
1. The petitioner herein has called in question the notice issued under Section 148 of Income Tax Act, 1961 as the same has been issued in violation of Section 149 of the Act of 1961 as it was barred by limitation.
2. Mr. Kothari, learned counsel for the petitioner submits that the time limit for issuing notice as per Section 149 of the Act of 1961 for the relevant assessment year i.e. 1994-95 is four years. If the period of four years has elapsed from the end of the relevant assessment year, and unless the case of the assessee falls under clause (b) of Section 149 of the Act of 1961, then only the notice for re-assessment can be issued against the assessee, whereas the case of the appellant-Company does not fall under Clause (b) of the Act of 1961, thus, the notice issued to the appellant was hopelessly barred by limitation.
3. Learned counsel for the respondent would support the impugned order.
4. We have considered the submissions made at the Bar and have gone through the relevant record of the case.
5. Admittedly, the notice issued under Section 148 of the Income Tax Act for re-assessment is barred by limitation as the time limit prescribed under Section 149 of the Act of 1961 is four years. For ready reference Section 149 of the Act of 1961 is reproduced as under:-
“(1) No notice under Section 148 shall be issued for the relevant assessment year.
(a) if four years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b)
(b) if four years, but no more than six years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to one lakh rupees or more for that year.
Explanation – In determining income chargeable to tax which has escaped assessment for the purposes of this sub-section, the provisions of explanation 2 of Section 147 shall apply as they apply for the purposes of that section.
(2) The provisions of sub-section (1) as to the issue of notice shall be subject to the provisions of section (5).
(3) If the person on whom a notice under Section 148 is to be served is a person treated as the agent of a non-resident under Section 163 and the assessment, reassessment or recomputation to be made in pursuance of the notice is to be made on him as the agent of such non-resident, the notice shall not be issued after the expiry of a period of two years from the end of the relevant assessment year.”
6. A bare perusal of Section 149 of the Act of 1961 clearly depicts that no notice under Section 148 of the Act of 1961 can be issued for the relevant assessment year, if the period of four years has elapsed from the end of the relevant assessment year unless the case falls under clause (b) of Section 149 of the Act of 1961. It is the case of the petitioner that his case does not fall within the ambit of clause (b) and, as such, after expiry of period of four years from the assessment year 1994-95, the notice issued to the petitioner is barred by period of limitation as provided under Section 149 of the Act of 1961.
7. In that view of the matter, the impugned notice dated 12.03.2001 is hereby quashed as set aside and the interim order dated 08.05.2001 passed by this Court is made absolute.
8. The writ petition is allowed to the extent indicated hereinabove.
