Reopening of assessments for assessment year as back as AY 2014-15, Ay 2015-16, 2016-17 and 2017-18 is not permissible: Delhi HC
Recently in a case before Delhi HC, issue of show cause notice under section 148(b) being issued for reopening of assessments for assessment year as back as AY 2014-15, Ay 2015-16, 2016-17 and 2017-18 was threre.
It was argued that the validity of all these assessment years stand barred by limitation as on date in view of the first proviso to Section 149(1). These notices probably have ignored the first proviso to section 149(1), whereby no assessment can be reopened which couldn’t be reopened as per time limit specified under the unamened section 149(1) i.e after six years from the end of the relevant assessment year. Accordingly, for assessment year up to assessment years up to 2017-18, the period of 6 years already stand expired on 31.3.2024 or earlier and hence barred by limitation as on date.
This issue has come up before Delhi High Court in the case of Manju Somani WP(C) 7364/2024 whereby the Hon’ble Court has examined this issue and vide order dated 23rd July, 2024 has quashed reopening of assessment for AY 2016-17 as 148A(d) order and 148 notice was issued on 29.04.2024 – beyond six years from the end of the assessment year. The Court has rejected the Department’s contention of period of 10 assessment years under the amended provision of Section 149(1).
The Relevant paras of this judgment are 12 to 14 and the copy of this judgment is annexed herewith.
This judgment being of jurisdictional High Court will be binding on all Tax Authorities falling under Delhi jurisdiction. It will be relevant to point out that the period of 10 years was to be available in respect of assessment year after AY 2021-22 (which provision will not be relevant post the amendment by Finance Act, 2024). Had this period of 10 years would have been applicable even for assessment years before AY 2021-22, there would not have been any need for so much prolonged hearing before Supreme Court in respect of assessment year 2013-14 onwards as admittedly after Ashish Aggarwal, new 148 notices have been issued in June/ July,2022 i. e within 10 years.
Since first proviso to section 149(1) is restricting limitation to 6 assessment years, the Instructions No1/2022 dt 11th May,2022 also has stated that extended period of limitation shall be available due to extension under TOLA and not because of amended section 149(1) allowing 10 years period for reopening of assessment.
It may be relevant to mention that Bombay HC in the case of Hexaware Technologies has also taken a similar view for AY 15-16 and held that notice under section 148 issued post 31.03.2022 (i.e after 6 years) is barred by limitation.
The copy of the order is attached herewith:
