No Illegality In Initiation Of Reassessment Proceedings After 10 Years Post-Search Under New Regime: Jharkhand High Court

The Jharkhand High Court had held that A.O. was justified in reopening the assessment for A.Y. 13–14 for 10 years as they had rightly taken previous sanction from the competent authority.

The bench of Justice Rongon Mukhopadhyay and Justice Deepak Roshan has observed that w.e.f. April 1, 2022, the legislature expanded the scope for revenue in search proceedings via amendment in Section 149(1)(b) by including entries in books of account apart from assets and expenditure. The records suggest that the department made allegations about the entries in the books of account. The bogus loans of Rs. 93 lacs given by the assessee's CA were not declared in the return of income of the assessee. Thus, notice under Section 148 was rightly issued. Section 153C entitles the department to initiate an assessment against a third person whose documents have been found during the course of the search conducted at the premises in the same manner as is prescribed under Section 153A.

The appellant/assessee is in the business of the construction and development of residential flats, commercial establishments, and schools.

The genesis of the present dispute relates to the issuance of notice to the respective assessees issued under Section 148 of the Income Tax Act by the respondent or department. The basis for the issuance of the notices was stated to be search and seizure operations conducted on the business premises of Naresh Kumar Kejriwal on June 9, 2022. Pertinently, Devika Constructions was only subjected to a survey under Section 133A.

The assessee contended that the legislative intent behind the introduction of the Finance Act, 2021, was to reduce the time limit in ordinary cases to three years and to increase the threshold amount of income having escaped assessment to Rs. 50 lakhs for invoking an extended time limit of ten years to reduce litigation and compliance burden, remove discretion, impart certainty, and promote ease of doing business. The extended time limit under Section 149(1)(b) is not applicable since the allegation, if at all, on the basis of so-called information does not result in any income escaping assessment in the hands of the respective petitioners represented in the form of any "ASSET." The notice under Section 148, which was issued after 10 years, is time-barred.

The court stated that since the search was conducted on June 9, which falls in the financial year 2022–23, which would be the assessment year 2023–24, the assessing officer was correct in issuing notice under 148 of the amended section for the assessment year 13–14 in the case of both the assessees.

Counsel For Petitioner: Kavita Jha

Counsel For Respondent: Lavanya Gadodia

Case Title: Devika Construction and Developers Private Limited Versus Principal Chief Commissioner of Income Tax

Case No.: W.P.(T) No. 2650 of 2023

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