The Delhi High Court has held that the reassessment notices issued between 1st April 2021 and 30th June 2021, will be deemed to have been issued under Section 148A of the Income Tax Act.
The division bench of Justice Manmohan and Justice Manmeet Pritam Singh Arora has observed that the re-assessment notice dated 29.06.2021, which has been issued within the extended period of limitation, is not time-barred.
The petitioner/assessee stated that the information regarding the petitioner's alleged transaction for the purchase of shares was factually wrong as there was no transaction for any sale or purchase of shares in the assessment year. The petitioner has no concern with the transactions set out in the notice dated June 1, 2022, as they were undertaken by the petitioner's shareholders, and the assessee has no concern with these transactions.
The petitioner submitted that, as per the first proviso to Section 149, no notice for re-assessment can be issued for the assessment year 2013–14, as the time limit for initiating the proceedings expired on March 30, 2020, as per the provisions of Section 149 (as it stood prior to its amendment by the Finance Act, 2021). The proceedings were initiated by the respondent in pursuance of the initial notice dated June 29th, 2021.
The department submitted that Section 3 of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) applies to the unamended provisions of Section 149 (as it stood prior to its amendment by the Finance Act, 2021). Therefore, the initial notice dated June 29, 2021, and the proceedings taken in continuation, were not time-barred. The information pertaining to the petitioner, which is a part of the BDR Group, is duly reflected in the investigation report. The BDR Group is in the business of providing accommodation, and as per the department, the petitioner received a bogus share premium and capital of Rs. 69.93 crores.
The court noted that the petitioner has not brought on record anything to prove that the reassessment proceedings are being undertaken in an arbitrary manner.
The court held that the relevant portion of the notification, which extended the time limit for the issuance of time-barring reassessment notices until June 30, 2021, was not struck down by the court. The Court categorically held that the power of re-assessment existed prior to 31st March 2021 and remained extended till 30th June 2021.
Except for the issue of limitation, the court clarified that the assessing officer must decide the case on its own merits, without regard to any observations made in the order.
Case Title: Touchstone Holdings Private Limited Versus Income Tax Officer
Citation: WPC 13102/2022
Counsel For Petitioner: Senior Advocate Salil Aggarwal with Advocate Madhur Aggarwal
Counsel For Respondent: Senior Standing Counsel Puneet Rai
Citation: 2022 LiveLaw (Del) 890