Interpreting the Supreme Court judgement in Ashish Agarwal case, it clarified the time limit to issue notices for Reassessment under Income Tax.
This case pertains to a Writ Petition filed by one Touchstone Private Limited for reopening of their assessment for A.Y. 2013-14 vide a 148 notice on 29.06.2021.
The time limit to issue notices of Reopening Assessment as per Section 149 of the Income Tax Act (before being amended in 2021) was 6 years from end of the assessment year, incase the income escaped assessment was more than Rs. 1 lakh. For A.Y. 2013-14 the same fell on 31.03.2020. This date was extended to 31.03.2021 vide Taxation & Other Laws (Relaxation & Amendment of certain provisions) Act, 2020 & then to 30.06.2021 vide Notification No. 38/2021.
These notifications then came up before Delhi High Court & Supreme Court in the case known as Ashish Agarwal (supra). The apex court in that matter ordered that 148 notices issued after 31.03.2021 are invalid because from 01.04.2021 the new procedure of reopening of assessment should have been followed. It then went on to give a balanced judgement that all 148 notices should deemed to be 148A notices & to be taken forward accordingly. The Supreme Court & High Court did not quash the power of reassessment beyond 31.03.2021. Infact, the Delhi High Court judgement went on to say that:
“98. It is clarified that the power of reassessment that existed prior to 31st March, 2021 continued to exist till the extended period i.e. till 30th June, 2021; however, the Finance Act, 2021 has merely changed the procedure to be followed prior to issuance of notice with effect from 1st April, 2021.”
Hence, the power to reopen cases pertaining to AY 13-14 always stood extended upto 30.06.2021 i.e. beyond the normal 6 years from the end of the A.Y.
All these deliberations occurred during the matter of Touchstone Holdings Pvt. Ltd. Vs ITO (Delhi High Court)(WPC 13102/2022) wherein the Delhi Court clarified that the power to issue notices under 149 beyond 31.03.2021 was never quashed. It was only the matter of whether notices should have been issued under section 148 or 148A post 31.03.2021.
This judgement shall, in all probability, be the torch bearer for several such writ petitions filed across several High Courts & the matter should now rest.
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