Allowed¶24

Mg Metalloy Private Limited v. Assistant Commissioner of Income Tax Central Circle 2 Delhi & Anr.

Income Tax Act, 1961 – Reassessment

Delhi HC15 Jan 2025W.P.(C)/399/2025

Download

Case brief

AI extract

What is this about?

Delhi High Court writ (W.P.(C) 399/2025, decided 15.01.2025, Vibhu Bakhru ACJ & Tushar Rao Gedela J): reassessment notice u/S. 148 Income Tax Act, 1961 for AY 2013-14 dated 25.09.2024 beyond S. 149(1) limitation; Revenue's reliance on S. 150 and on 'findings and directions' in PCIT v. Abhisar Buildwell (2024) 2 SCC 433 rejected, Court following ARN Infrastructures India Ltd. (2024:DHC:7423-DB); petition allowed, impugned notice set aside.

What did the court decide?

Petition allowed; impugned notice dated 25.09.2024 issued under Section 148 of the Act set aside; pending application (CM APPL. 2060/2025) disposed of. ¶24

Mg Metalloy Private Limited Vs Assistant Commissioner of Income Tax… — Income Tax | Delhi HC (2025)

What the court decided

AI extract

Outcome

Petition allowed; impugned notice dated 25.09.2024 issued under Section 148 of the Act set aside; pending application (CM APPL. 2060/2025) disposed of.

¶24

Issue for consideration

Whether the impugned notice dated 25.09.2024 issued under Section 148 of the Income Tax Act, 1961 in respect of AY 2013-14 is beyond the period stipulated under Section 149(1) of the Act, notwithstanding the Revenue's reliance on Section 150 of the Act. +1 more

¶11

Court's answer

The impugned notice dated 25.09.2024 issued under Section 148 of the Act in respect of AY 2013-14 is clearly beyond the period stipulated under Section 149(1) of the Act.

¶11

Ratio / Principle

The contention that the time-period stipulated under Section 149 of the Act is not applicable in the given facts — founded on the Revenue's construction of Abhisar Buildwell as embodying findings and directions permitting such notices — is erroneous and is rejected, the controversy being covered by this Court's earlier decision in ARN Infrastructures India Ltd. (2024:DHC:7423-DB).

¶23

Detailed headnote1 paragraphs

Income Tax Act, 1961 — Reassessment — Notice under Section 148 for AY 2013-14 dated 25.09.2024 held clearly beyond the limitation period stipulated under Section 149(1); Revenue's plea that the notice was nonetheless saved by Section 150 as being premised on the 'findings and directions' in Principal Commissioner of Income-tax, Central-3 v. Abhisar Buildwell (P.) Ltd., (2024) 2 SCC 433, rejected — Court held the question is no longer res integra, the controversy being covered by its earlier decision in ARN Infrastructures India Ltd. v. Assistant Commissioner of Income Tax Cental Circle-28 Delhi & Ors., Neutral Citation No.:2024:DHC:7423-DB, wherein it was reasoned that the liberty accorded to the Revenue in Abhisar Buildwell was subject to compliance with the conditions in Sections 147/148 and could not be read as overriding Section 149 — Contention rejected as erroneous; petition allowed and impugned notice set aside; pending application disposed of.

¶1

$~71

¶2

IN THE HIGH COURT OF DELHI AT NEW DELHI

¶3

W.P.(C) 399/2025 and CM APPL. 2060/2025

¶4

MG METALLOY PRIVATE LIMITED .....Petitioner

¶5

Through: Mr Mani Bhadra Jain, Advocate.

¶6

versus

¶7

ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 2 DELHI & ANR. .....Respondents Through: Mr Anant Mann, Advocate.

¶8

CORAM: HON'BLE THE ACTING CHIEF JUSTICE HON'BLE MR. JUSTICE TUSHAR RAO GEDELA O R D E R

¶9

% 15.01.2025

¶10

The petitioner has filed the present petition, inter alia, impugning notice dated 25.09.2024 (hereafter the impugned notice ) issued under Section 148 of the Income Tax Act, 1961 (hereafter the Act ) in respect of assessment year (AY) 2013-14.

¶11

The impugned notice is clearly beyond the period as stipulated under Section 149(1) of the Act. However, it is the Revenue’s case that the impugned notice is within the time by virtue of Section 150 of the Act. The Revenue claims that the impugned notice is premised on the ‘findings and directions’ as embodied in the decision of the Supreme Court in Principal Commissioner of Income-tax, Central-3 v. Abhisar Buildwell (P.) Ltd.: (2024) 2 SCC 433 . In the said decision, the Supreme Court had held that in certain cases, the assessing officer (AO) could exercise its powers under Section 147/148 of the Act, even in cases which are related to a search conducted under Section 132 of the Act. The Revenue construes the decision

¶12

This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 24/01/2025 at 15:46:52

¶13

as constituting a finding or a direction for issuing such notices in respect of cases such of the assessee’s.

¶14

The question whether the decision in the case of Principal Commissioner of Income-tax, Central-3 v. Abhisar Buildwell (P.) Ltd. ( supra ) constitutes a finding and a direction for permitting the issuance of notice under Section 148 of the Act in cases, which are otherwise beyond the period as stipulated under Section 149 of the Act is no longer res integra . This Court in the case of ARN Infrastructures India Ltd. v. Assistant Commissioner of Income Tax Cental Circle-28 Delhi & Ors.: Neutral Citation No.:2024:DHC:7423-DB had rejected a similar contention. The relevant extract of the said decision is set out below:

¶15

“38. It is pertinent to note that a reference to Sections 147 and 148 of the Act in Abhisar Buildwell firstly appears in paragraph 33 of the report and where the Supreme Court observed that in cases where a search does not result in any incriminating material being found, the only remedy that would be available to the Revenue would be to resort to reassessment.

¶16

However, the Supreme Court caveated that observation by observing that the initiation of reassessment would be “…..subject to fulfilment of the conditions mentioned in Sections 147/148, as in such a situation, the Revenue cannot be left with no remedy ”. This sentiment came to be reiterated with the Supreme Court observing that the power of the Revenue to initiate reassessment must be saved failing which it would be left with no remedy. It was thereafter observed in paragraph 36.4 of the report that insofar as completed or

¶17

This is a digitally signed order.

¶18

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 24/01/2025 at 15:46:52

¶19

unabated assessments were concerned, they could be reopened by the AO by invocation of Sections 147/148 of the Act, subject to the fulfillment of the conditions “……as envisaged/mentioned under Sections 147/148 of the Act and those powers are saved ”.

¶20

It thus becomes apparent that the liberty which the Supreme Court accorded and the limited right inhering in the Revenue to initiate reassessment was subject to that power being otherwise compliant with the Chapter pertaining to reassessment as contained in the Act. The observations of the Supreme Court cannot possibly be read or construed as a carte blanche enabling the respondents to overcome and override the restrictions that otherwise appear in Section 149 of the Act. The observations of the Supreme Court in Abhisar Buildwell were thus intended to merely convey that the annulment of the search assessments would not deprive or denude the Revenue of its power to reassess and which independently existed. However, the Supreme Court being mindful of the statutory prescriptions, which otherwise imbue the commencement of reassessment, qualified that observation by providing that such an action would have to be in accordance with law. This note of caution appears at more than one place in that judgment and is apparent from the Supreme Court observing that the power to reassess would be subject to the fulfilment of the conditions mentioned in Sections 147 and 148 of the Act.”

¶21

This is a digitally signed order.

¶22

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 24/01/2025 at 15:46:52

¶23

Plainly, the controversy involved in this petition is covered by the decision of this Court in ARN Infrastructures India Ltd. v. Assistant Commissioner of Income Tax Cental Circle-28 Delhi & Ors. ( supra ). The contention that the time-period as stipulated under Section 149 of the Act is not applicable, in the given facts, is erroneous and thus rejected.

¶24

The petition is, accordingly, allowed and the impugned notice is set aside. Pending application is also disposed of.

¶25

VIBHU BAKHRU, ACJ

¶26

TUSHAR RAO GEDELA, J

¶27

JANUARY 15, 2025/ tr Click here to check corrigendum, if any

¶28

Mg Metalloy Private Limited v. Assistant Commissioner of Income Tax Central Circle 2 Delhi & Anr.

Case brief

What is this about?

What did the court decide?

Mg Metalloy Private Limited v. Assistant Commissioner of Income Tax Central Circle 2 Delhi & Anr.

Case brief

What is this about?

What did the court decide?

Why is it important?

What the court decided

Issues for consideration

Cases cited

Statutes considered

Procedural history

Parties & counsel

Coram

Case details

Similar cases

Pragati Defence Systems Pvt. Ltd. Vs Union of India & Ors.

M/S Hyderabad Cable Digital Service Pvt. Ltd. Vs Zee Entertainment Enterprises Pvt. Ltd.

Sewa Ram Vs New Delhi Municipal Council & Anr.

Sanrok Enterpreses Vs Assistant Commissioner of Income Tax Circle 28 (1) Delhi

Prakash Industries Limited Vs Assistant Commissioner of Income Tax, Central Circle 30, Delhi & Anr.

M/S Royal Security Services Vs Jaipal Singh and Ors.

Fci Handling Workers Union Vs UOI & Anr.

Rajesh Gomes Vs New Delhi Municipal Council (Ndmc) and Ors.

Pragati Defence Systems Pvt. Ltd. Vs Union of India & Ors.

Pdm Dental College and Research Institute Vs Union of India & Anr.

Sanrok Enterpreses Vs Assistant Commissioner of Income Tax Circle 28 (1) Delhi

Kuki Students Organisation Vs Staff Selection Commission through Its Secretary & Ors.

G D Goenka University Vs Assistant Commissioner of Income Tax Central Circle 15 Delhi & Anr.

Aditi Infrabuild and Services Limited Vs Assistant Commissioner of Income Tax Central Circle 30 Delhi & Anr.