Facts of the Case

The petitioner, ARN Infrastructures India Limited, challenged multiple reassessment proceedings initiated for various assessment years by issuance of notices under Section 148 in November 2023 and March 2024.

These reassessment notices were issued after search assessment proceedings under Sections 153A/153C had already been set aside by appellate authorities on the ground that no incriminating material was found during the search.

The Revenue sought to justify the reopening by relying on observations of the Supreme Court in Principal Commissioner of Income Tax v. Abhisar Buildwell Pvt. Ltd. and CBDT Instruction No. 1/2023 dated 23 August 2023, contending that reassessment powers under Sections 147/148 stood revived.

 

Issues Involved

Whether reassessment notices issued under Section 148 beyond the statutory limitation were valid.

Whether observations in Abhisar Buildwell constitute a “finding or direction” under Section 150 enabling reopening beyond limitation.

Whether CBDT Instruction No. 1/2023 can override statutory limitation prescribed under Section 149.

Whether reassessment is permissible in the absence of incriminating material for completed/unabated assessments.

 

 Respondent’s Arguments

The Revenue argued that:

Abhisar Buildwell preserved the power of reassessment under Sections 147/148.

CBDT Instruction No. 1/2023 mandated reopening of completed assessments in appropriate cases.

Section 150 permitted reassessment notwithstanding limitation.

The Revenue would otherwise be left without remedy.

 

Court Order / Findings

The Delhi High Court categorically rejected the Revenue’s position and held:

Observations in Abhisar Buildwell do not constitute a “finding or direction” within the meaning of Section 150.

Liberty to reassess “if permissible under law” does not dispense with statutory limitation.

Completed/unabated assessments cannot be reopened merely because search assessments failed.

Incriminating material is a jurisdictional prerequisite for search-linked reassessment.

CBDT Instruction No. 1/2023 cannot override Sections 149 and 150 of the Act.

The Court relied upon:

Abhisar Buildwell Pvt. Ltd. (Supreme Court)

Kabul Chawla (Delhi High Court)

Saumya Construction (Gujarat High Court)

Sumitomo Corporation India (P) Ltd. (Delhi High Court)

 

Important Clarification

The Court clarified that:

Section 150 applies only where reassessment is necessary to give effect to a specific judicial finding or direction.

Administrative instructions cannot create jurisdiction where none exists.

Reassessment powers under Sections 147/148 remain subject to strict statutory safeguards, including limitation.

 

Final Outcome

Writ Petitions Allowed
 Reassessment notices issued under Section 148 quashed
 Proceedings held to be barred by limitation
 CBDT Instruction No. 1/2023 declared inapplicable to revive time-barred reassessments

Link to download the order - https://www.mytaxexpert.co.in/uploads/1770191674_ARNINFRASTRUCTURESINDIALIMITEDVsASSISSTANTCOMMISSIONEROFINCOMETAXCENTALCIRCLE28DELHIORS..pdf 

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