Facts of the Case

Dharampal Satyapal Ltd. (DSL), the petitioner, is the successor entity of Abhisar Buildwell Pvt. Ltd. (ABPL) pursuant to a court-approved scheme of arrangement. ABPL had been subjected to a search and seizure operation under Section 132, following which assessment proceedings under Section 153A were initiated.

The assessments framed under Section 153A were set aside by appellate authorities on the ground that no incriminating material had been found during the search. This view ultimately stood affirmed up to the Supreme Court in Principal Commissioner of Income Tax (Central)-III v. Abhisar Buildwell Pvt. Ltd.

Subsequently, relying on the observations in Abhisar Buildwell and CBDT Instruction No. 1/2023 dated 23 August 2023, the Revenue initiated reassessment proceedings under Sections 147/148 by issuing notices well beyond the limitation period prescribed under Section 149.

Aggrieved, the petitioner approached the Delhi High Court challenging the validity of the reassessment notices.

 

Issues Involved

Whether reassessment notices issued under Section 148 were barred by limitation under Section 149.

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

Whether CBDT Instruction No. 1/2023 can override the statutory limitation prescribed under the Act.

Whether completed/unabated assessments can be reopened without incriminating material.

 

Petitioner’s Arguments

The petitioner contended that:

The reassessment notices were ex facie time-barred under the First Proviso to Section 149(1).

Abhisar Buildwell merely preserved reassessment powers subject to fulfilment of statutory conditions, and did not mandate reopening.

The Supreme Court did not issue any finding or direction within the meaning of Section 150.

CBDT instructions issued under Section 119 cannot extend limitation or confer jurisdiction.

Reopening completed assessments without incriminating material violates settled law including Kabul Chawla and Saumya Construction.

 

Respondent’s Arguments

The Revenue argued that:

The Supreme Court in Abhisar Buildwell saved the power of reassessment under Sections 147/148.

Such observations amount to a finding or direction, thereby attracting Section 150.

CBDT Instruction No. 1/2023 mandated uniform implementation of the Supreme Court judgment.

Without reopening, the Revenue would be left without an effective remedy.

 

Court Order / Findings

The Delhi High Court rejected the Revenue’s contentions and held that:

Observations in Abhisar Buildwell do not constitute a “finding or direction” as contemplated under Section 150.

Liberty granted by the Supreme Court to reassess “if permissible in law” cannot override statutory limitation under Section 149.

CBDT Instruction No. 1/2023 cannot enlarge or override reassessment powers or statutory time limits.

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

Incriminating material remains a jurisdictional prerequisite for disturbing completed assessments.

The Court relied upon and reaffirmed principles laid down in:

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, not general observations.

Administrative instructions cannot supplant or modify statutory provisions.

Reassessment provisions must be strictly construed as they affect the finality of concluded assessments.

 

Final Outcome

Writ Petitions Allowed
 Reassessment Notices Issued Under Sections 148/148A Quashed
Proceedings Held Barred by Limitation
 CBDT Instruction No. 1/2023 Held Inapplicable for Reviving Time-Barred Cases

 Link to download the order - https://www.mytaxexpert.co.in/uploads/1770192070_DHARAMPALSATYAPALLTDSUCCESSOROFABHISARBUILDWELLPVTLTDVsDEPUTYCOMMISSIONEROFINCOMETAXANR..pdf 

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