Facts of the Case

Genpact India Private Limited, formerly known as Empower Research Knowledge Services Private Limited, is engaged in providing business process outsourcing, analytics, IT services, software solutions and allied services.

A survey under Section 133A was conducted at the petitioner’s premises between 25 and 27 February 2019, during which information surfaced regarding various remittances made to foreign entities. Based on this material, the Assessing Officer formed an opinion that income chargeable to tax had escaped assessment for Assessment Year 2015-16, primarily on allegations relating to non-deduction of tax under Section 195 and certain capital gains and dividend-related transactions.

A notice under Section 148 dated 30 June 2021 was issued under the old reassessment regime. The petitioner responded, pointing out that the Finance Act, 2021 had introduced a new reassessment framework and that the procedure under Section 148A was required to be followed.

Subsequently, purportedly in compliance with the Supreme Court decision in Union of India v. Ashish Agarwal, the Revenue issued a fresh notice under Section 148A(b) on 27 May 2022, followed by an order under Section 148A(d) and a notice under Section 148 dated 30 July 2022.

Aggrieved, the petitioner approached the Delhi High Court challenging the reassessment action as being barred by limitation.

 

Issues Involved

Whether reassessment proceedings for AY 2015-16 initiated after 31 March 2022 were barred by limitation under the First Proviso to Section 149(1).

Whether the decision in Union of India v. Ashish Agarwal permits revival or continuation of reassessment proceedings that are otherwise time-barred.

Whether a notice issued under Section 148A(b) in May 2022 could be treated as a continuation of the original notice dated 30 June 2021.

 

Petitioner’s Arguments

The petitioner contended that:

For AY 2015-16, reassessment could be initiated only up to 31 March 2022 in terms of the First Proviso to Section 149(1).

The notice under Section 148A(b) dated 27 May 2022 was issued after expiry of limitation and was therefore void.

Ashish Agarwal applies only to cases where reassessment notices had been quashed by courts and does not revive notices that were never challenged or struck down.

The fresh reassessment action could not be treated as a continuation or substitution of the earlier notice.

 

Respondent’s Arguments

The Revenue argued that:

The reassessment action originated from the notice dated 30 June 2021, which was within limitation.

Issuance of the Section 148A(b) notice was merely a procedural step taken to align with the directions in Ashish Agarwal.

The reassessment proceedings were therefore saved and not barred by limitation.

 

Court Order / Findings

The Delhi High Court allowed the writ petition and held that:

The First Proviso to Section 149(1) embodies a negative command prohibiting issuance of reassessment notices for pre-April 2021 assessment years if limitation had already expired under the old regime.

Ashish Agarwal was intended to modify judgments of High Courts that had quashed reassessment notices and cannot be read as reviving or reinventing proceedings that were never invalidated by any court.

Since the petitioner had never challenged the original notice dated 30 June 2021, there was no occasion to invoke the deeming fiction created in Ashish Agarwal.

The notice dated 27 May 2022 under Section 148A(b) constituted a fresh initiation of reassessment, not a continuation of earlier proceedings.

Once limitation expired on 31 March 2022, the Revenue was statutorily barred from initiating reassessment.

The Court relied upon and reaffirmed its earlier decisions, including:

Anindita Sengupta v. ACIT

Manju Somani v. ITO

 

Important Clarification

The Court clarified that:

Ashish Agarwal preserves all defences available to assessees, including those under Section 149.

Directions issued under Article 142 of the Constitution cannot extinguish vested rights or revive time-barred proceedings.

Reassessment provisions must be strictly construed, particularly where limitation affects finality of assessments.

 

Final Outcome

Writ Petition Allowed
 Notice under Section 148A(b) dated 27.05.2022 Quashed
 Order under Section 148A(d) and Notice under Section 148 dated 30.07.2022 Set Aside
 Entire Reassessment Proceedings Declared Barred by Limitation

Link to download the order - https://www.mytaxexpert.co.in/uploads/1770193368_GENPACTINDIAPRIVATELIMITEDVsASSISTANTCOMMISSIONEROFINCOMETAXRANGE10OSDNEWDELHIANR..pdf

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