Facts of the Case

Good Earth Plotted Development Private Limited was one of the petitioners in a batch of writ petitions challenging reassessment proceedings initiated by the Income Tax Department after the decision of the Supreme Court in Principal Commissioner of Income Tax (Central-3) v. Abhisar Buildwell Pvt. Ltd.

In the case of the petitioner, reassessment proceedings were initiated for Assessment Year 2008-09 by issuance of a notice under Section 148 dated 23 March 2024, following the introduction of the reassessment regime under the Finance Act, 2021.

The reassessment action was sought to be justified on the footing that earlier search-related assessments had been set aside on account of absence of incriminating material and that, in view of Abhisar Buildwell, the Revenue was entitled to initiate reassessment under Sections 147/148.

The petitioner challenged the reassessment as being ex facie barred by limitation under the First Proviso to Section 149(1) of the Income-tax Act, 1961.

 

Issues Involved

Whether reassessment proceedings initiated after the Finance Act, 2021 for completed assessments were barred by limitation under the First Proviso to Section 149(1).

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

Whether reassessment notices could be sustained when issued long after expiry of the limitation period prescribed under the Act.

 

Petitioner’s Arguments

The petitioner contended that:

For AY 2008-09, the limitation to issue a notice under Section 148 had expired on 31 March 2015.

The notice issued on 23 March 2024 was hopelessly time-barred.

The Supreme Court in Abhisar Buildwell merely observed that reassessment may be initiated if otherwise permissible in law, and did not confer any fresh or extended jurisdiction.

The judgment in Abhisar Buildwell does not amount to a “finding” or “direction” under Section 150 of the Act.

 

Respondent’s Arguments

The Revenue argued that:

The reassessment action was initiated in consequence of the Supreme Court decision in Abhisar Buildwell.

CBDT Instruction No. 1/2023 required Assessing Officers to examine feasibility of reopening completed assessments.

The liberty noted by the Supreme Court permitted initiation of reassessment proceedings notwithstanding earlier search-related failures.

 

Court Order / Findings

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

The First Proviso to Section 149(1) places a clear embargo on initiation of reassessment proceedings for past assessment years once limitation has expired under the old regime.

The observations of the Supreme Court in Abhisar Buildwell cannot be construed as a finding or direction under Section 150 of the Act.

Section 150 cannot be invoked to override limitation unless there is a specific and binding direction requiring reassessment of a particular assessment year.

CBDT instructions cannot confer jurisdiction where the statute expressly bars reassessment.

Reassessment notices issued years after expiry of limitation are void ab initio.

 

Important Clarification

The Court clarified that:

While Abhisar Buildwell preserves the theoretical power of reassessment, such power can be exercised only within the confines of statutory limitation.

Liberty to reopen “if permissible in law” does not dilute or suspend limitation provisions.

Finality of completed assessments cannot be disturbed by administrative instructions or expansive interpretation of judicial observations.

 

Final Outcome

Writ Petition Allowed
 Notice Issued Under Section 148 Quashed
 Entire Reassessment Proceedings Set Aside as Time-Barred
 Revenue Held to Be Statutorily Barred from Reopening the Assessment

Link to download the order - https://www.mytaxexpert.co.in/uploads/1770193416_GOODEARTHPLOTTEDDEVELOPMENTPRIVATELIMITEDVsASSISTANTCOMMISSIONEROFINCOMETAXCENTRACIRCLE2NEWDELHI.pdf

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