Facts of the Case

Param Dairy Ltd. was one of the petitioners in a batch of writ petitions challenging reassessment proceedings initiated under Section 148 of the Income Tax Act, 1961, for Assessment Year 2012–13.

The reassessment notice was issued on 30 November 2023, long after the expiry of the limitation period prescribed under Section 149(1) read with its First Proviso, which stipulated 31 March 2019 as the outer limit for issuance of notice.

The reassessment action was initiated by the Revenue after the decision of the Supreme Court in Principal Commissioner of Income Tax v. Abhisar Buildwell Pvt. Ltd., and in purported compliance with CBDT Instruction No. 1 of 2023 dated 23 August 2023.

 Issues Involved

Whether reassessment proceedings initiated under Section 148 after the expiry of the limitation period prescribed under Section 149 can be sustained by treating observations made by the Supreme Court in Abhisar Buildwell as a “finding or direction” under Section 150 of the Income Tax Act, 1961.

 Petitioner’s Arguments

The petitioner contended that the reassessment notice was ex facie barred by limitation under Section 149(1) read with the First Proviso, and that the Revenue had no jurisdiction to initiate reassessment proceedings after the prescribed cut-off date.

It was argued that the Supreme Court in Abhisar Buildwell merely observed that reassessment proceedings may be initiated “if otherwise permissible in law,” and such observation could not be construed as a finding or direction within the meaning of Section 150.

The petitioner further submitted that CBDT Instruction No. 1 of 2023 could not override statutory limitation provisions or confer jurisdiction where none existed. Reliance was placed on settled jurisprudence including Kabul Chawla and subsequent Delhi High Court decisions interpreting Sections 149 and 150.

 Respondent’s Arguments

The Revenue contended that reassessment proceedings were validly initiated pursuant to the liberty noted by the Supreme Court in Abhisar Buildwell. It was argued that such liberty constituted a finding or direction enabling invocation of Section 150, thereby lifting the bar of limitation.

The respondents relied heavily on CBDT Instruction No. 1 of 2023, asserting that field officers were obligated to reopen cases falling within the category of completed assessments where no incriminating material had been found during search.

 Court Order / Findings

The Delhi High Court allowed the writ petition and quashed the impugned reassessment notice.

The Court held that the observations of the Supreme Court in Abhisar Buildwell cannot be construed as a finding or direction under Section 150 of the Income Tax Act. The liberty granted by the Supreme Court was conditional and expressly subject to the reassessment being otherwise permissible in law.

The Court categorically held that statutory limitation under Section 149 continues to apply, and reassessment proceedings cannot be revived or validated by administrative instructions or a misconceived interpretation of judicial observations.

Accordingly, the reassessment notice issued to Param Dairy Ltd. was held to be barred by limitation and without jurisdiction.

 Important Clarification

The Court clarified that CBDT instructions issued under Section 119 are subordinate to the Act and cannot override or dilute statutory provisions relating to limitation. Observations made by a constitutional court permitting reassessment “if permissible in law” do not constitute a finding or direction under Section 150. Reassessment proceedings initiated beyond limitation are void ab initio and unsustainable in law.

Link to download the order -https://www.mytaxexpert.co.in/uploads/1770194496_PARAMDAIRYLTDVsASSISTANTCOMMISSIONEROFINCOMETAXANR..pdf

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.