Facts of the Case

  • Petitioners were issued reassessment notices under Section 148 for AY 2016–17 and 2017–18.
  • The alleged escaped income in all cases was below ₹50 lakhs.
  • Notices were issued after 01.04.2021 under the new reassessment regime introduced by Finance Act, 2021.
  • Earlier notices issued under the old regime (between 01.04.2021 to 30.06.2021) were validated by the Supreme Court in Ashish Agarwal.
  • CBDT issued Instruction dated 11.05.2022 stating notices would “travel back in time” to original dates.
  • Assessing Officers rejected objections and proceeded with reassessment.

Issues Involved

  1. Whether reassessment notices issued under Section 148 after 01.04.2021 are governed by amended Section 149.
  2. Whether extended limitation of 10 years under Section 149(1)(b) applies when escaped income is below ₹50 lakhs.
  3. Whether TOLA and CBDT Instruction can extend limitation beyond statutory provisions.
  4. Whether the “travel back in time” theory is legally sustainable.

Petitioner’s Arguments

  • Limitation under Section 149(1)(a) is three years, which had expired before issuance of notices.
  • Extended period under Section 149(1)(b) is not applicable since escaped income is below ₹50 lakhs.
  • TOLA does not permit reopening beyond statutory limitation.
  • CBDT Instruction cannot override statute or Supreme Court judgment.
  • Finance Act, 2021 substituted provisions completely; old regime cannot be applied.
  • “Travel back in time” theory is arbitrary and unsupported in law.

Respondent’s Arguments

  • Notices were valid based on Ashish Agarwal judgment and TOLA extensions.
  • Limitation should be computed by excluding time and treating earlier notices as valid.
  • Supreme Court directions under Article 142 validate reassessment proceedings.
  • CBDT Instruction is consistent with statutory framework.

Court Findings / Order

  • The amended provisions of Section 149 introduced by Finance Act, 2021 are fully applicable to notices issued after 01.04.2021.
  • For escaped income below ₹50 lakhs, limitation is strictly three years under Section 149(1)(a).
  • Revenue cannot invoke extended limitation of 10 years without satisfying statutory conditions.
  • TOLA and CBDT Instructions cannot override the statutory limitation framework.
  • The “travel back in time” theory is legally unsustainable.
  • Notices issued beyond limitation are invalid and liable to be quashed.

Important Clarification

  • Supreme Court judgment in Ashish Agarwal does not extend limitation.
  • It only converted old notices into Section 148A(b) notices.
  • All reassessment proceedings post 01.04.2021 must comply with amended law.
  • CBDT Instructions cannot curtail statutory rights of taxpayers.

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/RAS10112023CW115272022_212005.pdf

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