Reassessment Notices Issued Between 1st April 2021 To 30th June, 2021 Not Time Barred: Delhi High Court


The Delhi High Court in the case Touchstone Holdings Private Limited Versus Income Tax Officer observed and has held that the reassessment notices issued between 1st April 2021 and 30th June 2021, will be deemed to have been issued under Section 148A of the Income Tax Act, 1961.
The division bench comprising of Justice Manmohan and Justice Manmeet Pritam Singh Arora observed and has stated that the re-assessment notice dated 29.06.2021, which has been issued within the extended period of limitation, is not time-barred.
It was observed that the assessee/petitioner stated that the information regarding the petitioner’s alleged transaction for the purchase of shares was factually wrong as there was no transaction for any sale or purchase of shares in the assessment year. Thus, the petitioner has no concern with the transactions set out in the notice dated June 1, 2022, as they were undertaken by the petitioner’s shareholders, and the assessee has no concern with these transactions.
It was submitted by the petitioner that, as per the first proviso to Section 149, no notice for re-assessment can be issued for the assessment year 2013–14, as the time limit for initiating the proceedings expired on March 30, 2020, as per the provisions under section 149 (as it stood prior to its amendment by the Finance Act, 2021). The respondent initiated the proceedings in pursuance of the initial notice dated June 29th, 2021.
In the present case, the department submitted that Section 3 of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) applies to the unamended provisions under Section 149 (as it stood prior to its amendment by the Finance Act, 2021). However, the initial notice dated June 29, 2021, and the proceedings taken in continuation, were not time-barred. The information pertaining to the petitioner, which is a part of the BDR Group and the same is duly reflected in the investigation report. Thus, the BDR Group is in the business of providing accommodation, and as per the department, the petitioner received a bogus share premium and capital of Rs. 69.93 crores.
Further, the court noted that the petitioner has not brought on record anything to prove that the reassessment proceedings are being undertaken in an arbitrary manner.
It was held by the court that the relevant portion of the notification, which extended the time limit for the issuance of time-barring reassessment notices until June 30, 2021, was not struck down by the court. It was held by the court that categorically the power of re-assessment existed prior to 31st March 2021 and remained extended till 30th June 2021.
Accordingly, the court clarified that the assessing officer must decide the case on its own merits, without regard to any observations made in the order, except for the issue of limitation.