Jharkhand HC: Reopening Notice Under Section 148 Invalid if done Beyond Limitation Period Prescribed Under Section 149


LI Network

Published on: February 19, 2024 at 22:12 IST

The Jharkhand High Court (Ranchi Bench) declared that the initiation of reassessment proceedings would be deemed without jurisdiction if the notice issued under Section 148 surpasses the limitation period prescribed under Section 149 of the Income Tax Act, 1961.

The Division Bench, comprising Justice Rongon Mukhopadhyay and Justice Deepak Roshan, found that the notice issued on July 21, 2022, under Section 148 exceeded the three-year time period for the Assessment Year 2016-17, ending on March 31, 2020.

The notice, addressing an alleged escaped income of Rs. 39,21,450, was deemed beyond the permissible limit of three years and ineligible for the extended period up to ten years.

The Court emphasized that any notice under Section 148 of the Income Tax Act normally has a three-year limitation period from the end of the relevant assessment year, extendable beyond three years up to ten years only if the escaped income is Rs. 50,00,000 or more—a condition not met in this case.

The case involved an assessee company issued a notice under Section 148, followed by the department’s issuance of a letter deemed to be a notice under Section 148A(b) of the Act.

Despite the assessee’s objections and detailed replies pointing out discrepancies, the department proceeded to pass an order under Section 148A(d) and issued a demand notice.

The Court highlighted the legal principle that if the foundation of any proceeding is illegal, all consequential proceedings or orders are also considered legally unsound.

Consequently, the Jharkhand High Court quashed the Reassessment Order and the Notice of Demand, asserting that the initiation of the reassessment proceedings was beyond jurisdiction.

The case title is M/s. Sevensea Vincom Private Limited vs. Principal Commissioner of Income Tax, and the case number is W.P. (T) No. 2815 of 2023.

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