No Illegality Found in Commencing Reassessment Proceedings After 10 Years Post-Search: Jharkhand High Court

Jharkhand high court law insider in
Jharkhand high court law insider in

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Published on: December 14, 2023 at 16:30 IST

The Jharkhand High Court has ruled that there is no illegality in the initiation of reassessment proceedings a decade after a search, under the amended regime.

The court, presided over by Justice Rongon Mukhopadhyay and Justice Deepak Roshan, held that the Assessing Officer (A.O.) was justified in reopening the assessment for the assessment year 2013-14, even after the lapse of 10 years, as the requisite sanction from the competent authority had been duly obtained.

The court highlighted the legislative changes effective April 1, 2022, whereby Section 149(1)(b) was amended to broaden the scope of revenue in search proceedings.

The amendment included entries in books of account, apart from assets and expenditure, as grounds for initiating reassessment.

The case in question involved allegations related to entries in the books of account, specifically, the concealment of bogus loans amounting to Rs. 93 lakhs, which were not disclosed in the assessee’s income tax return. The court reasoned that the issuance of notice under Section 148 was justified in this context.

Additionally, the court underscored the applicability of Section 153C, allowing the department to initiate assessments against a third party whose documents were discovered during a search. This provision empowers the department to proceed against such entities in a manner similar to Section 153A.

The appellant, engaged in the construction and development of residential flats, commercial establishments, and schools, argued that the Finance Act, 2021, aimed to curtail the time limit to three years in ordinary cases.

However, the court held that the extended time limit of ten years under Section 149(1)(b) was valid in this case, as the search was conducted on June 9, 2022, falling within the financial year 2022-23 and leading to the assessment year 2023-24.

Case Title: Devika Construction and Developers Private Limited Versus Principal Chief Commissioner of Income Tax

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