Delhi High Court – Orders
Vikram Kapahi vs Assistant Commissioner Of Income Tax … on 15 January, 2025
Author: Vibhu Bakhru
Bench: Tushar Rao Gedela, Vibhu Bakhru
$~34.
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) 7220/2024 & CM APPL. 30096/2024
VIKRAM KAPAHI
.....Petitioner
Through: Mr. Ved Jain, Mr. Nischay Kantoor,
Ms. Sonuja Dodeja, Mr. Divyansh
Dubey and Mr. Govind Gupta, Advs.
versus
ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 19(1)
DELHI & ORS.
.....Respondent
Through: Mr. Puneet Rai, Sr. Standing Counsel
with Mr. Ashvini Kumar, Mr Rishabh
Nangia, JSC.
CORAM:
HON'BLE THE ACTING CHIEF JUSTICE
HON'BLE MR. JUSTICE TUSHAR RAO GEDELA
ORDER
% 15.01.2025
1. The petitioner has filed the present petition, inter alia, impugning a
notice dated 29.03.2024 issued by respondent no.1/Assessing Officer
(hereafter the AO) under Section 148A(b) of the Income Tax Act, 1961
(hereafter the Act); the order dated 16.04.2024 passed under Section
148A(d) of the Act; notice dated 16.04.2024 issued under Section 148 of the
Act in respect of the assessment year (AY) 2016-17. The petitioner also
impugns the intimation letter dated 16.04.2024 recording the prior approval
granted by respondent no.3.
2. It is the petitioner’s case that the impugned notice dated 16.04.2024
This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.
The Order is downloaded from the DHC Server on 31/01/2025 at 22:51:46
issued under Section 148 of the Act was passed beyond the period of
limitation.
3. After some arguments, it is apparent that the controversy involved is
covered in favour of the petitioner by a decision of this court in Manju
Somani v. Income Tax Officer Ward-70(1) & Ors: Neutral Citation:
2024:DHC:5411-DB.
4. We also consider it apposite to refer to the following passages of the
decision of the Supreme Court in Union of India & Ors. v. Rajeev Bansal:
2024 SCC OnLine SC 2693 whereby the said view has been upheld.
“46. The ingredients of the proviso could be broken down for
analysis as follows: (i) no notice under Section 148 of the new
regime can be issued at any time for an assessment year beginning
on or before 1 April 2021; (ii) if it is barred at the time when the
notice is sought to be issued because of the “time limits specified
under the provisions of’ 149(1)(b) of the old regime. Thus, a notice
could be issued under Section 148 of the new regime for assessment
year 2021-2022 and before only if the time limit for issuance of such
notice continued to exist under Section 149(1)(b) of the old regime.
*** *** ***
49. The first proviso to Section 149(1)(b) requires the determination
of whether the time limit prescribed under Section 149(1)(b) of the
old regime continues to exist for the assessment year 2021-2022 and
before. Resultantly, a notice under Section 148 of the new regime
cannot be issued if the period of six years from the end of the
relevant assessment year has expired at the time of issuance of the
notice. This also ensures that the new time limit of ten years
prescribed under Section 149(1)(b) of the new regime applies
prospectively. For example, for the assessment year 2012-2013, the
ten year period would have expired on 31 March 2023, while the six
year period expired on 31 March 2019. Without the proviso to
Section 149(1)(b) of the new regime, the Revenue could have had
the power to reopen assessments for the year 2012-2013 if the
escaped assessment amounted to Rupees fifty lakhs or more. The
proviso limits the retrospective operation of Section 149(1)(b) toThis is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.
The Order is downloaded from the DHC Server on 31/01/2025 at 22:51:46
protect the interests of the assesses.”
5. In the present case the notice under Section 148 of the Act could have
been issued for a maximum period of six years from the end of the relevant
assessment year. The said period expired on 31.03.2023. Notwithstanding
the same, Mr. Rai, the learned counsel for the Revenue submits that the
impugned notices and order should be considered within the specified time
as in the earlier round this court had stayed the proceedings. He submits that
the benefit of the stay granted by the court in Vikram Kapahi v. Assistant
Commissioner of Income Tax Circle 19(1) Delhi & Ors., W.P.(C)
1747/2023 is required to be construed in favor of the Revenue. According
to him, the time period during which the said petition was pending before
this court is required to be excluded for the purposes of computing
limitation.
6. We find no merit in the aforesaid contention. The AO, prior to issuing
the impugned notice, had issued a notice dated 29.06.2021 under Section
148 of the Act. The said notice was faulted as the same was issued under the
statutory regime as existing prior to 01.04.2021. Subsequently the Supreme
Court had, in exercise of its power under Article 142 of the Constitution of
India directed that the notices issued under Section 148 of the Act under the
old regime, but after 01.04.2021, be construed as notices under Section
148A(b) of the Act. The said order passed in Union of India and Ors. v.
Ashish Agarwal: (2023) 1 SCC 617, was directed to be applicable PAN
India in respect of all such notices irrespective of whether any challenge
against the said notices was subsisting at the relevant time. Additionally, the
This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.
The Order is downloaded from the DHC Server on 31/01/2025 at 22:51:47
Revenue was also directed to furnish the material to the assessee on which
such notices were premised.
7. Following the directions issued by the Supreme Court, the AO had
supplied the material to the petitioner. After considering the petitioner’s
response, the AO passed an order dated 26.07.2022 under Section 148A(d)
of the Act and issued a notice dated 26.07.2022 under Section 148 of the Act
in respect of AY 2016-17. The aforesaid notice dated 26.07.2022 was
challenged by the petitioner in W.P.(C) 1747/2023 and by an order dated
13.02.2023, the operation of the said notice was stayed.
8. The petitioner’s challenge to the said notice was, inter alia, founded
on the basis that it had been issued without the necessary mandatory
approvals. The said issue was decided by this court in a batch of matters in
Twylight Infrastructure Pvt. Ltd. v. Income Tax Officer Ward 25(3) Delhi
& Ors.: Neutral Citation No. 2024:DHC:259-DB. The relevant extract of
the said decision is set out below:
“6. A faint argument is made on behalf of the revenue that the
approval of the specified authority is not mandatory, which, in our
opinion, is in the teeth of the provisions of the Act. In this behalf, the
old Section 151 and the amended version of the provision (after
Finance Act 2021) are made reference to.
6.1. For the sake of convenience, the provisions of Sections 148, 149
and 151, before and after amendment are extracted hereafter:
Prior to Finance Act 2021
“148. (1) Before making the assessment, reassessment
or recomputation under section 147, the Assessing
Officer shall serve on the assessee a notice requiring
him to furnish within such period, as may be specified
in the notice, a return of his income or the income of
any other person in respect of which he is assessable
under this Act during the previous year correspondingThis is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.
The Order is downloaded from the DHC Server on 31/01/2025 at 22:51:47
to the relevant assessment year, in the prescribed form
and verified in the prescribed manner and setting forth
such other particulars as may be prescribed; and the
provisions of this Act shall, so far as may be, apply
accordingly as if such return were a return required to
be furnished under section139 :
Provided that in a case–
(a) where a return has been furnished during the
period commencing on the 1st day of October, 1991
and ending on the 30th day of September, 2005 in
response to a notice served under this section, and
(b) subsequently a notice has been served under sub-
section (2) of section 143 after the expiry of twelve
months specified in the proviso to sub-section (2) of
section 143, as it stood immediately before the
amendment of said subsection by the Finance Act,
2002 (20 of 2002) but before the expiry of the time
limit for making the assessment, re-assessment or
recomputation as specified in sub-section (2) of section
153, every such notice referred to in this clause shall
be deemed to be a valid notice:
Provided further that in a case–
(a) where a return has been furnished during the
period commencing on the 1st day of October, 1991
and ending on the 30th day of September, 2005, in
response to a notice served under this section, and
(b) subsequently a notice has been served under clause
(ii) of sub-section (2) of section 143 after the expiry of
twelve months specified in the proviso to clause (ii) of
sub-section (2) of section 143, but before the expiry of
the time limit for making the assessment, reassessment
or recomputation as specified in sub-section (2) of
section 153, every such notice referred to in this clause
shall be deemed to be a valid notice….
xxx xxx xxx
149. (1) No notice under section 148 shall be issued
for the relevant assessment year,–
(a) if four years have elapsed from the end of the
This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.
The Order is downloaded from the DHC Server on 31/01/2025 at 22:51:47
relevant assessment year, unless the case falls under
clause (b) or clause (c);
(b) if four years, but not more than six years, have
elapsed from the end of the relevant assessment year
unless the income chargeable to tax which has escaped
assessment amounts to or is likely to amount to one
lakh rupees or more for that year;
(c) if four years, but not more than sixteen years, have
elapsed from the end of the relevant assessment year
unless the income in relation to any asset (including
financial interest in any entity) located outside India,
chargeable to tax, has escaped assessment….
xxx xxx xxx
151. (1) No notice shall be issued under section 148
by an Assessing Officer, after the expiry of a period
of four years from the end of the relevant assessment
year, unless the Principal Chief Commissioner or
Chief Commissioner or Principal Commissioner or
Commissioner is satisfied, on the reasons recorded by
the Assessing Officer, that it is a fit case for the issue
of such notice.
(2) In a case other than a case falling under sub-
section (1), no notice shall be issued under section
148 by an Assessing Officer, who is below the rank of
Joint Commissioner, unless the Joint Commissioner
is satisfied, on the reasons recorded by such
Assessing Officer, that it is a fit case for the issue of
such notice.
(3) For the purposes of sub-section (1) and sub-section
(2), the Principal Chief Commissioner or the Chief
Commissioner or the Principal Commissioner or the
Commissioner or the Joint Commissioner, as the case
may be, being satisfied on the reasons recorded by the
Assessing Officer about fitness of a case for the issue
of notice under section 148, need not issue such notice
himself.”
Post Finance Act 2021
“148. Before making the assessment, reassessment or
This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.
The Order is downloaded from the DHC Server on 31/01/2025 at 22:51:47
recomputation under section 147, and subject to the
provisions of section 148A, the Assessing Officer shall
serve on the assessee a notice, along with a copy of the
order passed, if required, under clause (d) of section
148A, requiring him to furnish within such period, as
may be specified in such notice, a return of his income
or the income of any other person in respect of which
he is assessable under this Act during the previous
year corresponding to the relevant assessment year, in
the prescribed form and verified in the prescribed
manner and setting forth such other particulars as may
be prescribed; and the provisions of this Act shall, so
far as may be, apply accordingly as if such return were
a return required to be furnished under section 139:
Provided that no notice under this section shall be
issued unless there is information with the Assessing
Officer which suggests that the income chargeable to
tax has escaped assessment in the case of the assessee
for the relevant assessment year and the Assessing
Officer has obtained prior approval of the specified
authority to issue such notice…
xxx xxx xxx
149. (1) No notice under section 148 shall be issued
for the relevant assessment year–
(a) if three years have elapsed from the end of the
relevant assessment year, unless the case falls under
clause (b);
(b) if three years, but not more than ten years, have
elapsed from the end of the relevant assessment year
unless the Assessing Officer has in his possession
books of account or other documents or evidence
which reveal that the income chargeable to tax,
represented in the form of asset, which has escaped
assessment amounts to or is likely to amount to fifty
lakh rupees or more for that year…
xxx xxx xxx
151. Specified authority for the purposes of section
148 and section 148A shall be,–
This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.
The Order is downloaded from the DHC Server on 31/01/2025 at 22:51:47
(i) Principal Commissioner or Principal Director or
Commissioner or Director, if three years or less than
three years have elapsed from the end of the relevant
assessment year;
(ii) Principal Chief Commissioner or Principal
Director General or where there is no Principal Chief
Commissioner or Principal Director General, Chief
Commissioner or Director General, if more than
three years have elapsed from the end of the relevant
assessment year…”
[Emphasis is ours]
7. A careful perusal of the above extract would show that after
amendment, Section 151 has been split and the part which enjoins
that the approval of the specified authority is mandatory stands
embedded in the first proviso to Section 148.
7.1. The concerned specified authorities, depending on the
applicable timeframe, are adverted to in Section 151 of the Act.
8. The first proviso to Section 148 and Section 151, when read
conjointly, demonstrate the untenability of the submission made on
behalf of the revenue.
9. We may also note that in Ganesh Dass Khanna, we were
considering the provision of Section 149 of the Act and have taken
the view that since the escaped income was less than Rs.50,00,000/-,
the time limit as prescribed in Section 149(1)(a) of the Act would
apply.
10. As indicated above, the specified authority changes depending
on the time limit prescribed in Section 151 of the Act. It is on this
account that there is linkage between ruling rendered in Ganesh
Dass Khanna and the instant matters.
11. It may also be noted that in Ganesh Dass Khanna, we had
recorded the stand of the revenue that the issue concerning limitation
and the specified authority are “intertwined”. For convenience, the
relevant part of the judgement is extracted hereafter:
“24. On behalf of the revenue, the following broad
submissions were made:…
…(viii) Both under the unamended 1961 Act and
amended 1961 Act, the issue concerning limitation is
inextricably intertwined with two aspects:
This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.
The Order is downloaded from the DHC Server on 31/01/2025 at 22:51:47
(a) First, the rank of the authority granting
approval/sanction for triggering reassessment
proceedings.
(b) Second, the quantum of income which has escaped
assessment.”
[Emphasis is ours]
12. Clearly, the revenue advanced the argument of interlinkage
between limitation and the ascertainment of the specified authority
due to the plain language of the amended Section 151 of the Act.
Section 151, when read alongside the first proviso to Section 148,
brings the aspect of inextricable linkage to the fore.
12.1. Clauses (i) and (ii) of Section 151 of the amended Act (which
has been extracted hereinabove) clearly specify the authority whose
approval can trigger the reassessment proceedings. Thus, if three (3)
years or less have elapsed from the end of the relevant AY, the
specified authority who would grant approval for initiation of
reassessment proceedings will be the Principal Commissioner or
Principal Director or Commissioner or Director. However, if more
than three (3) years from the end of the relevant AY have elapsed,
the specified authority for according approval for reassessment shall
be the Principal Chief Commissioner or Principal Director General
or, where there is no Principal Chief Commissioner or Principal
Director General, Chief Commissioner or Director General.
12.2. That the approval is mandatory is plainly evident on perusal of
the first proviso appended to Section 148 of the Act. the said
proviso, at the risk of repetition, reads as follows:
“…Provided that no notice under this section shall be
issued unless there is information with the Assessing
Officer which suggests that the income chargeable to
tax has escaped assessment in the case of the assessee
for the relevant assessment year and the Assessing
Officer has obtained prior approval of the specified
authority to issue such notice….”
12.3. In these cases, there is no dispute that although three (3) years
had elapsed from of the end of the relevant AY, the approval was
sought from authorities specified in clause (i), as against clause (ii)
of Section 151.
12.4. Before us, the counsel for the revenue continue to hold this
This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.
The Order is downloaded from the DHC Server on 31/01/2025 at 22:51:47
position. The only liberty that they seek is that if, based on the
judgement in Ganesh Dass Khanna, the impugned orders and
notices are set aside, liberty be given to the revenue to commence
reassessment proceedings afresh.
13. Therefore, having regard to the aforesaid, the impugned
notices and orders in each of the above-captioned writ petitions
are quashed on the ground that there is no approval of the
specified authority, as indicated in Section 151(ii) of the Act. The
direction is issued with the caveat that the revenue will have
liberty to take steps, if deemed necessary, albeit as per law.
14. Needless to add, the rights and contentions of both the sides will
remain open, in the event the revenue triggers reassessment
proceedings.
15. The above-captioned writ petitions are disposed of, in the
aforesaid terms.
16. Consequently, the pending applications shall stand closed.
17. Parties will act based on the digitally signed copy of the order.”
[emphasis added]
9. Following the aforesaid decision in Twylight Infrastructure Pvt. Ltd.
v. Income Tax Officer Ward 25(3) Delhi & Ors. (supra) this court allowed
the petition filed by the petitioner being W.P.(C) No. 1747/2023 on
13.03.2024 and set aside the notice dated 26.07.2022.
10. It is apparent from the above that the notice issued under Section 148
of the Act in the earlier round was set aside on the ground that the AO had
not followed the mandatory requirement of seeking an approval from the
competent authority.
11. Clearly, the fact that the petitioner had succeeded in its challenge to
the said notice cannot be a ground for exclusion of the period spent by the
assessee in pursuing the said litigation. The time spent by the petitioner in
pursuing the challenge can neither be excluded nor can be claimed as
This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.
The Order is downloaded from the DHC Server on 31/01/2025 at 22:51:48
resulting in extension of the period of limitation.
12. The Revenue is required to take all necessary steps for initiation of the
assessment proceedings within the period of limitation. This would
obviously mean steps in accordance with law. The fact that the Revenue had
not taken the steps in accordance with law cannot possibly be construed as a
factor in favour of the Revenue for extending the limitation as stipulated
under Section 149 of the Act. Plainly, there was no court order impeding the
Revenue from issuing a notice under Section 148 of the Act, in accordance
with law.
13. In view of the above, we reject the contention that the period of
limitation as stipulated under Section 149(1) of the Act stood extended by
virtue of the proceedings initiated by the orders passed in W.P.(C)
1747/2023.
14. In view of the above, the present petition is allowed and the notice
dated 29.03.2024 issued by respondent no.1/ AO under Section 148A(b) of
the Act; the order dated 16.04.2024 passed under Section 148A(d) of the
Act; and the notice dated 16.04.2024 issued under Section 148 of the Act in
respect of the AY 2016-17, are set aside.
VIBHU BAKHRU, ACJ
TUSHAR RAO GEDELA, J
JANUARY 15, 2025
N.Khanna
This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.
The Order is downloaded from the DHC Server on 31/01/2025 at 22:51:48
[ad_1]
Source link