Time period for opening of re-assessment under new law will be applicable only in case of fresh notices issued.

• In this insight, we have summarized the recent decisions of the Hon’ble High Court of Delhi in two cases having validity of re-assessment notice challenged u/s 149(1)(b) of the Income Tax Act, 1961 (hereinafter referred as “the Act”).
• Hon’ble Delhi High Court in case of ADROIT FINANCIAL SERVICES PRIVATE LTD. v. ACIT held that reopening of present case is in violation of CBDT instruction no. 01/2022, wherein it was mandated that for issuing fresh notices in cases pertaining to AY 2013-14, 2014-15 and 2015-16, conditions specified under section 149(1)(b) of the Act needs to be fulfilled (income escaped assessment should be more than ₹50 lakhs). Therefore, impugned order in the given case which was issued u/s 148A(d) was quashed by the High Court.
• However, in case of TOUCHSTONE HOLDINGS PRIVATE LTD. v. Income Tax Officer, it was held by the same court that time limit for initiating assessment proceedings for AY 2013-14 stood extended by the TOLA, 2020 till 30-06-2021. Consequently, the re-assessment notice issued within the extended period of limitation, is not time-barred. Further, the first proviso of Section 149 of the Act (as amended by the Finance Act, 2021) is not attracted to the facts in this case.

SW’s Observation and Conclusion:

On the basis of above views given by the Delhi High Court, if notice for initiating reassessment proceeding has been issued on or before 30.06.2021 (as extended by TOLA) then as per the observation of Supreme Court in case of Union of India v. Ashish Agarwal the same shall not be time barred under the provisions of section 149(1)(b) of the Act. However, if notices are issued after 30.06.2021, then provision of section 149(1)(b) of the Act comes to rescue the assessee.

Lakshay Prakash Jonwal, Direct Tax Associate, SW India