Reassessment notice for AY 2012-13 is time-barred as search-linked limitation cannot exceed ten assessment years.

In brief

The question

1. Whether the impugned notice under Section 148 for Assessment Year 2012-13 is barred by limitation under the provisions of Section 149 read with Section 153A of the Act

The court held

The Court held that the notice for AY 2012-13 was barred by limitation

It also directed

The "relevant assessment year" reachable under search-related reopening cannot extend beyond ten years from the end of the search assessment year

The impugned notice dated 24.02.2023 was quashed and set aside

Rule made absolute

01Facts

A search and seizure operation under Section 132 of the Income Tax Act, 1961 ("the Act") was conducted on 08.09.2021

pp. 1-2, para 2.1

Consequent to this search, the Respondent issued a notice under Section 148 on 24.02.2023 to the Petitioner seeking to reopen the assessment for the Assessment Year (AY) 2012-13

¶ 2.2

The Petitioner challenged the notice on the ground of limitation

¶ 3

02Issues

i.1. Whether the impugned notice under Section 148 for Assessment Year 2012-13 is barred by limitation under the provisions of Section 149 read with Section 153A of the Act

¶ 3

03Law Applied

The Court applied the "Old Regime" of Section 149, as Section 152(3) mandates that for searches conducted between April 1, 2021, and September 1, 2024, Sections 147–151 as they stood prior to the Finance (No. 2) Act, 2024, apply

¶ 7

Under Section 153A(1)(b), the Assessing Officer (AO) can assess six years immediately preceding the search year and any "relevant assessment year"

¶ 8.1

Explanation 1 to Section 153A defines "relevant assessment year" as one falling beyond six but not later than ten assessment years from the "end of the assessment year relevant to the previous year in which search is conducted"

¶ 8.1

The Court relied on Ojjus Medicare (P) Ltd. (Delhi High Court) and A.R. Safiullah (Madras High Court) to interpret the different computation modes for the six-year and ten-year block periods

¶ 8.2

Provisions in the judgment · 16

Income-tax Act, 1961 16 provisions

Section 132Section 148Section 143Section 147Section 149Section 153ASection 153CSection 152Section 133ASection 139Section 151Section 153Section 276BSection 115OSection 194BSection 278B

04Reasoning

The Court noted that the search occurred on 08.09.2021 (FY 2021-22), making AY 2022-23 the "search assessment year"

¶ 8.3

Per Explanation 1 to Section 153A, the ten-year limit must be reckoned backwards from the end of the search assessment year (31.03.2023)

¶ 8.2

While the six-year block excludes the search year, the ten-year block includes it as the first year in the calculation

¶ 8.2, 8.3

Applying this backward computation: the 1st year is AY 2022-23, and the 10th year is AY 2013-14

¶ 8.3

Therefore, AY 2012-13 falls outside the permissible ten-year window

¶ 8.3

The Court rejected the Revenue’s argument that "end" should be construed as April 1st, holding that taxing statutes must be strictly construed and an unambiguous provision cannot be elastically interpreted

¶ 5.5, 8.2