Time limit for issuing notice u/s. 148 – Amendment to section 149 by Finance Act, 2012, which extended limitation for reopening assessment to sixteen years, could not be resorted for reopening proceedings concluded before amendment became effective

50. Brahm Datt vs. ACIT; [2018] 100 taxmann.com 324
(Delhi) Date of order: 6^th December, 2018 A. Y. 1998-99 Section 149 of ITA and Finance Act, 2012

Time limit for issuing notice u/s. 148 – Amendment to
section 149 by Finance Act, 2012, which extended limitation for reopening
assessment to sixteen years, could not be resorted for reopening proceedings
concluded before amendment became effective

The assessee was a senior citizen aged about 84 years. From A. Ys.
1984-85 to 2003-04, he was a non-resident/not ordinarily resident of India. He
was previously working and residing in foreign countries, viz; Jordan and Iraq
and while so, he derived income primarily from salary and professional
receipts. The assessee during the course of search clarified that he did not
maintain any foreign bank account in his personal capacity, he, however had
contributed an amount of approximately US$ 2-3 million at the time of settling
of the offshore Trust, when he was a non-resident, out of his income earned
from sources outside India. The revenue primarily relying upon his statement,
issued impugned notice dated 24/03/2015 u/s. 148 of the Income-tax Act, 1961
seeking to initiate reassessment proceedings for A. Y. 1998-99, on the
suspicion that the, income of the assessee had escaped assessment. The
Assessing Officer rejected the assessee’s contention that limitation for
re-assessment for A. Y. 1998-99 had expired on 31/03/2005 and therefore, re-assessment
was bared by limitation. The Assessing Officer contended that the proceedings
were initiated within the extended period of 16 years from the end of the
relevant assessment year by relying on section 149(1)(c), introduced by the
Finance Act, 2012, with effect from 01/07/2012.

The assessee filed writ petition challenging the notice u/s. 148 on the
ground of limitation. Delhi High Court allowed the writ petition and held as
under:

“i)   The revenue had sought to
contend that the amendment (to section 149) is merely procedural and no one has
a vested right to procedure; and that procedural amendments can be given effect
any time, even in ongoing proceedings.

ii)   The question of revival of
the period of limitation for reopening assessment for A. Y. 1998-99 by taking
recourse to the subsequent amendment made in section 149 in the year 2012,
i.e., more than 8 years after expiration of limitation on 31/03/2005, has been
dealt with by the Supreme Court in K.M. Sharma v. ITO [2002] 122 Taxman 426/254
ITR 772(SC).

iii)  Assessment for A. Y. 1998-99
could not be reopened beyond 31/03/2005 in terms of provisions of section 149
as applicable at the relevant time. The assessees return for A.Y. 1998-99
became barred by limitation on 31/03/2005.

iv)  In view of the above
discussion, it is held that the petition has to succeed; the impugned
reassessment notice and all consequent proceedings are hereby quashed and set
aside. The writ petition is allowed.”