INCOME TAX ACT, 1961

Section 149(1)(c)

Reassessment - Validity - Bar of limitation -

AO by way of notice issued under section 148 dt. 16-2-2016 reopened assessment for assessment years 2001-02 to 2005-06. Assessee objected to reopening of assessments 2001-02 to 2005-06 on the plea that proceedings under section 148 were initiated beyond limitation period prescribed under section 149. AO relying heavily on explanation appended to section 149, tried to make out a case that amended provision of section 149(1)(c) had retrospective effect, in terms of which any assessment for and upto sixteen years before 1-7-2012 could be reopened. Held: Finance Act, 2012, by which clause (c) was enacted in section 149(1), also made several other amendments in the and these were made applicable with retrospective effect. For instance, sections 2(14) & 2(47) which define the words 'capital asset' & 'transfer' were amended with retrospective effect from 1-4-1962. Similarly amendments in sections 9(1)(vi) & 9(1)(vii) enlarging the definition of income deemed to accrue in India by way of 'royalty' and 'fees for technical services' were made effective retrospectively from 1-4-1976. These amendments were also closely linked with foreign sources of income or transactions between non-residents. However, Legislature in its wisdom made foregoing amendments with retrospective effect, whereas amendment in section 149(1) by inserting clause (c) was made effective prospectively from 1-7-2012. Therefore, legislative intent to make the clause (c) of section 149(1) applicable retrospectively so as to revive close proceedings was not apparent. Therefore, reopening of assessment for assessment years 2001-02 to 2005-06 was quashed as invalid.

Followed:Raju Verma v. DCIT in I.T.A. Nos. 1796 & 1797/Del/2017, dated 9-4-2019 and Ravichandra V Mehta v. Dy.CIT ITA. Nos. 409, 450, 410 and 451/Rjt/2017, dated 25-2-2019 and J.P. Jani, ITO v. Induprasad Devshanker Bhatt (1969) 72 ITR 595 (SC) : 1969 TaxPub(DT) 151 (SC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2001-02 to 2005-06

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