The Bombay High Court quashed the reassessment order dated September 30, 2022, passed against Wavy Construction LLP under Sections 147, 143(3), and 144B of the Income Tax Act, 1961, on grounds of being barred by limitation under Section 153(2). The Court emphasized adherence to statutory timelines and procedural fairness in assessment proceedings.

Acts and Sections Discussed:

1. Income Tax Act, 1961:

   • Section 147: Reassessment of escaped income.
   • Section 148: Issuance of notice for reassessment.
   • Section 153(2): Time limit for completion of reassessment.
   • Section 144B: Faceless Assessment Scheme.
   • Section 151: Sanction for reassessment notice.
   • Section 260: Jurisdiction of High Courts.

2. Constitution of India:

   • Article 226: Power of High Courts to issue writs.

Ratio Decidendi:

1. The Court ruled that the extended limitation period under Section 153(2) had expired. Any reassessment order passed beyond the statutory time limit is invalid.
2. The assessing authority's failure to issue timely notices and adhere to procedural safeguards rendered the reassessment proceedings void ab initio.
3. The absence of explicit directions in the prior High Court order did not permit an automatic extension of reassessment timelines.

1. Background of Wavy Construction LLP (Para 3-4)

Wavy Construction LLP filed its income tax return for AY 2012-13 on September 29, 2012. Initial scrutiny was completed under Section 143(1), and no assessment was reopened for years.

2. Reassessment Notice Issued (Para 5-6)

In 2019, the Department issued a notice under Section 148, citing the sale of property amounting to ₹9 crores in AY 2012-13, alleging escapement of ₹4.13 crore taxable income.

3. Objections to Reassessment (Para 7-8)

The petitioner raised objections to the reopening, asserting the lack of adequate reasons and questioning procedural validity. The objections were dismissed by the assessing officer.

4. High Court Stay on Proceedings (Para 9-10)

A writ petition was filed in 2019, and the High Court granted a stay on reassessment proceedings. The Court remanded the matter back for reconsideration in September 2021.

5. Assessment Declared Time-Barred (Para 13-16)

The petitioner argued that the reassessment proceedings and notices issued post-November 20, 2021, exceeded the statutory limitation under Section 153(2) and were therefore invalid.

6. Revenue’s Arguments (Para 22-23)

The Revenue argued for an extended limitation under Section 153(6) due to the High Court's remand order, claiming sufficient compliance with procedural directions.

7. Court’s Decision (Para 24-28)

The Court held that the limitation period for reassessment expired on November 20, 2021, even after accounting for the stay period. The reassessment order dated September 30, 2022, was quashed as time-barred.

Subjects:

Income Tax, Limitation, Reassessment, Procedural Fairness

Income Tax Act, Section 147, Reassessment, High Court, Faceless Assessment, Limitation Period, Procedural Violation.