Case Note & Summary
The petitioner, Deepak Marda, a director of Cinepolis India Pvt. Ltd., was assessed to tax in Ichalkaranji, Kolhapur. In Financial Year 2013-14, he transferred equity shares and rights in Cinepolis India for Rs.33,55,12,980/- under a settlement agreement, incurring expenses of Rs.1,31,87,400/-. He filed his return of income for Assessment Year 2014-15 on 31 July 2014. On 31 March 2021, the Income Tax Officer, Ward-1(4), Gurgaon issued a notice under Section 148 of the Income Tax Act, 1961 proposing to reassess the income for A.Y. 2014-15. The petitioner filed objections on 10 June 2022, which were rejected by the same officer. The petitioner challenged the notice and the order on objections before the Bombay High Court. The court held that the Assessing Officer who issued the notice lacked jurisdiction over the petitioner, as the petitioner's assessment records were with the Ichalkaranji office and were not transferred to Gurgaon. Additionally, the mandatory procedure under Section 148A, including providing an opportunity of hearing, was not followed. The notice was also issued beyond the limitation period under Section 149. Consequently, the court quashed the impugned notice, the order on objections, and the reassessment proceedings.
Headnote
A) Income Tax - Reassessment - Section 148 of Income Tax Act, 1961 - Jurisdiction - The Assessing Officer who issued the notice lacked jurisdiction over the petitioner, as the petitioner was assessed in Ichalkaranji, Kolhapur, and the notice was issued by an officer in Gurgaon without proper transfer of records. Held that the notice was without jurisdiction and invalid (Paras 1-10).
B) Income Tax - Reassessment - Section 148A of Income Tax Act, 1961 - Mandatory Procedure - The Assessing Officer failed to comply with the mandatory procedure under Section 148A, including providing an opportunity of hearing to the petitioner before issuing the notice. Held that non-compliance vitiates the reassessment proceedings (Paras 11-15).
C) Income Tax - Reassessment - Limitation - Section 149 of Income Tax Act, 1961 - The notice was issued beyond the limitation period prescribed under Section 149, as the assessment year 2014-15 was time-barred. Held that the reassessment was barred by limitation (Paras 16-20).
Issue of Consideration
Whether the impugned notice under Section 148 of the Income Tax Act, 1961 and the subsequent reassessment proceedings for Assessment Year 2014-15 are valid and sustainable in law.
Final Decision
The court allowed the writ petition, quashing the impugned notice under Section 148 dated 31 March 2021, the order on objections dated 10 June 2022, and the reassessment proceedings for A.Y. 2014-15.
Law Points
- Jurisdiction of Assessing Officer
- Reassessment under Section 148
- Mandatory procedure under Section 148A
- Non-compliance with statutory requirements
- Limitation period for reassessment
Case Details
2023 LawText (BOM) (01) 233
WRIT PETITION NO. 8010 OF 2022
DHIRAJ SINGH THAKUR, KAMAL KHATA
Mr. Mihir Naniwadekar a/w. Ms. Rucha Vaidya i/by Ms. Farzeen Khambatta for the petitioner; Mr. Suresh Kumar for the respondents
The Income Tax Officer, Ward – 1, Ichalkaranji; The Income Tax Officer, Ward-1(4), Gurgaon; The Union of India
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Nature of Litigation
Writ petition challenging reassessment notice under Section 148 of the Income Tax Act, 1961.
Remedy Sought
Quashing of the impugned notice under Section 148 dated 31 March 2021, the order on objections dated 10 June 2022, and the reassessment proceedings for A.Y. 2014-15.
Filing Reason
The petitioner challenged the reassessment notice on grounds of lack of jurisdiction, non-compliance with mandatory procedure under Section 148A, and limitation.
Previous Decisions
The petitioner's objections to the reassessment notice were rejected by the Assessing Officer on 10 June 2022.
Issues
Whether the Assessing Officer who issued the notice under Section 148 had jurisdiction over the petitioner?
Whether the mandatory procedure under Section 148A was complied with before issuing the notice?
Whether the reassessment notice was barred by limitation under Section 149?
Submissions/Arguments
The petitioner argued that the Assessing Officer in Gurgaon lacked jurisdiction as the petitioner was assessed in Ichalkaranji and no transfer of records had taken place.
The petitioner contended that the procedure under Section 148A, including providing an opportunity of hearing, was not followed.
The petitioner submitted that the notice was issued beyond the limitation period of six years from the end of the relevant assessment year.
The respondents argued that the notice was valid and the reassessment was justified.
Ratio Decidendi
The Assessing Officer must have jurisdiction over the assessee to issue a reassessment notice under Section 148. The mandatory procedure under Section 148A, including providing an opportunity of hearing, must be strictly complied with. Reassessment notices issued beyond the limitation period under Section 149 are invalid.
Judgment Excerpts
This petition challenges the impugned notice under section (u/s) 148 of the Income Tax Act, 1961 (“Act”) dated 31st March 2021 and the impugned order on objection dated 10th June 2022 in addition to the impugned reassessment proceedings for Assessment Year (A.Y.) 2014-15.
The petitioner was a director of Cinepolis India Pvt. Ltd., Gurgaon and was assessed to tax in Ichalkaranji, Kolhapur.
The petitioner incurred an expense of Rs.1,31,87,400/- towards lawyers, Chartered Accountants, Escrow Agents etc. for the said transaction.
Procedural History
The petitioner filed his return of income for A.Y. 2014-15 on 31 July 2014. On 31 March 2021, the Income Tax Officer, Ward-1(4), Gurgaon issued a notice under Section 148 proposing reassessment. The petitioner filed objections on 10 June 2022, which were rejected on the same day. The petitioner then filed the present writ petition before the Bombay High Court, which was reserved on 18 January 2023 and pronounced on 15 February 2023.
Acts & Sections
- Income Tax Act, 1961: 148, 148A, 149
