HC isn’t an IT authority; Sec. 149 time limit applies to reassessment initiated to give effect of HC’s order

Case Details: Pavan Morarka v. ACIT - [2022] 136 taxmann.com 2 (Bombay)

Judiciary and Counsel Details

• • K.R. Shriram and N.J. Jamadar, JJ.
  • P.J. Pardiwalla, Sr. Adv. Niraj Sheth and Atul K. Jasani for the Petitioner. 
  • Suresh Kumar for the Respondent.

Facts of the Case

In the instant case, the Assessing Officer issued a reassessment notice relying on the observations of the Delhi High Court. The assessee filed the writ petition before the Bombay High Court against the issue of reassessment notice. The assessee contended that the notice was barred by limitation since it was issued beyond a period of 6 years from the end of the relevant assessment year.

The Delhi High Court held that Section 150 allows issuance of notice under Section 148 at any time to give effect to any “finding” or “direction” contained in an order passed by any authority in any proceedings under the Act by way of appeal, reference or revision or by a Court in any proceeding under any other law

High Court Held

Section 150 uses the words’ order passed by any authority in any proceeding under this Act’ or ‘by a Court in any proceeding under any other law’. It should be noted that the Hon’ble Delhi High Court is not among the classes of the Income Tax Authorities as defined by section 116 of the Income-tax Act. Further, the order of the Hon’ble Delhi High Court is not an order in any provision under any other law.

Thus, the observations of the Hon’ble Delhi High Court cannot be considered as “finding” or “direction” as contemplated by Section 150. Accordingly, the time limit for issuance of reassessment notice as provided by section 149 would be applicable if notice is issued to give the effect to a High Court order.

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