[Income Tax] Delhi HC Larger Bench To Decide On Retrospective Applicability Of Extended Limitation For Reassessment In Cases Involving Foreign Assets
A larger bench of the Delhi High Court will decide whether Section 149(1)(c) of the Income Tax Act 1961, inserted vide a 2012 amendment to provide an extended period of reassessment for cases involving foreign assets, applies retrospectively.Section 149(1)(c) prescribes that reassessment notice in respect of any income in relation to any asset located outside India, which had escaped...
A larger bench of the Delhi High Court will decide whether Section 149(1)(c) of the Income Tax Act 1961, inserted vide a 2012 amendment to provide an extended period of reassessment for cases involving foreign assets, applies retrospectively.
Section 149(1)(c) prescribes that reassessment notice in respect of any income in relation to any asset located outside India, which had escaped assessment, is not proscribed for a period of 16 years from the end of the assessment year in which such income was chargeable to tax.
A division bench of the High Court in Brahm Datt v. Assistant Commissioner of Income-Tax & Others (2018) had held that provisions of Section 149(1)(c) of the Act would not have any retrospective operation.
In the present case however, the bench of Justices Vibhu Bakhru and Tejas Karia expressed disagreement with Brahm Datt (supra). It was of the view that the above decision was passed in ignorance of Explanation to Section 149, which clarified that the provision would be applicable for “any assessment year” beginning on or before 1st day of April 2012.
“The import of using the word “any” is not restrictive,” the Court opined in its order dated May 30, 2025.
The development comes in a batch of petitioners challenging reassessment action on several grounds including that the reassessment notices are barred by limitation as they were issued beyond the period of six years from the end of the relevant assessment year.
The notices, issued between 2014 and 2021, pertained to Assessment Years starting 1997 till 2006.
Petitioners contended that Section 149(1)(c) was brought in force with effect from 01.07.2012 and it would apply only to cases where the limitation for re-opening the assessment had not already expired.
The Revenue on the other hand contended that the provision would be applicable retrospectively and thus, reassessment could be opened even where the same stood concluded by expiry of the limitation as was applicable prior to insertion of said Clause (c).
The High Court examined the legislative intent and the language of the statute to determine whether the provision was intended to be applicable retrospectively.
It referred to the legislative notes on the provision and found that Section 149 was intended to be procedural in nature, for enabling reopening of proceedings for assessment year commencing prior 1st July, 2012.
“The matter be placed before Hon'ble the Chief Justice to constitute a larger bench,” the Court thus ordered and listed it next on July 25.
Appearance: Counsel for the petitioners: Mr. Ajay Vohra, Sr. Adv. with Mr. Vaibhav Kulkarni, Advs. Counsel for the respondents: Mr. Sunil Agarwal, Mr. Shivansh Pandya, Mr. Viplav Acharya, Ms. Priya Sarkar & Mr. Utkarsh Tiwari, Advs. Mr. Vipul Agarwal, Mr. Sakshi, Mr. Akshat Singh, Advs. Mr. Ruchir Bhatia, Mr. P. Gupta, Advs. Mr. Indruj Singh Rai, Mr. Sanjeev Menon, Mr. Rahul Singh, Mr. Anmol Jagga & Mr. Gaurav Kumar, Advs.
Case title: U.K. Paints (Overseas) Ltd v. Asstt.Commissioner Of Income Tax, Central Circle.8, & Ors. (and batch)
Citation: 2025 LiveLaw (Del) 655
Case no.: W.P.(C) 2068/2015 (and batch)