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2024 (2) TMI 400 - HC - Income TaxReopening of assessment u/s 147 - period of limitation - whether Notice u/s 148 issued beyond limitation period prescribed U/s 149 and thus is time barred and void? - HELD THAT:- The Income Tax Act has provided a strict time-line to complete the assessment or reassessment proceedings under Section 147 of the Income Tax Act, 1961, once initiated under Section 148 of the Income Tax Act, 1961. If the said proceedings are not completed within the stipulated time-line, it will be barred by limitation. Thus the very initiation of reassessment proceeding is wholly without jurisdiction. Any notice under Section 148 of the I.T Act, 1961 is normally three years from the end of the relevant assessment year (in this case A.Y 2016-17) and extendable beyond 3 years till 10 years, provided the income which has escaped assessment is Rs. 50,00,000/- or more which is absent in the impugned Notices as indicated herein above. The three-year time period of A.Y 2016-17 had ended on 31.03.2020. Accordingly, the Impugned Notice, dated 21.07.2022, is beyond 3 years’ time period. Further, the said notice is for alleged escaped income of Rs. 39,21,450/- which is less than Rs. 50,00,000/- and thus, the said notice cannot take the benefit of extended period of limitation which is beyond three years till ten years. Thus, the Impugned Notice dated 21.07.2022, issued under Section 148, is barred by the limitation period prescribed under Section 149 of the Act. Accordingly, the Impugned Notice issued u/s 148, is barred by the limitation period prescribed under Section 149 and is illegal, unsustainable and void ab initio and is liable to be set-aside and consequently, all subsequent actions/notice/orders are also liable to be quashed. It is a well-established principle of law that if the foundation of any proceeding is illegal and unsustainable in law, then all consequential proceedings or order are also bad in law. Since the impugned notice u/s 148 of I.T Act, 1961, is illegal and unsustainable in law, accordingly, the Impugned Re-assessment order passed under Section 147 and the Notice of Demand issued under Section 156 are also bad in law and unsustainable and the same, is hereby, quashed and set aside. Decided in favour of assessee.
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