Delhi High Court Quashes Time-Barred Reassessment Notice:

Delhi High Court Quashes Time-Barred Reassessment Notice The Delhi High Court, in a judgment, ruled in favour of Gain Capital Private Limited, in which the court cancelled a reassessment notice issued by the Income Tax Department.

About the Case

Gain Capital Pvt. Ltd. is a company that provides financial services. For the financial year 2014-15 (AY 2015-16), the company filed its income tax return and reported it had made a loss. Years later, on June 30, 2021, the Assessing Officer sent the company a notice under Section 148 to reopen the case and reassess the return. However, the tax officer adopted the old method for reassessment, which was not valid anymore. Therefore, to correct this mistake, the AO relied on a Supreme Court judgment in Union of India vs Ashish Agarwal and considered the previous notices as if they were issued under Section 148A(b) of the amended law. So, the officer passed a new order on 25 July 2022 and then sent a fresh notice on 27 July 2022.

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Company Challenges Notice

The company reached out to the Delhi High Court to challenge the notice sent on July 27, 2022, arguing that the notice cannot be sent after April 1, 2021, for AY 2015-16, as the law had changed. The assessee cited the ruling of the Supreme Court on Union of India Vs Rajeev Bansal, the government had accepted that all notices issued after April 1, 2021, for AY 2015-16 were no longer invalid and had to be cancelled. A similar judgement was passed in the case of Deepak Steel and Power Ltd. vs CBDT.

High Court Final Ruling

The Delhi High Court supported the argument of the assessee and confirmed that the case was covered by the Supreme Court's ruling in the case of Rajeev Bansal. Additionally, the Court also cited its previous ruling in Make My Trip Pvt Ltd. vs Deputy Commissioner of Income Tax & Anr., which had the same issue. Therefore, the court quashed the notice issued on July 27, 2022 and all the proceedings.