Assessment Order for AY 2012-13 Overturned Due to Expiry of Limitation Period as per Sections 153A and 153C of the Income Tax Act, 1961
In a significant judgment, the Delhi High Court has quashed an income tax assessment order against Consistent Builders Pvt. Ltd. for the assessment year (AY) 2012-13, deeming it time-barred. The court, in its decision dated September 29, 2026, ruled that the assessment order, issued on March 30, 2023, was beyond the permissible time frame as prescribed under the Income Tax Act, 1961.
The case, titled "Consistent Builders Pvt. Ltd. v. ACIT, Central Circle 05, Delhi," was presided over by a division bench comprising Justices Dinesh Mehta and Aditi Choudhary. The petitioner, represented by advocates Mr. P. Roychaudhuri and Mr. Gagan Gupta, challenged the assessment order under Section 153C, which was issued in furtherance of a satisfaction note recorded on June 25, 2021. The satisfaction note fell within AY 2022-23, which necessitated the assessment period to be calculated backward, covering a maximum of 10 years.
The court found that even though the escaped income exceeded Rs. 50,00,000, the outer limit for reassessment could only extend up to AY 2013-14. Thus, the assessment order concerning AY 2012-13 was clearly beyond the stipulated 10-year period, making it invalid. The court referenced a precedent case, "Principal Commissioner of Income Tax-1 (Central-1) v. Ojjus Medicare Pvt. Ltd.," which supported the petitioner's contention and helped establish the legal position on the limitation period.
Mr. Ruchir Bhatia, Senior Standing Counsel for the Department, acknowledged the factual position but indicated that a Special Leave Petition (SLP) had been filed in the Supreme Court against the decision in the Ojjus Medicare case.
The Delhi High Court's decision highlights the importance of adhering to statutory time limits in tax assessments and reinforces legal precedents in interpreting Sections 153A and 153C. With the quashing of the assessment order, any pending applications were also disposed of.
Bottom Line :
Income-tax - Assessment under Sections 153A and 153C of the Income-tax Act, 1961 - Limitation - Where satisfaction note under Section 153C was recorded on 25.06.2021 falling in AY 2022-23, assessment order passed on 30.03.2023 for AY 2012-13 was beyond the permissible 10-year period counted backwards - Such order is time-barred and liable to be quashed.
Statutory provision(s): Sections 153A and 153C of the Income Tax Act, 1961, Article 226 of the Constitution of India
