The Delhi High Court has held that that time exclusion for reassessment applicable only if reference made under Indo-Swiss Double Tax Avoidance Agreement (DTAA).
The bench of Justice Vibhu Bakhru and Justice Tejas Karia has observed that the benefit of exclusion of time by virtue of Explanation (ix) of Section 153B of the Income Tax Act would, thus, be available only if the reference was made in terms of Indo-Swiss DTAA. However, the request as made was not in terms of the Indo-Swiss DTAA. It was contrary to the limitations as expressly specified under Article 14 of the Amending Protocol.
The appellant/assessees had filed their respective appeals against the orders of the Commissioner of Income Tax (Appeals) (CIT(A)) in respect of appeals emanating from the assessment orders (quantum appeals) as well as the orders passed in the penalty proceedings.
The assessments made in the case of Smt. Sneh Lata Sawhney and Smt. Sangeeta Sawhney were made on a protective basis. However, in the case of Praveen Sawhney and in the case of Sh. B.L. Sawhney (since deceased), the assessment has been made on substantive basis.
The ITAT allowed the respective appeals on the ground that the assessment orders giving rise to the said appeals were barred by limitation as it was passed beyond the period prescribed under Section 153B of the Income Tax Act.
The Assessees have succeeded in their respective appeals before the learned ITAT on the ground that the assessment orders from which the appeals emanate were passed beyond the period as stipulated under Section 153B of the Income Tax Act.
Search and seizure operations were conducted under Section 132 of the Income Tax Act in the case of Sh. Bhushan Lal Sawhney and other related persons on 28.07.2011. In connection with the operations, a warrant of authorization under Section 132 was also issued in the name of the Assessee.
The notices under Section 153A were issued including the notice dated 16.05.2012 to the Assessee requiring him to file the return for AY 2006-07. In response to the notice, the Assessee furnished his return of income on 25.06.2012, declaring the total income of Rs. 4,54,001. Thereafter, various notices were issued to the Assessee to respond to certain queries and clarifications sought by the AO. During the course of the search operations, a statement of the Assessee was also recorded.
The court held that the period of limitation as prescribed under Section 153B of the Act is required to be construed strictly. On a plain reading of the language of Explanation (ix) to Section 153B of the Act, the period commencing from the date on which a reference for exchange of information is made by an authority competent “under the Agreement referred to in Section 90 or Section 90A” of the Income Tax Act and ending with the date on which the information is last received, by the Principal Commissioner or Commissioner over a period of one year, whichever is less is required to be excluded.
The court answered against the department and in favour of the Assesses.
Case Details
Case Title: PCIT Versus Smt. Sneh Lata Sawhney
Case No.: ITA 758/2023
Date: 13.05.2025
Counsel For Petitioner: Puneet Rai, SSC
Counsel For Respondent: Dr Rakesh Gupta, Mr Somil Agarwal and Mr Dushyant Agarwal
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