Swagat Infrastructure Pvt. Ltd. Wins Writ Petition Against Deputy Commissioner of Income Tax, Assessment Order and Demand Notice Nullified
In a significant ruling, the Gujarat High Court has quashed the assessment order and demand notice issued by the Deputy Commissioner of Income Tax, Central Circle 1(4), Ahmedabad, against Swagat Infrastructure Private Limited. The division bench, comprising Justices A.S. Supehia and Pranav Trivedi, delivered the judgment on December 16, 2025, in a Special Civil Application filed by Swagat Infrastructure, challenging the validity of the assessment order dated April 30, 2024.
The core issue in the case revolved around the applicability and interpretation of the limitation periods prescribed under the Income Tax Act, 1961, particularly sections 153(B), 153(C), and 153(6)(i). The court observed that the assessment order was passed well beyond the permissible limitation period and thus lacked jurisdiction.
The case traces back to a search operation conducted on a third party, H.N. Safal Group, on September 4, 2013, which eventually led to the reassessment of Swagat Infrastructure's tax liabilities. The satisfaction note from the search was received by the assessing officer on August 28, 2017. The limitation period for framing the assessment, as per the proviso to Section 153B, was December 31, 2018. However, interim relief granted by the High Court on December 20, 2018, left only 11 days for completing the assessment.
Following a Supreme Court decision in favor of the Income Tax Department in the case of ITO v. Vikram Sujitkumar Bhatia, the limitation period was further extended by 60 days under Section 153B(9), allowing time until June 5, 2023, for the assessment to be finalized. Despite this, the assessment order was issued on April 30, 2024, long after the extended deadline.
The court rejected the respondent's reliance on Section 153(6)(i), which pertains to general assessment proceedings under Sections 143 and 144, not applicable to search proceedings under Section 153(C). The judgment clarified that the provisions for search assessments under Section 153(C) are distinct and have specific limitation periods prescribed by the legislature.
In conclusion, the Gujarat High Court allowed Swagat Infrastructure's petition, quashing both the assessment order and the demand notice for the Assessment Year 2011-12. This decision underscores the importance of adhering to statutory deadlines in tax assessments and provides clarity on the applicability of different provisions within the Income Tax Act.
Bottom Line:
Income Tax Act, 1961 - Assessment Order passed beyond the prescribed limitation period under Section 153(B) and 153(C) of the IT Act - Limitation period cannot be extended by invoking Section 153(6)(i) of the IT Act, which pertains to general assessment proceedings under Section 143 and 144, and not to search proceedings under Section 153(C).
Statutory provision(s): Income Tax Act, 1961 - Sections 153(B), 153(C), 153(6)(i)
