The Gujarat High Court has quashed an income tax assessment order and demand notice issued against Swagat Infrastructure Private Limited, holding that the proceedings were completed beyond the legally permitted time. The court ruled that the tax department had lost its jurisdiction by missing the statutory limitation period.
The judgment was delivered by a division bench of Justice A.S. Supehia and Justice Pranav Trivedi on December 16, 2025.
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Background of the Case
Swagat Infrastructure Private Limited approached the High Court challenging an assessment order dated April 30, 2024, along with the corresponding demand notice for the assessment year 2011–12.
The case originated from a search operation conducted in September 2013 on a third party - the H.N. Safal Group. During that search, certain documents allegedly related to Swagat Infrastructure were found. Based on this material, proceedings were initiated against the company under Section 153C of the Income Tax Act, which deals with assessments of persons other than those directly searched.
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The tax department received the satisfaction note and seized material in August 2017. Under the law, the last date to complete the assessment was December 31, 2018.
However, Swagat Infrastructure challenged the notice itself, and the High Court granted interim relief on December 20, 2018. At that point, only eleven days remained before the limitation period expired.
Court Observations
During the hearing, the petitioner argued that once the interim stay was lifted following a 2023 ruling of the Supreme Court of India, the tax department had only a limited window to complete the assessment.
The bench carefully examined the limitation provisions under Section 153B of the Income Tax Act. It noted that where less than sixty days remain, the law allows an extension only up to sixty days - not more.
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“The remaining period available to the assessing officer was merely eleven days,” the bench observed, adding that even after applying the statutory extension, the final deadline expired on June 5, 2023.
The assessment order, however, was passed nearly a year later in April 2024.
The court rejected the tax department’s reliance on Section 153(6)(i), which allows a longer time limit in certain situations following appellate or court directions.
The bench clarified, “These provisions apply to regular assessments and cannot override the special limitation framework governing search-related cases under Section 153C.”
The judges emphasized that search-related assessments operate under a distinct and stricter timeline prescribed by Parliament. Mixing general assessment provisions with special search provisions, the court said, would defeat the legislative intent.
“Section 153(6)(i) cannot be read in isolation or used to bypass the specific limitation fixed for search cases,” the court noted.
Since the tax department failed to act within the extended but limited window available after the Supreme Court judgment, the assessment was held to be without authority.
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Court’s Decision
Allowing the writ petition, the Gujarat High Court quashed both the assessment order dated April 30, 2024, and the corresponding demand notice for the assessment year 2011–12.
The bench concluded that the proceedings were clearly time-barred and therefore unsustainable in law. Rule was made absolute to this extent.
Case Title: Swagat Infrastructure Private Limited vs Deputy Commissioner of Income Tax
Case No.: Special Civil Application No. 9176 of 2024
Case Type: Writ Petition (Income Tax)
Decision Date: 16 December 2025
