Court rules notices for tax assessments beyond time limit, deems orders invalid. Petitions allowed solely on limitation ground.

The Court held that the notices issued for reopening assessments for the years 2013-14 and 2014-15 under Section 148 of the Income Tax Act, 1961 were time-barred. The orders passed under Section 148A(d) based on these notices were also deemed invalid. The Court set aside all impugned notices and orders for being beyond the permissible time limit, ruling them illegal and without jurisdiction. Consequently, all petitions were allowed solely on the ground of limitation, without addressing other legal or factual issues.

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Issues Involved:
1. Legality of notices issued under Section 148 of the Income Tax Act, 1961 for reopening assessments.
2. Validity of orders passed under Section 148A(d) of the Income Tax Act, 1961.
3. Application of limitation periods for issuing such notices.

Summary:

Issue 1: Legality of Notices Issued Under Section 148

All these Special Civil Applications challenge the notices issued for reopening assessments for the assessment years 2013-14 and 2014-15 under Section 148 of the Income Tax Act, 1961. The petitions involve similar facts and identical issues, therefore, they were heard together for disposal by this common judgment and order.

In Keenara Industries Pvt. Ltd. vs. The Income Tax Officer, the Division Bench of this Court decided that the notices issued for the assessment years 2013-14 and 2014-15 are barred by limitation as they were issued after six years from the end of the relevant assessment year. This judgment was based on the provisions of Section 149 of the Act as they stood before the Finance Act, 2021.

The Supreme Court in Union of India vs. Ashish Agarwal held that notices issued under Section 148 between 01.04.2021 and 30.06.2021 should be deemed to have been issued under Section 148A of the Act and treated as show-cause notices under Section 148A(b). However, the limitation period prescribed in the old regime continues to apply.

Issue 2: Validity of Orders Passed Under Section 148A(d)

The orders under Section 148A(d) were passed based on the notices issued under Section 148, which were treated as show-cause notices under Section 148A(b) following the Supreme Court's decision in Ashish Agarwal. However, these orders are invalid as the original notices were issued beyond the permissible time limit.

Issue 3: Application of Limitation Periods

Prior to the Finance Act, 2021, Section 149 allowed notices under Section 148 to be issued within four/six years from the end of the relevant assessment year. The Finance Act, 2021, introduced a new regime with Section 148A and amended Section 149, which reduced the time limit to three years, extendable to ten years under certain conditions.

The First Proviso to Section 149 of the Finance Act, 2021, stipulates that no notice under Section 148 shall be issued for the relevant assessment year beginning on or before 01.04.2021 if such notice could not have been issued at that time due to being beyond the time limit specified under the old regime.

In Keenara Industries Pvt. Ltd., it was held that notices issued after six years from the end of the relevant assessment year are barred and without jurisdiction. This position was affirmed by the Allahabad High Court in Rajeev Bansal vs. Union of India.

Therefore, all the impugned notices for the assessment years 2013-14 and 2014-15 are beyond the permissible time limit and are illegal and without jurisdiction.

Conclusion:

All the impugned notices and orders under Section 148 and Section 148A(d) for the assessment years 2013-14 and 2014-15 are set aside as they are barred by limitation. The petitions are allowed on this ground alone, and other factual and legal issues are not addressed.

The following orders are passed:

(i) Notice dated 30.07.2022 under Section 148 and Order dated 30.07.2022 under Section 148A(d) for the Assessment Year 2013-14 in Special Civil Application No.4860 of 2023 are set aside.

(ii) Notice dated 30.07.2022 under Section 148 and Order dated 30.07.2022 under Section 148A(d) for the Assessment Year 2013-14 in Special Civil Application No.4861 of 2023 are set aside.

(iii) Notice dated 30.07.2022 under Section 148 and Order dated 30.07.2022 under Section 148A(d) for the Assessment Year 2013-14 in Special Civil Application No.4862 of 2023 are set aside.

(iv) Notice dated 30.07.2022 under Section 148 and Order dated 30.07.2022 under Section 148A(d) for the Assessment Year 2013-14 in Special Civil Application No.4863 of 2023 are set aside.

(v) Notice dated 30.07.2022 under Section 148 and Order dated 30.07.2022 under Section 148A(d) for the Assessment Year 2013-14 in Special Civil Application No.4865 of 2023 are set aside.

(vi) Notice dated 30.07.2022 under Section 148 and Order dated 30.07.2022 under Section 148A(d) for the Assessment Year 2013-14 in Special Civil Application No.4886 of 2023 are set aside.

(vii) Notice dated 29.07.2022 under Section 148 and Order dated 29.07.2022 under Section 148A(d) for the Assessment Year 2014-15 in Special Civil Application No.4677 of 2023 are set aside.

All the petitions stand allowed. Rule is made absolute in each case.

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