Notices and orders for 2013-14 and 2014-15 under Income Tax Act Sections 148 and 148A(d) invalidated due to time-bar.

The HC invalidated the notices and orders issued under Sections 148 and 148A(d) of the Income Tax Act for the assessment years 2013-14 and 2014-15, deeming them time-barred under the old regime and without jurisdiction. Consequently, the petitions were allowed, and the rule was made absolute in each case.

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Issues Involved:
1. Legality of notices issued under Section 148 of the Income Tax Act, 1961 for reopening assessments for the years 2013-14 and 2014-15.
2. Validity of orders passed under Section 148A(d) of the Income Tax Act, 1961.
3. Applicability of the time limit for issuing such notices under the old and new regimes of the Income Tax Act.

Summary:

Issue 1: Legality of Notices Issued Under Section 148

The petitions challenge the notices issued for reopening assessments for the years 2013-14 and 2014-15 under Section 148 of the Income Tax Act, 1961. These notices were issued after the passage of six years from the end of the relevant assessment years, which is beyond the permissible time limit under the old regime of the Act. The Court referred to the Supreme Court's decision in Union of India vs. Ashish Agarwal, which stated that notices issued between 01.04.2021 to 30.06.2021 should be treated as show-cause notices under Section 148A(b) of the Act. However, the Court held that notices which had become time-barred under the old regime could not be revived under the new regime.

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

The orders passed under Section 148A(d) of the Income Tax Act were also challenged. The Court noted that these orders were based on notices that were time-barred under the old regime. Therefore, the orders under Section 148A(d) were also deemed to be without jurisdiction and illegal.

Issue 3: Applicability of Time Limit Under Old and New Regimes

The Court discussed the changes in the time limits for issuing notices under Section 148 before and after the Finance Act, 2021. Under the old regime, notices could be issued within six years from the end of the relevant assessment year if the escaped income exceeded one lakh rupees. The new regime, effective from 01.04.2021, reduced this period to three years, with an extension up to ten years if the escaped income exceeded fifty lakh rupees. The Court held that the first proviso to Section 149 of the new regime maintained the old regime's time limits for assessment years before 01.04.2021. Therefore, notices that were time-barred under the old regime could not be issued under the new regime.

Conclusion

The Court set aside all the impugned notices and orders under Sections 148 and 148A(d) of the Income Tax Act for the assessment years 2013-14 and 2014-15, as they were beyond the permissible time limit and thus without jurisdiction. The petitions were allowed, and the rule was made absolute in each petition.

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