2023 (10) TMI 276 - HC - Income Tax

Tax Assessments Upheld for AYs 13-14 to 18-19; Time-Barred for AYs 11-12, 12-13, 19-20 Set Aside; Appeals Allowed.

M/s. Agni Estates and Foundations Private Limited. Represented by its Authorized Signatory, Mr. T.G. Balaji Versus Deputy Commissioner of Income Tax, Central Circle 2 (1), Chennai And M/s. Agni Estates and Foundations Private Limited Versus Deputy Commissioner of Income Tax, Central Circle 2 (1), New Income Tax Building, Chennai

M/s. Agni Estates and Foundations Private Limited. Represented by its Authorized Signatory, Mr. T.G. Balaji Versus Deputy Commissioner of Income Tax, ... Issues Involved:1. Challenge to notices issued under the Income Tax Act, 1961.2. Challenge to orders of assessment.3. Challenge to penalty orders under Section 271(1)(c) of the Act.4. Challenge to penalty orders under Section 271B of the Act.5. Legal issue of limitation for completion of assessment.Summary:1. Challenge to Notices Issued Under the Income Tax Act, 1961:This batch of Writ Petitions has been filed by Agni Estates and Foundations Private Ltd. challenging notices, all dated 22.12.2021, issued under the provisions of the Income Tax Act, 1961 (in short 'Act') and seek a prohibition as against the Income Tax Department from passing orders of assessment.2. Challenge to Orders of Assessment:Technically, the above writ petitions are infructuous as they have culminated in orders of assessment, all dated 28.01.2022, passed under Section 153A read with Section 143(3) of the Act, challenged in the following Writ Petitions.3. Challenge to Penalty Orders Under Section 271(1)(c) of the Act:The following Writ Petitions challenge penalty orders under Section 271(1)(c) of the Act, all dated 27.07.2022.4. Challenge to Penalty Orders Under Section 271B of the Act:The following Writ Petitions challenge penalty orders under Section 271B of the Act, all dated 27.07.2022.5. Legal Issue of Limitation for Completion of Assessment:The premises of the petitioner had been subject to a search u/s 132 of the Act on 05.07.2018 and notices u/s 153A had been issued pursuant to the same. The challenge to the assessments raises one legal issue which goes to the root of the matter, relating to the bar of limitation.Details:A. Limitation Computation:Limitation is to be computed in terms of Section 153B, read with the Explanation thereunder and the extension provided by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (in short 'TOLA').B. Statutory Provisions:Section 153B and the Explanation, to the extent to which it is relied upon by the revenue, are extracted below:Time limit for completion of assessment under section 153A153B. (1) Notwithstanding anything contained in section 153, the Assessing officer shall make an order of assessment or reassessment-(a) in respect of each assessment year falling within six assessment years 64[and for the relevant assessment year or years] referred to in clause (b) of sub-section (1) of section 153A, within a period of twenty-one months from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed;(b) in respect of the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A, within a period of twenty-one months from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 1324 was executed:C. Petitioner's Argument:The petitioners argue that effect is first to be given to the exclusion under the Explanation to Section 153B and in such an event, the resultant date would fall on 07.05.2021/19.08.2021, both dates falling outside the range stipulated in the TOLA. Thus the benefit of TOLA would be unavailable to the revenue.D. Court's Conclusion:In my considered view, it is the statutory time that must be taken into account for the purposes of TOLA, that is, the date as per the main provision of Section 153B only. The Explanation provides for exclusions in various situations. The application of the exclusions will result in the expansion of the period taking note of various intervening events and the ultimate date would thus fluctuate depending on the exclusions taken into account and applied. This cannot be equated to statutory prescription and the date of limitation is determined only by the main provision which is inflexible.E. Final Decision:The orders of assessment for AYs 13-14 to 18-19 are confirmed as are the impugned orders of penalty and the writ petitions pertaining to those notices, orders of assessments, and orders of penalty, are dismissed. The petitioner is permitted to file statutory appeals on merits and such appeals, if filed within a period of four weeks from the date of receipt of this order, shall be entertained by the appellate authority without reference to limitation but ensuring compliance with all other statutory requirements.The impugned orders of assessment passed on 28.01.2022 in respect of AYs 11-12, 12-13 and 19-20 are hence held to be barred by limitation qua these three assessment years and are set aside. The writ petitions challenging those notices, orders of assessment, and penalties are allowed.MPs closed with no order as to costs.