2024 (5) TMI 963 - HC - Income Tax

Reassessment notices under Section 148 for AY 2013-14 quashed for exceeding six-year limitation period

Gajlaxmi Steel P. Ltd. Through Anoop Gopikishan Jajoo Versus The Income Tax Officer And Others

The Bombay HC quashed reassessment notices issued under Section 148 for AY 2013-14, ruling they were issued beyond the statutory limitation period. The ... Validity of reopening of assessment - scope of section 148A - applicability of provisions existing prior to it’s amendment and impugned notices issued for the Assessment Year 2014-2015, after the amendment to the Finance Act - period of limitation to issue notice after provisions of the new reassessment law introduced by the Finance Act, 2021 - validity of a notice issued under Section 148/148A - scope of Taxation and other laws (Relaxation and Amendment of certain provisions) Act, 2020 (TOLA) application - provisions of the new reassessment law introduced by the Finance Act, 2021 - case of petitioner that the reopening notice under Section 148 ought to have been issued within 6 years from the end of the AY 2013-14 - HELD THAT:- As decided in THE NEW INDIA ASSURANCE COMPANY LIMITED [2024 (1) TMI 803 - BOMBAY HIGH COURT] we are unable to comprehend the contention raised that if the notice dated 30th May 2022 under Section 148A (b) of the Act is valid in terms of Apex Court order in Ashish Agrawal [2022 (5) TMI 240 - Supreme Cour], then the notice under Section 148 of the Act cannot be issued on 31st March 2021 and respondent cannot be expected to do impossible. It has nowhere been urged by petitioner that assessing officer ought to complete the proceedings before the show cause notice under Section 148A (b) of the Act was issued. It is the case of petitioner that the reopening notice under Section 148 ought to have been issued within 6 years from the end of the AY 2013-14. This limitation period, as extended by TOLA, expired on 31st March 2021. However, in the present case, the reopening notice has been issued in July 2022 and, therefore, beyond the statutory time limit. In any case, as stated above, the Hon'ble Supreme Court, while invoking powers under Article 142, consciously and categorically granted liberty to assessees to raise all defences available to the assessee, including the defences under Section 149 of the Act. This specific and express directions cannot be set at naught. Accepting this contention of the Revenue would be a travesty of justice. In the circumstances, in our view, the notice issued under Section 148 of the Act, impugned in this petition, for AY 2013-14 is issued beyond the period of limitation. Also this Court in Godrej Industries Limited [2024 (3) TMI 109 - BOMBAY HIGH COURT] has decided in favour of the Assessee. Thus Writ Petition is allowed. The impugned notices are quashed and set aside. Issues Involved:1. Issuance of impugned notices after the amendment to the Finance Act.2. Reopening of assessment for Assessment Year 2014-2015.3. Applicability of the judgment in The New India Assurance Company Limited case.4. Limitation period for issuing notices under Section 148 of the Income Tax Act.Issue-Wise Detailed Analysis:1. Issuance of Impugned Notices After the Amendment to the Finance ActThe court noted that the impugned notices were issued after the amendment to the Finance Act, based on the provisions that existed prior to the amendment. These notices pertain to the Assessment Year 2014-2015. The Respondent Department contended that certain earnings/transactions had escaped income assessment, leading the Assessment Officer to issue notices for reopening the assessment.2. Reopening of Assessment for Assessment Year 2014-2015The Department argued that the notices were issued to address purported escaped income for the Assessment Year 2014-2015. The court referred to a previous judgment delivered on 15.01.2024 in the case of The New India Assurance Company Limited Vs. The Assistant Commissioner of Income Tax and Others, where it was concluded that the reassessment proceedings initiated based on a notice barred by limitation were invalid.3. Applicability of the Judgment in The New India Assurance Company Limited CaseThe court extensively cited the judgment in The New India Assurance Company Limited case, which held that a notice issued under Section 148 of the Act cannot reopen an assessment if the right to reopen was already barred under the pre-amended Act. The judgment emphasized that the limitation period for issuing a notice under Section 148 had expired, making any subsequent reassessment proceedings invalid. The court also discussed various legal precedents, including CIT V/s. Onkarmal Meghraj (HUF) and J.P. Jani, Income-tax Officer v. Induprasad Devshanker Bhatt, to support this conclusion.4. Limitation Period for Issuing Notices Under Section 148 of the Income Tax ActThe court addressed the limitation period for issuing notices under Section 148. It was noted that the limitation period for issuing a notice for the Assessment Year 2013-14 had expired on 31st March 2021. The court rejected the Department's contention that the period could be extended by notifications or the provisions of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA). The court found that the notices issued after the expiration of the limitation period were invalid.ConclusionThe court concluded that the notice issued for the Assessment Year 2014-2015 was barred by limitation, similar to the notice in The New India Assurance Company Limited case. Consequently, the impugned notices were quashed and set aside. The court clarified that its order was restricted to the point of limitation, as the notices were issued after the amendment to the Finance Act under the provisions existing prior to the amendment.Final JudgmentThe Writ Petition was allowed, and the impugned notices were quashed and set aside based on the limitation issue. The court emphasized that this decision was specific to the point of limitation for the Assessment Year 2014-2015.