AI Drafter 
TaxTMI 
TaxTMI 
2023 (2) TMI 961
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....f four years from the end of the relevant assessment year was barred by limitation without appreciating that the Explanation below sec.149(3), introduced w.e.f. 1.4.2012, clearly gave retrospective operation to section 149(1)(c) and therefore, the Assessing Officer was justified in issuing notice u/s 148 for A.Y.2004-05. 3. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in quashing the notice u/s 148 of the Act without appreciating that the facts found during the course of search proceedings showed that the members of the assessee group were holding undisclosed foreign bank account in various foreign banks including HSBC Geneva and ABN AMRO Bank, Zurich and, therefore, the ingredients of section 147 were clearly attracted. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O., considering the merits of this case, which has not been discussed. 5. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O, be restored to the above extent." 3. As is evident from the above, the grievance of the Revenue is against the findings of....
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....re-amended provision of Section 149 of the Act being 6 years expired on 31.03.2011; that it was only subsequently that sub-clause (c) to Section 149(1) was brought on the Statute by Finance Act, 2012 with effect from 01.07.2012 extending the limitation to 16 years in cases where the escaped income was on account of foreign assets. The learned CIT(A) noted that the proposition laid down by the Hon'ble Delhi High Court in the case of Braham Dutt (supra) and the decision of Hon'ble Supreme Court in the case of K.M. Sharma (supra), followed by the ITAT in the case of father and grandfather of the assessee, applied squarely to the facts of the present case and accordingly he held that the notice in the present case had been also issued beyond the limit prescribed under the Act. He accordingly quashed the reassessment proceedings and subsequently the order passed to be held as invalid. It is aggrieved by this order of the learned CIT(A) that the Department has come up in appeal before us. 5. During the course of hearing before us, the learned Counsel for the assessee drew our attention to the fact that in the case of father and grandfather of the assessee, the reassessment proceedings....
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....t to reopen the assessment was barred under the old (pre- amended) act and the date when new act (new amendment ) came into force. The learned CIT(A) has also placed reliance on the decision of ITAT Rajkot in assessee's case dated 25-02-2019 in the case of Shri Ravichandra V. Mehta for assessment year 1996-97 and assessment year 1997- 1998 (in ITA No. 409/ RJT/ 2017, 450/ RJT/ 2017, 410/ RJT/ 2017 and 451/RJT/ 2017 and also the subsequent order of ITAT Rajkot dated 25th June, 2019 in the case of the assessee. 42. The relevant Part of the decision of learned CIT appeal is reproduced as under:- "5.2 It has already been mentioned before that during the appeal proceedings, the appellant has taken two additional grounds separately - one related to the residential status of the appellant and other related to the legality of the notices u/s.148 which led to the assessment order(s) impugned in these appeals under consideration and has made submission praying for admission of these grounds and also submission for admission of additional evidences (related to the appellant's case that the funds were earned outside India and were of 1970s). They were sent to the AO f....
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....d assessment, however, said sub clause (c) of Section 149(1) cannot help to extend the time limit which has already expired before the insertion of sub clause (c) to Section 149(1) which is inserted with effect from 1.7.2012 only. The time limit for all the captioned years (Assessment Year 1998-99 to 2004-05) had already expired on 31.3.2011 which cannot be further extended in view of the amendment as carried out with effect from 1.7.2012. For the purpose reliance has been placed on the decision of Hon'ble Gujarat High Court in the case of Induprasad Bhatt Vs. J.P. Jani (ITO) (58 ITR 559) where the Hon'ble High Court of Gujarat held that on proper construction of section 297(2)(d)(ii) of the Act the ITO cannot issue notice u/s. 148 to reopen the assessment of an assessee in the case where the right to reopen the assessment was barred under the old (pre-amended) Act at the date when new Act (new amendment) came into force. The said decision was confirmed by the Supreme Court in the case of J.P. Jani Vs. Induprasad Devshankar Bhatt (72 ITR 595). Similar decisions were made by the Hon'ble High Court of Bombay in S.C. Prashar Vs. VasantsenDwarkadas [1956] 29 ITR 857, and by....
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....n the decision of Hon'ble Delhi High Court in the case of Braham Dutt Vs. ACIT 100 taxmann.com 324, the decision of Hon'ble Supreme Court in the case of S.S Gadgil Vs. Lal & Co. 53 ITR 231, and in the matter of K M Sharma v/s ITO 254 ITR 772 where in it has been held that when the time limit for issuing notice u/s. 148 has expired before any amendment in law from a prospective date will not revive. The decision of the Hon'ble ITAT in the case of Shri Ravichandra V Mehta is as under "10. Thus, in all above cases Courts have held that when the time limit for issuing notice u/s. 148 has expired before any amendment in law from a prospective date will not revive. The time limit for those years for which limitation has already expired on the date of amendment. There was no challenge to vires of the amendment but still the Courts had held the u/s. 148 is beyond limitation period. In the present case in our hand, prior to amendment in section 149 and the time limit for issued of notice under section 148 for Ay 1996-97 expired on 31-03-2003 and date for 1997-98 expired on 31-03-2004. The amendment of section 149 is with effect from 01- 07-2012 and its not retrospective....
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....re, Ld.CIT(A) misread the provisions to hold that since the time limit prescribed in law has been extended the notice is within the time. We are inclined to differ with the view of Ld.CIT(A). The issue is no more res integra. The issue has first came up before the Hon'ble Supreme Court in the case of S.S. Gadgilvs.Lal& Co. reported in 53 ITR 231(SC). Taking note of the said case, Hon'ble Gujarat High Court in the case of Induprasad Bhatt(supra) held as under: "We are, therefore, of the view that on a true construction of s. 297(2)(d)(ii), the ITO cannot issue a notice under s. 148 in order to reopen the assessment of an assessee in cases where the right to reopen the assessment was barred under the old Act at the date when the new Act came into force. The right of the ITO to reopen the assessment of the petitioner in the present case was admittedly barred under s. 34(1)(a) at the commencement of the new Act and it was, therefore, not competent to the ITO to issue a notice under s. 148 in order to reopen the assessment of the petitioner and to reassess the income of the petitioner by relying on the provision enacted in s. 297(2)(d)(ii). The notice dt. 13th Nov., 196....
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.... held by this Court that the notice was not a valid notice inasmuch as the right of the ITO to reopen the assessment of the assessee under the unamended provision became barred on 31st March, 1956, and the amended provision did not operate against him so as to authorise the ITO to commence proceedings for reopening the assessment of the assessee in a case where, before the amended provision came into force, the proceedings had become barred under the unamended provision. At page 240 of the report, Shah, J., speaking for the Court, observed as follows : "As we have already pointed out, the right to commence a proceeding for assessment against the assessee as an agent of a non-resident party under the IT Act before it was amended, ended on 31st March, 1956. It is true that, under the amending Act, by s. 18 of the Finance Act, 1956, authority was conferred upon the ITO to assess a person as an agent of a foreign party under s. 43 within two years from the end of the year of assessment. But the authority of the ITO under the Act before it was amended by the Finance Act of 1956, having already come to an end, the amending provision will not assist him to commence a proceeding e....
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....39;ble Court held as under:- "13. In KM Sharma's case (supra) the assessee's land was acquired under the Land Acquisition Act, 1894 and an award was passed in 1967 granting compensation in favour of the assessee. Thereafter, the Additional District Judge by judgment dated 20.05.1980 held the assessee to be entitled to 1/32th share of the compensation and the assessee was granted total compensation of Rs.1,18,810 in the year 1981. Subsequently, by another judgment dated 31.07.1991, the assessee was awarded sum of Rs.1,10,20,624, which was received by it between 15.10.1992 and 25.05.1993. The said amount comprised of principal compensation as well as interest up to 18.05.1992. As land acquired was agricultural land, principal amount was not chargeable to tax; however, interest amounting to Rs.76,84,829 was chargeable on year to year basis. The assessee claimed that proceedings till assessment year 1982-83 had already attained finality and therefore, filed letter requesting the assessing officer to initiate proceedings for subsequent assessment years for bringing to tax interest component relatable to the said assessment years. The assessee was, however, issued notices un....
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.... and finality to legal proceedings and to avoid exposure to risk of litigation to litigant for indefinite period on future unforeseen events. Proceedings, which have attained finality under existing law due to bar of limitation cannot be held to be open for revival unless the amended provision is clearly given retrospective operation so as to allow upsetting of proceedings, which had already been concluded and attained finality. The amendment to subsection (1) of section 150 is not expressed to be retrospective and, therefore, has to be held as only prospective. The amendment made to sub- section (1) of section 150 which intends to lift embargo of period of limitation under section 149 to enable authorities to reopen assessments not only on the basis of orders passed in proceedings under the Act but also on order of a Court in any proceedings under any law, has to be applied prospectively on or after 1.4.1989 when the said amendment was introduced to sub-section (1). The provision in sub-section (1), therefore, can have only prospective operation to assessments, which have not become final due to expiry of period of limitation prescribed for assessment under section 149. 1....
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....tes such unjust and discriminatory situation, has to be avoided. We do not find that sub-section (2) of section 150 has that result. Subsection (2) intends to insulate all proceedings of assessments, which have attained finality due to the then existing bar of limitation. To achieve the desired result it was not necessary to make any amendment in sub-section (2) corresponding to sub-section (1), as is the reasoning adopted by the High Court. 18. Sub-section (2) aims at putting embargo on reopening assessments, which have attained finality on expiry of prescribed period of limitation. Sub-section (2) in putting such embargo refers to whole of sub-section (1) meaning thereby to insulate all assessments, which have become final and may have been found liable to reassessments or re-computation either on the basis of Orders in proceedings under the Act or Orders of Courts passed under any other law. The High Court, therefore, was in error in not reading whole of amended sub-section (1) into sub- section (2) and coming to the conclusion that reassessment proposed on the basis of order of Court in proceedings under Land Acquisition Act could be commenced even though the original ....
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....ise the Income- tax Officer to commence proceedings which before the new Act came into force had by the expiry of the period provided become barred." 20. On a proper construction of the provisions of Section 150 (1) and the effect of its operation from 1.4.1989, we are clearly of the opinion that the provisions cannot be given retrospective effect prior to 1.4.1989 for assessments which have already become final due to bar of limitation prior to 1.4.1989. Taxing provision imposing a liability is governed by normal presumption that it is not retrospective and settled principle of law is that the law to be applied is that which is in force in the assessment year unless otherwise provided expressly or by necessary implication. Even a procedural provision cannot in the absence of clear contrary intendment expressed therein be given greater retrospectivity than is expressly mentioned so as to enable the Authorities to affect finality of tax assessments or to open up liabilities, which have become barred by lapse of time. Our conclusion, therefore, is that sub-section (1) of Section 150, as amended with effect from 1.4.1989, does not enable the Authorities to reopen assessments,....
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....nd that procedural amendments can be given effect any time, even in ongoing proceedings. 17. This court is of the opinion that there is no merit in the revenue's contention. In Sri Prithvi Cotton Mills Vs Broach Borough Municipality, AIR 1970 SC 192, examined the validity of the retrospective amendment of a statute in light of Article 19(1)(g) of the Constitution of India, i.e. a fundamental right to practice any profession, or to carry on any occupation, trade or business. The court said: "In testing whether a retrospective imposition of a tax operates so harshly as to violate fundamental rights under article 19(1)(g), the factors considered relevant include the context in which retroactivity was contemplated such as whether the law is one of validation of taxing statute struck-down by courts for certain defects; the period of such retroactivity, and the decree and extent of any unforeseen or unforeseeable financial burden imposed for the past period etc." 18. In Govinddas v Income Tax Officer AIR 1977 SC 552the Supreme Court held that Section 171 (6) of the Income Tax Act was prospective and inapplicable for any assessment year prior to 1st April, 1962,....
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....urts have held that notice issued u/s.148 is beyond limitation period. In the present case in our hand, prior to amendment in section 149 and the time limit for issuance of notice u/s.148 for AY 1996-97 expired on 31/03/2003 and that for 1997-98 expired on 31/03/2004. The amendment of section 149 is with effect from 01/07/2012 and is not retrospective in nature. Thus, the time limit which have already been expired could not have been revived by subsequent amendment. For all these reasons and complying the ratio laid down by above cited cases, we hold that notice issued u/s.148 on 25/03/2013 for both the above years is beyond jurisdiction and accordingly quashed. Since the notice is held to be invalid, subsequent assessment order pursuant to the said notices are also quashed and set aside." 44. We find that issues raised before the tribunal in these years are similar to proceeding assessment years. It would not be appropriate for us to deviate from the view taken in earlier years without pointing out any material change in the facts and circumstances in subsequent years. The learned departmental representative has not disputed about the decision of the tribunal in the earli....
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....mitation as prescribed under Section 149 of the Act. Before proceeding to adjudicate on this issue, it is relevant to bring out the facts of the case. The learned CIT(A) has brought out the facts at paragraph Nos. 4.1 to 4.3 of his order as under:- "4.1 From the perusal of the assessment order dated 31.03.2015 for AY 2004-05 u/s 144 rws 147 of the Act impugned in the present appeal under consideration, it is seen that the residential status of the assessee is Resident, that a search U/s 132 of the Act was carried out on 20.03.2012 in the Mehta Group of cases which covered the assessee and his family members, that they were found to be holding undisclosed foreign accounts in various foreign banks outside India which were not disclosed for the purpose of the Act, that he along with his father Shri Balkrishna Mehta and grandfather Shri Ravichandra Mehta had admitted that there was balance of Rs.1 crore, that the bank account with ABN AMRO Bank, Geneva represented assets located outside India within the meaning of Explanation 2(d) to section 147 of the Act and accordingly as per provisions of section 149(1)(c) notice u/s. 148 could be issued up to 16 years which have lapsed du....
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.... total income at Rs.22,57,875/- and penalty proceedings u/s 271(1)(c) was initiated." 9. As is evident from the above, on account of search action undertaken on the Mehta Group on 20.03.2012 which covered the assessee and his family, it was found that they held undisclosed foreign accounts in various foreign banks outside India. The assessee along with his father Shri Balakrishna Mehta and grandfather Shri Ravichandra Mehta admitted to a balance of Rs.1 crore in the bank accounts with ABN AMRO Bank, Geneva. Accordingly, notice under Section 148 of the Act was issued for reopening the case of the assessee before us, i.e. pertaining to AY 2004-05, and the notice was issued on 27.02.2015 as per the limitation prescribed under Section 149(1)(c) of the Act which provided a limitation of 16 years prior to the relevant assessment year to be reopened in cases where income were on account of foreign undisclosed assets. During assessment proceedings, no information was forthcoming from the assessee except for a chart of interest income submitted; as per which the interest income earned from the foreign bank account during the impugned year was Rs.22,57,875/-. Since the documents seized du....
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....ble. 6.3 During the appeal proceedings the Ld. AR has also contended that following the decision of the Hon'ble ITAT, Ahmedabad(Rajkot Bench) in the cases of appellant's father Shri Balkrishna R Mehta and appellant's grandfather Shri Ravichandra V Mehta for AY 1996-97 and AY 1997-98, the impugned assessment could not have been made by the AO because as per the pre amended provisions then applicable the notice u/s. 148 could not have been issued after 31.03.2011 and this time barring date does not get enhanced by virtue of amendment in section 147(explanation 2(d)), 148 and specially insertion of clause (c) to section 149(1) by virtue of Finance Act, 2012 with effect from 01.07.2012. 6.4 Further from the records it is seen that the ld. AR of the appellant had taken an additional ground that the notice issued u/s. 148, pursuant to which the impugned assessment order is framed, is barred by limitation prescribed u/s.149 of the Act and therefore assessment framed pursuant to such invalid notice is void ab initio. 6.5 In this regard it has been contented by the appellant that the above referred additional ground is purely legal in nature and therefore,....
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....n reopened for Assessment Years 1996-97 to AY 2005-06, which has become barred by limitation on 31stMarch 2012, the Amending Act being Finance Act, 2012 inserting sub clause (c) Section 149 (1) w.e.f. 01.07.2012 cannot give a fresh lease of life for re-opening the same which has already become barred by limitation on 31.12.2012. In view of the above, the Notice issued u/s. 148 being beyond the limitation prescribed u/s. 149 is bad in law and hence consequential assessment framed pursuant to such invalid notice is also required to be quashed and set aside." 6.6 The submission of the appellant also contained the copy of various foreign bank accounts. 6.7 The appellant has enclosed and brought to attention the judgment of ITAT Rajkot dated 25.02.2019 in the case of Shri Ravichandra V Mehta for AY1996- 97 and 1997-98 (ITA No.(s) 409/RJT/2017, 450/RJT/2017, 410/RJT/2017 and 415/RJT/2017). and also the subsequent order of ITAT Rajkot dated 25.06.2019 in the case of Shri Baikrishna R Mehta for AY 1996-97 and 1997-98 (ITA No.(s) 407/RJT/2017, and 408/RJT/2017) were the order dated 25-02-2019 in the case of Shri Ravichandra V Mehta has been followed. In the case o....
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....8 on 25-03-2013 for both the above years is beyond jurisdiction and accordingly quashed. Since the notice is held to be invalid, subsequent assessment order pursuant to the said notice as are also quashed and set aside. 11. In the result appeals of the assesses are allowed. Since we have quashed the assessment for the both the years, appeals of the Revenue have become infructuous and hence Revenue's appeals are dismissed." Similarly in the decision dated 25.06.2019 in the case of Shri Balkrishna R Mehta for AY 1996-97 and AY. 1997-98 the grounds of the appellant were that the learned C1T (A) had erred in holding that notice of reopening u/s.148 of the Act is barred by limitation and that the learned CTP (A) erred in not distinguishing the Judgements put forth by the appellant The Hon'ble ITAT has followed its decision dated 25.02.2019 in the case of Shri Ravichandra V Mehta and has held that proceedings initiated u/s.147 of the Act are not sustainable and accordingly the assessment orders were quashed and appeal of the assessee were allowed. 6.8 The orders of jurisdictional ITAT are binding and the appellant is found to be covered in his favour by....