TaxTMI 
TaxTMI 
2023 (3) TMI 104
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....92 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 17501 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 17503 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 17603 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 17641 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 17653 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 17707 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 17750 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 17817 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 17953 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 17984 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 17965 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 17968 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 18253 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 18523 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 18549 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 18552 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 18578 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 18591 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 18713 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 18785 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 18884 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 18949 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 19088 of 2022 With R/SPECIAL C....
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....L APPLICATION NO. 20355 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 20362 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 20364 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 20430 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 20490 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 20521 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 20533 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 20613 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 20752 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 20761 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 20770 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 20775 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 20786 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 20919 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 20984 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 20985 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 21018 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 21061 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 21097 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 21118 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 21151 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 21239 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 21286 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 21374 of ....
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....2 With R/SPECIAL CIVIL APPLICATION NO. 22871 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 22876 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 22877 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 22880 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 22882 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 22895 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 22949 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 22960 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 22963 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 22971 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 22973 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 22974 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 23000 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 23018 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 23105 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 23133 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 23134 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 23136 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 23139 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 23140 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 23142 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 23143 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 23188 of 2022 With R/SPECIAL CIVIL APPL....
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....TION NO. 24938 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 24941 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 25319 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 25321 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 25330 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 25339 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 25348 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 25352 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 25367 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 25502 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 25506 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 25510 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 25521 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 25523 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 25524 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 25528 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 25535 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 25536 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 25605 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 25617 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 25914 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 25916 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 25922 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 25925 of 2022 With....
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....nged and the matter eventually from various High Courts had travelled to the Apex Court, which vide its judgment dated 04.05.2022 in case of Union of India vs. Ashish Agarwal, reported in (2022) 444 ITR 1 (SC) adjudicated the issue as to the validity of such reopening notices issued across the Nation and gave certain directions to the department. 2.2 Consequent to the aforesaid decision, the reassessment proceedings for the year under consideration have been initiated and the respondent issued a show cause notice dated 28.05.2022 under clause (b) of section 148A of the Act, whereby the petitioner was supplied the relevant material, on the basis of which the case for the year under consideration is sought to be reopened. The petitioner was called upon to show cause as to why, in view of such material, notice under section 148 of the Act should not be issued for the year under consideration. 2.3 The information has been received from the Investigation Wing, Kolkata, to the effect that during the course of search action carried out in the case of Maji Group (i.e. third party) on 05.11.2020, it was found that Anup Majee alias Lala has acquired certain paper companies including St....
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....atements, Balance Sheet and Profit and Loss Account of Starlight Devcon Pvt.Ltd. were attached. Various notices were issued during the original assessment stage and reply furnished in response thereto were tabulated. Details of unexplained loans received during the year under consideration were duly furnished at the original assessment stage, as is evident from the details and at the time of original assessment stage in support of genuineness of the loans (i) audited Balance Sheet of the petitioner, (ii) confirmation of lender, (iii) audited Balance Sheet of lender and (iv) Bank statement of lender have been furnished and after threadbare examination of all such details and evidences, the then Assessing Officer consciously chose not to make any addition in respect of the unsecured loans received from Starlight Devcon Pvt. Ltd. while framing the assessment under Section 143(3) of the Act vide order dated 06.12.2017. 2.10 It is further averred that the issue on hand was threadbare examined at the original assessment stage, as is evident from the peculiar facts of the case narrated. Hence, action of reopening is nothing, but, an outcome of mere change of opinion which is not permis....
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....coming into force. It is clarified that the new provisions relating to reopening introduced by the Finance Act, 2021 came into force with effect from 01.04.2021. 2.17 It is also the say of the petitioner that as per the old regime of reopening, reopening notice under Section 148 of the Act could have been issued before the expiry of six years from the end of the relevant assessment year i.e. no notice could have been issued after the expiry of the period of six years from the end of the relevant assessment year and if the period of six years from the end of the relevant assessment year expired on or before 31.03.2021, then notice under section 148 of the Act could not have been issued under the new regime for the said assessment years. 2.18 Following are the example given for appreciation of the above referred legal provisions pertaining to reopening under the new regime: Particulars Assessment Year 2013-14 Assessment Year 2014-15 Date of expiry of the Assessment Year 31.03.2014 30.03.2015 Date of expiry of six years from the end of the Assessment year 31.03.2020 31.03.2021 Date of new provisions introduced by Finance Act, 2021 coming into force ....
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....et; and 2. Income which has escaped assessment amounts to or is likely to amount to Rs.50 Lakh or more for that years. 2.22 The asset shall include for the purpose of clause (b) of sub-section (1) of section 149 of the Act the immovable property, being land or building or both, shares and securities, loans and advances, deposits in Bank account. 2.23 The impugned notice, since, has been issued by the respondent after expiry of three years from the end of the relevant assessment year, according to the petitioner, there is no income chargeable to tax represented in the form of asset which has escaped assessment. The case has been reopened on the count that certain unsecured loans taken by the petitioner are fictitious. The issue in question would fall within the ambit of asset. Thus, requirement of clause (b) of sub-section (1) of section 149 of the Act have not been satisfied. 2.24 According to the petitioner, there is no information, as prescribed under the Act, which suggests that any income chargeable to tax has escaped assessment. The petitioner invited the attention of this Court to the first proviso to section 148 of the Act, no notice under section 148 of the A....
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....(d) provide for the cost of this petition." 4. This Court issued the notice and the affidavit-in-reply has been filed on behalf of the respondent denying all allegations made and the contentions raised in the memo of the petition. 4.1 According to the respondent, the petitioner's challenge to the issue of notice under section 148 of the Act is on the ground that it is barred by limitation. The case has been reopened on the basis and directions of the Apex Court in its judgment dated 04.05.2022 in case of Union of India vs. Ashish Agarwal (supra) therefore, the question of the case being barred by limitation does not arise. The assessee has referred to the Explanation to section 149(1)(b) of the Act to say that no income chargeable to tax in the form of asset had escaped assessment. Section 149(1)(b) of the Act gives an explanation as under: "Explanation-For the purpose of clause (b) of this sub-section, "asset" shall include immovable property, being land or building or both, shares and securities, loans and advances, deposits in bank account." The very reading of Explanation makes it clear that it is inclusive in nature and not exclusive. 4.2 The assessee has ....
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....dy also has been seriously raised. 4.7 It is mentioned that the case has been reopened by issuance of notices under new provision of section 148A of the Act and the notices were issued under section 148A(b) of the Act providing assessee an opportunity of furnishing relevant evidences and explanation. The order under section1 48A(d) of the Act has been passed and the notice under section 148 has been issued after obtaining the approval of specified authority. 4.8 Reliance is placed on the decision of the Delhi High Court in WPC No.13102 of 2022 in case of Touchstone Holdings Pvt. Ltd. dated 02.09.2022, where the Court has held thus: "The time period for assessment stood extended till 30.06.2021. The initial re-assessment notice for A.Y.2013-14 was issued to the petitioner within the said extended period of limitation. The Supreme Court has declared that the said re-assessment notice be deemed as a notice issued under section 148A of the Act and permitted Revenue to complete the said proceedings. In this case the income alleged to have escaped assessment is more than 50 Lakhs and therefore, the rigor of section 149(1)(b) of the Act (as amended by the finance act, 2021)....
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....on 148A(b) notices as jurisdictional notices, even assuming without admitting that the revenue is correct in its submission that the extension provided under the TLA Act would enable the revenue to travel back in time to the original date. Under the new scheme, notices under section 148A(b) only for the period of initiation of the proceedings and such notices by themselves do not confer jurisdiction to reopen. 7. It is reiteratively emphasized that the first proviso to section 149(1) of the Act would not enable the revenue to issue notices beyond the period of six years, which was the limitation period under the old regime. More than six years have elapsed from the end of the assessment year in the present case and therefore, the action is barred by limitation. The extension provided under the TLA Act read with notifications would cease to operate the moment the underlying provisions are deleted from the statute book. Extension of the provision cannot operate in vacuum without the main provision. In view of the same, the first proviso would limit the rights of the revenue to issue reopening notices beyond the period of six years to be counted without any extension. The TLA Act a....
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....rst proviso to section 149(1) of the Act" in the context of developments which took place after the notices having been issued under section 148 of the old Act in the context of developments which took place after the notices having been issued under section1 48 of the old Act. 11. From the material on the record, at the outset, it is required to be noted that the Assessing Officer had issued the reassessment notices on or after 01.04.2021 under the erstwhile sections 148 to 151 of the Act by relying on Notification No.20/2021 dated 31.03.2021 and Notification No.38/2021 dated 27.04.2021, which extended the applicability of those provisions as they stood on 31.03.2021 before the commencement of Finance Act, 2021 beyond the period of 31.03.2021. 12. These reassessment notices under section 148 of the Act were challenged before various High Courts and some of the High Courts set aside the reassessment notices, on the ground that they were issued after 01.04.2021 and they cannot be governed by the provisions of sections 148 to 151 of erstwhile provisions as they stood on 31.03.2021 and would be instead governed by substituted sections 148 to 151 which came into effect vide Finan....
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....or to substitution, issuance of notice under section 148 of the Act on or after 01.04.2021 shall need to be in accordance with newly introduced provisions under Finance Act, 2021. Therefore, reassessment notices issued on or after 01.04.2021 without complying with substituted provision of section 148A was held to be illegal and was quashed. 13.3.1 The Rajasthan High Court also held that section 3(1) of the TLA Act vested power to Central Government to extend time limits for taking actions and making compliances in specified Acts upto 31.12.2020 by issuing notification, however any Explanation touching provisions of Income-tax Act was not part of the delegation. Therefore, Explanation to Notifications dated 31.03.2021 and 27.04.2021 issued by the CBDT which extended applicability of provisions of sections 148, 149 and 151 of the Act as they stood as on 31.03.2021 before commencement of Finance Act, 2021 beyond the period of 31.03.2021 were unconstitutional and were to be declared invalid. 13.4 The Delhi High Court in case of Mon Mohan Kohli vs. Assistant Commissioner of Income-tax, reported in 2021 133 taxmann.com 166 (Delhi) also considered section 3(1) of the TLA Act, which ....
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.... AS THE FACT THAT THE RELAXATION ACT, 2020 WAS ENACTED LONG BEFORE FINANCE ACT, 2021. 80. To substantiate its stand that the impugned notices are not barred by limitation, the Revenue without even considering the pre-condition prescribed by Section 3 of Relaxation Act, 2020 has selectively chosen and picked up two terms viz. "such action" & "stand extended" to put forward an interpretation which could not have been contemplated by the Legislature at the time of enactment of the said provision, namely, that notices under Section 148 will relate back and be governed by old law. In the opinion of this Court, the submission of the Revenue is completely flawed, as the same is contrary to basic principles of interpretations, which prohibits selectively choosing/ignoring words from the statutory language. 81. It is settled law that when the words of a statute are clear and unambiguous, it is not permissible for the Court to read words into the statute. In fact, the principle of interpretation of taxing statutes was best enunciated by Rowlatt J. in his classic statement in Cape Brandy Syndicate v I.R.C. (1 KB 64, 71), "In a taxing statute one has to look merely at what is....
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....NOT MENTIONING SUBSTITUTED SECTION 147 OF THE INCOME TAX ACT, 1961 IN THE IMPUGNED EXPLANATIONS. 84. Even if it is assumed that the impugned Explanations in the two Notifications are valid, still the impugned notices are bad in law, as the impugned Explanations only seek to effectuate the erstwhile Sections 148, 149 and 151 and they do not cover Section 147. However, the conditions provided for in the substituted Section 147 were not considered while issuing notices by the Assessing Officer. In fact, the said Section 147 is itself subject to Sections 148 to 153, which would include Section 148A. THE "LEGAL FICTION" ARGUMENT IS WITHOUT ANY FOUNDATION. THERE IS NO PROVISION IN RELAXATION ACT STATING THAT IF THE "ACTION" IS TAKEN WITHIN THE EXTENDED TIME LIMIT, IT WOULD BE DEEMED TO HAVE BEEN TAKEN BEFORE THE EXPIRY OF THE ORIGINAL (UN-EXTENDED) TIME LIMIT. 85. The "legal fiction" argument is without any foundation. A statute can be said to enact a legal fiction when it assumes the existence of something which is known not to exist. The extension of time for completing an assessment or issuing a Section 148 notice has no element of legal fiction in it. The o....
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.... 13.5.2 The Bombay High Court in case of Tata Communications Transformation Ltd. (supra) in paragraphs 36,37,38,39,40,41 and 42 has held thus: "36. In order to uphold the arguments of the Revenue in this regard, either a savings clause, or a specific legislative enactment deferring applicability of the amended provisions and the repeal of the old provisions of the Act, would be required. Plainly no such savings clause or enactment is available. 37 Section 3(1) of Relaxation Act does not provide that any notice issued under Section 148 of the Act, after 31st March 2021 will relate back to the original date or that the clock is stopped on 31 st March, 2021 such that the provision as existing on such date will be applicable to notices issued relying on the provision of Relaxation Act. A plain reading of Relaxation Act, as Mr. Mistri rightly submitted, makes it clear that Section 3(1) of Relaxation Act merely extends the limitation provided in the specified Acts (including Income-tax Act) for doing certain Acts but such Acts must be performed in accordance with the provisions of the specified Acts. Therefore, if there is an amendment in the specified Act, the amende....
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....er Section 147, which (as amended) empowers the revenue to reopen an assessment subject to Sections 148 to 153, which includes Section 148A. Thus, even if Explanations are valid, the mandatory procedure laid down by Section 148A has not been followed and hence, without anything further, the notices under Section 148 of the Act are invalid and must be struck down for this reason as well. This proposition has also been upheld by the Delhi High Court. 42. As regards Revenue's arguments that Relaxation Act being a beneficial legislation must be given purposive interpretation', the purpose of Section 3(1) of Relaxation Act is to extend limitation periods as provided in Gauri Gaekwad 65/71 1377.WP-1334-2021 AND ORS.doc a specified Act (including the Income-tax Act). The purpose of Section 3(1) of Relaxation Act is not to postpone the applicability of amended provisions of a Specified Act. Though Relaxation Act was in existence when the Finance Act, 2021 was passed, the Parliament has specifically enacted the new, (amended) provisions of Section 147 to 151 of the Act and made them applicable with effect form 1st April, 2021. Therefore, it is clear that amendment is to be ....
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....ment would result into absence of reassessment proceedings. The Apex Court permitted the respective notices under section 148 of the Act to be deemed to have been issued under section 148 A of the Act as substituted by the Finance Act, 2021 and to be treated as the show cause notice in terms of section 148 A (b) of the Act in the following manner: "8. However, at the same time, the judgments of the several High Courts would result in no reassessment proceedings at all, even if the same are permissible under the Finance Act, 2021 and as per substituted sections 147 to 151 of the IT Act. The Revenue cannot be made remediless and the object and purpose of reassessment proceedings cannot be frustrated. It is true that due to a bonafide mistake and in view of subsequent extension of time vide various notifications, the Revenue issued the impugned notices under section 148 after the amendment was enforced w.e.f. 01.04.2021, under the unamended section 148. In our view the same ought not to have been issued under the unamended Act and ought to have been issued under the substituted provisions of sections 147 to 151 of the IT Act as per the Finance Act, 2021. There appears to be g....
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....nder the Finance Act, 2021 and in law and whatever rights are available to the Assessing Officer under the Finance Act, 2021 are kept open and/or shall continue to be available and; (v) The present order shall substitute/modify respective judgments and orders passed by the respective High Courts quashing the similar notices issued under unamended section 148 of the IT Act irrespective of whether they have been assailed before this Court or not. 9. There is a broad consensus on the aforesaid aspects amongst the learned ASG appearing on behalf of the Revenue and the learned Senior Advocates/learned counsel appearing on behalf of the respective assessees. We are also of the opinion that if the aforesaid order is passed, it will strike a balance between the rights of the Revenue as well as the respective assesses as because of a bonafide belief of the officers of the Revenue in issuing approximately 90000 such notices, the Revenue may not suffer as ultimately it is the public exchequer which would suffer. Therefore, we have proposed to pass the present order with a view avoiding filing of further appeals before this Court and burden this Court with approximat....
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....y issue notice under section 148 (as substituted); (iv) All defences which may be available to the assesses including those available under section 149 of the IT Act and all rights and contentions which may be available to the concerned assessees and Revenue under the Finance Act, 2021 and in law shall continue to be available. 11. The present order shall be applicable PAN INDIA and all judgments and orders passed by different High Courts on the issue and under which similar notices which were issued after 01.04.2021 issued under section 148 of the Act are set aside and shall be governed by the present order and shall stand modified to the aforesaid extent. The present order is passed in exercise of powers under Article 142 of the Constitution of India so as to avoid any further appeals by the Revenue on the very issue by challenging similar judgments and orders, with a view not to burden this Court with approximately 9000 appeals. We also observe that present order shall also govern the pending writ petitions, pending before various High Courts in which similar notices under Section 148 of the Act issued after 01.04.2021 are under challenge." 13.4 It is to be ....
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....(hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year): Provided that where an assessment under sub−section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub−section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year: Provided further that nothing contained in the first proviso shall apply in a case where any income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment for any assessment year: Provided also that the Assessing Officer may assess or reassess such income, other than the income involving matters which are the subject matters of any appeal, reference or revisi....
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....ome in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under sub− section (2) of section 148. Explanation 4.-For the removal of doubts, it is hereby clarified that the provisions of this section, as amended by the Finance Act, 2012, shall also be applicable for any assessment year beginning on or before the 1st day of April, 2012. Issue of notice where income has escaped assessment- 148.(1) Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as ma....
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.... chargeable to tax which has escaped assessment amounts to or is likely to amount to one lakh rupees or more for that year; (c) if four years, but not more than sixteen years, have elapsed from the end of the relevant assessment year unless the income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment. Explanation.-In determining income chargeable to tax which has escaped assessment for the purposes of this sub− section, the provisions of Explanation 2 of section 147 shall apply as they apply for the purposes of that section. (2) The provisions of sub−section (1) as to the issue of notice shall be subject to the provisions of section 151. (3) If the person on whom a notice under section 148 is to be served is a person treated as the agent of a non-resident under section 163 and the assessment, reassessment or re-computation to be made in pursuance of the notice is to be made on him as the agent of such non−resident, the notice shall not be issued after the expiry of a period of six years from the end of the relevant assessment year. Expl....
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....ed Act; or (b) filing of any appeal, reply or application or furnishing of any report, document, return or statement or such other record, by whatever name called, under the provisions of the specified Act; or (c) in case where the specified Act is the Income-tax Act, 1961, - (i) making of investment, deposit, payment, acquisition, purchase, construction or such other action, by whatever name called, for the purposes of claiming any deduction, exemption or allowance under the provisions contained in- (I) sections 54 to 54GB, or under any provisions of Chapter VI-A under the heading "B.-Deductions in respect of certain payments" thereof; or (II) such other provisions of that Act, subject to fulfilment of such conditions, as the Central Government may, by notification, specify; or (ii) beginning of manufacture or production of articles or things or providing any services referred to in section 10AA of that Act, in a case where the letter of approval, required to be issued in accordance with the provisions of the Special Economic Zones Act, 2005, has been issued on or before the 31st day of March, 2020, and where completion or comp....
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....rtificate under section 203 of that Act in respect of deduction or payment of tax under section 192 thereof for the financial year commencing on the 1st day of April, 2019, the provision of this sub-section shall have the effect as if for the figures, letters and words "31st day of March, 2021", the figures, letters and words "15th day of August, 2020" had been substituted; (v) sections 54 to 54GB of that Act, referred to in item (I) of subclause (i) of clause (c), or sub-clause (ii) of the said clause, the provision of this subsection shall have the effect as if- (a) for the figures, letters and words "31st day of December, 2020", the figures, letters and words "29th day of September, 2020" had been substituted for the time-limit for the completion or compliance; and (b) for the figures, letters and words "31st day of March, 2021", the figures, letters and words "30th day of September, 2020" had been substituted for making such completion or compliance; (vi) any provisions of Chapter VI-A under the heading "B.- Deductions in respect of certain payments" of that Act, referred to in item (I) of sub-clause (i) of clause (c), the provision of this s....
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.... of June, 2020 as the Central Government may, by notification, specify in this behalf, and if such amount has not been paid within such date, but has been paid on or before the 30th day of June, 2020, or such other date after the 30th day of June, 2020, as the Central Government may, by notification, specify in this behalf, then, notwithstanding anything contained in the specified Act,- (a) the rate of interest payable, if any, in respect of such amount for the period of delay shall not exceed three-fourth per cent. for every month or part thereof; (b) no penalty shall be levied and no prosecution shall be sanctioned in respect of such amount for the period of delay. Explanation.-For the purposes of this sub-section, "the period of delay" means the period between the due date and the date on which the amount has been paid." 14.2 The Central Government issued the Notifications extending the timelines prescribed under section 149 of the Act for issuance of reassessment notice under section 148 of the Act pursuant to the powers vested under section 3 of the TLA Act Act. 14.3 The Apex Court has tabulated these Notifications and extension of time in case....
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....he relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139: Provided that no notice under this section shall be issued unless there is information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the relevant assessment year and the Assessing Officer has obtained prior approval of the specified authority to issue such notice. Explanation 1.-For the purposes of this section and section 148A, the information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment means,- (i) any information flagged in the case of the assessee for the relevant assessment year in accordance with the risk management strategy formulated by the Board from time to time; (ii) any final objection raised by the Comptroller and Auditor− General of India to the effect that the assessment in the case of the as....
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....ssment; (b) provide an opportunity of being heard to the assessee, with the prior approval of specified authority, by serving upon him a notice to show cause within such time, as may be specified in the notice, being not less than seven days and but not exceeding thirty days from the date on which such notice is issued, or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice under section 148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year and results of enquiry conducted, if any, as per clause (a); (c) consider the reply of assessee furnished, if any, in response to the show−cause notice referred to in clause (b); (d) decide, on the basis of material available on record including reply of the assessee, whether or not it is a fit case to issue a notice under section 148, by passing an order, with the prior approval of specified authority, within one month from the end of the month in which the reply referred to in clause (c) is received by him, or where no such reply is furnished, within ....
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....21: Provided further that the provisions of this sub−section shall not apply in a case, where a notice under section 153A, or section 153C read with section 153A, is required to be issued in relation to a search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A, on or before the 31st day of March, 2021: Provided also that for the purposes of computing the period of limitation as per this section, the time or extended time allowed to the assessee, as per show−cause notice issued under clause (b) of section 148A or the period during which the proceeding under section 148A is stayed by an order or injunction of any court, shall be excluded: Provided also that where immediately after the exclusion of the period referred to in the immediately preceding proviso, the period of limitation available to the Assessing Officer for passing an order under clause (d) of section 148A is less than seven days, such remaining period shall be extended to seven days and the period of limitation under this sub−section shall be deemed to be extended accordingly. Explanation.-For the purpose....
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....ed with the requirement of conducting any inquiry with the prior approval of the specified authority under section 148A(a) as a onetime major. 17.1 It also further directed the officers to pass an order in terms of section 148A(d) after following the due procedure as required under section 148A(b) in respect of each of the assesses. While so doing, the Court has kept all the defence available to the assessee under section 149 of the Act and which may be availed under the Finance Act, 2021 open. The Court has also kept the right of Assessing Officer under the Finance Act, 2021 open and to continue to be available. This judgment of the Apex Court substituted and modified the respective judgments and orders passed by the respective High Courts quashing the similar notices issued under the unamended section 148 of the Act regardless of whether they have been assailed before the Court or not. This was done on a broad consensus expressed by the learned ASG appearing on behalf of the revenue and learned senior advocates/counsels appearing on behalf of the assesses. The Court struck a balance between the rights of the revenue and of the respective assesses on the ground that it was a bo....
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....the case false under clause (a) or clause (b). In that context, if the first proviso to section 149(1) of the Finance Act, 2021 is examined, it clearly provides that no notice under section 148 of the Act shall be issued at any time in a case for the relevant assessment year beginning on or before 01.04.2021, if such notice could not have been issued at that time on account of being beyond the time limit specified under the provision of clause (b) of sub-section(1) of section 149 of the Act as they stood immediately before the commencement of the Finance Act, 2022. This proviso, thus, does not permit the issuance of notice under section 148 of the Act for the past assessment years by taking a recourse of larger period of limitation prescribed in newly substituted clause (b) of section 149(1) of the Act. Therefore, the notice issued after 01.04.2021 shall need to confirm to the requirement of section 149(1) of the Act where the upper time limit provided in the substituted provision shall need to be adhered to. 19. It is quite clear from the memorandum explaining the proposed provision in the financement as well as the provisions as contained in the Finance Act, 2021 that the acti....
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....4.2021. 21. It is to be noted that while enacting the Finance Act, 2021, Parliament was aware of the existing statutory laws both under the Act as amended by the Finance Act, 2021 as also the ordinance and the TLA Act and Notification issued there under. However, the new scheme for reassessment which was made effective from 01.04.2021 does not have any saving clause. This brings an end to the possibility of any fresh proceedings being initiated under the unamended reassessment provisions after 01.04.2021. Finance Act, 2021 also did not contain savings clause and since the legislature through Finance Act, 2021 and TLA Act did not include any intention to protect and extend the erstwhile scheme of section 148 of the Act. The life of erstwhile scheme of 148 cannot be elongated. The principle that would also employ is that the substitution for omit and obliterate the pre-existing provision and in absence of any saving clause either under the ordinance or the TLA Act the Finance Act, 2021 the presumption is available for the old provision to continue beyond 31.03.2021. 22. The real interpretation of statute provides that later statute would prevail in case of conflict with provisi....
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....k in time to their original date when such notices were to be issued and then new section 149 of the Act is to be applied at that point." 25. On the basis of the Apex Court's decisions, if these notices to be treated as show cause notice under section 148A(d) of the Act, the fresh information if is supplied by the department as per the direction of the Apex Court and a fresh notice under section 148 of the Act is issued after the order under section 148A(d) of the Amended Act. The Board Circular if is applied, the fresh notice would travel back to the date on which the original notice was to be issued. It would result into the following aspects: (i) as per Amended Law, notice under section 148 of the Act is required to be issued along with the order under section 148A(d) of the Act therefore, the notice earlier issued in pre Ashish Agarwal period, could be issued before 148A(d) order; (ii) section 153(2) of the Amended Act provides that the reassessment proceedings needs to be completed within 12 months from the end of financial year in which the notice under section 148 is issued. 26. In the CBDT Circular, travelled back theory is applied, the due date for ....
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.... New Delhi dated 11.05.2022 surely cannot override the provisions of law or the decision of the Apex Court. 28. This Court needs to firstly take note of the budget speech of the Finance Minister for 2021-2022, which noted that at the time the assessment could be reopened upto six and ten years and therefore, the tax payers have to remain under uncertainty for a long time. Hence, the time limit is reduced to 3 years from 6 years. 29. Likewise, the memorandum explaining the provision, the Finance Bill 2021 under the head "rationalization of various provisions provides for a completely reforms system of assessment/reassessment and re-competition". A new procedure of assessment of cases has been proposed by the bill, which would result in less litigation and the same would provide the ease of doing business to tax payers due to reduction in time limit for notice. Therefore, despite the Act having come into force at the time of issuance of notice, if the revenue is allowed to choose and apply the repealed and substituted provisions, the entire objective of the legislature would be defeated. The Apex Court applying mischief rule of interpretation of statute and ascertained from the....
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.... in question, it is not only legitimate but highly convenient to refer both to the former Act and to the ascertained evils to which the former Act had given rise, and to the later Act which provided the remedy. These three being A compared I cannot doubt the conclusion." This Rule being a Rule of construction has been repeatedly applied in India in interpreting statutory provisions. It would therefore be legitimate in interpreting sub-section (2) to consider that was the mischief and defect for which section 52 as it then stood did not provide and which was sought to be remedied by the enactment of sub-section (2) or in other words, what was the object and purpose of enacting that sub-section. Now in this connection the speech made by the Finance Minister while moving the amendment introducing sub-section (2) is extremely relevant, as it throws considerable light on the object and purpose of the enactment or sub-section (2). The Finance Minister explained the reason for introducing sub-section (2) in the following words: "Today, particularly every transaction of the sale of property is for a much lower figure than what is actually received. The deed of registratio....
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....it differently, the actual consideration received for the transfer was 'considerably more' than that declared or shown by the assessee, but which were not covered by sub- section (1) because the transferee was not directly or indirectly connected with the assessee. The object and purpose of sub-section (2), as explicated from the speech of the Finance Minister, was not to strike at honest and bonafide transactions where the consideration for the transfer was correctly 13: disclosed by the assessee but to bring within the net of taxation those transactions where the consideration in respect of the transfer was shown at a lesser figure than that actually received by the assessee, so that they do not escape the charge of tax on capital gains by under-statement of the consideration. This was real object and purpose of the enactment of sub-section (2) and the interpretation of this sub-section must fall in line with the advancement of that object and purpose. We must therefore accept as the underlying assumption of sub-section (2) that there is under-statement of consideration in respect of the transfer and sub-section (2) applies only where the actual consideration received by ....
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....ection 2(1) (b) of this Act, the specified Act includes the Income Tax Act. As per section 3(1)(b) of the TLA, the time limit for issuance of notice under section 148 of the Act falls during the period from 20.03.2020 to 31.12.2020 or such other date after 31.12.2020 as the Central Government made by Notification specified in this behalf and such notice has not been issued within time limit, this time limit for issuance of such notices shall stand extended to 31.03.2021 or such other date after 31.03.2021 as the Central Government made by Notification specified in this behalf. 34. Chapter III of the TLA Act provides for various amendments to the IT Act by virtue of such provisions, some of the provisions of the Income Tax Act, 1961 has been amended. 35. The overall consideration of the TLA Act would provide that time limit for issuance of notice under section 148 of the Act would be governed by Chapter II of the TLA Act, which provides for relaxation of certain provisions of the specified Act. It provided for certain extension for issuance of such notice without corresponding the amendment in section 149 of the Act as applicable upto 31.03.2021. The TLA Act cannot rewrite the....
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....ed from 31.03.2021 to 30.04.2021 and by virtue of 27.04.2021 Notification, the time limit for issuance of notice under section 148 of the Act was extended from 30.04.2021 to 30.06.2021. Therefore, what can be seen is that the Notification dated 31.03.2021 came to be issued before the amended provision of reopening came into force and thus, the Notification was applicable to the unamended provision of reopening. The unamended provisions of reopening since ceased to exist from 01.04.2021, the extension of Notification could have no applicability. The Notification dated 27.04.2021 was in continuity of earlier Notification dated 31.03.2021 as the unamended provisions of reopening itself ceased to exist on 01.04.2021. The Notifications cannot extend the time limit. 39. It is a trite law that no Notification can extend the limitation of the repealed Act. The Apex Court in case of Union of India vs. Ashish Agarwal (supra) had not disturbed the findings of various High Courts to the effect that Notifications in question were ultra vires. Therefore, once the act had been repealed, there cannot be extension of the time limit prescribed under the repealed act by virtue of Notification issu....
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....te legislation may be struck down as arbitrary or contrary to statute if it fails to take into account very vital facts which either expressly or by necessary implication are required to be taken into consideration by the statue or, say, the Constitution. This can only be done on the ground that it does not conform to the statutory or constitutional requirements or that it offends Article 14 or Article 19(1)(a) of the Constitution. It cannot, no doubt, be done merely on the ground that it is not reasonable or that it has not taken into account relevant circumstances which the Court considers relevant." It was categorically held that a subordinate legislation would not enjoy the same degree of immunity as a legislative act would. The Apex Court held that delegate must act within limit of authority and cannot go beyond the Act. If a rule was beyond the power delegated under the Act, it becomes the ultra vires. 41. In case of Assam Co. Ltd. and Anr vs. State of Assam and ors, reported in (2001) 248 ITR 567 (SC), the Apex Court held thus: "10. We see force in the above contention. A perusal of Section 50 of the Act shows that the State Government has been empowe....
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....o recompute the agricultural income from tea different from that which is computed by the Central officers under the Central Act. Thus, it is seen that this Rule is not only made beyond the rule-making power of the State under Section 50 of the Act but also runs counter to the object of the Act itself, and enlarges the scope of the Act. The same also suffers from the other vices pointed out by us hereinabove, hence such a Rule, in our opinion, is ultra vires of the Act. Therefore, proviso to Rule 5 of the State Rules to the extent it empowers the State Officers to recompute the agricultural income already computed by the Central Officers is ultra vires of the State Act." The Apex Court has held that a delegate must act within the limit of authority conferred by act and cannot go beyond what the Act contemplates. 42. The Notification that imposed condition for deduction not arising from the section was held to be impermissible. In case of CIT vs. Sirpur Paper Mills, reported in (1988) 172 ITR 762 the Apex Court held that the asset it is a settled position of law that when it conflict the rule must give way to the act. In case of CIT vs. S. Chennaippa Mudaliar, reported in (196....
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....e of notice under the old scheme. Therefore, we respectfully do not endorse to the view of the Delhi High Court, which goes on a premise that earlier notice was legal, valid and within the time frame. 47. Once the act itself is repealed and operation of the said act is not extended by any savings clause, the Notification could not extend the operation of such a repealed act. The Delhi High Court has gone on a premise that by virtue of Notification in case of Mon Mohan Kohli (supra) the extension to time limit would survive. 48. Resultantly, it could be held that the time limit for issuance of the notice under the old regime for assessment years 2013-14 and 2014-15 since distinguished on 31.03.2021, no extension of such time period when the act itself was repealed would arise. The alter contention raised by the petitioner in relation to the limitation tabulated for ready reference this wise: Date of Notification Original limitation for issuance of notice under section 148 of the Act Extended Limitation 31.03.2020 20.03.2020 to 29.06.2020 30.06.2020 24.06.2020 2 0.03.2020 to 31.12.2020 31.03.2021 31.03.2021 31.03.2021 30.04.2021 27.04.2021....
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....cuments or evidence which reveal that income chargeable to tax represented in form of assets which is escaped the assessment amounts to or is likely to amount of Rs.50 Lakh or more for that year. Thus, as per first proviso to section 149 of the Act, no notice under section 148 of the Act shall be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April 2021. Such notice could not have been issued at that time on account of being beyond the time limit specified under the provision of clause(b) of sub-section 1 of this section as they stood immediately before the commencement of Finance Act, 2021. 51.2 Therefore, as per the first proviso if a notice could not have been issued under the old provision of section 149 prior to its substitution w.e.f. 01.04.2021, notice could not have been issued under the new provisions. Prior to substitution w.e.f. 01.04.2021, the time limit as per section 149 of the Act was six years from the end of relevant assessment year if, the income chargeable to tax has escaped amounts to or is likely to amount to Rs.1 Lakh or more for that year. As per section 149(1)(b) of the Act prior to its substitution a case ....
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.... cannot be oblivious of the fact that the Apex Court had in no uncertain terms expressed that it is in compete agreement with the view taken by various High Courts and thus had affirmed the views of the High Courts which held that after enactment of Finance Act, 2021, no notice under section 148 of the Act can be issued on the basis of provisions contained in TLA Act. Therefore, the CBDT's interpretation for issuance of directions to the Assessing Officers by relying on the TLA Act is contrary to the ratio of the Apex Court. The legal effect of enactment of Finance Act, 2021 and substitution of provisions contained in sections 147 to 151 of Finance Act, 2021 when regarded, it is to be appreciated that the TLA Act has extended the last date under unamended section for initiating the actions under sections 147/148 of the Act which is prescribed under unamended section 149. TLA Act is a subsidiary legislation, whereas the unamended sections 147 to 151 being the principal legislation, substitution of sections 147 to 151 by Finance Act with the entire new set of provision having different conditions and procedures on which the existence of subsidiary legislation TLA Act depends itself a....
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....ifications would extend time period provided under the proviso to section 149(1) of the IT Act. 56.2 The time limit as per unamended section 149(1)(b) rendered six years from the end of assessment year. TOLA has not altered time limit provided in clause (b) of unamended section 149 of the IT Act. 57. It is needed to be clarified that we have since held the notices to be barred by the ground of limitation, other legal and factual aspects are not deal with in any of the petitions and all these petitions are allowed on the issue of limitation. 58. Resultantly, these petitions are allowed. Notices under section 148 of the IT Act and impugned orders under section 148A(d) of the IT Act are quashed and set aside on the ground of limitation. 59. All these petitions are accordingly disposed of. (SONIA GOKANI, J) (MAUNA M. BHATT,J) Supplementing View: 1. I've had the benefit of reading the scholarly judgment authored by my esteemed sister Hon'ble Ms. Justice Sonia Gokani. With great respect, I find myself in complete agreement with the reasoning and the eventual conclusion arrived at by sister Hon'ble Justice Gokani. Even though the judgment delivered by sister Hon'bl....
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....eme Court in the case of Union of India vs. Ashish Agarwal 06.05.2022 Special Civil Application No.13433 of 2021 and allied matters disposed of by this Court following the judgment of the Hon'ble Supreme Court in the case of Ashish Agarwal (supra) 28.05.2022 Show cause notice under Section 148A(b) was issued in accordance with the decision in case of Ashish Agarwal (Supra) on 28.05.2022 and assessee was granted time of two weeks for furnishing reply to such notice. 9.6.2022 Assessee responded to the notice issued under Section 148A(b) on 9.6.2022 26.7.2022 Order under Section 148A(d), passed by the respondent department 26.7.2022 Fresh notice under Section 148 issued. 5. Factual background: Section 148 of the Income Tax Act refers to notice where income has escaped assessment. With the introduction of Finance Act 2021, with effect from 01.04.2021, Section 148 of the Act has been amended drastically substituting the old provision. With the introduction of Finance Act 2021, old provisions of sections 147 to 151 have been substituted by introduction of new provisions. One of the significant amendments is insertion of section 148A and section 148B w.....
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....rs passed by the respective High Courts as under: - "(i) The respective impugned section 148 notices issued to the respective assessees shall be deemed to have been issued under section 148A of the IT Act as substituted by the Finance Act, 2021 and treated to be show-cause notices in terms of section 148A(b ). The respective assessing officers shall within thirty days from today provide to the assessees the information and material relied upon by the Revenue so that the assessees can reply to the notices within two weeks thereafter; (ii) The requirement of conducting any enquiry with the prior approval of the specified authority under section 148A(a) be dispensed with as a one-time measure vis-avis those notices which have been issued under Section 148 of the unamended Act from 01.04.2021 till date, including those which have been quashed by the High Courts; (iii) The assessing officers shall thereafter pass an order in terms of section 148A(d ) after following the due procedure as required under section 148A(b ) in respect of each of the concerned assessees; (iv) All the defenses which may be available to the assessee under section 149 and/or wh....
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....e petitions are heard only on the ground of limitation i.e. whether fresh notice issued under Section 148 of the Act for A.Y.2013-2014 and for A.Y. 2014-15, after decision of Supreme Court in the case of Ashish Agarwal (supra) are barred by limitations or not? 10. The arguments on behalf of the petitioners were opened by Mr. Tushar Hemani, Learned Senior Advocate assisted by Ms. Vaibhavi Parikh, learned Advocate. His arguments were as follows: 10.1. Purpose of enactment: (a) Referring to the budget speech of the Finance Minister for the year 2021-22, he submitted that the intention of the legislature behind substituting erstwhile provisions of reopening with new provisions of reopening w.e.f. 1.4.2021 is expressly clear from para 153 and 154 of the said speech. In the said paras it is expressed that earlier the taxpayers had to remain under uncertainty for a longer time, therefore, the new provisions are introduced with an intent to reduce the time limit. Similarly, the memorandum explaining the provisions of Finance Bill 2021 proposes that the new system would result in less litigation and with the reduction in time limit for issuance of notice, it would provide ease of d....
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....l as revenue. Therefore, first proviso to section 149(1), applicable w.e.f. 1.4.2021 cannot be ignored. As per first proviso to section 149(1) of the Act, applicable w.e.f. 1.4.2021, no notice under Section 148 of the Act can be issued at any time in a case for the relevant assessment year, if the time limit specified under unamended provision had expired. As per the unamended provision (applicable till 31.03.2021), notice under Section 148 of the Act could not be issued beyond a period of six years from the end of the relevant Assessment Year. Such a time limit of six years for the assessment years in question ended on the following dates: - • For the Assessment Year 2013-14 six years ended on 31.03.2020 and • For Assessment Year 2014-15 six years ended on 31.03.2021. Thus, the notices issued under Section 148 of the Act for the Assessment Years 2013-14 and 2014-15 could not have been issued after 31.03.2020 and 31.03.2021 respectively, because before the substituted provision came into force w.e.f. 01.04.2021, time limit for issuance of notice under Section 148 of the Act for A.Y. 2013-14 and A.Y. 2014-15 had expired. Hence, the notices issued under S....
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.... Act, particularly when the erstwhile Section 149, to which the TOLA was made applicable ceases to exist. He thus submitted that TOLA has no role to play in so far as reopening provisions are concerned on or after 01.04.2021 and, therefore, reference made of TOLA in the affidavit of the revenue is misconceived. 10.4. Notification dated 31.03.2021 and 27.04.2021, whereby time limit for issuance of Notice under section 148 of the Act was extended in exercise of powers conferred under section 3(1) of TOLA: (a) Referring to Notification dated 31.03.2021, Mr. Hemani, learned senior counsel submitted that by the said notification, time limit for issuance of notice under section 148 of the Act was extended from 31.03.2021 to 30.04.2021. By another Notification dated 27.04.2021, the said time limit was extended from 30.04.2021 to 30.06.2021. Thus, in exercise of power conferred under section 3(1) of TOLA, time limit for issuance of notice under section 148 of the Act was extended from 31.03.2021 to 30.06.2021. Admittedly, these two Notifications were issued prior to the amended provisions of sections 147 to 151 of the Act, which came into force w.e.f. 01.04.2021 and therefore, the sa....
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....) In the case of Kunj Behari Lal Butail vs. State of H.P. reported in (2000)3 SCC 40; Therefore, the executives, in exercise of delegated powers, cannot go beyond the principal Acts i.e. Income Tax Act,1961 and TOLA. (b) Alternatively, he submitted that assuming that TOLA has powers to extend the time limit prescribed under the provisions of the Act, in view of the settled legal position, such powers are unconstitutional and ultra vires. In support of his submissions, he relied upon decision in the case of State of Tamil Nadu and others vs. K. Shyam Sunder and others reported in (2011)8 SCC 737 and in the case of The Chamber of Tax Consultants and another vs. Union of India reported in (2018) 400 ITR 178 (Delhi). Extending his submissions on the same line, he further submitted that executives while exercising delegated powers, cannot, by issuing Notification, revive or extend Repealed Act. 10.6. Application of Instruction No. 1/2022 Dated 11.5.2022: (a) Mr. Hemani, learned senior counsel submitted that, CBDT pursuant to the decision in the case of Ashish Agarwal (supra), issued Instruction No.1/2022, broadly interpreting the said decision. "Instructions" issued by CBDT ....
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....thin the permissible extended time by virtue of operation of TOLA and Notifications issued thereunder. (ii) This fundamental premise of issuance of notices under section 148 of the Act between 01.04.2021 to 30.06.2021 being illegal, reliance placed on the said decision is of no consequence. Referring to the decision of Ashish Agarwal (supra), he submitted that even the Supreme Court has noted that notices were issued due to bonafide mistakes. Decision refers to genuine application of amendment as the officers of the revenue were under bonafide belief that amendment may not have been enforced. In other words, despite substitution of provisions, an old provision cannot be made applicable. (iii) Delhi High Court committed an error in not appreciating that after deletion of explanations, extension provided under the notifications was only applicable to the repealed Act. The said Notification cannot be made applicable beyond 31.03.2021. When an act itself is repealed, the same cannot be extended by Notification. (iv) Delhi High Court erroneously has observed that notices issued between 01.04.2021 to 30.06.2021 shall be deemed as Notices under section ....
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....llahabad and Rajasthan (among others) had held that explanation in the Notifications dated 31.03.2021 and 27.04.2021 is illegal. Consequently, notices issued between 01.04.2021 to 30.06.2021 under section 148 of the Act were struck down. The Supreme Court has held that the High Courts were correct in holding that only the new provisions would apply after 01.04.2021 and explanation in notifications cannot be made applicable after 01.04.2021. Therefore, the natural corollary would be that all the notices issued under Section 148 between 01.04.2021 and 30.06.2021 under old provisions be rendered illegal. However, considering the same as bonafide mistake, the Hon'ble Suprem Court substituted the original notices issued under Section.148 of the Act, under old provisions as the notices under section 148A(b) of the Act under new provisions, keeping everything else remaining the same. In support of his submission, he relied upon Para- 7 & 8 of Hon'ble Supreme Court in the case of Ashish Agarwal (supra). (c) He further submitted that the observation of the Supreme Court that the revenue should not be left remediless is not blanket but contextual. In the context that the revenue, if....
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....nder Proviso to Section 149: (a) Learned Senior Counsel Mr. Soparkar submitted that law applicable on the date of issuance of notice under Section 148 is to be seen and therefore, when notice under Section 148 was issued in the month of July- August,2022, the substituted provisions were applicable and therefore, the same is barred by limitation. Even as per first proviso to section 149 of the Act, the notices for AY 2013-14 got time barred on 31.03.2020 and therefore also, they are barred by limitation particularly when no extension was permitted under section 149 of the Act. Section 148 notices are substituted by Hon'ble Supreme Court as show cause notices under Section 148A(b) of the Act. Notices issued between 01.04.2021 to 30.06.2021 are not in existence and the notices issued in July- August,2022 are the only notices. Relying upon para - 6.2, 6.4 and 6.5 of decision in the case of Ashish Agarwal (supra), he submitted that it is expressly stated in the said decision that all the defences are kept open and therefore, time limit prescribed under first proviso to section 149 cannot be ignored. 11.3. Notices issued under Section.148 of old Act for AY 2013-14 and 2013-14....
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....nly operative till 30.06.2021. (e) The decision of Delhi High Court in the case of Touchstone Holdings (supra) is erroneous because it upheld the notice on the wrong premise that the original notice issued under Section. 148 stands revived. He, thus, submitted that by no stretch of imagination, the notice issued under Section. 148 for A.Y. 2013-14 and for A.Y. 2014-2015 is stated to be within the time limit prescribed under the Act and since they are issued beyond the period of limitation prescribed under the Act, the same are barred by limitation and without jurisdiction. (f) He has also raised other grounds challenging the validity of notice but as observed earlier since at present, the petitions are heard only on the ground of limitation the other grounds are not referred hereunder at this stage. 13. Learned advocate Mr. Dharan Gandhi, submitted the following: (a) The judgment of the Hon'ble Supreme Court in the case of Union of India Vs. Ashish Agarwal reported in 444 ITR (1) has held that they are in complete agreement with the view taken by various high courts, and therefore, it is not open for the revenue to take the very same ground which has been ad....
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....er, without withdrawal of the first notice under Section. 148 of the Act, the second notice cannot be issued. In support of his submissions, he replied upon the decision of this Court in the case of Aditya Medisales Limited Vs. Deputy Commissioner of Income Tax, Circle-1 reported in 2016 (242) taxmann 228. Further in all the petitions, the notice issued under Section 148 and the notice pursuant to Hon'ble Supreme Court's decision issued under Section 148A(b) of the Act are by different authorities, and therefore, also they cannot be stated to be valid notice. In support of his submissions, he relied upon the decision rendered by this Court in the case of Hynoup Food & Oil Industry Limited Vs. Assistant Commissioner of Income Tax reported in 2008 (307) ITR (115). 14. Learned Advocate Mr. S.N.Divetia submitted the following:- (a) Section 147 w.e.f. 01.04.2021 empowers the Assessing Officer to assess or reassess the income, subject to the provisions of Sections 148 to 153, therefore, Section 149 which came into play before such powers are exercised by the A O and the same cannot be ignored. The conditions of Section 149 need to be satisfied for valid reopening. (b....
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....be issued beyond the first proviso to Section 149 of the Act. (b) The Finance Act, 2021 which came into force w.e.f. 01.04.2021, wherein provisions of Sections 147 to 151 were amended/substituted after enactment of TOLA. Despite that no corresponding amendment is made in Section 149 of the Act, and therefore, the notices issued under Section. 148 for A.Y. 2013-14 and 2014-15 are beyond the limitation prescribed and therefore, without jurisdiction. (c) The Parliament, while enacting Finance Act, 2021 was very much alive of TOLA and the notifications issued pursuant thereto. Despite that it chose to enforce the new scheme w.e.f. 01.04.2021 which itself endorses the intent and object of the insertion of new provision after 01.04.2021. As per settled position of law substitution omits and thus obliterates the pre-existing provision and therefore, old provision would not operate beyond 31.03.2021. (d) The rule of interpretation of statutes clearly determines that the latest statute shall prevail in case of any conflict with the provisions of existing statutes. In support of his submission, he relied upon the decision of Hon'ble Supreme Court in the case of Sta....
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....the notices issued under section 148 of the act, to be treated as notices issued under Section.148A(b) of the Act. As the said decision was made applicable to PAN India, it is applicable to the proceedings where notices under Section 148 were issued between the period 01.04.2021 to 30 .06. 2021. The submission of the petitioners that the Decision of Hon'ble Supreme Court will be applicable to the proceedings where notices were subject matter of challenge before various High Courts is not correct. (c) He further submitted that the decision of Hon'ble Supreme Court in case of Ashish Agarwal (Supra) arose out of the order of High Court of Allahabad in case of Ashok Kumar Agarwal Vs. Union of India reported in (2021) 131 taxmann.com - 2022 (Allahabad) wherein, in para-3, Allahabad High Court had noted that several petitions were filed challenging the notices issued under Section. 148 between 01.04.2021 to 30.06.2021 for A.Y. 2013-14 to 2017-18. The said notices were directed to be treated by the Hon'ble Supreme Court as notices issued under Section 148A(b) (substituted provision), in exercise of powers under Article 142 of the Constitution of India, and therefore, now it is no....
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....for A.Y. 2013-14 to 2017-18 between 01.04.2021 to 30.06.2021 which were within the limitation as per extension provided under TOLA, 2020 and therefore, now it is not open for the assessee to rely on first proviso to Section 149 of the Act to submit that the notices under Section 148A are barred by limitation. (e) Alternatively, Learned Senior Standing Counsel Mr. Patel submitted that, without prejudice to the above submissions, in any case the first proviso to Section 149(1) (substituted provision applicable w.e.f. 01.04.2021) would not be applicable in the present case. The first proviso to Section 149(1) (amended provision) restrains the department from issuing notice under Section. 149 after 01.04.2021, if such notices could not have been issued at the relevant time on account of expiry of time limit specified in Section 149A(b) of the amended Act prior to Finance Act, 2021. In the present case, the time limit for issuance of notice under Section. 148 was extended up to 30.06.2021, and by that time the limitation was not over and therefore, proviso to Section 149(1) would not be applicable in the present case. (f) Placing reliance on the decision of Delhi High ....
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....relevant assessment year for the purpose of applying new Section 149 therefore, the theory of travel back in time as canvased is not contrary to the provisions of the Act. By giving illustrations, he has submitted the following: In simple terms, it provides the mechanism for deciding applicability of Clause (a) or (b) of section 149 (amended provision) to the reassessment proceedings pursuant to the decision of Ashish Agarwal (supra). For the purpose of deciding applicability of clause (a) or (b) of the new Section 149, one has to decide the relevant number of assessment years for which the reassessment notice under Section 148 was originally issued under the unamended law after applying the TOLA. For example, if the original notice under Section. 148 of the unamended law was issued for the sixth year after applying TOLA, the reassessment proceedings post Ashish Agarwal's decision would be treated as reassessment proceedings for the sixth year and accordingly clause (b) of new Section 149 would be applicable. Following table explains the aforesaid contention: A.Y. Number of AY for which original notice under Section 148 (unamended law) was issued with TOLA extens....
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.... Court, therefore, recognizing the plight of the ordinary citizen was pleased to extend the limitation from time to time for filing various proceedings, requests and other administrative requisites. The legislature on recognizing similar difficulty on part of the administrative and various functionaries, enacted TOLA Act, 2020, so as to notify and extend the time limits under various legislations. (b) Pursuant to TOLA, the CBDT issued notifications extending time limit for issuance of notice under Section 148 up to 30.6.2021. The said notices were challenged before various High Courts on the ground that the notification could not have an overriding effect over legislation which introduced a specific manner of functioning from 1.4.2021. Such action was set aside in case of similarly placed assessees by the High Court of Uttar Pradesh and High Court of Allahabad in the case of Ashish Agarwal (supra). The Allahabad High Court had not permitted extension of time limit for issuance of notice under the pre-existing provisions up to 30.6.2021 as was sought to be done by the CBDT. (c) The Union of India challenged the said decision before the Hon'ble Supreme Court which v....
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....ssessing Officer to follow the procedure with respect to such notices. Thus, it has created a fiction by directing to treat the notices issued under Section 148 (unamended law) of the Act, as notices issued under Section 148A(b) (substituted provision) with a clear intention to save about 90,000/- proceedings, being conscious of the fact that there were approximately 90,000 such notices, which have been issued on a bonafide belief that old provisions would be applicable. Therefore, to strike a balance between rights of the revenue as well as respective assessees, keeping in mind that the revenue may not suffer as ultimately it is a public exchequer, the Hon'ble Supreme Court in exercise of its power under Article 142 of the Constitution of India, has made the order, which shall be applicable PAN India. Therefore, I am not in agreement with submissions of petitioners that the decision in the case of Ashish Agarwal (supra) would be applicable to the cases, where such notices have been challenged before different High Courts. In view of the fact recorded by Hon'ble Supreme Court that about 90,000 reassessment notices were issued after 01.04.2021, which were subject matter of more than....
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....ially repealed or wholly repealed by the legislature only. The philosophy underlying a statute or the legislative policy, with the passage of time, may be altered but therefore only the legislature has the requisite power and not the executive. The delegated legislation must be exercised, it is trite, within the parameters of essential legislative policy. The question must be considered from another angle. Delegation of essential legislative function is impermissible. It is essential for the legislature to declare its legislative policy which can be gathered from the express words used in the statute or by necessary implication, having regard to the attending circumstances. It is impermissible for the legislature to abdicate its essential legislative functions. The legislature cannot delegate its power to repeal the law or modify its essential features." Xxxxxxxxx "147. The legislative objection and policy indisputably must be considered having regard to the Preamble and other core provisions of the Act. Section 3 although is a part of the Act, but the same cannot be said to contain an inbuilt policy so as to empower the Administrator to do all such things which c....
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.... is inconsistent with the Act. Any Rule made in exercise of such delegated power has to be in consonance with the provisions of the Act, and if the Rule goes beyond what the Act contemplates, the Rule becomes in excess of the power delegated under the Act, and if it does any of the above, the Rule becomes ultra vires of the Act. We have already noticed that none of the provisions of the Act has contemplated any power to be vested in the State officers to recompute the agricultural income from tea while proviso to Rule 5 of the Rules in specific terms empowers the State officers to recompute the agricultural income from tea different from that which is computed by the Central officers under the Central Act. Thus, it is seen that this Rule is not only made beyond the rule-making power of the State under Section 50 of the Act but also runs counter to the object of the Act itself, and enlarges the scope of the Act. The same also suffers from the other vices pointed out by us hereinabove, hence such a Rule, in our opinion, is ultra vires of the Act. Therefore, proviso to Rule 5 of the State Rules to the extent it empowers the State Officers to recompute the agricultural income already c....
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....ayer a burden higher than what the Act itself on a true interpretation envisages. The task of interpretation of the laws is the exclusive domain of the courts. However, - this is what Sri Ramachandran really has in mind- circulars beneficial to the assessees and which tone down the rigour of the law issued in exercise of the statutory power under Section 119 of the Act or under corresponding provisions of the predecessor Act are binding on the authorities in the administration of the Act. The Tribunal, much less the High Court, is an authority under the Act. The circulars do not bind them. But the benefits of such circulars to the assessees have been held to be permissible even though the circulars might have departed from the strict tenor of the statutory provision and mitigated the rigour of the law. But that is not the same thing as saying that such circulars would either have a binding effect in the interpretation of the provision itself or that the Tribunal and the High Court are supposed to interpret the law in the light of the circular. There is, however, support of certain judicial observations for the view that such circulars constitute external aids to construction." I....
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.... for the reasons stated, passed an order construing notices issued under section 148, as those deemed to have been issued under Section 148A as substituted by the Finance Act 2021 and treated to be show-cause notices in terms of section 148A(b) of the Act. The requirement of conducting any inquiry, if any, with the prior approval of specified authority under section 148A(a) has been dispensed with as a one- time measure. The assessing officer has been directed thereafter to pass an order under section 148A(d) in respect of each of the concerned assessee and the revenue is also permitted to proceed further with the reassessment proceedings as per the provisions of Section 148A, subject to compliance of all the procedural requirements. The defenses, which may be available to the assessee including those available under section 149 of the Act and all rights and contentions available to concerned assessee and Revenue under Finance Act 2021 and law shall continue to be available. (iii) Section 149 of the Act, substituted by Finance Act 2021 w.e.f 01.04.2021, provides for a time limit for issuance of notice. Section 149 of the Act reads as under: "149. Time limit for notice ....