TaxTMI 
TaxTMI 
TaxTMI 
2023 (4) TMI 554
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....lanation below Section 149, which clarifies that the provisions of sub-sections (1) & (3) 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." (ii) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating the relevant facts of the case in respect of addition made on account of undisclosed foreign assets/investments." 4. From a perusal of the aforesaid grounds of appeal, it is discerned that the revenue has challenged the action of the Ld. CIT(A) in allowing the assessee's appeal on the legal issue raised before him without going into the merit of the case (addition made by AO on account of undisclosed Foreign Asset). 5. Brief facts pertaining to the legal issue against reopening of the assessment for AY. 1999-2000 is that the assessment of the assessee was reopened u/s 147 of the Income Tax Act, 1961 (hereinafter "the Act") by issuing notice u/s 148 of the Act by notice dated 27.03.2015. Pursuant to the notice of AO the assessee requested for "reasons for reopening", which was given to the assessee vide letter dated 30.03.2015. Later, the AO issu....
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....come there from. Further, the assessee has Claimed receipt from Resurgent India Bonds (RIB) deposited in 1998 which got matured in 2003. However, no details regarding source of Investment was furnished. It was claimed by the assessee that the corpus of the fund of Chhaganlal Suchak Family Trust is from the maturity amount of RIB. There Is evidence to show that the assessee is the account holder of bank account maintained in the name of Chhaganlal Suchak Family Trust in Geneva. There Is also evidence to show that Suryakant Suchak is not the account holder. No documentary proof of source of fund for investment in RIB has been furnished by the assessee." 6. Based on the aforesaid reason the AO reopened the assessment and for doing so he took the aid of Section 149(1)(c) of the Act which reads as under:- "Time Limit for notice 149 [(1) No notice under section 148 shall be issued for the relevant assessment year, (a) if four year have elapsed from the end of the relevant assessment year, unless the case falls under clause(b) or clause (c) (b) If four years, but not more than six years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax w....
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....t portion of the judgement of the Hon'ble Delhi High Court is reproduced below: "3. Search and seizure operation under Section 132 was carried out in the case of the Petitioner. During the course of search, his statement was recorded on 27.09.2011 under Section 132(4) of the Act. In the statement, the Petitioner was, inter-alia, asked to clarify if he maintained foreign bank account(s). In response to the said query, he stated that though he did not maintain any foreign bank account in his individual capacity, he, however did settle an offshore trust when he was non-resident. It is submitted that in the said statement recorded during the course of search as well as during the course of proceedings under section 153A read with Section 143(3) of the Act, the Petitioner repeatedly clarified that he did not maintain any account with foreign bank in his personal capacity, but had contributed an amount of approximately US$ 2-3 million at the time of settling of the Second Techna Trust, when he was a non-resident, out of his income earned from sources outside India. 4. The petitioner complains that despite such explanation, the revenue primarily relying upon his statement, issued ....
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....assessment year, unless the income chargeable to tax which has escaped assessment amounts to or Is likely to amount to rupees fifty thousand or more for that year..." It is stated that the outer period of limitation for reopening under section 147 of the Act ws prescribed to be ten years after the end of the relevant assessment year. 5. The petitioner next refers to the amendment to Section 149 by the Finance Act, 2001, with effect from 01.06.2001 further reducing the time for limitation to six years. Provisions of the said section, as amended are reproduced hereunder: "149. Time limit for notice. (1) No notice under section 148 shall be issued for the relevant assessment year, - (a) if four years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b); (b) if four years, but not more than six years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to one lakh rupees or more for that year. Explanation.- In determining income chargeable to tax which has escaped assessment for the purposes of this sub section, the provisions....
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....gs and seeks to avoid exposure to risk of litigation to litigant for indefinite period on future unforeseen events. Therefore, matters that attain finality under existing law due to bar of limitation cannot be reopened 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. It was highlighted that in this case, the provisions of the 2012 amendment are expressly prospective and cannot be used to re-open those matters that attain finality. It was also contended that the petitioner s status as a person not residing in India has not been disputed and rather, is accepted by the revenue. 9. The revenue resists the petition and refers to its arguments in the counter affidavit. Its counsel, Mr. Ashok Manchanda, submits that in this case, the AO issued notice under Section 148 after recording the reasons to believe, in writing, as the amount of 12,54,60,000/- used for settling a trust had escaped assessment for AY 1998-99 and in line with the provisions of Income Tax Act 1961, the AO had the valid reasons to believe in support of the decision to reopen the assessment ....
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....ars, have elapsed from the end of the relevant assessment year unless the income 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..." 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 to1/32th share of the compensation and the assessee was granted total compensation of 1,18,810 in the year 1981. Subsequently, by another judgment dated 31.07.1991, the assessee was awarded sum of 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 to18.05.1992. As land acquired was agricultural land, principal amount was not chargeable to ....
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.... 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. 14. To hold that the amendment to sub-secti....
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....hat sub-section (2) of section 150 has that result. Sub-section (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 assessments for the relevant years in question have attained finality on expiry of period....
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....o 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, which have become final due to bar of limitation prior to 1.4.1989 and this position is applicable equally to reassessments proposed on the basis of Orders passed under the Act or under any other law." 14. The ratio of K.M Sharma and S.S. Gadgil, in the opinion of this court covers the facts of this case. Reassessment for 1998-99 could not be reopened beyond 31.03.2005 in terms of provisions of Section 149 of the Act as app....
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...., trade or business. The court said: "In testing whether a retrospective imposition of a tax operates so harshly as to violate fundamental rights under article19(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 552 the 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, the date on which the Act came into force and observed that: "11. Now it is a well settled rule of interpretation hallowed by time and sanctified by judicial decisions that, unless the terms of a statute expressly so provide or necessarily require it, retrospective operation should not be given to a statute so as to take away or impair an existing right or create a new obligation or impose a new liability otherwise than as regards matters of procedure. The general rule as s....
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....ment year unless the income 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. 6.6 Section 149(1)(c) which extends the period to 16 years where income in relation to any asset located outside India, chargeable to tax has escaped assessment came into effect from 01.07.2012. By the time section 149(1) (c) was introduced i.e. 01.07.2012, the time limit for issue of notice u/s 148 as per the law prevailing on that day has expired. Following the ratio of the judgement of the Hon'ble Delhi High Court in the case of Brahmdatt (supra), the assessment cannot be reopened in 2015 and the period of 16 years does not apply to this case. In the light of the judgments of the Hon'ble Delhi High Court and the Hon'ble Supreme Court (supra), reopening proceedings which are beyond the relevant period are quashed." 8. Aggrieved by the aforesaid action of the Ld. CIT(A....
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....arred by limitation in terms of provision of section 149[1][c] of the Act. We have perused the order passed by the tribunal and we find that the tribunal rightly took note of the legal position and allowed the assessee's appeal. Aggrieved by the same, the revenue preferred the appeal before the learned tribunal. The tribunal before took note of the facts of the case took note of the various decisions, more particularly, the decision in the case of BRAHM DATT VS. ASSISTANT COMMISSIONER OF INCOME TAX; REPORTED IN [2018] 100 TAXMANN.COM 324 [DELHI]. In the said decision it was held that the amendment of Section 149 of the Act by Finance Act, 2012, which extended limitation for reopening assessment to sixteen years could not be resorted for reopening proceedings concluded before amendment came into effect. Admittedly the amendment came into effect on 1st July, 2012 and the notice under Section 148 was issued on 19th August, 2013. The decision in Brahm Datt (supra) as well as other decisions were noted in the case of SMT. N. ILLAMATHY VS. INCOME TAX OFFICER, WARD-11(2);[2020] 120 taxmann.com 313 (Madras) . At this juncture it would be beneficial to extract the relevant paragraph of ....