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2023 (4) TMI 554
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.... Income tax Act, 1961 by the Finance Act, 2012 and Explanation 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....
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.... However, she has not furnished the details of opening of account and income 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, ....
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....x Court in the case of K.M.Sharma vs. ITO 254 ITR 772 (SC) and S.S. Gadgil vs. Lal & Co 53 ITR 231. The relevant 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. ....
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.... likely to amount to rupees twenty-five thousand or more for that year; iii) if seven years, but not more than ten 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 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 amoun....
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....e the period of limitation ends, by virtue of the provisions of the Act, it is not open to the revenue, to revisit such issues that are final. It was submitted that the law of limitation confers certainty and finality to legal proceedings 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, a....
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...."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 fails 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. (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....
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....oceeding in any other law, that the provision has been amended to lift bar of limitation for reassessment. 13. Fiscal statute, more particularly a provision such as the present one regulating period of limitation must receive strict construction. The law of limitation is intended to give certainty and finality to legal proceedings and to avoid exposure to risk of litigation to litigant for indefinite period on future unforeseen events. Proceedings, which have attained finality under existing law due to bar of limitation cannot be held to be open for revival unless the amended provision is clearly given retrospective operation so as to allow upsetting of proceedings, which had already been concluded and attained finality. The amendment to subsection (1) of section 150 is not expressed to be retrospective and, therefore, has to be held as only prospective. The amendment made to sub-section (1) of section 150 which intends to lift embargo of period of limitation under section 149 to enable authorities to reopen assessments not only on the basis of orders passed in proceedings under the Act but also on order of a Court in any proceedings under any law, has to be applied prospe....
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....erpretation would make the whole provision under Section 150 discriminatory in its application to assessments sought to be reopened on the basis of Orders under the IT Act and other assessments proposed to be reopened on the basis of Orders under any other law. Interpretation, which creates such unjust and discriminatory situation, has to be avoided. We do not find that 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....
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.... commence proceedings which before the new Act came into force had by the expiry of the period provided become barred.' 20. On a proper construction of the provisions of Section150 (1) and the effect of its operation from 1.4.1989, we are clearly of the opinion that the provisions cannot be given retrospective effect prior to 1.4.1989 for assessments which have already become final due to bar of limitation prior to 1.4.1989. Taxing provision imposing a liability is governed by normal presumption that it is not retrospective and settled principle of law is that the law to be applied is that which is in force in the assessment year unless otherwise provided expressly or by necessary implication. Even a procedural provision cannot in the absence of clear contrary intendment expressed therein be given greater retrospectivity than is expressly mentioned so as to enable the Authorities to affect finality of tax assessments or to open up liabilities, which have become barred by lapse of time. Our conclusion, therefore, is that sub-section (1) of Section 150, as amended with effect from 1.4.1989, does not enable the Authorities to reopen assessments, which have become final due to bar of l....
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.... time, even in ongoing proceedings. 17. This court is of the opinion that there is no merit in the revenue $ contention. In Sri Prithvi Cotton Mills versus Broach Borough Municipality, AIR 1970 SC 192, examined the validity of the retrospective amendment of a statute in light of Article 19(1)(g) of the Constitution of India, i.e. a fundamental right to practice any profession, or to carry on any occupation, trade or business. The court said: "In testing whether a retrospective imposition of a tax operates so harshly as to violate fundamental rights under 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 ob....
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.... on 31.03.2006. However, it is seen that the notice u/s 148 was issued on 27.03.2015. Section 149(1) is reproduced hereunder for ready reference: 149. (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) 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 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 is....
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....ing Act which indicated Legislative intent to make provision of section 149[1][c] applicable, to those proceedings which had become barred by limitation on 01.07.2012? We have heard Mr. Tilak Mitra, learned standing Counsel for the appellant/revenue and Mr. Pratyush Jhunjhunwala, learned Advocate appearing for the respondent. The short question falls for consideration is whether the proceeding initiated by the assessing officer under section 148 of the Act for the year under consideration, namely, AY 2005-06 is barred 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 l....