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TaxTMI 
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2024 (3) TMI 109
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....s raised the following grounds : (a) the impugned notice is issued beyond the period of limitation provided for in Section 149 of the Act and hence, the impugned notice is bad in law; (b) there exists no 'information' as the said term is understood in view of Explanation 1 to Section 148 of the Act; (c) the impugned notice is issued during the pendency of reassessment proceedings pursuant to an earlier notice under Section 148 of the Act dated 21st May 2021 and, therefore, is illegal. The directions given by the Hon'ble Supreme Court in its judgment in Union of India V/s. Ashish Agarwal (2022) 444 ITR 1 (SC) are not applicable to petitioner's case as no writ petition was filed by petitioner challenging the notice dated 21st May 2021 issued under Section 148 of the Act. Hence, the notice dated 21st May 2021 issued under Section 148 of the Act cannot be deemed to be a notice issued under Section 148A(b) of the Act; (d) there is no income chargeable to tax which is represented in the form of an asset which has escaped assessment and hence, the extended period of time limit specified in Section 149(1)(b) of the Act cannot apply to petitioner; (e) respondent no. 1 has no power....
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....under Section 148 of the Act and hence, the validity of reassessment proceedings have to be tested on the anvil of the applicability of Section 149 of the Act qua the notice issued under Section 148 of the Act and not having regard to the date when the notice under Section 148A(b) of the Act is issued or the order under Section 148A(d) of the Act is passed. This Court has confirmed this principle of law in The New India Assurance Company Limited V/s. Assistant Commissioner of Income Tax, Circle 3(2) (1), Mumbai & Ors 2024 SCC Online Bom 146; (c) the Hon'ble Calcutta High Court in Ved Prakash Mittal V/s. Union of India & Ors. Writ Petition No. 2450 of 2022 dated 26th August 2022 applied the first proviso to Section 149(1) of the Act and held that the notice issued under Section 148 of the Act for AY 2014-15 in July 2022 was barred by limitation. The Hon'ble Rajasthan High Court in Sudesh Taneja V/s. Income Tax Officer, Ward 1(3), Jaipur (2022) 442 ITR 289 held that no notice under Section 148 of the Act would be issued for the past assessment years by resorting to the larger period of limitation prescribed in newly substituted clause (b) of Section 149 of the Act and the notice is....
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.... period of 31st March 2021 were declared ultra vires the TOLA. The purpose of Section 3(1) of TOLA was to enable the Central Government to issue notification for extending limitation periods as provided in the specified Act but not to postpone applicability of the amended provisions. The provisions of TOLA and the subsequent notifications issued thereunder cannot apply post 1st April 2021 when the new reassessment provisions were introduced by Finance Act, 2021. The theory of notice issued under Section 148 of the Act after 31st March 2021 relating back to the original date or that the clock is stopped on 31st March 2021 and the provisions as existing on such date will be applicable based on TOLA stands specifically rejected by this Court in Tata Communications Transformation Services Ltd. (Supra) and the Hon'ble Delhi High Court in Mon Mohan Kohli V/s. ACIT (2022) 441 ITR 207 which have both been affirmed by the Hon'ble Supreme Court in Ashish Agarwal (Supra). Therefore, TOLA can have no application to relate back the impugned notice issued under Section 148 of the Act to an earlier date; (g) this Court in Siemens Financial Services Private Limited (Supra) at paragraphs 28 to 31....
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...., for AY 2014-15 the time limit to issue a notice under Section 148 of the Act has already expired on 1st April 2021. This Court in The New India Assurance Company Limited (Supra) has accepted this principle in paragraph 36. 6. In the affidavit in reply filed various grounds have been raised almost identical to the grounds which were considered and dealt with in The New India Assurance Company Limited (Supra). Mr. Suresh Kumar in fairness submitted that he would only make two further submissions in addition to what was made in The New India Assurance Company Limited (Supra) by the Revenue. The Revenue's submissions in The New India Assurance Company Limited (Supra) have been recorded in paragraph 17 and further dealt with particularly in paragraph 37 therein. 7. Mr. Suresh Kumar further submitted as under : (a) the AY is 2014-15. The time to issue notice was extended under TOLA by Notification No. 20 of 2021 dated 31st March 2021 and further by Notification No. 38 of 2021 dated 27th April 2021 upto 30th June 2021. (Mr. Pardiwalla did not dispute this); (b) notice issued under Section 148 of the Act in this case was issued on 21st May 2021, thus the same was within time ....
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....d that the notice issued under Section 148 of the Act was barred by limitation and all the submissions other than the two submissions noted above of Mr. Suresh Kumar have been dealt with, we see no reason to deal with those submissions again. We have to now only consider whether the submissions made by Mr. Suresh Kumar, as noted above, make any difference. In our view, it does not, and the notice issued for AY 2014-15 is barred by limitation. 9. Before we proceed further with the submissions made by Mr. Suresh Kumar, it will be useful to reproduce our findings in The New India Assurance Company Limited (Supra) which read as under : 19. Section 148 of the Act reads as under : xxxxxxxxxxxxxxxxxxxxxx Section 148A of the Act reads as under : xxxxxxxxxxxxxxxxxxxxxx Section 149 of the Act read as under : xxxxxxxxxxxxxxxxxxxxxx 20. The validity of a notice issued under Section 148 of the Act must be judged on the basis of the law existing on the date on which such notice is issued. A Division Bench of this Court in Siemens Financial (Supra) followed what was held in Tata Communications (Supra) to hold that the validity of a notice issued under Section 148 of the Act must b....
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....ssued at that time on account of being beyond the time limit specified under the unamended Section 149(1)(b), i.e., as it stood prior to the Finance Act, 2021. Applicability of Section 149 to be seen qua the notice under Section 148 and not with respect to the notice issued under Section 148A(b) or the order passed under Section 148A(d) of the Act. 23. In the present case, as for AY 2013-14, the 6 years period expired on 31st March 2021, extended under Section 3(1) of TOLA. Therefore, the impugned notice dated 28th July 2022, which is under challenge in the petition, is barred by limitation. The Hon'ble Calcutta High Court in Ved Prakash (Supra) held "By this writ petition, petitioner has challenged the impugned order under Section 148 A(d) of the Income Tax Act, 1961 dated 29th July, 2022, relating to the assessment year 2014-2015 on the ground that the same being without jurisdiction and being barred by limitation since the initiation of re-opening of the assessment has been made admittedly after six years from the end of the expiry of the period of relevant assessment year. Mr. Roychowdhury, learned Counsel appearing for the respondent is not in a position to contradict the af....
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....ce under Section 148 'as per time limit specified in Section 149' is 31st March 2021 it shall be extended to 30th April 2021. It does not say "as per time limit specified under Section 149 as extended by TOLA". For AY 2014-15, the 6 years period will end on 31st March 2021, whereas the time limit prescribed under Section 149 for AY 2013-14 is 31st March 2020. This is reiterated by the Explanation in the Notification which says for the removal of doubts, it is hereby clarified that for the purposes of issuance of notice under Section 148 as per time limit specified in Section 149 under this sub-clause, the provisions of Section 149, as they stood as on the 31st March 2021, before the commencement of the Finance Act, 2021, shall apply. The date of the Notification is also relevant and it is 31st March 2021. 26. Another Notification dated 27th April 2021 being Notification S.O. 1703(E) [No. 38/2021/F.No. 370142/35/ 2020-TPL] came to be issued where a specific reference is made to Notification S.O. 1432(E) dated 31st March 2021 and it also says - 'the Central Government hereby specifies for the purpose of sub-section (1) of Section 3 of TOLA.' It is stated, where the specified Act is....
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.... 30. The Allahabad High Court in Ashok Kumar Agarwal V/s. Union of India held that TOLA is an enactment to extend timelines only. Consequently, all references to issuance of notice contained in TOLA from 1st April 2021 must be read as reference to the substituted provisions only. Paragraph 66 of Ashok Kumar Agarwal (Supra) reads as under : xxxxxxxxxxxxxxxxxxxxxx In our view, TOLA has no role to play and it cannot salvage the notice under challenge. 31. Reliance by respondents on Instruction No. 1 of 2022 issued by CBDT is also grossly misplaced. Neither the provisions of TOLA nor the judgment in Ashish Agarwal (Supra) provide that any notice issued under Section 148 of the Act after 31st March 2021 will travel back to the original date. This very argument was urged in the challenge to the initial reassessment and was categorically rejected by this Court in Tata Communications (Supra) as well as the Delhi High Court in Mon Mohan Kohli (Supra). Paragraphs 37 and 38 of Tata Communications (Supra) read as under : xxxxxxxxxxxxxxxxxxxxxx Both these judgments, i.e., Tata Communications (Supra) and Mon Mohan Kohli (Supra), have been affirmed in Ashish Agarwal (Supra). 32. Furt....
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....2020. Hence, Notification No. 20/2021 did not apply to the facts of the present case, viz., reopening notice for the AY 2013-14. Therefore, the Revenue could not issue any notice under Section 148 beyond 31st March 2021 and hence, even the relate back theory of the Revenue could not safeguard the reassessment proceedings initiated after 1st April 2021 for AY 2013-14. 36. Therefore, in the present case, as the foundation of the entire reassessment proceeding, viz., the notice issued in June 2021 itself was barred by limitation in view of non- applicability of Notification No. 20/2021, the superstructure sitting thereon, viz., the reassessment proceedings initiated pursuant to judgment in Ashish Agarwal will also be regarded as beyond time limit. Therefore, on this ground as well, the impugned reopening notice dated 28th July 2022 issued for AY 2013-14 in petitioner's case is barred by limitation and deserves to be quashed and set aside. Alternatively, it is well settled that a notice under Section 148 of the Act cannot be issued in order to reopen the assessment of an assessee in a case where the right to reopen the assessment was already barred under the pre-amended Act on the da....
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....ention is flawed inasmuch as it expands the scope of the Notification and violates its plain language, viz., the time limit, specified in, or prescribed or notified under the Income Tax Act falls for completion. The limitation under the Act (erstwhile Section 149) for reopening the assessment for the AY 2013-14 expired on 31st March 2020. Hence, Notification No. 20 of 2021 did not apply to the facts of the present case. Notification No.38 of 2021 dated 27th April 2021 categorically uses the expression the time limit for completion of such action expires on the 30th day of April 2021 due to its extension by the said notifications, such time limit shall further stand extended to the 30th day of June 2021. Hence, it is incorrect to say that 31st March 2021 under the Act would mean under the Act, plus, extension by TOLA; (d) The submission that the Hon'ble Supreme Court, while deciding Ashish Agarwal (Supra), was conscious of the limitation of 6 years expiring on 31st March 2021 under the pre-amendment provisions in respect of AY 2013-14 if the Covid period was not excluded, despite which the Apex Court has stated that all notices issued should be read to be issued under Section 148A....
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.... that no particular case was considered by the Hon'ble Supreme Court while deciding Ashish Agarwal (Supra). It is apposite to cite here an extract of the judgment of the Hon'ble Supreme Court in Parashuram Pottery Works Co. Ltd V/s. Income Tax Officer, which reads as under : xxxxxxxxxxxxxxxxxxxxxx (e) The contentions that (i) the true meaning of Apex Court order in Ashish Agrawal (Supra) is that the notices issued under Section 148, irrespective of the Assessment Year of the unamended Act, between 1st April 2021 to 30th June 2021 are to be treated as show cause notices without being hit by limitation, if issued on or before 30th March 2021 and (ii) the defence under Section 149 available to the assessee would mean that if the Revenue had issued any notice under Section 148 under the unamended Act during the period 1st April 2021 to 30th June 2021 pertaining to AY 2013-14, the same would be barred by limitation under Section 149 in effect means the Civil Appeal of the Revenue in Ashish Agrawal (Supra) was dismissed, are completely flawed. It completely fails to appreciate that the limitation period to issuance of reopening notices under Section 148 for all Assessment Y....
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....0th February 2023. It should also be noted that the Hon'ble Gujarat High Court in Keenara Industries (P.) Ltd. V/s. Income Tax Officer and the Allahabad High Court in Rajeev Bansal V/s. Union of India have taken a view that notices issued for AY 2013-14 were barred by limitation in view of the amended Section 149 of the Act. Subsequently, the Apex Court, in SLPs preferred by the Revenue, has issued notice and stayed both the orders/judgments; (i) We are unable to comprehend the contention raised that if the notice dated 30th May 2022 under Section 148A(b) of the Act is valid in terms of Apex Court order in Ashish Agrawal (Supra), then the notice under Section 148 of the Act cannot be issued on 31st March 2021 and respondent cannot be expected to do impossible. It has nowhere been urged by petitioner that assessing officer ought to complete the proceedings before the show cause notice under Section 148A(b) of the Act was issued. It is the case of petitioner that the reopening notice under Section 148 ought to have been issued within 6 years from the end of the AY 2013-14. This limitation period, as extended by TOLA, expired on 31st March 2021. However, in the present case, the reo....
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....(1) of this section or section 153A or section 153C, as the case may be, as they stood immediately before the commencement of the Finance Act, 2021: 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 cases referred to in clauses (i), (iii) and (iv) of Explanation 2 to section 148, where,- (a) a search is initiated under section 132; or (b) a search under section 132 for which the last of authorisations is executed; or (c) requisition is made under section 132A, after the 15th day of March of any financial year and the period for issue of notice under section 148 expires on the 31st day of March of such financial year, a period of fifteen days shall be excluded for the purpose of computing the period of limitation as per this section and the notice issued under section 148 in such case shall be deemed to have been issued on the 31st day of M....
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....sessment or recomputation, as the case may be.] 11. The fifth proviso enacts that for computing the period of limitation under Section 149 of the Act, the following should be excluded : (i) the time or extended time allowed to an assessee as per the show cause notice issued under Section 148A(b) of the Act; or (ii) the period during which the proceedings under Section 148A of the Act is stayed by an order or injunction of any Court. The first limb of the fifth proviso to Section 149 of the Act will apply where a show cause notice under Section 148A(b) of the Act is issued to an assessee and the time granted to him or the extended time subsequently granted to him to reply to the show cause notice would be excluded in computing the period of limitation. Therefore, the first limb of the proviso only excludes the time frame between the date when the notice under Section 148A(b) of the Act is issued and the date granted to the assessee to file its response. 12. Based on petitioner's facts, the show cause notice under Section 148A(b) of the Act was issued on 24th May 2022 asking petitioner to furnish a reply by 8th June 2022. Petitioner filed a detailed reply in response to the sh....
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....l (Supra) only deemed the first notice issued under Section 148 of the Act to be a show cause notice under Section 148A(b) of the Act and left all defences available to the assessee under Section 149 of the Act. The Hon'ble Supreme Court in Ashish Agarwal (Supra) did not grant any stay and the period from 21st May 2021 till the notice under Section 148A(b) of the Act is issued cannot be excluded under the second limb of the fifth proviso or even under the first limb. 15. The validity of a notice must be judged on the basis of the law existing as on the date on which the notice is issued under Section 148 of the Act, which in the present case is 31st July 2022, by which time the Finance Act, 2021 is already on the statute and in terms thereof, no notice under Section 148 of the Act for AY 2014-15 could be issued on or after 1st April 2021 based on the first proviso to Section 149 of the Act. Therefore, the fifth proviso cannot apply in a case where the first proviso applies because, if a notice under Section 148 of the Act could not be issued beyond the time period provided in the first proviso, then the fifth proviso could not save such notices. The fifth proviso can only apply wh....