TaxTMI 
TaxTMI 
2024 (3) TMI 109
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....149 and 151 of the Act. 2. Petitioner has 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 ....
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....red by limitation; (b) the provisions of Section 149 of the Act provide a time limit to issue a notice 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....
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....cation No. 20/2021 and 38/2021 which sought to extend the applicability of the erstwhile Sections 148, 149 and 151 as they stood as on 31st March 2021 beyond the 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 impu....
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....the date when the new legislation came into force. Reliance is placed on the decision of the Hon'ble Supreme Court in CIT V/s. Onkarmal Meghraj (HUF) (1974) 93 ITR 233 (SC) and hence, 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....
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.... All other submissions made in case of The New India Assurance Company Limited (Supra) were not repeated. FINDINGS : 8. In view of our findings in The New India Assurance Company Limited (Supra) for AY 2013-14 where we have held 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 ....
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....ed additional conditions, including the limitation provided for by the first proviso to Section 149(1) of the Act. The first proviso to Section 149(1) stipulates that no notice under Section 148 can be issued at any time in a case for any assessment year, if a notice under Section 148 could not have been issued 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 withou....
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.... period during which the time limit, specified in, or prescribed or notified under the Income Tax Act falls for the completion of such action, then, 30th day of April 2021 shall be the extended end date for the completion of such action. Therefore, this would apply only for AY 2014-15 because it says completion of any action when it relates to issuance of notice 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 ....
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....f the Act. The first proviso to Section 149(1) of the Act puts a fetter on issuing of a notice under Section 148 and not Section 148A(b) of the Act beyond the stipulated period. The impugned notice under Section 148 of the Act is issued on 28th July 2022. Hence, TOLA has no application. 29. This Court in Siemens Financial (Supra), in paragraph 26, has held as under : xxxxxxxxxxxxxxxxxxxxxx 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 ve....
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....n a period of six years from the end of the relevant assessment year. The Notifications issued under TOLA, viz., Notification No. 20/2021, which is relied upon by the Revenue, only cover those cases where 31st March, 2021 was the end date of the period during which the time limit, specified in, or prescribed or notified under the Income Tax Act falls for completion. The limitation under the Income Tax Act, 1961 (erstwhile Section 149) for reopening the assessment for the AY 2013-14 expired on 31st March 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 t....
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....ill 30th June 2021, respondent, in other words, argues that the Notification No. 20 of 2021 seeks to extend the time limit inter alia for issuing notice under Section 148 which was expiring on 31st March 2021 not only under the provisions of the Act, but would also include the time extension in the Act by virtue of TOLA. To put in another way, the time limit expiring on 31st March 2021 specified in Notification No. 20 of 2021, according to respondents, would have to be read to include limitation under the Act read with TOLA. As noted earlier, this contention 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....
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....sessees to raise all defences available to the assessee including the defences under Section 149 of the Act. The Apex Court observed that its order will strike a balance between the rights of the Revenue as well as the respective assessees. Moreover, in Siemens Financial (Supra), this Court has already considered a similar contention of the Revenue and held that equity has no place in taxation or while interpreting taxing statute such intendment would have any place and that taxation statute has to be interpreted strictly. The Revenue also fails to appreciate 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 lim....
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....ish Agarwal (Supra) is given. Moreover, in that case, petitioner did not argue that for AY 2013-14 the time limit would have expired even under TOLA on 31st March 2021; (h) As regards Salil Gulati (Supra), the Delhi High Court, to reach its conclusion, has merely relied upon its earlier decision in Touchstone Holdings (Supra). It will be relevant to note that following Salil Gulati (Supra), a similar view was taken by the Delhi High Court in Yogita Mohan V/s. Income Tax Officer. Against the judgment, in an SLP preferred by the assessee, the Apex Court has issued notice vide its order dated 20th 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....
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....geable to tax, represented in the form of - (i) an asset; (ii) expenditure in respect of a transaction or in relation to an event or occasion; or (iii) an entry or entries in the books of account, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more:] Provided that no notice under section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April, 2021, if a notice under section 148 or section 153A or section 153C could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause (b) of sub-section (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....
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....he purposes 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. [(1A) Notwithstanding anything contained in sub-section (1), where the income chargeable to tax represented in the form of an asset or expenditure in relation to an event or occasion of the value referred to in clause (b) of sub-section (1), has escaped the assessment and the investment in such asset or expenditure in relation to such event or occasion has been made or incurred, in more than one previous years relevant to the assessment years within the period referred to in clause (b) of sub-section (1), a notice under section 148 shall be issued for every such assessment year for assessment, reassessment 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 148....
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....ond limb of the fifth proviso to Section 149 of the Act will apply when the proceedings under Section 148A of the Act is stayed by an order or injunction of any Court. Since, petitioner has not filed a writ petition it has not received any stay or injunction from any Court till the date of the impugned notice, i.e., 31st July 2022, and hence, there can be no period which can be excluded as per the second limb of the proviso. Petitioner has filed a writ petition against the impugned notice on 16th September 2022 and received ad-interim relief on 10th October 2022 where, this Court stayed the operation and effect of the impugned notice under Section 148 of the Act. However, the second limb of the proviso does not contemplate a situation where such period can be excluded. 14. The Hon'ble Supreme Court in Ashish Agarwal (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 i....