TaxTMI 
TaxTMI 
2024 (3) TMI 1004
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.... AY 2015-16 under consideration, the commissioning of assessee's plant was in progress and hence the assessee was not having any income from business. However, the assessee filed its original return of income u/s 139(1) on 28.09.2015 declaring a total income of Rs. 22,73,04,890/- from interest on bank deposits. This return was processed u/s 143(1) of the Act. Subsequently, the AO re-opened assessment by issuing notice dated 30.03.2021 u/s 148 calling the assessee to re-file return. In response, the assessee re-filed return on 28.04.2021 repeating the same income of Rs. 22,73,04,890/-. Thereafter, the AO issued statutory notices u/s 143(2) and 142(1) from time to time which the assessee complied with. The assessee submitted details/documents as required by AO from time to time. Finally, the AO completed assessment vide order dated 30.03.2022 u/s 147 assessing total income at Rs. 61,84,54,919/- with three (3) types of additions/ adverse conclusions as under: (i) The AO made an addition of Rs. 38,08,18,089/- u/s 56(2)(viib) on the premise that the assessee had received excessive consideration for issue of shares; (ii) The AO made an adverse conclusion that the assess....
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....acts and in law, in confirming the action of the AO in issuance of the notice under s. 148 of the Act, without considering the material fact that the notice under s. 148 of the Act was issued by the AO without first obtaining an appropriate sanction from an appropriate authority as prescribed under the then prevailing provisions of section 151 of the Act. 1(d). That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the AO in issuance of the notice under s. 148 of the Act, without considering the material fact that first of all, the sanction was granted by an inappropriate authority and secondly, the sanction so granted was not in accordance with law, inasmuch, the sanction was granted in a mechanical manner and without application of mind. 2(a). That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in upholding the findings given by the AO to the effect that the appellant company had booked excessive capital expenditure in its books of account under the garb of bogus payments aggregating to a sum of Rs. 34,43,98,002/- to vendors during the relevant pr....
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....excel sheets. 2(f) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the AO's allegation of bogus payments to vendors, without considering and appreciating the material fact that during the course of the assessment proceedings, the AO had not made any independent inquiry by way of issuance of any summons under s.131 or letter under s.133(6) of the Act to the concerning vendors. 3(a) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the addition of Rs. 1,03,31,940/- made by the AO in the appellant's income on the allegation of payment of commission to various vendors in lieu of bogus capital expenditure, by holding the same as unexplained expenditure of the appellant under s. 69C of the Act without properly considering and appreciating the explanation of the appellant to the effect that the entire financial transactions undertaken by it during the relevant previous year with various vendors were fully genuine and duly supported by credible evidences and therefore, it was neither required, nor it had made any payment of commission to an....
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....sment or reassessment. The said section 147 reads thus: "147. If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of section 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year." [Emphasis supplied] 5. Ld. AR submitted that the section 147 is 'subject to the provisions of section 148 to 153' and sections 148 to 153 prescribe different-different requirements, conditions, time-limitations, etc. Section 151 is one section falling in the series of sections 148 to 153 and therefore section 147 is also subject to section 151. The means, the AO must follow the provision of section 151 but in present case, there is a violation of section 151. 6. To show such violation, Ld. AR carrie....
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....re, the notice issued by AO u/s 148 is violative of section 151(1) and illegal in the eyes of law. When it so, the ultimate passing of assessment-order u/s 147 is also illegal. Therefore, the entire proceeding done by AO has to be quashed. 9. Then, the Ld. AR submitted that the assessee raised this very claim before CIT(A) and made a detailed submission also but the CIT(A) has wrongly rejected assessee's submission and upheld AO's action. The Ld. AR made following pleadings to oppose the CIT(A)'s order: 9.1 The CIT(A) has observed that the AO sent proposal to Joint Commissioner on 22.10.2019 and the Joint Commissioner had also granted approval on 23.10.2019, which was before 31.03.2020 i.e. before expiry of 4 years' period from end of AY 2015-16; therefore the AO was having a valid approval in possession in terms of section 151(2). Ld. AR submitted that such observation made by CIT(A) is very much faulty for the simple reason that the AO actually issued notice to assessee on 30.03.2021 which was beyond the outer limit of four years. He argued that the section 151(1) and 151(2) are independent of each other and prescribe clear-cut and altogether different provisions for issuan....
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....s to tax authorities due to Covid-19 Pandemic but there are two vital propositions in assessee's case to be taken note of. These are as follows : (i) The assessee's case relates to AY 2015-16 for which the AO had time to issue notice u/s 148, of course after obtaining a proper approval u/s 151(1), within 6 years from end of AY 2015-16, therefore the time-limit to issue notice would expire on 31.03.2022. Being so, the TOLA is not applicable because section 3(1)(a) of TOLA, re-produced above, clearly prescribes its applicability to cases where the time-limit for issuing notice was to expire during 20.03.2020 to 29.06.2020 or such other date after 29.06.2020 as the Central Govt. may notify. Since the Central Govt. ultimately notified 31.03.2021, the section 3(1)(a) was applicable only for the situations where the time-limit would expire upto cut-off date of 31.03.2021. In assessee's case, the time limit to issue notice was not expiring on 31.03.2021, the AO had time-limit upto 31.03.2022; and (ii) Even if the TOLA may have extended the time-limit to issue notice as prescribed in section 149 of the Act but that would not amount to amending the provisions of section 151(1)/(2) requiring....
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....there been no Covid, the AO would have perhaps issued notice before 31.03.2020. But since the TOLA extended time-limit uptill 31.03.2021, the AO issued notice on 30.03.2021. Therefore also, the notice is saved by TOLA. Ld. DR made one more submission that the assessee never objected AO's action during assessment-proceeding and participated in assessment proceeding, therefore the irregularity in obtaining approval, even if there be, is saved by section 292BB and the assessee is precluded from raising such an objection due to bar imposed in section 292BB. 12. In re-joinder, Ld. AR submitted that just to address the contention raised by Ld. DR and without prejudice to his earlier submission, when the AO got approval as early as on 23.10.2019 and the Covid Pandemic came into being on 15.03.2020/20.03.2020, the AO had about 5 months' ample time to issue notice but the AO did not. Thus, the AO himself made a serious lapse and now the revenue is just trying to cover up the AO's lapse by gaining sympathy and support from Covid-19 pandemic whereas the Covid came into being in March, 2020. Therefore, the revenue cannot be granted any such concession to cover up the lapse of AO. With regar....
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....ess the Joint Commissioner is satisfied, on the reasons recorded by such Assessing Officer, that it is a fit case for the issue of such notice." A careful reading of above provision of section 151 shows that the subsection (1) as well as (2) use the wording "no notice shall be issued". Thus, the phraseology used by Parliament is negative and very much stricter. It stops the AO from issuing a notice unless the proper authority prescribed therein is satisfied that "it is a fit case for the issue of notice". It is further noteworthy that sub-section (1) prescribes a higher authority if the notice is to be issued after expiry of four years. There is a significant purpose involved in prescribing higher authority of department in sub-section (1) as compared to sub-section (2). The language is also very clear and does not leave any scope of ambiguity and the words are very plain and specific. It is clearly prescribed in sub-section (1) that "No notice shall be issued under section 148 by an Assessing Officer, after the expiry of a period of four years .....". Thus, if the AO wants to issue notice after expiry of four years, this can be done only under the approval of Principal Chief Co....
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....ent with Ld. AR's submission. There is one more dimension to this very argument being claimed by revenue. The revenue is claiming that due to Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 dated 31.03.2020 ["TOLA"], there was an extension of time-limit. But this argument is also not acceptable because of direct decisions of Hon'ble Mumbai High Court governing assessee's facts/propositions as discussed in foregoing Para No. 9.2 at length. While Ld. AR has quoted several decisions but we re-produce below the first in sequence referred by Ld. AR i.e. JM Financial and Investment Consultancy Services Private Limited Vs. ACIT, Circle-3(2)(1) and others order dated 04.04.2022: (2023) 451 ITR 205 (Bombay HC) / (2022) (4) TMI 1446: "1 Petitioner is impugning a notice dated 31st March 2021 issued under Section 148 of the Income Tax Act, 1961 (the Act) for Assessment Year 2015-2016, an order dated 24th January 2022 rejecting petitioner's objections to reopening, the sanction granted under Section 151 of the Act dated 26th March 2021 for issuance of notice under Section 148 of the Act and a subsequent notice dated 24th January 2022 under Section 142(1) ....
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.... of Income Tax that in view of the Taxation and other Laws (Relaxation of Certain Provisions) Act, 2020 (Relaxation Act), limitation, inter alia, under provisions of Section 151(1) and Section 151(2), which were originally expiring on 31st March 2020 stand extended to 31st March 2021. According to the Income Tax Officer, in view of the above, Assessment Year 2015-2016 which falls under the category within four years as on 31st March 2020, the statutory approval for issuance of notice under Section 148 of the Act for the Assessment Year 2015-2016 may be given by the Range Head as per the said provisions. Mr. Sharma clarifies that the Income Tax Officer is only conveying the view of the Principal Commissioner of Income Tax because this letter has been issued on the letterhead of Principal Commissioner of Income Tax. 6. Even for a moment we agree with the view expressed by the Principal Commissioner of Income Tax, still it applies to only cases where the limitation was expiring on 31st March 2020. In the case at hand, the assessment year is 2015-2016 and, therefore, the six years limitation will expire only on 31st March 2022. Certainly, therefore, the Relaxation Act provisio....
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.... in time; or (c) served upon him in an improper manner: Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment." Thus, the section 292BB has a limited application, it operates in only one of the three situations mentioned in (a), (b) or (c) which are basically situations of ir-regularity in "service" of notice. In present case of assessee, the AO has issued notice u/s 148 without having a valid approval u/s 151(1) which is not at all covered by section 292BB. Therefore, the Ld. DR's pleading that the revenue has protection of section 292BB is meritless and liable to be rejected. 16. In our extensive discussions in preceding paragraphs, we have dealt all contentions of parties. That brings us to conclude that the AO has issued notice u/s 148 without having a valid approval mandated by section 151(1). Being so, we are of considered view that the revenue's case is suffering from jurisdictional defect and the entire proceeding u/s 148 / 147 undertaken by AO is illegal and unsustainable. We, therefore, allow ground 1(a), 1(c) and 1(d) of assessee's appeal an....
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...., the date of digital signature may be taken as date of document ROOM NO:109,1 Floor, Aaykar Bhawan, 48, ARERA HILLS, HOSHANGABAD ROAD, BHOPAL, Madhya Pradesh, 462011 Email: BHOPAL [email protected] Office Phone:07552525341 *DIN-Document identification No. This document is digitally signed Signer SHOBHNA ME Date: Tuesday, Marc 6, 2021 3:57 PM Location: BHOPAI Document 2 ANNEXURE-A-SOS अधर, मनà¥à¤·à¥à¤¯ आका आपक 22 OCT 2015 1176 133 GOVERNMENT OF INDIA मंतà¥à¤°à¤¾à¤²à¤¯ / MINISTRY OF FINANCE राजसà¥à¤µ विà¤à¤¾à¤— / DEPARTMENT OF REVENUE कारà¥à¤¯à¤¾à¤²à¤¯ उप. आयकर आयà¥à¤•à¥à¤¤-1 (1) à¤à¥‹à¤ªà¤¾à¤² OFFICE OF THE DEPUTY COMMISSIONER OF INCOME TAX-1(1), BHOPAL 2011/mo. 109, Asyakar Bhawan, Hoshangabad Road, Bhopal- e-mail-bhopal [email protected] F.No.:DCIT-1(1)/BPL/151(1)/2019-20 Dated: 22.10.2019 To The Joint Commissioner of Income Tax-I ....
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....it case for issue of notices 148 M/s DB Power Limited, Office Block, IA, DB City Park, 5th Floor, Corporate Block, Opposite MP Nagar , Zone-1, MP Nagar , Arera Hills , Bhopal -462016 AACCD5475F Company DCIT 1(1), Bhopal 2015-16 Rs 38,08,18,090/- Yes (a) Yes (b) 28.09.2015 As per Annexure-A (Rajat Singhai) Dy. Commissioner of Income Tax Circle 1(1). Bhopal Yes, I am satisfied that it is a fit case for Issue of notice u/s 148 on the Reason recorded by the AO.A.Y.2015-16 namual Mear Alpesb-Parmar) 231189 Joint Commissioner of Income-Tax (gen, Bhupal) (ALPEH PARMAR) virgen Joint Commissioner of Income Tax Range 132 ANNEXURE-AS04 à¤à¤¾à¤°à¤¤ सरकार/ GOVERNMENT OF INDIA OF FINANCE /(DEPARTMENT OF REVENUE कारà¥à¤¯à¤¾à¤²à¤¯ ਧਰਵਾ ਦਰਦ ਰਾਜ! ਮੱਦਦ 24657209 कारà¥à¤¯à¤¾à¤²à¤¯ संयà¥à¤•à¥à¤¤ आयकर आयà¥à¤•à¥à¤¤ परà¤....