AI Drafter 
TaxTMI 
TaxTMI 
2024 (8) TMI 352
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.... Commissioner of Income Tax, International Tax, Corporate Circle 1(1), Chennai ('Ld. AO') under section 143(3) r.w.s 147 r.w.s 144C(13) of the Income-tax Act, 1961 ('the Act') is bad in law and is contrary to the facts and circumstances of the present case. The detailed grounds of appeal being independent and without prejudice to one another, including the position in law and facts is set out in the ensuing paragraphs. 2. Ground 2 Addition of Guarantee Fees received from Hyundai Transys Lear Automotive India Private Limited ('Indian Subsidiary') amounting to INR 3,908,249 (Tax effect-INR 1,641,465) 2.1. The Ld. AO and Dispute Resolution Panel ('DRP') has failed to appreciate the facts of the case and has erroneously concluded that the guarantee fees received by the Appellant amounting to INR 3,908,249 accrues and arises in India and is liable to tax in India under section 5(2) r.w.s section 9(1)(i) of the Act at the rate of 40 percent plus applicable surcharge and cess. 2.2. The Ld. AO and DRP erred on facts and in law in holding that the situs of issue of guarantee in respect of loans availed by Indian subsidiary ....
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....l grounds under Rule 11 of the Income Tax Appellate Tribunal Rules 1963. The following additional grounds are raised under Rule 11 of the Income Tax Appellate Tribunal Rules 1963: '3. Ground 3: Reassessment Proceedings initiated is barred by limitation 3.1 The Ld. AO erred in facts and law without appreciating the fact that the Guarantee fee received by the Appellant amounting to INR 3,908,249 is less than the threshold limit of INR 5,000,000 prescribed under section 149(1)(b) of the Income-tax Act, 1961 ('the Act') as amended vide Finance Act, 2021, read with CBDT Instruction No. 01/2022 and as a result the case cannot be subjected to reassessment proceedings and such proceedings conducted by the Ld. AO is barred by limitation and liable to be quashed. 3.2 The Ld. AO erred in facts and law in initiating reassessment proceedings by issuing a notice under section 148 of the Act on 15 April 2021 without taking cognizance of the amended provisions of sections 148 to 151 of the Act as it existed as on the date of issuance of such notice, and the procedures prescribed thereunder are mandatory in nature and binding on the Ld. AO to follow in letter and ....
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....nly required to consider a question of law arising from the facts which are on record in the assessment proceedings we fail to see why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee. 8. The reframed question, therefore, is answered in the affirmative, i.e., the Tribunal has jurisdiction to examine a question of law which arises from the facts as found by the authorities below and having a bearing on the tax liability of the assessee. We remand the proceedings to the Tribunal for consideration of the new grounds raised by the assessee on the merits''. 9. Similarly, the Hon'ble Jurisdictional High Court of Madras in the case of CIT Vs Indian Bank [(2015) 230 Taxman 635 (Madras)] held as under: ''4. The appellant /Revenue has challenged that portion of the order of the Tribunal allowing the raising of additional grounds contending that additional grounds ought not to have been raised before the Tribunal on the plea which was not adjudicated before the CIT (Appeals). 5. Heard learned Standing Counsel appearing for the Revenue and perused the mat....
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....iction. In fact this Court in CIT (Central) v. ITSC [2014] 365 ITR 68/[2013] 35 taxmann.com 443 has held that mere participation by a party in proceedings without jurisdiction will not vest/confer jurisdiction on the authority. Reason to believe that income chargeable to tax has escaped assessment is a jurisdictional fact and only on its satisfaction does the Assessing Officer acquire jurisdiction to issue notice. Thus this lack of satisfaction of jurisdictional fact can never confer jurisdiction and an objection to it can be raised at any time even in appeal proceedings. The mere fact that no objection is taken before the Assessing Officer would not by itself bestow jurisdiction as the Assessing Officer. Such an objection can be taken in appeal also. Moreover, the Apex Court in its recent decision in Kanwar Singh Saini v. High Court of Delhi [2012] 4 SCC 307 has held that it is settled position that conferment of jurisdiction is a legislative function and cannot be conferred by consent of petitioner. An issue of jurisdiction can be raised at any time even in appeal or execution. Reliance in this regard could usefully be made to Indian Bank v. Manilal Govindji Khona [2015] 3 SCC 71....
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....e setting aside the impugned order in its entirety in view of the discussion herein above. The issues raised with regard to capital gains tax would be reconsidered by the Tribunal in case it comes to the conclusion that the notice dated 13/11/2000 is a notice within jurisdiction of the Assessing Officer''. 11. Therefore, in the light of above settled position of law and respectfully following the Hon'ble Supreme Court and Hon'ble High Courts judgments referred supra , we admit the additional grounds of appeal raising validity of jurisdictional notice dated 15.04.2021 u/s 148 of the Act on the anvil of limitation which goes root of the matter. 12. By preferring petition for additional ground of appeal No.3 (3.1 to 3.3), inter alia, the assessee company has challenged in this case, the jurisdiction of the AO to have issued notice dated 15.04.2021 u/s. 148 of the Act as per sec.149(1)(b) of the Act (as amended by Finance Act, 2021), no notice for re-assessment could have been issued to assessee for AY 2015-16 as the time limit for issuing proceedings had expired on 31.03.2019 and the guarantee fee received by the appellant amounting to Rs. 39,08,249/- is less than the threshold ....
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....filed return of income declaring an income of Rs. 18,45,97,940/- on 31/05/2021. Further reasons to re-open assessment proceedings was issued to the assessee vide office letter dated 06/12/2021. 14. Reasons for reopening was that the assessee company has not offered for taxation the entire amount of Rs. 18,97,63,119/- for taxation as income for the AY 2015-16 and on verification with the Indian entity it was noted that the Indian entity had booked expenses to the tune of Rs. 19,23,72,397/- towards payment to the assessee company in the FY 2014-15 relevant to the AY 2015-16. Hence created difference of guarantee fee of Rs. 39,08,249/- which was not offered for taxation by the appellant. 15. Before us ld.Counsel contended that the guarantee fee received by the appellant amounting to Rs. 39,08,249/- is less than the threshold limit of Rs. 50,00,000/- (Rupees fifty lakhs) prescribed under section 149(1)(b) of the Income Tax Act, 1961 ('Act' in short) as amended vide Finance Act, 2021 read with CBDT Instruction No.01/2022, therefore, the case cannot be subjected to reassessment proceedings and is barred by limitation. 16. The ld.Counsel further AO initiated reassessment proceedi....
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....e show-cause notice referred to in clause (b); and (iv) decide, on the basis of material available on record including reply of the assessee, as to whether or not it is a fit case to issue a notice under Section 148 of the IT Act; and (v) the AO is required to pass a specific order within the time stipulated. 20. Therefore, all safeguards are provided before notice under Section 148 of the IT Act is issued. At every stage, the prior approval of the specified authority is required, even for conducting the enquiry as per Section 148- A(a). Only in a case where, the assessing officer is of the opinion that before any notice is issued under Section 148-A(b) and an opportunity is to be given to the assessee, there is a requirement of conducting any enquiry, the assessing officer may do so and conduct any enquiry. Thus if the assessing officer is of the opinion that any enquiry is required, the assessing officer can do so, however, with the prior approval of the specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment''. Substituted Section 149 is the provision governing the time-limit for i....
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....or 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. Explanation.-In determining income chargeable to tax which has escaped assessment for the purposes of this sub-section, the provisions of Explanation 2 of section 147 shall apply as they apply for the purposes of that section. (2) The provisions of sub-section (1) as to the issue of notice shall be subject to the provisions of section 151. (3) If the person on whom a notice under section 148 is to be served is a person treated as the agent of a non-resident under section 163 and the assessment, reassessment or recomputation to be made in pursuance of the notice is to be made on him as the agent of such non-resident, the notice shall not be issued after the expiry of a period of six years from the end of the relevant assessment year. Explanation.-For the removal of doubts, it is hereby clarified that the provisions of sub-sections (1) and (3), as amended by the Finance Act, 2012, shall also be a....
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....curities, loans and advances, deposits in bank account. (2) The provisions of sub-section (1) as to the issue of notice shall be subject to the provisions of section 151. 8. In the case of Ashish Agarwal (supra), Hon'ble Supreme Court held in Paras 23, 25 and 27, as under:- "23. However, at the same time, the judgments of the several High Courts would result in no reassessment proceedings at all, even if the same are permissible under the Finance Act, 2021 and as per substituted sections 147 to 151 of the IT Act. The Revenue cannot be made remediless and the object and purpose of reassessment proceedings cannot be frustrated. It is true that due to a bonafide mistake and in view of subsequent extension of time vide various notifications, the Revenue issued the impugned notices under section 148 after the amendment was enforced w.e.f. 01.04.2021, under the unamended section 148. In our view the same ought not to have been issued under the unamended Act and ought to have been issued under the substituted provisions of sections 147 to 151 of the IT Act as per the Finance Act, 2021. There appears to be genuine non-application of the amendmen....
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....the Assessing Officer under the Finance Act, 2021 are kept open and/or shall continue to be available and; (v) The present order shall substitute/modify respective judgments and orders passed by the respective High Courts quashing the similar notices issued under unamended section 148 of the IT Act irrespective of whether they have been assailed before this Court or not. 25. Therefore, we have proposed to pass the present order with a view avoiding filing of further appeals before this Court and burden this Court with approximately 9000 appeals against the similar judgments and orders passed by the various High Courts, the particulars of some of which are referred to hereinabove. We have also proposed to pass the aforesaid order in exercise of our powers under Article 142 of the Constitution of India by holding that the present order shall govern, not only the impugned judgments and orders passed by the High Court of Judicature at Allahabad, but shall also be made applicable in respect of the similar judgments and orders passed by various High Courts across the country and therefore the present order shall be applicable to PAN INDIA. 27. The present order....
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....r referred to as "the Act") following the procedure prescribed under various sections pertaining to reassessment namely sections 147 to 151, as they existed prior to their amendment by the Finance Act, 2021 (hereinafter referred to as "old law"). With effect from l April 2021, the old law has been substituted with new sections 147-151 (hereinafter referred to as the "new law"). 3. Hon'ble Supreme Court has held that these extended reassessment notices issued under the old law shall be deemed to be the show cause notices issued under clause (b) of section 148A of the new law and has directed Assessing Officers to follow the procedure with respect to such notices. It has also held that all the defences available to assessees under section 149 of the new law and whatever rights are available to the Assessing Officer under the new law shall continue to be available. Hon'ble Supreme Court has passed this order in exercise of its power under Article 142 of the Constitution of India. 4. The implementation of the judgment of Hon'ble Supreme Court is required to be done in a uniform manner. Accordingly, in exercise of its power under section 119 of the Act, the....
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....on of Hon'ble Supreme Court read with the time extension provided by TOLA will allow extended reassessment notices to travel back in time to their original date when such notices were to be issued and then new section 149 of the Act is to be applied at that point. 6.2 Based on above, the extended reassessment notices are to be dealt with as under: (i) AY 2013-14, AY 2014-15 and AY 2015-16: Fresh notice under section 148 of the Act can be issued in these cases, with the approval of the specified authority, only if the case falls under clause (b) of sub-section (1) of section 149 as amended by the Finance Act, 2021 and reproduced in paragraph 6.1 above. Specified authority under section 151 of the new law in this case shall be the authority prescribed under clause (ii) of that section. (ii) AY 16-17, AY 17-18: Fresh notice under section 148 can be issued in these cases, with the approval of the specified authority, under clause (a) of sub-section (1) of new section 149 of the Act, since they are within the period of three years from the end of the relevant assessment year. Specified authority under section 151 of the new law in this case shall be the au....
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....sessee, if assessee makes a request by making an application that more time be given to him to file reply to the show cause notice, then such a request shall be considered by the Assessing Officer on merit and time may be extended by the Assessing Officer as provided in clause (b) of new section 148A of the Act. - After receiving the reply, the Assessing Officer shall decide on the basis of material available on record including reply of the assessee, whether or not it is a fit case to issue a notice under section 148 of the Act. The Assessing Officer is required to pass an order under clause (d) of section 148A of the Act to that effect, with the prior approval of the specified authority of the new law. This order is required to be passed within one month from the end of the month in which the reply is received by him from the assessee. In case no such reply is furnished by the assessee, then the order is required to be passed within one month from the end of the month in which time or extended time allowed to furnish a reply expires. If it is a fit case to issue a notice under section 148 of the Act, the Assessing Officer shall serve on the assessee a notice under sectio....
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....dated 11.05.2022, if a case does not fall under Clause (b) of sub-Section (i) of Section 149 of the Act, 1961 for the Assessment Years 2013-14, 2014-15 and 2015-16 (where the income of an assessee escaping assessment to tax is less than Rs. 50,00,000/-) and notice has not been issued within limitation under the unamended provisions of Section 149, then proceedings under the amended provisions cannot be initiated. 12. For all the reasons aforestated, the impugned notice under Section 148 of the Act, 1961 issued on 01.04.2021 for the Assessment Year 2014-15 and the impugned notice dated 13.01.2022 under Section 144 of the Act, 1961 and the reassessment order dated 13.01.2022 under Section 147 read with Section 144B of the Act, 1961 for the Assessment Year 2014-15 passed by the respondent No.4 are hereby quashed. The writ petition is allowed''. 20. The Hon'ble High Court of Delhi in the case of Ganesh Dass Khanna Vs Income Tax Officer [(2024) 460 ITR 546 (Delhi) / (2023) 156 Taxmann.com 417 (Delhi) has considered the entire conspectus of legal arguments contended by the both sides, in similar situation held as under: ''53.1 As would be evident from the extracts se....