TaxTMI 
TaxTMI 
2024 (8) TMI 1363
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.... The Ld. Assessing Officer erred in not allowing cost of improvement on sale of properties and computing the capital gains from the flats at Rs. 1,08,76,618/- instead of Rs. 8,69,539/- as declared by the appellant in the return of income by not appreciating the facts of the case. 4. The Ld. Assessing Officer erred in not referring the matter to the Department Valuation Officer for determining the fair value of the property, ignoring the specific request of the appellant during the assessment proceedings. 5. The Ld. Assessing Officer erred in not allowing the deductions claimed under Chapter- VIA amounting to the Rs. 1,82,619/- and Advance Tax amounting to Rs. 94,807/-, the same ought to be claimed as in the returned income. 6. All of the above grounds are without prejudice to each other. The appellant craves leave to add, amend, alter, or delete any of the above grounds of appeal." 3. Representatives were heard at length, case records carefully perused and the relevant documentary evidences considered in light of Rule 18(6) of the ITAT Rules, 1963. 4. Briefly stated, the facts of the case are that on the basis of specific information received from t....
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....uction no. 1/2022 at paragraph 6.2(ii) has wrongly stated that the notices issued under section 148 of the Act for AY 2016-17 are to be considered as having been issued within a period of three years from the end of the relevant assessment year and, on that basis, has wrongly mentioned that the approval of the specified authority under section 151(i) should be taken. This conclusion is premised on the basis that these notices travel back to 31 March 2020 which premise is completely erroneous as explained hereinbefore. The notice under section 148 of the Act is issued on 31 July 2022 and, hence, is issued beyond period of three years from the end of the relevant assessment year and, accordingly, the approval of the specified authority under section 151(ii) of the Act should be taken. 30. This court in Tata Communications Transformation Services (P.) Ltd. (supra), has rejected that argument of the Revenue on the issue of travel back. This court in paragraph 37 of Tata Communications Transformation Services (P.) Ltd. (supra) has held that section 3(1) of TOLA does not provide that any notice issued under section 148 of the Act, after 31st March 2021 will relate back to the or....
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....ically sets out that any notices issued by Revenue after the amendment made by the Finance Act, 1989 must comply with the amended provision of the law. Therefore, any notice issued after 1st April, 2021 must comply with the amended provisions of the Act which was amended with effect from 1st April, 2021. This contention has also been considered and upheld by the Delhi High Court and the Allahabad High Court. 35. We have to also note the well settled proposition that when the Act specifies that something is to be done in a particular manner, then, that thing must be done in that specified manner alone, and any other method/(s) of performance cannot be upheld. Hence, notices issued under section 148 of the Act after 1st April, 2021 must comply with the amended provisions of law and cannot be sustained on the basis of the erstwhile provision. 36. In order to uphold the arguments of the Revenue in this regard, either a savings clause, or a specific legislative enactment deferring applicability of the amended provisions and the repeal of the old provisions of the Act, would be required. Plainly no such savings clause or enactment is available. 37. Section 3(1)....
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.... those actions are to be taken. A plain reading of the impugned Explanations in Notification Nos.20 of 2021 and 38 of 2021 shows that it purports to "clarify" that the unamended provisions of sections 147 to 151 of the Act will apply for the purposes of issue of notices under section 148 of the Act, which is clearly ultra vires Relaxation Act. 41. In our view, the reopening notices issued after 1st April, 2021 are unsustainable and bad in law even if one was to apply the Explanations to the Notification Nos. 20 of 2021 and 38 of 2021. The Explanation seeks to extend the applicability of erstwhile sections 148, 149 and 151. The impugned Explanation does not cover section 147, which (as amended) empowers the revenue to reopen an assessment subject to sections 148 to 153, which includes section 148A. Thus, even if Explanations are valid, the mandatory procedure laid down by section 148A has not been followed and hence, without anything further, the notices under section 148 of the Act are invalid and must be struck down for this reason as well. This proposition has also been upheld by the Delhi High Court. 42. As regards Revenue's arguments that Relaxation Act be....
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...., there is no such provision in Chapter III of the Act. 45. As submitted by Mr. Pardiwalla there are other Sections in the Finance Act, 2021 which have amended other provisions of the Income-tax Act from dates other than 1st April, 2021. Like for example Section 12 of the Finance Act inserted a proviso in section 43CA. Had the intention of the legislature, while amending sections 147 to 153, been to give it effect from 1^st July, 2021, a similar savings clause could have been inserted, which has not been done. We agree with Mr. Pardiwalla because as per section 1(2)(a) of the Finance Act, 2021, the amendments to sections 147 to 153 of the Act shall come into force on 1st April, 2021. Similarly, the Memorandum explaining the provisions of the Finance Bill, 2021 clarifies that these amendments will take effect from 1st April, 2021. Section 12 of the Finance Act inserted a proviso in section 43CA which inter alia provides that the words 'one hundred and ten percent' in the first proviso will be substituted by the words 'one hundred and twenty percent' if the transfer of residential units takes place during the period beginning from 12th day of November, 2020 a....
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....s only after complying with the amended section 147. The same has not been done by the Assessing Officers as (a) his assumption of jurisdiction is on the basis of his 'reason to believe' that income chargeable to tax has escaped assessment, a concept, which is no longer recognised in the amended section 147; and (b) the amended section 147 is in any event subject to sections 148 to 153, which would also include the procedure contained in section 148A, which has not been followed. Therefore, the impugned notices do not even comply with the relevant statutory provisions, even if we do not find fault with the Explanations in the two notifications. Infact the Delhi High Court in paragraph 84 of Mon Mohan Kohli (supra) has also considered and accepted this aspect of the matter. 49. Some more reasons why the reopening notices must go are : (a) Section 297 of the Act provides a saving clause for applicability of various provisions of the 1922 Act, even though the Act itself had been repealed. In the absence of such a saving clause for applicability of erstwhile sections 147 to 151 of the Act, the amended provision of the Act would apply from 1st April, 2021. ....
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....hat the courts have held. Even by the finding of the Apex Court in Ashish Agarwal (supra), only the original notice issued under section 148 of the Act was converted into a notice deemed to have been issued under section 148A(b) of the Act. The Apex Court held that the Assessing Officer shall thereafter pass orders in terms of Section 148A(b) in respect of each of the assessee and after following the procedure as required under section 148 of the Act. Even judgment in Ashish Agarwal (supra) does not anywhere indicate the notices that could be issued for eternity like in this case, on 31st July 2022, would be sanctioned by the authority other than sanctioning authority defined under the Act. 32. We have to also note that the instructions dated 11th May 2022, on which respondents have relied upon, has no applicability to the facts of this case. These instructions expressly provides that it applies only to the issue of reassessment notice issued by the Assessing Officer during the period beginning 1st April 2020 and ending with 30th June 2021 within the time extended under TOLA and various notifications issued thereunder. Since the impugned notice in this case is dated 31st J....
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....d provisions of the Instruction dated 11-5-2022 are also unsustainable in law because they are vague. "Certainty" in taxing statutes is one of the ground norms, as ordinarily, they are agnostic to equitable principles. 53. Apart from what we have stated above on the language and scheme of the relevant provisions introduced with the enactment of FA 21, one has to bear in mind, in our opinion, the raison d'etre for forging the new regime. A clue about the same is provided in the Finance Minister's budget speech delivered on 1-2-2021 and the relevant parts of the Memorandum explaining the provisions of the Finance Bill 2021 [hereafter referred to as "Memorandum"] which morphed into FA 2021. For convenience, the relevant parts are extracted below: Speech of the Finance Minister "...Reduction in Time for Income-tax Proceedings 153. Honourable Speaker, presently, an assessment can be re-opened up to 6 years and in serious tax fraud cases for up to 10 years. As a result, taxpayers have to remain under uncertainty for a long time. 154. I therefore propose to reduce this time-limit for re-opening of [the]assessment to 3 years from the pre....
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....ond the period of three years from the end of the relevant assessment year can be taken only in a few specific cases. In specific cases where the Assessing Officer has in his possession evidence which reveal that the income escaping assessment, represented in the form of asset, amounts to or is likely to amount to fifty lakh rupees or more, notice can be issued beyond the period of three year but not beyond the period of ten years from the end of the relevant assessment year; Another restriction has been provided that the notice under section 148 of the Act cannot be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April, 2021, if such notice could not have been issued at that time on account of being beyond the time limit prescribed under the provisions of clause (b), as they stood immediately before the proposed amendment. Since the assessment or reassessment or re-computation in search or requisition cases (where such search or requisition is initiated or made on or before 31st March 2021) are to be carried out as per the provision of section 153A, 153B, 153Cand 153D of the Act, the aforesaid time limitati....