TaxTMI 
TaxTMI 
2024 (9) TMI 347
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....d beyond 3 years only if income escapement is above 50 lacs, in fact of present case the impugned notice issued for AY. 2017-18 is for income escaped below Rs. 50 lacs, i.e. Rs. 43,32,000/-, therefore, reopening is bad in law. 2 The learned CIT(DRP-3) failed to appreciate that the JAO have no jurisdiction to issue show cause notice u/s 148A(b) and notice u/s 148 and pass order u/s 148A(d) as after 29.03.2022 same can be done in a faceless manner, therefore the reassessment proceedings is bad in law. 3. The learned CIT (DRP-3) failed to appreciate that the AO issued reopening notice beyond period of three years, approval was required to be taken as per provisions of amended section 151 of the Act from Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General however approval is from PCIT. ON MERITS: 4. The learned CIT(DRP-3) has failed to appreciate the Permanent Alternative Accommodation Agreement, which has become a non-starter as the assessee has neither surrendered his tenancy rights nor given possession of existing premises and still continues to enjoy his occupation rights as on day and the develope....
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....at the difference of Rs. 43,32,000 is the income of the assessee chargeable to tax which has escaped assessment. 5. Subsequently, in view of the decision of the Hon'ble Supreme Court in Union of India v/s Ashish Agarwal, Civil Appeal No. 3005 of 2022 and CBDT Circular No. 1 of 2022 dated 11/05/2022, notice under section 148A(b) was issued to the assessee on 23/05/2022 to show cause as to why notice under section 148 of the Act should not be issued on the basis of the information which suggests that income chargeable to tax has escaped assessment. 6. After rejecting the objections filed by the assessee, an order under section 148A(d) of the Act was passed on 18/07/2022 declaring that it is a fit case for initiation of reassessment proceedings under section 147 by issuing notice under section 148 of the Act. Thereafter, on 24/07/2022 notice under section 148 of the Act was issued by the Jurisdictional Assessing Officer. The final assessment order was passed under section 147 r/w section 144C(13) of the Act assessing the total income of the assessee at Rs. 43,57,950 after making an addition of Rs. 43,32,000 under section 57(2)(vii)(b) of the Act. 7. During the hearing, the le....
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.... of the assessment year 2017-18 without appreciating that notice under 148 can be issued beyond 3 years only if income escapement is above 50 lacs, in fact of present case the impugned notice issued for A.Y. 2017-18 is for income escaped below Rs. 50 lacs. i.e. Rs. 43, 32,000/-, therefore reopening is bad in law. Department's stand: As mentioned in the CIT (DRP) order, in Para 6.3.2, the issue was deliberated as per instructions issued by the CBDT consequent to the Hon'ble SC decision in the case of Ashish Aggarwal. In this regard it is further submitted that the procedure laid out in Ashish Agarwal relates to those matters where, although notices may have been issued, proceedings were yet to attain finality. The Hon'ble Supreme Court prescribed a procedure following which Revenue was rendered remedies to assess the escaped income and where notices had been already issued. The Hon'ble Court held that all such notices would be treated as being under Section 148A(b) and where proceedings were to be taken forward in accordance with law thereafter. Under the old Section 149(1)(b) as it stood prior to 1/4/2021, the period for which a n....
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.... Bombay High court decision and if the DRP does not follow departmental line later no remedy would be left in case. Accordingly it is prayed that the department's contentions on the above grounds may be upheld and the case may be heard further on merits." 9. We have considered the submissions of both sides and perused the material available on the record. Before proceeding further, it is pertinent to note the provisions of the Act, which are relevant for deciding the issue at hand. The relevant provisions of section 148 of the Act, as amended by Finance Act 2021, read as follows: - "148. Before making the assessment, reassessment or recomputation under section 147, and subject to the provisions of section 148A, the Assessing Officer shall serve on the assessee a notice, along with a copy of the order passed, if required, under clause (d) of section 148A, requiring him to furnish within a period of three months from the end of the month in which such notice is issued, or such further period as may be allowed by the Assessing Officer on the basis of an application made in this regard by the assessee, a return of his income or the income of any other person in....
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....2. Therefore, from the plain reading of section 151 of the Act, it is evident that in the case where more than three years have elapsed from the end of the relevant assessment year, the Specified Authority for the purpose of granting prior approval, as required under section 148 of the Act, is Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General. 13. Section 149 of the Act provides a time limit for issuance of notice under section 148 of the Act and the relevant portion of the same reads as follows: - "149. (1) No notice under section 148 shall be issued for the relevant assessment year,- (a) if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b); (b) if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income chargeable 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 ....
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....8 and section 148A shall be, if three years or less than three years have elapsed from the end of the relevant assessment year, Principal Commissioner or Principal Director or Commissioner or Director. If more than three years have elapsed from the end of the relevant assessment year, then Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General. 21. Admittedly, in this case, the approval/sanction for order under section 148A(d) of the Act has been granted by the Principal Commissioner of Income Tax-8. The entire controversy is, therefore, (a) whether the Principal Commissioner was the specified authority, who could have granted the approval/sanction?, (b) if not, the effect thereof? 22. In our view, the approval is not valid. Hence, the impugned order passed under section 148A(d) read with notice issued under section 148 of the Act dated 31st July 2022 is not valid and has to be quashed and set aside. 23. The first proviso to section 148 of the Act refers to the approval of the specified authority being obtained before a notice under section 148 of the Act can be issued. Explanation 3 to section 148 of the Act ....
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....t March 2021. Thus, TOLA only seeks to extend the period of limitation and does not affect the scope of section 151. 26. The Assessing Officer cannot rely on the provisions of TOLA and the notifications issued thereunder as section 151 has been amended by Finance Act, 2021 and the provisions of the amended section would have to be complied with by the Assessing Officer, w.e.f., 1st April 2021. Hence, the Assessing Officer cannot seek to take the shelter of TOLA as a subordinate legislation cannot override any statute enacted by the Parliament. Further, the notification extending the dates from 31st March 2021 till 30th June 2021 cannot apply once the Finance Act, 2021 is in existence. The sanction of the specified authority has to be obtained in accordance with the law existing when the sanction is obtained and, therefore, the sanction is required to be obtained by applying the amended section 151(ii) of the Act and since the sanction has been obtained in terms of section 151(i) of the Act, the impugned order and impugned notice are bad in law and should be quashed and set aside." 17. Therefore, respectfully following the aforesaid decision of the Hon'ble Jurisdictional....