TaxTMI 
TaxTMI 
2024 (9) TMI 1282
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....h Ms. Pratishtha Chaudhary, Ms. Nivedita & Ms. Nancy Jain, Advs. JUDGMENT YASHWANT VARMA, J. 1. This batch of writ petitions assails the validity of the reassessment action initiated by the respondents under Section 148 of the Income Tax Act, 1961 [Act] and pertaining to Assessment Year [AY] 2015- 16. The solitary ground on which those reassessments were assailed before us was a violation of the provisions contained in Section 151 of the Act. 2. It is the case of the writ petitioners that the sanction for initiation of reassessment action rests on an approval granted by the Joint Commissioner of Income Tax [JCIT] as opposed to the Principal Chief Commissioner /Chief Commissioner/ Principal Commissioner/ Commissioner as mandated by Section 151 (1) of the Act. It is contended that since all the impugned Section 148 notices have come to be issued after the expiry of a period of four years from the concerned AY, they were liable to be mandatorily approved by the Principal Chief Commissioner or the other authorities specified in sub-section (1) of Section 151. 3. According to the writ petitioners, the impugned notices would not sustain even if they were tested on the b....
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....aged across the country. The provisions of TOLA thus provided an extended lifeline for the issuance of notices, the grant of sanction and other statutory compliances contemplated under the Act. It is thus submitted that since the impugned notices, by virtue of TOLA, came to be validly issued after the expiry of four years, the sanction was liable to be obtained in accordance with sub-section (2) of Section 151 and consequently, the approval accorded by the JCIT would be compliant with the statutory scheme of that provision. 6. It is pertinent to note that Section 151, pre-Finance Act 2021, categorized the approval liable to be accorded based upon the period within which a reassessment action was proposed to be initiated when computed from the end of the relevant AY. While sub-section (1) catered to situations where a notice for reassessment was sought to be issued after the expiry of four years from the end of the relevant AY and thus required that action be preceded by approval being obtained from the Principal Chief Commissioner and the other authorities specified therein, sub-section (2) constituted the residuary clause and pertained to cases falling within its ambit where ap....
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....f the Act. Section 151 has been further reframed by virtue of Finance Act 2024 to define the 'specified authority' for sanction for issuance of notice to be the Additional Commissioner/ Additional Director/ Joint Commissioner/ Joint Director. However, in the present batch of writ petitions, we are concerned with the provisions of Section 151 as it stood immediately before and after the promulgation of Finance Act 2021. 9. For the purposes of brevity, we deem it apposite to notice the following salient facts as they obtain in W.P.(C) 2698/2022. For AY 2015-16, the petitioner is stated to have furnished a Return of Income on 30 October 2015. The aforesaid Return is stated to have been duly acknowledged in terms contemplated under Section 143 (1) of the Act. Thereafter, a notice under Section 148 dated 31 March 2021 is stated to have been issued to the writ petitioner. The notice, it is pertinent to note, appears to have been digitally signed on 01 April 2021, and, as per the writ petitioner, served via email on 22 April 2021. Responding to the aforesaid Section 148 notice, a revised Return is stated to have been filed by the writ petitioner on 13 July 2021. 10. The petitioner i....
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....ginal notice under Section 148 in W.P.(C) 2698/2022, the same came to be issued with the approval of the JCIT Range-52, Delhi. Similar is the position that emerges from a perusal of the Section 148 notices which are impugned in the connected writ petitions with the solitary distinction being of the JCITs' being authorities conferred with jurisdiction over different ranges. 15. Leading arguments on behalf of the writ petitioners, Mr. Kapil Goel learned counsel submitted that the challenge as raised by the writ petitioners is liable to succeed bearing in mind the consistent position with respect to Section 151 which has been taken by the Bombay, Madras and Orissa High Courts and all of which have taken the view that the provisions of TOLA cannot be construed as having amended the procedure for approval as contemplated under Section 151 of the Act. 16. Mr. Goel further submitted that this aspect had also fallen for consideration before our High Court in Twylight Infrastructure (P.) Ltd. vs. Commissioner of Income Tax 2024 SCC OnLine Del 330 and where too this issue came to be answered in favour of the assessees as under:- "4.1. In defence of the writ petitions, the Reve....
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....of sub-section (2) of the pre-amendment Section 151 and consequently the sanction and approval accorded by the JCIT would be in accordance with law. 18. We find that a challenge on identical lines was addressed before the Bombay High Court in J M Financial and Investments Consultancy Services Private Limited vs. ACIT, Circle 3(2)(1) & Ors Writ Petition No. 1050 of 2022 dated 04 April 2022. While dealing with these aspects the Bombay High Court had in J M Financial held as follows:- "5. Respondents have relied upon a letter dated 18th March 2021 issued by one Income Tax Officer, who has given an opinion to the Additional Commissioner 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....
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....The impugned notice mentions that the prior approval has been taken of the "Principal Commissioner of Income-tax-8" ("PCIT-8") which is bad in law as the approval should have been obtained in terms of section 151 (ii) and not section 151 (i) of the Act and the Principal Commissioner of Income-tax-8 cannot be the specified authority as per section 151 of the Act. Further, even in the affidavit-in-reply, the Department has accepted that the approval obtained is of the "Principal Commissioner of Income-tax-8" and, hence, such an approval would be bad in law. 25. The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, enacted on September 29, 2020 and came into force on March 31, 2020 ([2020] 428 ITR (St.) 29). It, inter alia, provided for a relaxation of certain provisions of the Income-tax Act, 1961. Where any time limit for completion or compliance of an action such as completion of any proceedings or passing of any order or issuance of any notice fell between the period March 20, 2020 to December 31, 2020, the time limit for completion of such action stood extended to March 31, 2021. Thus, the Taxation and Other Laws (Relaxation and Amendment of C....
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....ion 151 by reference and make it applicable. 14. The next question to be examined is the impact of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. Undoubtedly, the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 extended the time limits under specified enactments, including the Income-tax Act. As per clause (a)(ii) of sub-section (1) of section 3 thereof, time limits for grant of sanction or approval were also extended. Since the petitioner does not challenge the sanction with respect to the time limit, clause (a) of sub-section (1) of section 3 is immaterial. Indeed, the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, which extends the time limits for completion of specified tasks up to March 31, 2021, itself becomes irrelevant because of the nature of the challenge in these writ petitions. 15. In Siemens Financial Services [Siemens Financial Services Pvt. Ltd. v. Dy. CIT, (2023) 457 ITR 647 (Bom); 2023 SCC OnLine Bom 2822; (2023) 154 taxmann.com 159 (Bom).] , the Division Bench of the Bombay High Court concluded, in substantially similar facts and circu....
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.... of the notifications issued by the Central Government in terms of the provisions of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, the said time limits stood extended is clearly untenable as those notifications were issued to deal with the situation arising from the amendment to the Income-tax Act by the Finance Act, 2021 with effect from April 1, 2021 whereas in these cases the notices were issued prior to April 1, 2021. 5. This court had an occasion in similar circumstances to quash an identical notice under section 148 of the Income-tax Act by its order dated November 20, 2019 in Writ Petition (C) No. 7618 of 2009 and which order stood confirmed by this court by the dismissal of the Department's review petition, i. e., RVWPET No. 188 of 2020 by the order dated December 3, 2021 which reads as under : "1. Although the point made by the Revenue in this review petition is that this court in its order dated November 20, 2019 erred in drawing a distinction between an Additional Commissioner and Commissioner in terms of their authority, the point involved was that for the purpose of section 151 (1) of the Income-tax Act, 1....
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.... (a) First, the rank of the authority granting approval/sanction for triggering reassessment proceedings. (b) Second, the quantum of income which has escaped assessment." (Emphasis is ours) 12. Clearly, the Revenue advanced the argument of interlinkage between limitation and the ascertainment of the specified authority due to the plain language of the amended section 151 of the Act. Section 151, when read alongside the first proviso to section 148, brings the aspect of inextricable linkage to the fore. 12.1. Clauses (i) and (ii) of section 151 of the amended Act (which has been extracted hereinabove) clearly specify the authority whose approval can trigger the reassessment proceedings. Thus, if three (3) years or less have elapsed from the end of the relevant assessment year, the specified authority who would grant approval for initiation of reassessment proceedings will be the Principal Commissioner or Principal Director or Commissioner or Director. However, if more than three (3) years from the end of the relevant assessment year have elapsed, the specified authority for according approval for the reassessment shall be the Principal Chief Commis....
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.... learned counsels for respective sides had taken a divergent view with respect to the date when the impugned notices could be said to have been "issued" and consequently the version of Section 151 which would be applicable. Although all the notices bore a date of 31 March 2021, in all the cases before us they came to be served upon the assessees' thereafter. It is also asserted by the writ petitioners that the notices were digitally signed on or after 01 April 2021 and dispatched thereafter. They would thus contend that it was the amended regime of reassessment that would be applicable. 25. In the counter affidavit which has been filed in the lead writ petition, we find that the respondents have in paragraphs 6 to 9 taken the following stand:- "6. It is respectfully submitted that the technical team of ITBA portal were asked certain queries to clarify the issues regarding issuance of impugned notice dated 31.03.2021. The technical team of ITBA clarified the followings- i. The document with DIN No. ITBA/AST/S/148/2020-21/1032104440(1) was generated at 7:41 pm on 31.03.2021. ii. The last transaction time of AO Ward 54(1) on 31.03.2021 was 08:56 pm. ....
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....said to have been issued is no longer res integra and stands conclusively answered by the Court in Suman Jeet Agarwal vs. Income Tax Officer & Ors. 2022 SCC OnLine Del 3141. The Court firstly categorised the various writ petitions under the following broad heads:- "Categories identified 1.13. The impugned notices as categorized by the counsel for the petitioners, Ms. Kavita Jha and recorded by this court vide its order dated March 24, 2022, are reproduced hereinunder : "1. Category A : is in respect of writ petitions where notice is dated March 31, 2021 or before but digitally signed on or after April 1, 2021, however sent and received on or after April 1, 2021. 2. Category B : is in respect of writ petitions where notice is dated March 31, 2021 or before, digitally not signed, however sent and received on or after April 1, 2021. 3. Category C : is in respect of writ petitions where notice is dated March 31, 2021 or before, digitally signed on or before March 31, 2021, however sent and received on or after April 1, 2021. 4. Category D : is in respect of writ petitions where notice is dated March 31, 2021 or before, digitally sig....
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....was issued to the petitioner on April 6, 2021 through e-mail, therefore, we hold that the impugned notice under section 148 of the Act, 1961 is time barred. Consequently, the impugned notice is quashed." (emphasis supplied) 25.11. In the subsequent judgments of the Allahabad High Court in the case of Santosh Krishna (supra) and Mohan Lal Santwani (supra) the High Court summoned the details of date and time of triggering of e-mail by the Income Tax Business Application e-mail software system to determine the date of issuance of the e-mail attaching the notice. The High Court held the said date of triggering of e-mail to be the date of issue of section 148 notice for the purpose of section 149 of the Act of 1961. 25.12. The review of the aforesaid judgments of the Supreme Court and the several High Courts shows that all courts have consistently held that the expression "issue" in its common parlance and its legal interpretation means that the issuer of the notice must after drawing up the notice and signing the notice, make an overt act to ensure due despatch of the notice to the addressee. It is only upon due despatch, that the notice can be said to have been "issu....
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....on the Income Tax Business Application screen simplicitor (even before its despatch) is to be held to be issued does not persuade the court and is contrary to the judgment relied upon by the said party. 25.15. This court in the case of Court on its Own Motion v. CIT [2013] 352 ITR 273 (Delhi), while dealing with section 143 (1) of the Act of 1961, has held that the law requires that, the intimation under section 143 (1) should be communicated to the assessee. The uncommunicated orders or intimations cannot be enforced and are not valid. The relevant extract of the aforesaid decision is reproduced herein under (page 295 of 352 ITR) : "The second grievance of the assessee is with regard to the uncommunicated intimations under section 143 (1) which remained on paper/file or the computer of the Assessing Officer. This is serious challenge and a matter of grave concern. The law requires intimation under section 143 (1) should be communicated to the assessee, if there is an adjustment made in the return resulting either in demand or reduction in refund. The uncommunicated orders/intimations cannot be enforced and are not valid... But when there is failure to despatch or....
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.... deals with the limitation for exercise of the powers under sub-sections (1) and (2) of the Act and which is the relevant provision for consideration in this appeal reads as follows : 'No order shall be made under sub-section (1) or sub-section (2) after the expiry of one year from the date of the decision or order of the adjudicating authority.'. . ." The court in the aforesaid judgment deliberated with reference to the phrase "no order shall be made" in section 35E(3) of the Act of 1944 and concluded that the date on which the order was made by the adjudicatory authority by signing it is a relevant date for determining if it was passed within limitation. As is evident, the expression used in section 35E(3) of the Act of 1944, is "no order shall be made" which is distinct from the expression used in section 149 of the Act of 1961 which reads as "no notice under section 148 shall be issued". The two statutory provisions are materially different and the ratio of the said judgment can have no bearing in interpreting section 149 of the Act of 1961." 29. It proceeded to record its conclusions in the following terms:- "31. For the reasons and princi....
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....e with the law laid down in this judgment. If such date of issuance is determined to be on or after April 1, 2021, the notices will be construed as issued under section 148A (b) of the Act of 1961 as per the Ashish Agarwal (supra) judgment. 31.5. Category "E" : The petitions challenging notices falling under category "E" which were manually despatched, are disposed of with the direction to the jurisdictional Assessing Officers to determine in accordance with the law laid down in this judgment, the date and time when the notices were delivered to the post office for despatch and consider the same as date of issuance. If the date and time of despatch recorded is on or after April 1, 2021, the notices are to be construed as show-cause notices under section 148A (b) as per the directions of the apex court in the Ashish Agarwal (supra) judgment. 31.6. Notices sent to unrelated e-mail addresses : The petitions challenging notices which were sent to unrelated e-mail addresses are disposed of with the direction the jurisdictional Assessing Officers to verify the date on which the notice was first viewed by the assessee on the e-filing portal and consider the same as the d....
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....er shall, within thirty days from today provide to the respective assessees information and material relied upon by the Revenue, so that the assessees can reply to the show-cause notices within two weeks thereafter ; (ii) The requirement of conducting any enquiry, if required, with the prior approval of specified authority under section 148A(a) is hereby dispensed with as a one-time measure vis-a-vis those notices which have been issued under section 148 of the unamended Act from April 1, 2021 till date, including those which have been quashed by the High Courts. Even otherwise as observed hereinabove holding any enquiry with the prior approval of specified authority is not mandatory but it is for the concerned Assessing Officers to hold any enquiry, if required ; (iii) The Assessing Officers shall thereafter pass orders in terms of section 148A (d) in respect of each of the concerned assessees. Thereafter after following the procedure as required under section 148A may issue notice under section 148 (as substituted) ; (iv) All defences which may be available to the assessees including those available under section 149 of the Income-tax Act and a....
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....),- (i) making of investment, deposit, payment, acquisition, purchase, construction or such other action, by whatever name called, for the purposes of claiming any deduction, exemption or allowance under the provisions contained in- (I) sections 54 to 54GB, or under any provisions of Chapter VI-A under the heading "B.-Deductions in respect of certain payments" thereof; or (II) such other provisions of that Act, subject to fulfilment of such conditions, as the Central Government may, by notification, specify; or (ii) beginning of manufacture or production of articles or things or providing any services referred to in section 10AA of that Act, in a case where the letter of approval, required to be issued in accordance with the provisions of the Special Economic Zones Act, 2005 (28 of 2005), has been issued on or before the 31st day of March, 2020, and where completion or compliance of such action has not been made within such time, then, the time-limit for completion or compliance of such action shall, notwithstanding anything contained in the specified Act, stand extended to the 31st day of March, 2021, or such other date after the 31st day of Mar....
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....ters and words "31st day of March, 2021", the figures, letters and words "15th day of August, 2020" had been substituted; (v) sections 54 to 54GB of that Act, referred to in item (I) of sub-clause (i) of clause (c), or sub-clause (ii) of the said clause, the provision of this subsection shall have the effect as if- (a) for the figures, letters and words "31st day of December, 2020", the figures, letters and words "29th day of September, 2020" had been substituted for the time-limit for the completion or compliance; and (b) for the figures, letters and words "31st day of March, 2021", the figures, letters and words "30th day of September, 2020" had been substituted for making such completion or compliance; (vi) any provisions of Chapter VI-A under the heading "B.- Deductions in respect of certain payments" of that Act, referred to in item (I) of sub-clause (i) of clause (c), the provision of this sub-section shall have the effect as if- (a) for the figures, letters and words "31st day of December, 2020", the figures, letters and words "30th day of July, 2020" had been substituted for the time-limit for the completion or compliance; and ....
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....ate after the 30th day of June, 2020, as the Central Government may, by notification, specify in this behalf, then, notwithstanding anything contained in the specified Act,- (a) the rate of interest payable, if any, in respect of such amount for the period of delay shall not exceed three-fourth per cent. for every month or part thereof; (b) no penalty shall be levied and no prosecution shall be sanctioned in respect of such amount for the period of delay. Explanation.-For the purposes of this sub-section, "the period of delay" means the period between the due date and the date on which the amount has been paid." 33. A plain reading of Section 3 establishes that where the time limit for the completion or compliance of any action under a specified Act were to fall between 20 March 2020 to 31 December 2020, the period for completion and compliance would stand extended up to 31 March 2021 or such other date thereafter as may be specified by the Union Government by way of a notification. Undisputedly, the date of 31 March 2021 came to be extended thereafter up to 30 April 2021 and lastly up to 30 June 2021. 34. Concededly, Finance Act 2021 was enacted th....
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....ad TOLA as intending to amend the distribution of power or the categorisation envisaged and prescribed by Section 151. The additional time that the said statute provided to an authority cannot possibly be construed as altering or modifying the hierarchy or the structure set up by Section 151 of the Act. The issue of approval would still be liable to be answered based on whether the reassessment was commenced after or within a period of four years from the end of the relevant AY or as per the amended regime dependent upon whether action was being proposed within three years of the end of the relevant AY or thereafter. The bifurcation of those powers would continue unaltered and unaffected by TOLA. 39. The fallacy of the submission addressed by the respondents becomes even more evident when we weigh in consideration the fact that even if the reassessment action were initiated, as per the extended TOLA timelines, and thus after the period of four years, Section 151 incorporated adequate measures to deal with such a contingency and in unambiguous terms identified the authority which was to be moved for the purposes of sanction and approval. Section 151 distributed the powers of appr....