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2025 (5) TMI 216
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.... the principal question that falls for consideration of this court is whether the impugned notice has been issued beyond the period stipulated under Section 149 (1) of the Act. PREFATORY FACTS 3. Briefly stated, the facts relevant to address the aforesaid controversy are as under: 3.1 The petitioner filed its income tax return under Section 139 (1) of the Act in respect of Assessment Year [AY] 2016-17 on 30.11.2016. The petitioner's return of income was selected for scrutiny and the Assessing Officer [AO] issued a notice dated 04.09.2017 under Section 143 (2) of the Act. The said proceedings culminated in an assessment order dated 18.12.2018 passed under Section 143 (3) of the Act. In terms of the said assessment order, the AO made an addition of Rs. 2,98,84,704/- to the declared income of the petitioner for AY 2016-17. 3.2 The petitioner appealed the said assessment order before the Commissioner of Income Tax (Appeals)-8, Mumbai [CIT(A)]. 3.3 The said appeal was partially allowed by an order dated 14.02.2020, whereby the learned CIT(A) deleted the addition of Rs. 8,35,864/- made on account of disallowance under Section 14A of the Act read with Rule 8D of the Income ....
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....er Section 149 (1) (b) of the Act. 6. Mr Lalchandani disagreed with the aforesaid submission and argued that, in terms of the fourth proviso to Section 153A (1) of the Act, no notice for the relevant assessment year or years could be issued unless the AO had in his possession books of account or other documents or evidence which revealed that income represented in the form of an asset has escaped assessment. Thus, the extended period of limitation beyond the six years preceding the assessment year relevant to previous year in which a search was conducted, would be applicable only in cases where the AO had evidence, which discloses that the escaped income was represented by an asset. He contended that, in the present case, the income which is alleged to have escaped assessment is on account of an expenditure, which the AO had disallowed and not on account of any asset which represent such income. REASONS & CONCLUSION 7. At the outset, it is relevant to refer the relevant extract of Section 149 of the Act, as was in force at the material time. The same is set out below: "149. Time limit for notice: - (1) No notice under section 148 shall be issued for the relevant a....
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....and before. Resultantly, a notice under Section 148 of the new regime cannot be issued if the period of six years from the end of the relevant assessment year has expired at the time of issuance of the notice. This also ensures that the new time limit of ten years prescribed under section 149 (1) (b) of the new regime applies prospectively. For example, for the assessment year 2012-2013, the ten year period would have expired on 31 March 2023, while the six year period expired on 31 March 2019. Without the proviso to Section 149 (1) (b) of the new regime, the Revenue could have had the power to reopen assessments for the year 2012-2013 if the escaped assessment amounted to Rupees fifty lakhs or more. The proviso limits the retrospective operation of Section149 (1) (b) to protect the interests of the assesses. *** *** *** 54. The proviso to Section 149 (1) (b) of the new regime uses the expression "beyond the time limit specified under the provisions of clause (b) of sub section (1) of this section, as they stood immediately before the commencement of the Finance Act, 2021." Thus, the proviso specifically refers to the time limits specified under section 149 (1) (b....
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....twithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003 [but on or before the 31st day of March, 2021], the Assessing Officer shall- (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years and for the relevant assessment year or years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139; (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made and of the relevant assessment year or years: ....
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....shall include immovable property being land or building or both, shares and securities, loans and advances, deposits in bank account." 12. It is apparent from the above that Section 153A of the Act refers to time periods within which the assessments could be reopened. In terms of Section 153A (1) of the Act, the assessments can be reopened for a block of six years preceding the assessment year relevant to the previous year in which search under Section 132 of the Act is conducted or requisition is made under Section 132A of the Act as well as the relevant assessment year or years. 13. As is apparent from the plain language of Section 153A (1) of the Act, the AO has the jurisdiction to issue a notice in respect of each of the assessment years falling within six assessment years as well as for the relevant year or years as referred to in Clause (b) of Section 153A (1) of the Act. However, the fourth proviso to Section 153A (1) of the Act proscribes issuance of any notice for assessment or reassessment in respect of a relevant assessment year unless the conditions as stipulated in the fourth proviso are satisfied. 14. The expression "relevant assessment year" is defined under....
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....ers: It was observed that Smart Chip Pvt Ltd had undertaken various transactions in the nature of contract, rent, professional charges with various parties who have not either never filed the ITR or not filed in the year in which transaction occurred. The details of transactions are tabulated below: *** *** *** In this regard, summons notices were issued to the above non-filers to verify the genuineness of the transactions by investigation wing. However, no response has been received from the parties till date. In the absence of any compliance by the party and in view of the fact that above parties are non-filer till date, the genuineness of contract/rent payments made by Smart Chip could not be verified. In view of the above, assessee's income aggregating Rs. 4,46,21,363/- has escaped assessment by way of various transactions during the FY 2015-16 to FY 2020-21 in the nature of contract, rent, professional charges with various parties who have not either never filed the ITR or not filed in the year in which transaction. Hence the genuineness of expenses of Rs. 4,46,21,363/- with non-filers from FY 2015-16 to 2020-21 needs to be verified. ....
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.... amounting to Rs.8,70,00,000 /-. Various incriminating facts were noted from perusal of the seized memo which raised significant doubts over the genuineness of the payments made by Smart Chip to Vihaan Infrasystems Ltd.: • Smart Chip is the major contributor to the total revenue of Vihaan Infrasystems Ltd. and in some financial years, the expenses paid by Smart Chip to Vihaan Infrasystems Ltd. even exceeded the total revenue of Vihaan Infrasystems Ltd.; • Mr. Sanjeev Shriya, his family members and Mr. Alok Mukherjee were shareholders and key managerial persons of Vihaan Infrasystems Ltd. in the past years and can be said to have significant influence over the affairs of Vihaan Infrasystems Ltd. and thus, it can be observed that Vihaan Infrasystems Ltd. was used to book non-genuine expenses in the books of Smart Chip and divert money for the benefit of specific persons; • Common address, website of Vihaan Infrasystems Ltd. and Smart Chip and other group companies; • Vihaan Infrasystems Ltd. presented as a group company /related company of Idemia Group entities; • Mr. Sanjeev Kumar Jain, holding substantial sha....
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....iew of the above, it is clearly corroborated that Smart Chip has been regularly making payments to Vihaan Infrasystems Limited without any actual receipt of any services and thus, claim of expenses of Rs. 8,70,00,000/- cannot be said to be wholly and exclusively incurred for the purpose of business during the FY 20 15-16 relevant to AY 2016-17 and treated as escaped assessment and needs to be examined. As discussed above, assesse's income of Rs.9.21 Crores by way of expenses debited to non -filers and personal expenses & payment made to Vihaan Infrasystems Limited for F.Y. 2015-16 relevant to A.Y. 2016-17 in the head of business expenses has escaped assessment and needs to be examined. *** *** *** 2. Evidently, warrant was issued in the name of the assessee and the case of the assessee was covered under Search u/s 132 of the Income Tax Act 1961 on 21.03.2023. 3. Hence, in light of the provisions of Explanation-2 to Section 148 and first proviso to Section 148A, I am satisfied that I have 'information' which suggests that income chargeable to tax has escaped assessment in the case of the assessee for the year under consideration and it is a fi....