TaxTMI 
TaxTMI 
2025 (5) TMI 675
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.... fact of present case the impugned notice issued for A.Y. 2017-18 is for income escaped below Rs. 50 lacs. i.e. Rs. 35,13,283/-, therefore reopening is bad in law. 2. The learned CIT (DRP-2) 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 19/07/2022 same can be done in a faceless manner, therefore the reassessment proceedings is bad in law 3. The learned CIT (DRP-2) 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-2) has failed to appreciate the flat was booked during FY 2013-2014 vide allotment letter dt 31/8/2013 at a consideration of Rs, 90 lacs, therefore stamp duty value of FY 2013-2014 should be considered for the purpose of Section 56(2) of Income Tax Act 1961 and not the stamp duty value of Rs. 1,25,13,283/- on the date of registration of agreement on 29/8/2016 i.e., FY 2016-....
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....2 which according to the assessee was reopened after expiry of 3 years from the end of A.Y. 2017-18, without considering the fact that notice u/s. 148 of the Act can be issued beyond 3 years only if income which has escaped assessment is above Rs. 50,00,000/-, Here in the present case, the income alleged to have been escaped assessment is Rs. 35,13,283/-. 5. The learned Authorised Representative ('ld. AR' for short) for the assessee for this preposition has relied on the decision of the Hon'ble Jurisdictional High Court in the case of Naresh Balchandrarao Shinde Vs. Income Tax Officer [2023] 146 taxmann.com 65 (Bombay), order dated 26.09.2022, wherein it was held that when the income which has escaped assessment is less than Rs. 50,00,000/- as contemplated u/s. 149(1)(b) of the Act, the impugned notice which was issued beyond 3 years was liable to be quashed and set aside. 6. The learned Departmental Representative ('ld. DR' for short) on the other hand controverted the said fact and stated that the assessee has failed to raise this ground before the lower authorities. 7. On perusal of the above contentions raised by the assessee, it is evident that the ld. AO has issued the....
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....ex Court including the case of Union of India and Ors. vs. Ashish Agarwal, dated 04.05.2022 and various other decisions of the Hon'ble High Courts. The relevant extract of the said decision is cited hereinunder for ease of reference. "27. A careful perusal of Clause (b) of Section 149 would show that one of the conditions for triggering the extended period, which goes up to ten (10) years in cases where three (03) years have elapsed, is that income chargeable to tax which has escaped assessment amounts to, or is likely to amount to Rs. 50 lakhs or more for the AY in issue. 28. Therefore, after the coming into force of FA 2021, in cases where, for the relevant AY, the alleged escaped income was less than Rs. 50 lakhs, notice under Section 148 could only be issued for commencement of reassessment proceedings within the limitation period provided in Clause (a) of Section 149(1) of the amended 1961 Act. 29. Thus, in the ordinary course, the limitation for AY 2016-17 would expire on 31.03.2020; likewise, for AY 2017-18, the end date for the culmination of the limitation period would be 31.03.2021. 30. The revenue seeks to take recourse to the provisions of Section 3(1) of TOLA a....
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....oncerning reassessment proceedings. Taking cognizance of this state of affairs, the Supreme Court held that, since the new provisions substituted by FA 2021 were both remedial and benevolent, they would apply to past AYs provided Section 148 notices had been issued on or after 01.04.2021. This was also the view taken by various High Courts; a view which was sustained by the Supreme Court. 32.3. The Supreme Court, however, having regard to the fact that the procedure prescribed under the new regime (which was encapsulated in FA 2021) had not been followed, modified the judgments of the High Courts by issuing specific directions to balance the interests of the assessees and the revenue. 32.4. The Supreme Court was persuaded to modify the judgments, having regard to the fact that if the decisions of various courts, including that of the coordinate bench of this court in Mon Mohan Kohli, were to be sustained as is, it would result in the failure of reassessment proceedings, even if the same were "permissible" under FA 2021 and as per the substituted provisions incorporated in the statutes, i.e., Sections 147 to 149 and Section 151. In this regard, the following observations made in....
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....d and substituted as under: 28.1. The impugned Section 148 notices issued to the respective assessees which were issued under unamended Section 148 of the IT Act, which were the subject-matter of writ petitions before the various respective High Courts shall be deemed to have been issued under Section 148-A of the IT Act as substituted by the Finance Act, 2021 and construed or treated to be show-cause notices in terms of Section 148-A(b). The assessing officer 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. 28.2. The requirement of conducting any enquiry, if required, with the prior approval of specified authority under Section 148-A(a) is hereby dispensed with as a one-time measure vis-à-vis those notices which have been issued under Section 148 of the unamended Act from 1-4- 2021 till date, including those which have been quashed by the High Courts. 28.3. Even otherwise as observed herein above holding any enquiry with the prior approval of specified authority is not mandatory but it is for the assessing ....
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....eration concerning the provisions of TOLA or the Notifications issued thereunder. 36. Amongst others, the Court issued two (02) significant directions which have some bearing on the lis before us. First, all defences, including those available under Section 149 of the amended 1961 Act, would remain open to the assessees. Second, all rights and contentions available to the assessees and the revenue under FA 2021 and in law will continue to subsist. 37. Therefore, according to us, it cannot be contended on behalf of the revenue that if the defence of limitation is available under Section 149(1)(a) of the Act, the same cannot be entertained by this Court. 38. Likewise, as indicated by the Supreme Court in no certain terms, it will also be open to the revenue to advance submissions based on the provisions of FA 2021 and those that may otherwise be available in law. 39. Besides this, since the Supreme Court, in no uncertain terms, ruled that the judgments of the various High Courts, which includes the decision of the coordinate bench of this court in Mon Mohan Kohli, stood "modified/substituted" to the extent indicated in the directions issued by the Court, it would follow that ....
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....ragraph 99: "...99. It is clarified that the power of reassessment that existed prior to 31st March, 2021 continued to exist till the extended period i.e. till 30th June, 2021; however, the Finance Act, 2021 has merely changed the procedure to be followed prior to issuance of notice with effect from 1st April, 2021..." 44.1. A careful perusal of the said observations would show that all that the Court noted (which was a matter of fact) that the power of reassessment which existed before 31.03.2021 continued to exist till 30.06.2021, with alteration in procedure brought about upon the enactment and enforcement of FA 2021. 44.2. This is abundantly clear if one were to read the paragraphs following paragraph 99, i.e., paragraphs 100 to 105 of the judgment. The Court, in no uncertain terms, declared explanation A(a)(ii)/A(b) of Notifications dated 31.03.2021 and 27.04.2021 as being ultra vires the parent statute, i.e., TOLA. 44.3. The said explanations sought to impose the unamended provisions of Sections 148, 149 and 151 of the 1961 Act, although the substituted provisions had kicked in. The Court refused to countenance a situation that the amended provisions, i.e., Sections 1....
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....le to past Assessment Years, as it is substantial in nature is contradicted by[the] Respondents' own Circular 549 of 1989 and its own submission that from 1st July, 2021, the substitution made by the Finance Act, 2021 will be applicable. 103. Revenue cannot rely on Covid-19 for contending that the new provisions Sections 147 to 151 of the Income Tax Act, 1961 should not operate during the period 1st April, 2021 to 30th June, 2021 as Parliament was fully aware of [the] Covid-19 Pandemic when it passed the Finance Act, 2021. Also, the arguments of the respondents qua non- obstante clause in Section 3(1) of the Relaxation Act, "legal fiction" and "stop the clock provision" are contrary to facts and untenable in law. 104. Consequently, this Court is of the view that the Executive/Respondents/Revenue cannot use the administrative power to issue Notifications under Section 3(1) of the Relaxation Act, 2020 to undermine the expression of Parliamentary supremacy in the form of an Act of Parliament, namely, the Finance Act, 2021. This Court is also of the opinion that the Executive/Respondents/Revenue cannot frustrate the purpose of substituted statutory provisions, like Sections 147....
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....lowing reasons: (i) Firstly, a perusal of the judgments in Touchstone and Salil Gulati's case, as noticed above, did not deal with the facts and circumstances, which obtain in the instant cases. There was no occasion for the writ petitioners in those cases to invoke the provisions of Clause (a) Sub-Section (1) of Section 149, given the fact that the alleged escaped income was not below Rs. 50 lakhs. (ii) Secondly, the defence that the limitation has expired goes to the root of the jurisdiction of the AO to trigger reassessment proceedings. It is well established that the principle of res judicata is dicta, which governs procedure, and therefore, if the proceedings are wrongly initiated, it cannot come in the way of the court entertaining such an action. The estoppel, waiver or res judicata principles cannot apply in such situations. [See Chandra bhai K. Bhoir and Ors. v Krishna Arjun Bhoir and Ors, (2009) 2 SCC 315. Union of India and Another v. Association of Unified Telecom Providers of India and Ors., (2011) 10 SCC 543, Ashok Leyland Ltd. v. State of Tamil Nadu and Another (2004) 3 SCC 1 at 2861- 63]. (ii)(a) Explanation IV to Section 11 of Code of Civil Procedure, 1908 [h....
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....which was conferred on the Central Government under Section 3(1) of TOLA, cannot be construed as one which could extend the period of limitation provided under Section 149(1)(a) of the 1961 Act. As per the ratio enunciated in Ashish Agrawal's case, Section 149(1)(a) would apply to AY 2016- 17 and AY 2017-18. 50. The other argument that the provision of the third and fourth proviso would help the cause of the revenue by excluding the periods provided therein fails to take into account the following: 50.1. The third proviso appended to Section 149 of the Act, inter alia, provides that the time or extended time allowed to the assessee as per the show-cause notice issued under Section 148A(b) of the 1961 Act shall stand excluded for computation of limitation provided under the said Section. 50.2. The fourth proviso provides that where the timeframe adverted to in the third proviso leads to the situation that the period of limitation available to the AO for passing an order under 148A(d) is less than seven (7) days, then the remaining period shall stand extended to seven (7) days. Consequently, the limitation under Sub-Section (1) shall be deemed to be extended accordingly. 50.3....
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....ment 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 asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more for that year: Provided that no notice under section 148 shall 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 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. Hon'ble Supreme Court has upheld the views of High Courts that the benefit of new law shall be made available even in respect of proceedings relating to past assessment years. Decision of [the] 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 [the] ab....
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....part 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 01.02.2021 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 present 6 years. In serious tax evasion cases too, only where there is evidence of concealment of income of Rs.50 lakh or more in a year, can the assessment be re-opened up to 10 years. Even this reopening can be done only after the approval of the Principal Chief C....
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....e 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 limitation shall not apply to such cases. * It is also proposed that for the purposes of computing the period of limitation for issue of section 148 notice, the time or ....