TaxTMI 
TaxTMI 
2025 (5) TMI 675
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....g 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. 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 ....
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....d on the merits of the addition made by the ld. AO. Ground no. 1 pertains to reopening of the assessment vide notice u/s. 148 of the Act dated 19.07.2022 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 ....
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....f Ganesh Dass Khanna vs. ITO in Writ Petition (C) No. 11527/2022 & CM Application No. 34097/2022, dated 10.11.2023 has decided this issue in favour of the assessee by considering the various decisions of the Hon'ble Apex 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 limi....
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....ices issued on or after 01.04.2021, when FA 2021 had already kicked in. 32.2. The Supreme Court noticed that with the enactment and enforcement of FA 2021, Sections 147 to 149 and Section 151, as they stood on 31.03.2021, had been substituted, bringing about radical and reformative changes in the matters concerning 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 ....
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....gh Courts: "...28. In view of the above and for the reasons stated above, the present appeals are allowed in part. The impugned common judgments and orders [Ashok Kumar Agarwal v. Union of India, 2021 SCC OnLine All 799] passed by the High Court of Judicature at Allahabad in WT No. 524 of 2021 and other allied tax appeals/petitions, is/are hereby modified 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 here....
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....SG representing the revenue and counsels representing the assessees. [See paragraph 26 at page 633]. 34. Consequently, the notices issued by the AO under the unamended Section 148 of the 1961 Act, which were the subject matter of writ actions preferred before various High Courts, were deemed to have been issued under Section 148A(b) of the amended 1961 Act. 35. As would be evident, there was no discussion or deliberation 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 ....
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.... by the assesses, concluded that since the old provisions had been substituted by new provisions pursuant to the coming into force of FA 2021, the impugned explanations set out in the Notification dated 31.03.2021 and 27.04.2021 would not apply. Therefore, notices issued under Section 148 relating to any AY, albeit after 31.03.2021, had to comply with the substituted provisions. [See paragraph 98]. 44. The revenue, however, seeks to latch on to the following observations made by the coordinate bench in paragraph 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 ....
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.... 101. The submission of the Revenue that Section 6 of the General Clauses Act saves notices issued under Section 148 post 31st March, 2021 is untenable in law, as in the present case, the repeal is followed by a fresh legislation on the same subject and the new Act manifests an intention to destroy the old procedure. Consequently, if the Legislature has permitted reassessment to be made in a particular manner, it can only be in this manner, or not at all. 102. The argument of the respondents that the substitution made by the Finance Act, 2021 is not applicable 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 ....
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....indicate that, although the revenue had raised the argument in Salil Gulati's case that the reassessment notices had travelled back in time to their original date when such notices were first issued and that the period of limitation provided in the new Section 149 of the Act would have to be applied from that point, albeit, based on the Instruction dated 11.05.2022, the coordinate bench rendered no ruling with regard to the same [See paragraphs 5 and 9 of the said judgment]. 48. Therefore, the arguments advanced on behalf of the revenue that principles of constructive res judicata would apply are flawed for the following 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....
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....e the end date, i.e., 30.06.2021 were valid in the eyes of the law, is misconceived for the following reasons: (i) First, there was no power invested under TOLA, and that too via Notifications, to amend the statute, which had the imprimatur of the Legislature. Since, with effect from 01.04.2021, when FA 2021 came into force, the Notifications dated 31.03.2021 and 27.04.2021, which are sought to be portrayed by the revenue as extending the period of limitation, were contrary to the provisions of Section 149(1)(a) of the Act, in our opinion, they lost their legal efficacy. (ii) Second, the extension of the end date for completion of proceedings and compliances, a power 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 foll....
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....w section 149 of the Act, the following may be seen: Hon'ble Supreme Court has held that the new law shall operate and all the defences available to assessees under section 149 of the new law and whatever rights are available to the Assessing Officer under the new law shall continue to be available. Sub-section (1) of new section 149 of the Act as amended by the Finance Act, 2021 (before its amendment by the Finance Act, 2022) reads as under:- 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 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 1s....
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....ntioned above are clearly ultra vires the provisions of Section 149(1) of the amended 1961 Act. 52.2. Furthermore, a perusal of the judgment of the Supreme Court rendered in Ashish Agrawal's case would show that it did not rule on the provisions contained in TOLA or the impact they could have on the reassessment proceedings. In any event, TOLA conferred no such power on the CBDT. 52.3. Besides this, as correctly argued on behalf of the assessees, there is no clarity in the aforementioned Instruction regarding the "original date when such notices were to be issued". The impugned provisions of the Instruction dated 11.05.2022 are also unsustainable in law because they are vague. "Certainty" in taxing statutes is one of the grund 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 01.02.2021 and the relevant parts of the Memorandum explai....
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....ther it is a fit case for issue of notice under section 148 and serve a copy of such order along with such notice on the assessee. The Assessing Officer shall before conducting any such enquiries or providing opportunity to the assessee or passing such order obtain the approval of specified authority. However, this procedure of enquiry, providing opportunity and passing order, before issuing notice under section 148 of the Act, shall not be applicable in search or requisition cases. (viii) The time limitation for issuance of notice under section 148 of the Act is proposed to be provided in section 149 of the Act and is as below: • in normal cases, no notice shall be issued if three years have elapsed from the end of the relevant assessment year. Notice beyond 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 b....
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....ssessment and re-computation could be issued. 53.2. Thus, as per the Memorandum, in "normal cases", no notice was intended to be issued if three (03) years had elapsed from the end of the relevant AY. Notice, beyond the prescribed three (03) years from the end of the relevant AY, could be issued only in a few specific cases; one such example which is given in the Bill is where the AO was in possession of evidence that escaped income amounted to Rs. 50 lakhs or more. 53.3. In sum, the sense that one gets upon a holistic reading of the backdrop in which the new regime for reopening assessments was enacted is that where escapement of income was below Rs. 50 lakhs, the normal period of limitation, i.e., three (03) years was to apply. In comparison, the extended period of ten (10) years would apply in serious tax evasion cases where there was evidence of concealment of income of Rs. 50 lakhs or more in the given period. 53.4. The State, perhaps, did not deem it worthwhile to chase assessees beyond three (03) years, where the alleged escaped income was less than Rs. 50 lakhs. These aspects concerning legislative policy come through if one were to read the relev....