TaxTMI 
TaxTMI 
TaxTMI 
2025 (7) TMI 830
X X X X Extracts X X X X
X X X X Extracts X X X X
.... reply on 01.02.2019. Thereafter, on 26.07.2019 notice was issued under Section 142(1) of the Act. On 27.12.2019 an order of assessment was passed under Section 143(3) of the Act accepting the return of income filed by the assessee. While so, on 23.02.2024, show cause notice under Section 148A(b) of the Act was issued informing the assessee that income to the tune of Rs. 329,68,73,645/- had escaped assessment. On 08.03.2024, the assessee offered their reply. On 26.03.2024, an order was passed under Section 148A(d) of the Act deciding that it was a fit case to issue notice under Section 148 of the Act. On 26.03.2024, notice was issued under Section 148 of the Act informing the assessee that the assessment for the assessment year 2017-18 stood reopened. Challenging the said notice and the preceding order, the assessee filed W.P.(MD)No.10198 of 2024. The writ petition was allowed by the learned single Judge on 23.08.2024. Challenging the same, this writ appeal has been filed. 3.The learned Standing counsel appearing for the Department submitted as follows:- The assessee company raised money to the tune of Rs. 294,00,00,000/- by issuing Non-Convertible Debentures (NCD) from domestic ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er the assessee had made true and full disclosure of material facts is not relevant. If the assessing officer has information that suggests that the income chargeable to tax has escaped assessment, notice under Section 148 of the Act can be issued. This notice has to be decided only on the anvil of Section 148(3) of the amended Act and one should not fall back on the precedents that were rendered under the old regime. The learned single Judge had erroneously followed the principles laid down by the Hon'ble High Courts and the Hon'ble Supreme Court in the context of the unamended provisions. The writ petition is not maintainable in the light of the decision of the Hon'ble Supreme Court reported in (2022) 449 ITR 256 (Anshul Jain V. Principal Commissioner of Income-Tax). The learned Standing counsel called upon this Court to set aside the order of the learned Single Judge and allow this writ appeal. 4.Per contra, the learned Senior counsel for the assessee contended that the learned Single Judge rightly held that the reopening of the assessment is sought to be made on a mere change of opinion. He submitted that the reassessment proceedings have been initiated with no fr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing the objections raised by the assessee, if the assessee has any grievance on the merits thereafter, the same has to be agitated before the assessing officer in the re-assessment proceedings. No doubt, in the said case also, the assessee, as in the present case, challenged the determination order under Section 148A(d) and the consequential notice under Section 148 of the Act. The Division Bench of the Punjab and Haryana High Court was of the opinion that it was not a case where from a bare reading of notice, it can be axiomatically held that the authority had clutched upon the jurisdiction not vested in it. In that view of the matter, the writ petition filed by the assessee stood dismissed [(2022) 143 taxmann.com 37). The Hon'ble Supreme Court declined to interfere with the said order. In our view, this decision far from supporting the contention of the revenue, is positively against it. The High Court itself made a distinction between jurisdictional error and error of law / fact within jurisdiction. The High Court clarified that for rectification of errors, statutory remedy has been provided. The clear implication is that where there are jurisdictional errors, writ petition ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (iii) an entry or entries in the books of account, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more: 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 [a notice under section 148 or section 153A or section 153C 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 or section 153A or section 153C, as the case may be, as they stood immediately before the commencement of the Finance Act, 2021:" 9.The proviso to Section 149(1)(b) contains the key. It bars issuance of notice under Section 148 for the assessment year beginning on or before 01.04.2021 if on the date of issuance of the notice, it was time-barred. Whether it was time-barred or not has to be decided with reference only to Section 149(1)(b) or Section 153A or Section 153C as they stood before 01.04.2021. In this case, we are not concerned with Sections 153A or 153C. As on 31.03.2021, Section 149(1)(b) stood as follows:- "149.Time-limit for notice - (1) No notic....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sment year was 2015- 2016. The sixth year expired on 31.03.2022. But the notice under Section 148 was issued on 27.08.2022. It was clearly beyond the period of limitation prescribed in Section 149 r/w. the first proviso to the said section. Hexaware certainly does not come to the rescue of the assessee on the issue of limitation. 11.The third issue concerns the relevance of the precedents rendered under the old regime. The learned Senior Counsel appearing for the assessee asserted that the principles laid down in CIT vs Kelvinator ((2010) 2 SCC 723) will apply even post-amendment. He pointed out that such a view has been taken in Hexaware Technologies Limited Vs Assistant Commissioner of Income-tax ([2024] 162 taxmann.com 225 (Bombay)) and Siemens Financial Services Private Limited Vs DCIT [2023] 154 taxmann.com 159. 12.In Kelvinator, it was held that one must treat the concept of "change of opinion" as an in-built test to check abuse of power by the assessing officer. The assessing officer has no power to review. Reassessment cannot be done based on mere change of opinion. In Siemens, it was held that if change of opinion concept is given a go by, that would result in giving arb....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under subsection (2) of section 148. " 148. Issue of notice where income has escaped assessment.-1 [(1)] Before making the assessment, reassessment or re-computation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, 2 *** as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, 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:" 14.Post amendment, Section 147, 148, 148A read as follows: "148A. Procedure before issuance of notice under section ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at the "information", however tenuous, would not suffice: it is necessary that the "information" has a live and robust link with alleged escapement of income. We would not go that far. If the information is relevant and implies a possible escapement of income, the reopening process can be initiated. At the stage of issuance of initial notice under Section 148A(1), the Court would not go into the sufficiency or adequacy of the information. If the assessing officer can show that he has "information" and it suggests escapement of income, the writ Court should not interfere at that stage. 16.Section 148A contains sufficient safeguards. Suppose there is an audit objection, it is certainly an information but then on that sole ground, an order cannot be passed that the case is fit for issuing notice under Section 148. The assessee's reply must be considered. In Springer Health Care Limited Vs Assistant Commissioner of Income Tax & another (W.P(C)336/2025 vide order dated 21.05.2025), the Hon'ble Division Bench of Delhi High Court held that if the assessing officer is satisfied with the reply furnished by the assessee and the material on record, the assessing officer is bound to h....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... IT Act. Section 148-A of the IT Act is a new provision which is in the nature of a condition precedent. Introduction of Section 148-A of the IT Act can thus be said to be a game changer with an aim to achieve the ultimate object of simplifying the tax administration, ease compliance and reduce litigation. 18. But prior to pre-Finance Act, 2021, while reopening an assessment, the procedure of giving the reasons for reopening and an opportunity to the assessee and the decision of the objectives were required to be followed as per the judgment of this Court in GKN Driveshafts (India) [GKN Driveshafts (India) Ltd. v. ITO, (2003) 1 SCC 72]. 19. However, by way of Section 148-A, the procedure has now been streamlined and simplified. It provides that before issuing any notice under Section 148, the assessing officer shall: (i) conduct any enquiry, if required, with the approval of specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment; (ii) provide an opportunity of being heard to the assessee, with the prior approval of specified authority; (iii) consider the reply of the assessee furnished, if any, in respo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dents evolved in a different context. The Judges must be alert to see if the ground beneath the judicial feet has shifted. Ashish Agarwal was rendered on 04.05.2022. Dr.Mathew Cherian came later on 01.09.2022. However, in Dr.Mathew Cherian, Ashish Agarwal has not been referred to. 19.One other aspect may have to be clarified. It has been held by the Delhi High Court in Springer Healthcare Limited that audit objection should not be taken as a command to make re-assessment. We have already expressed our agreement with the said ratio. We want to add something more. Clause (ii) of Section 148(3) of the Act states that the information with the assessing officer which suggests that the income chargeable to tax has escaped assessment means, inter alia, any audit objection to the effect that the assessment in the case of the assessee for the relevant assessment year has not been made in accordance with the provisions of the Income Tax Act. Since this provision provides for reopening a concluded assessment, it cannot be construed liberally. The audit objection must definitely opine that the assessment was not made as per the statutory provisions. Only if the audit objection contains such a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vidence to prove that these expenses (processing charges legal & professional charges) are having nexus with the assessee's business and expended wholly for the business purpose 2. The genuineness (Identity & credit worthiness of persons to whom NCDs issued and genuineness of transactions) of the long term borrowing (NCDs) & short term borrowing are not established 3. The absence of admission of any income from the investments made in listed equities The above three information suggests that income to the extent of Rs 329,68,73,645/-has escaped assessment. You are required to submit the detailed reply with evidence to the show cause notice u/s 148 A(b) of the Act on or before 08/03/2024" There is no reference to any audit objection in the above notice. In our view, the notice under Section 148A(1) of the Act must be accompanied by a copy of the audit objection or at least the relevant portions. In this case, before eliciting the assessee's response, the audit objection was not furnished. A truncated extract is found as part of the order passed under clause (d) of Section 148A of the Act. The relevant para reads as follows : "Order under clause (d) of section 14BA of ....