TaxTMI 
TaxTMI 
2025 (7) TMI 1754
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....el/2024 2014-15 30.01.2024 24.12.2019 153A r.w.s 144 5. 1382/Del/2024 2015-16 30.01.2024 24.12.2019 153A r.w.s 144 6. 1383/Del/2024 2016-17 30.01.2024 24.12.2019 153A r.w.s 144 7. 1384/Del/2024 2017-18 30.01.2024 24.12.2019 144 2. At the time of hearing, it was stated that the issues involved in all captioned appeals filed by the assessee, for Assessment Years 2011-12 to 2017-18 are common, interlinked and arising from the search action on the assessee. Hence, all these cases have been heard together and accordingly, adjudicated by this common order. 3. First we take appeal of the assessee in ITA No.1378/Del/2024 [Assessment Year 2011-12]. ITA No.1378/Del/2024 [Assessment Year 2011-12] 4. Brief facts of the case are that the assessee filed his return of income u/s 139 of the Act on 30.12.2011, declaring total income of INR 2,44,620/-. The return was processed u/s 143(1) of the Act on 09.03.2012 at INR 2,44,620/-. A search and seizure action u/s 132 of the Act was carried out in AMQ Group of cases on 27.02.2017 and at the residential premises of the assessee was searched on 28.02.2017. As a consequence, no....
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....he appellant is bad in law and as such the assessment framed on such basis is bad in law and may please be quashed. 5. That the Ld. Commissioner of Income Tax (Appeals) has erred in law while upholding the addition made by the Ld. Assessing Officer of Rs. 1,00,000 u/s 80C of the Act without appreciating the submissions made by the appellant. As such, the addition of Rs. 1,00,000/- is bad in law and may please be deleted. 6. That the Ld. Commissioner of Income Tax (Appeals) has erred in law while upholding the addition made by the Ld. Assessing Officer of Rs. 60,000 u/s 69C of the Act without appreciating the submissions made by the appellant. As such, the addition of Rs. 60,000/- is bad in law and may please be deleted. 7. That the assessee craves leave to add, delete or/and modify any of the ground of appeal at the time of hearing. 6. In support to the Ground of appeal No.1, the ld. AR of the assessee invited our attention to the provisions of section 153B providing time limit for making assessment for search & seizure cases. The section 153B is reproduced as under: 153B.(1) Notwithstanding anything contained in section 153, the Assessing Off....
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....9-20 and onwards. For this he invites our attention to Paragraph 5 of the DTAA Protocol which is available at paper book pages 240, information requests for periods prior to 30.11.2018 must be forcibly relevant to a taxable event occurring after that date. The relevant extract of Paragraph 5 of the DTAA Protocol is reproduced as below: 5. With reference to Article 26 (Exchange of Information) of the Agreement, it is understood that: (a) information exchanged shall not be disclosed to any third jurisdiction. (b) the competent authority of India may disclose information to: (i) Parliamentary Committees; (ii) Special Investigation Team (SIT) constituted by Government; and (iii) any other oversight bodies mutually agreed upon in writing. (c) the requested Contracting Party shall disclose any information that precedes the date on which the Agreement has effect for the taxes covered by the Agreement, insofar the information is for esecably relevant for a fiscal year or taxable event following that date. 9. In the instant case, the reference related to the assessment years prior the DTAA, the request falls outside the permi....
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....mentary Protocol stood deleted and was replaced by Article 26 as set out in the Amending Protocol. Further, paragraph 2 of Article 14 of the Amending Protocol expressly stipulated that the Amending Protocol would form an integral part of the Indo- Swiss DTAA and would be applicable on the date of the notifications confirming that all legal requirement for giving effect to the Amending Protocol were satisfied. However, paragraph 3 of Article 14 of the Amending Protocol makes it explicitly clear that notwithstanding anything contained in paragraph 2 of Article 14 of the Amending Protocol, Article 26 of the Indo-Swiss DTAA would be applicable only for information that relates to any fiscal year beginning on or after first day of January of the year following the date on which the Amending Protocol was executed. Since the Amending Protocol was signed on 30.08.2010, Article 26 would be effective only for exchange of information that relates to the following fiscal year, that is, commencing 01.04.2011. Thus, Mr. Rai's contention that the Indo-Swiss DTAA contained provisions regarding exchange of information even prior to the Amending Protocol and therefore, the request for information re....
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.... of an existing provision. 25. Substitution of a provision results in repeal of the earlier provision and its replacement by the new provision (see Principles of Statutory Interpretation, ibid., p. 565). If any authority is needed in support of the proposition, it is to be found in West U.P. Sugar Mills Assn. v. State of U.P. [West U.P. Sugar Mills Assn.v. State of U.P., (2002) 2 SCC 645], State of Rajasthan v. Mangilal Pindwal [State of Rajasthan v. Mangilal Pindwal, (1996) 5 SCC 60], Koteswar Vittal Kamath v. K. Rangappa Baliga& Co. [Koteswar Vittal Kamath v. K. Rangappa Baliga& Co., (1969) 1 SCC 255] and A.L.V.R.S.T. Veerappa Chettiar v. I.S. Michael [A.L.V.R.S.T. Veerappa Chettiar v. I.S. Michael, 1962 SCC OnLine SC 318 : 1963 Supp (2) SCR 244 : AIR 1963 SC 933]. In West U.P. Sugar Mills Assn. case [West U.P. Sugar Mills Assn. v. State of U.P., (2002) 2 SCC 645], a three-Judge Bench of this Court held that the State Government by substituting the new rule in place of the old one never intended to keep alive the old rule. Having regard to the totality of the circumstances centring around the issue the Court held that the substitution had the effect of just deleting the ....
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....vious Prohibition Order of 1119, cannot be held to be revived. This argument ignores the distinction between supersession of a rule, and substitution of a rule. In A.T.B. Mehtab Majid & Co. (Firm) [A.T.B. 6 (2024) 8 SCC 742 ITA No.782/2023 & Connected Cases Page 36 of 47 Mehtab Majid & Co. (Firm) v. State of Madras, (1963) 14 STC 355 : 1962 SCC OnLine SC 51], the new Rule 16 was substituted for the old Rule 16. The process of substitution consists of two steps. First, the old rule it made to cease to exist and, next, the new rule is brought into existence in its place. Even if the new rule be invalid, the first step of the old rule ceasing to exist comes into effect, and it was for this reason that the court held that, on declaration of the new rule as invalid, the old rule could not be held to be revived." (emphasis in original)" 53. We may also note the decision of the Supreme Court in Firm A.T.B. Mehtab Majid & Co. v. State of Madras & Another 7. In its decision, the Supreme Court had observed as under: "......It has been urged for the respondent that if the impugned rule be held to be invalid, old rule 16 gets revived and that the tax assessed on the petitione....
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.... bank account of 'X' in connection with an investigation conducted in India. Pursuant to the said request, on 10.04.2013, the Federal Revenue Administration (FRA) had made a request to the bank to furnish the relevant documents and also informed 'X' of the same. 'X' had opposed the request and on 23.07.2013, referred the matter to the Federal Administrative Court. The rough and ready translation8 of the relevant extract of the said decision is set out below: "6.2.4.2 It follows that Art. 26 para. 1 CDI IN-CH9, as amended by the Protocol of 30 August 2010, applies - pursuant to Art. 14 para. 3 of the Protocol - at most the reports relating to the "fiscal year" ("fiscal year") beginning on first January of the civil year following the signing of the Memorandum of Review. ... CDI IN-CH is defined, the "fiscal year" ("fiscal year") corresponds to the previous year ("previous year"), excluding the "financial year immediately preceding the assessment year". By virtue of Indian law, the tenure of which is confirmed by Art. 14 para. 2 of the Protocol of 30 August 2010, the "previous year" beginning on 1st April of each civil year. This therefore means that the new art. 26 CDI CH-I....
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.... 59. Thus, we find no infirmity with the view of the learned ITAT that the request made by the competent authorities under Article 26 of the IndoSwiss DTAA for information, which was prior to 01.04.2011, was not maintainable. 60. Having stated the above, the next question required to be addressed is whether by virtue of Clause (ix) of the Explanation to Section 153B of the Act, the period for completion of the assessment would stand extended notwithstanding that the request for information made by the Revenue Authority for a period prior to 01.04.2011, was not maintainable. ITA No.782/2023 & Connected Cases Page 40 of 47 61. The learned ITAT had referred to the earlier decisions in the context of extension of limitation under Clause (ii) of Explanation to Section 153B of the Act. In terms of the said Clause as was in force prior to Amendment Act, 17 of 2013 coming into force, the period commencing from the date when the Assessing Officer directs an assessee to get his accounts audited under Section 142(2A) of the Act and ending on the day on which the assessee is required to furnish the audit report, is required to be excluded for the purposes of computing the....
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....ext of Explanation (ii) to Section 153B of the Act do shed light on the controversy as raised in the present appeal. 65. In VLS Finance Limited and Anr. v. Commissioner of Income Tax and Anr.10, the Supreme Court considered a case where the Assessing Officer had issued a direction under Section 142(2A) of the Act for conduct of a special audit on 29.06.2000, which was received by the assessee on 10 (2016) 12 SCC 32. The assessee had challenged the same by filing a writ petition and had secured an interim order dated 24.08.2000 staying the directions for conduct of a special audit. Thereafter, the assessee succeeded in its petition and the directions to conduct a special audit, which were issued on 29.06.2000 were set aside by a judgment dated 15.12.2006. In the aforesaid context, one of the questions that arose for consideration of the Supreme Court was whether the period between 24.08.2000 (the date on which the interim order was granted) and 15.12.2006 (the date on which the petition was allowed) was required to be excluded for calculation of the period of limitation for framing the assessment order. The said question was considered in the context of Explanation (1) to S....
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....sion of such a time is not dependent upon the final outcome of the proceedings in which interim stay was granted." 66. It is material to note that Clause (ii) of Explanation 1 to Section 158BE of Act was also similar to Clause (ii) of the Explanation to Section 153B of the Act. The Supreme Court directed that the period during which a stay order was granted, that is, from 24.08.2000 till 15.12.2006 when the judgment setting aside the direction issued under Section 142(2A) of the Act was delivered, was to be excluded for computing the period available for passing the assessment order. However, it is material to note, that the period from 29.06.2000 till 24.08.2000; that is, the date of issuance of the order till the date of passing the stay order was not excluded. Although there is no discussion on this issue, it is implicit that the exclusion on account of direction to conduct a special audit, would not be applicable if the said direction is found to be invalid. 67. In Sahara India (Firm), Lucknow v. CIT & Anr.11, the Supreme Court considered the question whether an assessee was required to be afforded a hearing before issuance of a direction for conduct of a spec....
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....eme Court to treat this decision as settling the law prospectively - the effect of which was to save the orders issued under Section 142(2A) of the Act that were issued prior to the court handing down its ruling - the assessments made would have to be set aside as fresh assessments would be barred by limitation. It is in the aforesaid view that the learned ASG had made a request for prospective ruling, which was acceded to by the Supreme Court. It is implicit that if the directions issued under Section 142(2A) of the Act were held to be invalid, the benefit of exclusion of the period under Clause (ii) of the Explanation to Section 153B of the Act would not be available. 69. In Principal Commissioner of Income-tax v. Vilson Particle Board Industries Limited12, the Bombay High Court following the decision in Sahara India (Firm), Lucknow v. CIT &Anr. upheld the decision of the learned ITAT setting aside the assessment order as barred by limitation, a consequence of the directions under Section 142(2A) of the Act being vitiated. The relevant extract of the ITAT's order as noted by the Bombay High Court is reproduced below: "8. .....Applying the principles laid down by....
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....iss DTAA. It was contrary to the limitations as expressly specified under Article 14 of the Amending Protocol. 72. In view of the above, the questions to law as framed are answered against the Revenue and in the negative; that is, against the Revenue and in favour of the Assesses. 73. The appeals are, accordingly, dismissed. The pending applications, if any, stand disposed of." 13. The instant appeal is pertaining to AY 2011-12, wherein the assessment orders have been passed u/s 153A r.w. Section 143(3) of the Act on 24.12.2019. The DTAA between India-Hongkong come into force w.e.f. 30.11.2018. As per paragraph 5(c) of the Article 26, request for disclose any information for periods prior to 30.11.2018 should be forcibly relevant to the fiscal year or taxable event following that date Thus, no request can be made under Article 26 of the DTAA for the period/ fiscal year prior to 30.11.2018. Therefore, in our considered opinion, the period of limitation could not be extended under Explanation (ix) to Section 153B of the Act to frame the assessment based on such reference. By relying on the ratio laid down by the Hon'ble High Court of Delhi(supra), we hold tha....