TaxTMI 
TaxTMI 
2025 (10) TMI 425
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....y the Learned AR at the time of hearing. The same is reckoned as a statement made from the Bar and accordingly the Ground No. 11 raised by the assessee is hereby dismissed as not pressed. 3. We find that the assessee vide Ground No. 3 of its Cross Objections had raised a legal ground challenging the validity of assumption of jurisdiction under section 147 of the Act on the ground that Learned AO did not have any books of accounts, evidence or other documents in his possession which reveal that that income of the assessee had escaped assessment and such income is represented in the form of asset as required under section 149(1)(b) of the Act and hence the notice issued under section 148 of the Act is barred by limitation. This issue goes to the root of the matter and hence is taken up first for adjudication. 4. We have heard the rival submissions and perused the materials available on record. The assessee had filed its original return of income for the assessment year 2013-14 on 30-09-2013 declaring total income of Rs. 27,38,23,720/-. On the basis of specific information received through Insight portal uploaded by DDIT (Inv.) 1, Ghaziabad on 12-03-2021 in respect of the assess....
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....llow only the expenses in the form of purchases made from Bansal traders treating it as ingenuine. The same is not represented in the form of an "asset". Hence the assessment cannot be reopened after 3 years. It is not in dispute that the notice under Section 148 of the Act was issued on 23-04-2021 which is beyond 3 years from assessment year 2013-14. It was accordingly submitted that the notice under Section 148 of the Act dated 23-04-2021 is barred by limitation. 7. We find that the issue in dispute is no longer res integra in view of the decision of the Hon'ble Jurisdictional High Court in the case of Smart Chip Private Limited vs ACIT reported in 476 ITR 389 (Del) dated 23-04- 2025. The relevant facts and operative portion of the said order are reproduced hereunder:- "1. The petitioner has filed the present petition, inter alia, impugning a notice dated 21.03.2024 [impugned notice] issued under Section 148 of the Income Tax Act, 1961 [Act] and the reassessment proceedings conducted pursuant to the impugned notice. It is the petitioner's case that the impugned notice is barred by limitation and therefore, the reassessment proceedings initiated are without jurisdi....
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....ations made by the Supreme Court in Union of India v. Rajeev Bansal: 2024 SCC OnLine SC 2693/ [2024] 167 taxmann.com 70/301 Taxman 238/469 ITR 46 (SC): "49. The first proviso to Section 149(1)(b) requires the determination of whether the time limit prescribed under section 149(1)(b) of the old regime continues to exist for the assessment year 2021-2022 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. *** *** *** ....
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....o the previous year in which the search under Section 132 was conducted or a requisition under Section 132A of the Act was made. Plainly, the said controversy is required to be addressed by referring to Section 153A of the Act. Section 153A(1) of the Act is set out below: "153A. Assessment in case of search or requisition.- (1) Notwithstanding 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 acco....
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....he previous year in which search is conducted or requisition is made which falls beyond six assessment years but not later than ten assessment years from the end of the assessment year relevant to the previous year in which search is conducted or requisition is made. Explanation 2.-For the purposes of the fourth proviso, "asset" 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. ................ 15. Mr. Maratha's contention that the extended period of limitation under Section 153A of the Act would be applicable for the purpose of the proviso to Section 149(1) of the Act notwithstanding that the conditions, as stipula....
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....ies 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 ?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 ?4,46,21,363/- with non-filers from FY 2015-16 to 2020-21 needs to be verified. B. DISALLOWANCE OF PERSONAL EXPENSES It is noticed that during the course of search proceedings, some incriminating evidences were seized from the premises of Mr. Matthew David Foxton (34, Jor Bagh, New Delhi-110003) annexurized as Annexure A-2 in Premise TDR-9, wherein some instances of personal expenses of the key persons of Smart Chip Pvt. Ltd. were claimed in the books of accounts of Smart Chip. The incriminating evidences found are discussed as under: *** *** *** On perusal of the above, it can be noted that gold items worth Rs. 2,42,646/were being purchased in FY 2015-16. Further,....
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....e 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 shares in Vihaan Infrasystems Ltd., was the former employee of Smart Chip and having close relationship/connivance with Mr. Sanjeev Shriya; * The fees charged by Vihaan Infrasystems Ltd. was much higher as compared to other contractual manpower company; * No proper documentation and proof of service existed in respect of expense transactions with Vihaan Infrasystems Ltd. * Discrepancies in employee's attendance record found which further establishes the non-receipt of any actual services and non-genuineness of the transaction with Vihaan lnfrasystems Ltd. Further, the above observations in the seized Memo were also corrobor....
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....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 ofthe 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 fit case to issue notice u/s 148 r.w.s 149 r.w.s 151(ii) of the Income Tax Act 1961 as amended by the Finance Act 2022. 4. In view of the above, the assessee has misrepresent the amount of Rs. 9.21 Crorcs [Rs.0.49 Crore expenses debited to non-filers + Rs. 0.024 Crores as personal expenses + Rs. 8.70 Crores as expenses debited to Vihaan Infrasystems Ltd. represented in the form of an entry and expenditure] in its ITR filed for F. Y. 201516 relevant to A. Y. 2016-17 by way of various tax-avoiding arrangements and shifting profits to their Associated Enterprises (AEs) outside India. Therefore, as specified u/s 149(l)(b) of the Income-tax Act, 1961 read with explanation th....
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....conducted. 21. The search in question was conducted in financial year 2022-23; thus, the relevant block of six assessment years would be the six assessment years preceding AY 2023-24, being the assessment year relevant to the previous year in which the search was conducted. Accordingly, AY 2016-17 falls beyond the block of six years. 22. In view of the above, the impugned notice as well as the proceedings initiated pursuant thereto are set aside. The petition is allowed in the aforesaid terms. Pending applications also stand disposed of." 8. It is relevant to note that the term "asset" as defined in the 4th proviso to section 153A and in Explanation to section 149(1)(b) as it stood at the relevant point of time for the year under consideration were one and the same. We find that from 1-4-2021, the provisions of section 149(1)(b) is amended wherein income escaping assessment amounting to Rs 50 lakhs or more should be represented in the form of an asset, expenditure in respect of a transaction or in relation to an event or occasion or an entry or entries in the books of account. This amendment is to be construed only prospective in nature in the light of....