TaxTMI 
TaxTMI 
2025 (4) TMI 1713
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....ted 29.02.2024 bearing DIN: ITBA/ AST/F/144(FCM)/2023- 24/1061726288(1) issued by the Respondent Department for being issued without jurisdiction as the very initiation of the impugned re-assessment proceeding was initiated on admitted false premise by issuing false notice under Section 148A(b) of the Income Tax Act, 1961; (ii) For quashing the order dated 06.04.2022 bearing DIN and ITBA/AFT/F/148A/2022-24/Notice No. 1042559776 (1) passed under Section 148A(d) of the Income Tax Act, 1961 as the same has been passed on false premise that the petitioner is a non-filer of return and has escaped assessment of income for the Assessment Year 2015-16 whereas in the impugned Show Cause Notice it has been admitted that the petitioner had filed its Income Tax Return for the Assessment Year 2015-16; (iii) For setting aside the entire re-assessment proceeding and inquiry conducted under Section 142 of the Income Tax Act, 1971 with respect to Assessment Year 2015-16 as the same had been initiated on the basis of the impugned order dated 06.04.2022 passed under Section 148A(d) of the Income Tax Act, 1961 which is per se illegal, arbitrary and bad in law; (iv) For a declaration ....
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....t, Balance Sheet and Books of Accounts of the petitioner's proprietary ship firm was audited by a Chartered Accountant who issued Audit Report under Section 44AB of the Income Tax Act, 1961 (hereinafter referred to as the 'Act of 1961'). A copy of the Income Tax Return Acknowledgment and the audit report are enclosed with the writ application as Annexure 'P/1' and 'P/2' respectively. 6. The grievance of the petitioner is that after completion of six years, the petitioner was served with impugned order purportedly passed under Section 148A(d) of the Act of 1961 on 06.04.2022 with respect to Assessment Year 2015-16. A copy of the order dated 06.04.2022 is Annexure 'P/3' to the writ application. Submissions on behalf of the Appellant 7. Learned counsel for the petitioner submits that reading of the impugned order would show that the Notice under Section 148A (b) of the Act of 1961 dated 23.03.2022 was issued upon the petitioner due to non-filing of return. According to the said notice, on the basis of the information received from Insight Portal under the Module "Non-filing of Return" the petitioner was served with a notice which wrongly al....
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....er Section 148A(d) of the Act of 1961 was passed. 12. It is submitted that the petitioner has been issued impugned Show Cause Notice dated 29.02.2024 under signature of the Assessment Unit, Income Tax Department whereby long term gain to the tune of Rs. 25,90,000/- on account of sale of shares has been alleged to be bogus and the petitioner has been show caused as to why the said variation be not implicated on the petitioner. The Department has doubted the sale proceeds of sale of 7000 shares of Tarang Project by the petitioner which was purchased by the petitioner on 13.06.2009 from M/s. Tushar (India) Pvt. Ltd. vide Contract No. 13 dated 13.06.2009 which was subsequently sold by the petitioner through Hindustan Tradecom Pvt. Ltd. The sale proceeds of said shares were received in the bank account of the petitioner and also duly accounted in its books of accounts. It is submitted that the long term capital gain claimed as exempted by the petitioner has been arbitrarily denied by the Respondent- Department. 13. During pendency of the writ application, the Respondent-Assessing Authority, Assessment Unit, Income Tax passed assessment order under Section 144, 144(b) read with Sec....
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....dence, to escape the threshold of Rs. 50 lakhs which is a prerequisite to initiate reassessment and the ultimate post enquiry figure of income escaping assessment is only Rs. 29 lakhs which admittedly could not have triggered the notice after six years of the end of the assessment year. The very premise of the notice that assessee is a non-filer of return is flawed. 17. Learned counsel submits that lack of jurisdiction goes to the root of the matter and in this case a jurisdictional error has been committed by the assessing authority which will vitiate the whole reassessment proceedings. Learned counsel has relied upon the judgment of the Bombay High Court in the case of Inventors Industrial Corporation Ltd. v. CIT reported in 1991 SCC OnLine Bom 655 : (1992) 194 ITR 548 : (1991) 96 CTR 206. 18. Learned counsel further submits that the speech of the Finance Minister while introducing the amendment in the Income Tax Laws may be found in the judgment of the Hon'ble Delhi High Court in the case of Ganesh Dass Khanna vs. Income Tax Officer and Anr. reported in [2024] 460 ITR 546 (Delhi) wherein it is clearly stated that only in serious tax evasion cases where there is evidenc....
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....sed on 06.04.2022 after approval of the competent authority. 21. The counter affidavit enlists the details of the opportunity given to the assessee from which it appears that one show cause notice was issued on 23.03.2022 under section 148A(b). It is stated that after receipt of the notice under Section 148 of the Act, the assessee did not file his return of income. Later on, the case was transferred to Faceless Unit for assessment proceedings. It is admitted that during assessment, the Faceless Assessing Officer (FAO) found that the assessee had filed its ITR on 30.03.2016 declaring total income of Rs. 7,99,960/-. The FAO observed that the assessee had purchased 7000 Equity Shares of Tarang Project from one M/s Tushar (India) Pvt. Ltd. on 13.06.2009 which was further sold on 24.03.2015 through some other broker. When the assessee was asked about this, he submitted his inability to provide the details of broker. The reason given by the assessee is that as the data was too old to recover and also did not maintain any Demat or Trading Account with the said broker. He was not having any share transfer slip for transfer of shares in his name. He had not received any dividend from Ta....
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....ther submits that before issuance of Section 148 notice, the Department has followed the procedures prescribed by law and the reassessment proceeding had been opened only after giving an appropriate opportunity of hearing to the petitioner. Learned Senior Standing Counsel submits that under the old law, the Department had six years available for issuance of notice under Section 148 of the Act. The period of six years would have lapsed on 31.03.2022 but if the time given to respond is excluded in counting the period of limitation, the notice under Section 148 dated 06.04.2022 would be found within time. 26. It is submitted that in the present case, despite receipt of notice under Section 148 of the Act, the petitioner failed to file his return. Learned Senior Standing Counsel has relied upon the judgment of the Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd. vs. Income Tax Officer and Ors. reported in (2003) 1 SCC 72. 27. Learned Senior Standing Counsel further submits that at the stage of issuing notice under Section 148A, all that is required is to provide the information on the basis of which the notice has been issued. In case of Chaturbhuj Gattani vs....
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....ded by Finance Act, 2016 reads as under: Time limit for notice. [For relevant case laws, see Taxmann's Master Guide to Income-tax Act.]"'149. [Substituted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1- 4-1989](1) No notice under section 148 shall be issued [For the meaning of the term "issued", see Taxmann's Direct Taxes Manual, Vol.3.] for the relevant assessment year,- [58. Clauses (a) and (b) substituted by the Finance Act, 2001, wef. 1-6-2001. Prior to their substitution, clauses (a) and (b), as amended by the Direct Tax Laws (Second Amendment) Act, 1989, we.f. 1-4-1989, read as under:" (a) in a case where an assessment under sub-section (3) of section 143 or section 147 has been made for such assessment year,- (i) if four years have elapsed from the end of the relevant assessment year, unless the case falls under sub-clause (ii) or sub-clause (iii); (ii) if four years, but not more than seven years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to rupees fifty thousand or more for that year; ....
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....ect to the provisions of section 151. (3) If the person on whom a notice under section 148 is to be served is a person treated as the agent of a non-resident under section 163 and the assessment, reassessment or recomputation to be made in pursuance of the notice is to be made on him as the agent of such non-resident, the notice shall not be issued after the expiry of a period of [Substituted for "two" by the Finance Act, 2012, w.e.f. 1-7-2012][six] years from the end of the relevant assessment year." 31. The Finance Act, 2021 inserted Section 148A with a heading "Conducting inquiry, providing opportunity before issue of notice under section 148. Section 148A as inserted by Finance Act, 2021 with effect from 01.04.2021 reads as under :- "148A. The Assessing Officer shall, before issuing any notice under section 148,- (a) conduct any enquiry, if required, with the prior approval of specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment; (b) provide an opportunity of being heard to the assessee, with the prior approval of specified authority, by serving upon him a notice to sh....
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....2021, the time limit for notice under section 148 of the Act was changed. Section 149 as substituted with effect from 01.04.2021 reads as under :- "[ Substituted by the Finance Act, 2021, w.e.f. 1-4-2021. Prior to its substitution, section 149, as amended by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989 Direct Tax Laws (Second Amendment) Act, 1989, w.e.f. 1-4- 1989, Finance Act, 2001, w.e.f. 1-6-2001 and Finance Act, 2012, w.e.f. 1-7-2012, read as under: *149. Time limit for notice.-(1) No notice under section 148 shall be issued** for the relevant assessment year,- (a) if four years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b) or clause (c); (b) if four years, but not more than six years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has †escaped assessment amounts to or is likely to amount to one lakh rupees or more† for that year; (c) if four years, but not more than sixteen years, have elapsed from the end of the relevant assessment year unless the income in relation to any asset (including fi....
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....he provisions of clause (b) of sub-section (1) of this section, as they stood immediately before the commencement of the Finance Act, 2021: Provided further that the provisions of this sub-section shall not apply in a case, where a notice under section 153A, or section 153C read with section 153A, is required to be issued in relation to a search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A, on or before the 31st day of March, 2021: Provided also that for the purposes of computing the period of limitation as per this section, the time or extended time allowed to the assessee, as per show-cause notice issued under clause (b) of section 148A or the period during which the proceeding under section 148A is stayed by an order or injunction of any court, shall be excluded: Provided also that where immediately after the exclusion of the period referred to in the immediately preceding proviso, the period of limitation available to the Assessing Officer for passing an order under clause (d) of section 148A is less than seven days, such remaining period shall be extended to seven days and the period ....
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....aid that such submissions cannot be taken as an appropriate explanation from the respondents. The name of the petitioner has been mentioned in the first paragraph of the annexure and then the authority issuing the notice has apparently mentioned about a data available on the e-filing portal which is not a correct data. The fact remains that the petitioner has filed its ITR on 30.03.2016 and his audit report was also uploaded. 35. This Court further finds that in the second paragraph of the annexure, it is stated that the assessee had deposited in cash aggregating to Rs. 20 lakhs in the State Bank of India and had also made transactions of Rs.26,31,400/- and Rs.43,97,919/- but all these transactions have not at all been discussed later on and what has ultimately transpired is that the Assessing Officer has disallowed long term capital gain of Rs. 25,90,000/- which was claimed by the petitioner in his Income Tax Return. 36. The contention of learned counsel for the petitioner that in the annexure to the notice issued under section 148A (b) of the Act, the amount of escaped assessment was inflated to bring it over and above Rs. 50 lakhs only to avoid the period of limitation, ha....
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....issue is covered by the judgments of this Court referred to above. It was categorically found that Section 149 provides for a time-limit for notice to be issued under Section 148 which under clause (a) of Sub-section (1) is three years. A limitation of 10 years is provided only for escaped assessment where the tax escaped is more than Rs. 50 Lakhs. In the present case admittedly the total assessment is only of Rs. 31 lakhs and the demand now raised is slightly more than Rs. 19 lakhs. Insofar as Section 148A it was brought into the Act by Finance Act, 2021 with effect from 01.04.2021 when Section 148 also stood substituted. Section 148A deals with the enquiry and opportunity provided before issuance of notice under Section 148 but under the very same Finance Act, 2021. The limitation period provided under Section 149 was also amended and it was brought down to three years where the escaped assessment is of less than Rs. 50 lakhs. 101. Under section 148A(b), the Assessing Officer has to comply with two requirements : (i) issuance of a show-cause notice; and (ii) supply of all the relevant information which forms the basis of the show-cause notice. The supply of the relevant ....
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....ud 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 reopening of 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 reopened up to 10 years. Even this reopening can be done only after the approval of the Principal Chief Commissioner, the highest level of the Income Tax Department .... Memorandum .. Income escaping assessment and search assessments- Under the Act, the provisions related to income escaping assessment provide that if the assessing officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may assess or reassess or recompute the total income for such year under Section 147 of the Act by issuing a notice under Section 148 of the Act. However, such reopening is subject to the time limits prescribed in Section 149 of the Act .... The Bill proposes a completely new procedure for assessment of such cases. It is expected that the new system wou....
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.... stood immediately before the proposed amendment. ● Since the assessment or reassessment or recomputation in search or requisition cases (where such search or requisition is initiated or made on or before 31-3-2021) are to be carried out as per the provisions of Sections 153-A, 153-B, 153-C and 153-D 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 extended time allowed to the assessee in providing opportunity of being heard or period during which such proceedings before issuance of notice under Section 148 are stayed by an order or injunction of any court, shall be excluded. If after excluding such period, time available to the assessing officer for passing order, about fitness of a case for issue of Section 148 notice, is less than seven days, the remaining time shall be extended to seven days .... " (emphasis is ours) 53.1. As would be evident from the extracts set forth above, both from the Finance Minister's speech and the memorandum, the time limit for reopening under the new ....