TaxTMI 
TaxTMI 
2026 (1) TMI 993
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....v) the Show-Cause Notice issued under section 274 r.w.s. 271(1)(c) of the Act dated March 30, 2022 during the operation of the ad-interim stay granted by this Court on March 07, 2022. 3. The facts relevant for the purpose of this petition are that the Petitioner filed its original return of income for the year under consideration on September 24, 2015, and subsequently filed a revised return of income on October 23, 2015, declaring a total income of Rs. 1,49,32,563/-. The Petitioner had claimed "Loss on derivatives" of Rs. 3,86,36,313/- under the head "other expenses" in the Statement of Profit & Loss forming part of the said return of income. The loss on derivatives is also disclosed in "Note 20: Other Expenses", which provides a breakup of other expenses debited to the profit and loss account in the books of accounts of the Petitioner. 4. The case of the Petitioner was selected for scrutiny assessment, and the Assessing Officer called for and scrutinized various details in relation to the return filed by the Petitioner. The Assessing Officer then passed an assessment order u/s 143(3) on June 30, 2017 making certain additions to the returned income of the Petitioner. 5. S....
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....2021), no notice can be issued unless there is a failure on part of an assessee to disclose fully and truly all material facts necessary for assessment of such Assessment Year. The Petitioner pointed out that during the year under consideration, the Petitioner had claimed a loss on derivatives of Rs. 3,86,36,313/- under the head "other expenses" in its profit and loss account, and the same was also disclosed during the course of the original assessment proceedings. Therefore, there is no failure on part of assessee to disclose fully and truly all material facts necessary for assessment of such Assessment Year. 8. Respondent No. 4 passed an order dated January 31, 2022 disposing of the Petitioner's objections, inter alia, by merely stating that the reasons recorded do reflect that there was failure on part of the assessee to disclose fully and truly all material facts. Respondent No. 4 further stated that jurisdiction of the competent authority under section 151 of the Act cannot be challenged. Respondent No.4 opined that the notice is issued within a period of four years from the end of the relevant Assessment Year, and therefore, the requirements of the proviso to section 147 o....
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....stand extended for grant of sanction in terms of section 151 of the Act as per the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, ("TOLA") as held in paragraphs 73, 74 and 77 of the judgment of the Hon'ble Supreme Court in the case of Union of India v. Rajeev Bansal [2024] 469 ITR 46 (SC). 13. He, therefore, submits that, as the reopening is treated to be within a period of four years from the end of the relevant Assessment Year, the specified authority as per section 151(2) of the Act is the Joint Commissioner of Income-tax, which authority ought to have granted sanction for issuance of the impugned notice under section 148 of the Act. The impugned notice under section 148 of the Act itself mentions that the said notice has been issued with the prior approval of the Principal Commissioner of Income-tax, Mumbai - 4. He submitted that since the authority at whose satisfaction the notice under section 148 of the Act must be issued, is not the Principal Commissioner, but the Joint Commissioner, the notice issued under section 148 of the Act on March 31, 2021 is liable to be quashed and set aside. Consequently, the final assessment order passed u....
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....of Income-tax is the specified authority for granting sanction under section 151(1) of the Act. He further states that all the conditions of section 147 of the Act have been satisfied and the Assessing Officer had reason to believe that income chargeable to tax in the case of the Petitioner has escaped assessment within the meaning of 147 of the Act. He further argued that the failure of the Petitioner to disclose fully and truly material facts is apparent from the reasons as recorded because the Petitioner has made an incorrect claim in the return of income. He therefore submitted that the validity of the impugned notice under section 148 of the Act, dated March 31, 2021 as well as the impugned final assessment order dated March 30, 2022, passed under section 147 of the Act, should be upheld. Mr. Kumar submits that mere absence of the sentence "Failure to disclose" in the reasons to believe would not make the notice under section 148 of the Act invalid. It is a matter of record that the petitioner failed to disclose the transactions in securities at the time of filing the return and even during the scrutiny proceedings. At the stage of issuance of notice under section 147, complet....
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....here has been a failure on the part of an Assessee to disclose fully and truly all material facts necessary for assessment of such Assessment Year when proceedings under section 147 are sought to be initiated beyond a period of four years from the end of the relevant Assessment Year. This view is also supported by a decision of this Court in case of Stock Holding Corporation of India Ltd. v. ACIT [2025] 178 taxmann.com 191 (Bombay HC), where the Assessing Officer therein did not even mention in the reasons recorded that there has been a failure on the part of the Assessee to disclose fully and truly all material facts necessary for assessment of such Assessment Year, and followed the decision of the coordinate bench of this Court in case of Hindustan Lever Ltd. v. R.B. Wadkar, ACIT (supra). He submitted that the fact that the Petitioner had losses on derivatives has been mentioned in the return of income as well as in the books of accounts of the Petitioner. 18. We have heard both parties at length and also perused the documents, proceedings and affidavits filed by the parties in the present petition. 19. We are in agreement with the primary contention of the Petitioner that ....
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....aping assessment was less than Rupees one lakh: (a) a reassessment notice could be issued under section 148 within four years after obtaining the approval of the Joint Commissioner; and (b) no notice could be issued after the expiry of four years; and (ii) If income escaping was more than Rupees one lakh: (a) a reassessment notice could be issued within four years after obtaining the approval of the Joint Commissioner; and (b) after four years but within six years after obtaining the approval of the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner. ...... 77. Parliament enacted TOLA to ensure that the interests of the Revenue are not defeated because the assessing officer could not comply with the pre conditions due to the difficulties that arose during the COVID-19 pandemic. Section 3(1) of TOLA relaxes the time limit for compliance with actions that fall for completion from 20 March 2020 to 31 March 2021. TOLA will accordingly extend the time limit for the grant of sanction by the authority specified under section 151. The test to determine whether TOLA will apply to Section....
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...., then the mandate of the statute must be strictly followed, and when the statute mandates the satisfaction of a particular functionary for exercise of the power, the satisfaction must be of that Authority alone and not of any other authority. This view is also supported by the decision of the coordinate bench of this Court in case of Ghanshyam K. Khabrani v. ACIT (supra). Hence, the Petition is liable to succeed on this ground alone. 22. Be that as it may, even assuming that the argument of the learned counsel of the Respondents is to be considered, namely, that the impugned notice under section 148 of the Act dated March 31, 2021 was issued beyond a period of four years, then, in view of the first proviso to section 147 of the Act, the said notice could have been issued only if there is a failure on part of the assessee to disclose fully and truly all material facts necessary for assessment. We say this because in the present case an assessment order was already passed on June 30, 2017 under section 143(3) of the Act. In the reasons as recorded for issuing the notice under section 148 of the Act, we see that there is not even an allegation that the income of the Petitioner has....