TaxTMI 
TaxTMI 
2026 (2) TMI 70
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....me-barred by 16 days, and hence void ab initio, being contrary to the binding directions of the Hon'ble Supreme Court in Union of India v. Ashish Agarwal [Civil Appeal No. 3005/2022] and the interpretation laid down by the Hon'ble Supreme Court in Union of India v. Rajeev Bansal (2024) 167 taxmann.com 70 (SC). B. No Tangible 'Material/Information' suggests Income has Escaped Assessment 2. That in the facts and circumstances of the case and in law, the Ld. AO erred in re-opening the assessment on the basis of the 'Information' that has been received from 'Sources' with respect to an organized racket of generating bogus entries of LTCG in penny stocks and has incorrectly presumed the Assessee's indulgence in such bogus entries. 3. That in the facts and circumstances of the case and in law, the Ld. AO erred in not providing the Assessee with a complete copy of the Investigation Report/ information received from Investigation Wing - DDIT, Unit-8(2), Mumbai, on the basis of which the Assessing Officer has concluded that the Assessee's income has escaped assessment. 4. That in the facts and circumstances of the c....
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....aw, the Ld. CIT (A) failed to appreciate that the impugned notice u/s 148 dated 20.07.2022 is invalid, bad in law and liable to be quashed as the same does not contain DIN in the entire body of the notice and also does not mention the reasons for not containing DIN and is accordingly in violation of CBDT Circular No.19/2019 dated 14.08.2019. 2. On the facts and circumstances of the case and law, the Ld. CIT (A) failed to appreciate that Ld. ITO erred in issuing the re-opening notice u/s 148 dated 20.07.2022 as is violative of the CBDT Notification No. 18/2022 dated 29.03.2022, as the same should have been issued by a faceless Assessing Officer. 4. In the present appeal, essentially, the issue to be decided is on the legal ground challenging the validity of notice under section 148 of the Act, on account of being barred by limitation and consequent reassessment order passed under section 147 r.w. section 143(3), being bad in law. 4.1 There is a delay of one day in filing the present appeal for which petition seeking condonation is placed on record. The due date on which limitation expired was not a working day. Assessee filed the appeal on the next working day and thu....
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....edents relied upon, for which, relevant judicial orders are placed on record. Assessee has also furnished a paper book to demonstrate its factual matrix relating to the legal issue, so raised. Merits of the case have not been argued upon by either party, nor any submission made to that effect. 7. It is noted that the notice u/s. 148 is issued on 20.07.2022, which according to the assessee is barred by limitation, since it has been issued after expiry of 6 years from the end of the relevant assessment year i.e., AY 2013-14. According to the assessee, it is contrary to the mandate of the first proviso below section 149(1)(b) and therefore is invalid, bad in law and leading the impugned assessment proceedings as well as the impugned assessment order bad in law, liable to be quashed ab initio. 8. To delve on the issue on hand before us, let us take note of the provisions contained in section 149 under the new regime introduced by the Finance Act, 2021, prescribing limitation on issue of notice u/s. 148 of the Act. Section 149 of the Act reads as under: Time limit for notice. 149. (1) No notice under section 148 shall be issued for the relevant assessment year,- ....
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.... referred to in Explanation 1 to section 148 emanates from a statement recorded or documents impounded under section 131 or section 133A, as the case may be, on or before the 31st day of March of a financial year, in consequence of,- (a) a search under section 132 which is initiated; or (b) search under section 132 for which the last of authorisations is executed; or (c) a requisition made under section 132A, after the 15th day of March of such financial year, a period of fifteen days shall be excluded for the purpose of computing the period of limitation as per this section and the notice issued under clause (b) of section 148A in such case shall be deemed to have been issued on the 31st day of March of such financial year:] 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 14SA 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 perio....
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....r approval of the specified authority. iii. He shall consider the reply of the assessee furnished, if any in response to the show cause notice. iv. He shall decide on the basis of material available on record and after considering the reply of the assessee as to fitness of the case to issue a notice u/s. 148 for which a specific order shall be passed within the stipulated time. v. Thus, section 148A under the new regime of re-assessment is a provision brought on the statute which is in the nature of condition precedent to issuing of notice u/s. 148. 8.2 Also, first proviso to section 149 under the new regime introduced by the Finance Act, 2021 prescribed limitation on issuance of notice by taking into consideration the time limit available under the old regime for the relevant assessment year. First proviso to section 149 states, "Provided that no notice u/s. 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 o....
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....erated in detail. Relevant paragraphs are extracted below for ready reference: "46. The ingredients of the proviso could be broken down for analysis as follows: (1) no notice under Section 148 of the new regime can be issued at any time for an assessment year beginning on or before 1 April 2021; (ii) if it is barred at the time when the notice is sought to be issued because of the "time limits specified under the provisions of 149(1)(b) of the old regime. Thus, a notice could be issued under Section 148 of the new regime for assessment year 2021-2022 and before only if the time limit for issuance of such notice continued to exist under Section 149(1)(b) of the old regime. ................ 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....
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....ing to the Hon'ble Court the reference to "at any time" is to the date of the notice to be issued by the Assessment officer and therefore, the term "at that time" would also refer to the said date. Thus, on the said date, if a notice could not have been issued under the provision of section 149(1)(b) of the old regime for any Assessment Year beginning on or before 01.04.2021, the notice cannot be issued even under the new regime. 10.1 Hon'ble Court took into consideration the stand of the Revenue to interpret the first proviso to section 149 of the Act to be applicable only for Assessment Years 2013-14 and 2014-15, i.e., for the Assessment Years where the period of limitation has already expired on 01.04.2021 which was held to be not correct because that would render the first proviso to section 149 under a new regime redundant and otiose. According to the Hon'ble Court, if such a stand of the Revenue is accepted then, it would amount to re-writing the proviso to section 149(1)(b). Hence such an interpretation as canvassed by the Revenue is clearly not permissible in law. Hon'ble Court thus, concluded that the first proviso to section 149(1)(b) is an exception to....
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....ear prescribing the conditions and time limit. It does not refer to show cause notice/s.148A(b). The first proviso to section 149(1)(b) also carves out an exception to the limitation in respect of notice u/s. 148 and not under section 148A(b). Further, Hon'ble High Court of Bombay in the case of Hexaware Technologies Ltd. (supra) in para-30 has categorically held that if a notice u/s. 148 is not with the time prescribed under the first proviso to section 149(1)(b) then, such period cannot be extended by fifth proviso and sixth proviso to the said section. 11.1 Admittedly, the undisputed fact in the present case is that impugned notice issued u/s. 148 is dated 20.07.2022 which is after the limitation expired on 31.03.2020 within the meaning of first proviso to section 149(1)(b). In view of the above stated deliberations, on the factual matrix of the present case and the applicable law including the jurisprudence discussed above, we hold that notice for Assessment Year 2013-14 issued on 20.07.2022 u/s. 148 of the new regime is barred by limitation and hence bad in law, liable to be quashed, resulting in impugned re-assessment proceedings as well as the impugned assessment orde....