TaxTMI 
TaxTMI 
2026 (8) TMI 564
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....ice, the petitioner's bank accounts maintained with the 3rd and 4th respondents in W.P.No.50601 of 2025 were sought to be attached. 3. The petitioner had earlier challenged the impugned Assessment Order dated 31.03.2025 by filing an appeal before the Appellate Commissioner under Section 246A of the Act. Thereafter, the present writ petitions were filed on 26.12.2025 and 09.07.2025. 4. Under these circumstances, the petitioner was directed to elect either to pursue the Appellate remedy before the Appellate Commissioner or to proceed with the writ petitions before this Court, particularly in W.P.No.25340 of 2025, wherein the impugned assessment order dated 31.03.2021 is under challenge. 5. The petitioner elected to pursue the Writ remedy. Thus, the appeal was dismissed as withdrawn and an order dated 10.02.2026 was passed to that effect by the Appellate Commissioner. 6. The facts on record reveal that the petitioner had filed a regular Return of Income under Section 139(1) of the Act on 28.12.2023 for the Assessment Year 2023-2024. 7. Even before the aforesaid return could be either processed under Section 143(1) of the Act by way of intimation or by way of Scrutiny As....
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....me has escaped assessment, there is no scope for passing a regular Scrutiny Assessment under Section 143(3) of the Act. 16. The learned Senior Counsel for the petitioner drew the attention to the amendments to Sections 147, 148 and 151 of the Act, as in force between 01.04.2021 and till 31.08.2024 after they were amended by the Finance Act, 2021 and Finance (No.2) Act, 2024 respectively. 17. The learned Senior Counsel for the petitioner further referred to the Memorandum explaining the provisions of the Finance Bill, 2021, which introduced a slew of amendments to the provisions of the Act relating to assessment and reassessment. 18. The learned Senior Counsel would draw the attention of this court to the following passages from the said Memorandum explaining the provisions of the Finance Bill, 2020 - 2021, which read as under:- "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 re-compute the total income for such year u....
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....ovisions of section 153A and section 153C, of the Act are proposed to be made applicable to only search initiated under section 132 of the Act or books of accounts, other documents or any assets requisitioned under section 132A of the Act, on or before 31st March 2021. (ii) Assessments or reassessments or in re-computation in cases where search is initiated under section 132 or requisition is made under 132A, after 31st March 2021, shall be under the new procedure. (iii) Section 147 proposes to allow the Assessing Officer to assess or reassess or re-compute any income escaping assessment for any assessment year (called relevant assessment year). (iii) Before such assessment or reassessment or recomputation, a notice is required to be issued under section 148 of the Act, which can be issued only when there is information with the Assessing officer which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the relevant assessment year. Prior approval of specified authority is also required to be obtained before issuance of such notice by the Assessing Officer. (iv) It is proposed to provide that any info....
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.... * in specific cases where the Assessing Officer has in his possession evidence which reveal that the income escaping assessment, represented in the form of asset, amounts to or is likely to amount to fifty lakh rupees or more, notice can be issued beyond the period of three year but not beyond the period of ten years from the end of the relevant assessment year; * Another restriction has been provided that the notice under section 148 of the Act cannot be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April, 2021, if such notice could not have been issued at that time on account of being beyond the time limit prescribed under the provisions of clause (b), as they stood immediately before the proposed amendment. * Since the assessment or reassessment or re-computation in search or requisition cases (where such search or requisition is initiated or made on or before 31 March 2021) are to be carried out as per the provision of section 153A, 153B, 153C and 153D 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 o....
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....e Act. In support of this submission, the Petitioner relies on the following case laws: i. Ishwar Chand VsThe Union of India through its Secretary of Finance, Department of Revenue (2024: PHHC:119312-DB). ii. UCO Bank, Calcutta Vs Commissioner of Income Tax, W.?. (1999) 4 SCC 599 iii. Kerala Financial Corporation Vs Commissioner of Income Tax (1994) 4 SCC 375 iv. State Bank of Travancore Vs Commissioner of Income Tax, Kerala (1986) 2 SCC 11 21. It is submitted that the Respondent-Department has pursuant to the very same search action and material, invoked proceedings under Section 148 of the Act for Ays. 2021-22 and 2022-23, thereby consciously recognizing and applying the special reassessment framework governing search-triggered assessments under the post-Finance Act, 2021 regime. 22. It is further submitted that the Respondent having accepted the applicability of the said statutory route for different Assessment Years, the failure to adopt the identical jurisdictional procedure for the subject AY 2023-24 constitutes a patent inconsistency and a legally impermissible departure from the governing statutory scheme. 23. It is submitted tha....
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....of Income Tax Vs Laxman Das Khandelwal 2021 18 SCC 691, The Hon'ble Supreme Court observed that for Section 292BB to apply, the notice must have emanated from the department. It is only the infirmities in the manner of service of notice that the Section seeks to cure. The Section is not intended to cure complete absence of notice itself. (c) Sumit Balkrishna Gupta Vs Assistant Commissioner of Incometax, Circle 16(2), Mumbai 2019 SCCOnline Bom 13178, it was concluded by the Hon'ble Bombay High Court that the issue of a notice under Section 148 of the Act is a foundation for reopening of assessment. Section 292B of the Act cannot be invoked to correct a foundational / substantial error as it is meant so as to meet the jurisdictional requirement. 28. Accordingly, it is submitted that where the foundational statutory notice itself has not been issued or served as required, Section 292BB has no application and cannot validate proceedings that are void ab initio. 29. It is submitted that the decisions relied by the Respondent are wholly irrelevant and misconceived, as the said judgments pertains to the pre-Finance Act, 2021 assessment framework and was rendered in ....
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....e of being attached as the bank does not become a debtor. In this regard, the following decisions were also cited :- i. Kaneria Granito Vs Assistant Commissioner of Income Tax 2016 SCCOnline Guj 10313 ii. M/s. Kundlas Loh Udyog Vs Union of India, before the Hon'ble High Court of Himachal Pradesh in CMPMO No.418 of 2024. 37. The learned Senior Counsel for the petitioner further drew the attention of this Court to a recent decision of the Division Bench of the Rajasthan High Court in Shyam Sunder Khandelwal vs. Assistant Commissioner of Income Tax and other connected writ petitions in D.B Civil Writ Petition No.18363 of 2019, dated 19.03.2024. 38. It is submitted that the Department unsuccessfully challenged the said decision before the Hon'ble Supreme Court by filing Special Leave Petition (Civil) Diary No.75521 of 2025. It is submitted that the Hon'ble Supreme Court dismissed the said petition not only on the ground of limitation but also on merits, holding that the order passed by the Rajasthan High Court did not warrant any interference. 39. A specific reference was made to Paragraph Nos. 23 to 43 of the said judgment. 40. Defending the impugned ....
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....o be done. It depends on the relevancy of the Assessment Year and time limit available for the completion of the Original Assessment. 47. It is submitted that when the original assessment is completed or the time for original assessment is expired, then if any material comes to the possession and knowledge of the department including the seized materials, then reopening of assessment u/s. 147 can be done subject to the procedure contemplated u/s. 148 to 153. On the other hand, if the time limit is available for the completion of original assessment, then original assessment can be done and there is no necessity of reopening of assessment. 48. In this regard, the learned Senior Standing Counsel for the respondents drew the attention of this Court to the following decisions:- i. Commissioner of Income Tax Vs. K.M.Pachayappan, dated 04.07.2007 reported in [2008] 304 ITR (Madras) ii. Commissioner of Income - Tax Vs. Qatalys Software Technologies Ltd dated 29.07.2008 reported in [2009] 308 ITR 249 (Madras) iii. Commissioner of Income Tax Vs. TCP Limited, dated 06.04.2009 reported in [2010] 323 ITR 346 (Madras) iv. Jasmine Towels (P) Ltd. Vs. Ass....
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....ion of such assessment or reassessment." 54. It is also submitted that the proviso to Section 292BB makes the legal position clear in this regard. 55. I have considered the arguments advanced by the learned Senior Counsel for the petitioner and the learned Senior Standing Counsel for the respondents / Income Tax Department. 56. The point for consideration in these writ petitions is whether the 2nd respondent ought to have proceeded against the petitioner under Section 148 of the Act (hereinafter referred to as Act), as in force with effect from 01.04.2021 and as modified by Finance Act No.2 of 2024 with effect from 31.08.2024 or proceeded with a Scrutiny Assessment under Section 143(3) of the Act, as was done in these cases? 57. The argument of the Learned Senior Counsel for the petitioner is that under the changed scenario with effect from 01.04.2021, once a search has been conducted under Section 132 of the Act, or where requisition of information is made under Section 132A results in information which suggests, that the income chargeable to tax, has escaped assessment, the procedure under Section 148 has to be mandatorily followed. 58. The above submission though ....
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....ent, as the Assessing Officer is deemed to have information suggesting Income having escaped assessment for three Assessment Years immediately preceding the Assessment Year relevant to the Previous Year in which the search is initiated in terms of Explanation-2 to Section 148. 62. The above cases also proceeded on the footing that the Revenue could have only invoked the machinery provisions under Section 148, since the time limit for issuing notice under Section 143(2) had already expired. 63. The decisions of the Tribunals at best have a persuasive value and are not binding on the High Courts and the Supreme Court, whether in their appellate jurisdiction or special jurisdiction or writ jurisdiction. 64. Although the decisions of the Tribunals referred to supra were informative, in my view, the ratio laid therein is incorrect insofar as the said decisions seek to exclude the application of Section 143(3) of the Act, if the limitation to issue a notice under Section 143(2) is otherwise available. 65. Though the views taken by the Tribunal in the above cases were also attempted to be canvassed by the Learned Senior Counsel for the Petitioner in the present case, I am unab....
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....(3) of the Act. 73. However, a notice under Section 143(2) for framing an assessment under Section 143(3) cannot be issued after expiry of three months from the end of the financial year in which the return is furnished. For the sake of clarity, Section 143(2) and Section 143(3) of the Act are reproduced below: Section 143(2) Section 143(3) Where a return has been furnished under section 139, or in response to a notice under sub-section (1) of section 142, the Assessing Officer or the prescribed income-tax authority, as the case may be, if, considers it necessary or expedient to ensure that the assessee has not understated the income or has not computed excessive loss or has not under-paid the tax in any manner, shall serve on the assessee a notice requiring him, on a date to be specified therein, either to attend the office of the Assessing Officer or to produce, or cause to be produced before the Assessing Officer any evidence on which the assessee may rely in support of the return: Provided that no notice under this subsection shall be served on the assessee after the expiry of [three] months from the end of the financial year in which the return is furnished. ....
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....ment under Section 153A and Section 153C of the Act is not available in the case of Search under Section 132 and/or Requisition of Documents under Section 132A of the Act after 01.04.2021. 80. A provision similar to that which existed earlier under Chapter XIVB of the Act for Block Period prior to 31.03.2003 has been now re-introduced with effect from 01.09.2024 vide Finance Act 2023 with retrospective effect from 01.09.2024. In this case, the court is not concerned with the above amendments with effect from 01.09.2024 and therefore no opinion is expressed on the same. 81. Earlier, under the 2nd proviso to Section 153A of the Act, an assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years pending on the date of initiation of the search under Section 132 or making of requisition under Section 132-A, as the case may be, in case of a searched person would have stood abated. 82. This legal position was also clarified by the Hon'ble Supreme Court in CIT vs. Abhisar Buildwell (P) Ltd., (2024) 2 SCC 433.In Paragraph 33, the Hon'ble Supreme Court observed as under :- 33. As per the provisions of Section 153-A, ....
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....ns mentioned in Sections 147/148, as in such a situation, the Revenue cannot be left with no remedy. Therefore, even in case of block assessment under Section 153-A and in case of unabated/completed assessment and in case no incriminating material is found during the search, the power of the Revenue to have the reassessment under Sections 147/148 of the Act has to be saved, otherwise the Revenue would be left without remedy. 83. In other words, the pending assessment proceedings, if any, would have stood abated and would have been required to be assessed under Section 153A of the Act in the case of the "Searched Person" and under Section 153C of the Act in the case of the "Other Person" i.e., the person other than the "Searched Person". 84. The above case was rendered in the context of Section 153A to 153C of the Act, as it stood prior to its amendment with effect from 01.04.2021 as per which nothing contained in Section 153C of the Act shall apply to Search initiated under Section 132 or books of account, other documents or any assets requisitioned under Section 132A on or after 01.04.2021. 85. Therefore, the ratio of the Hon'ble Supreme Court in Abhisar Buildwell (P) Ltd....
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.... such notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, 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 accordingly as if such return were a return required to be furnished under section 139: 90. As per the 1st proviso to Section 148 of the Act, no notice shall be issued unless: i. there is/are information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the relevant assessment year; and ii. the Assessing Officer has obtained prior approval of the specified authority under Section 151 of Act to issue such notice. 91. However, under 2nd proviso to Section 148 of the Act, no such prior approval is required to be obtained from the "Specified Authority" under Section 151 of Act as is required under 1st proviso to Section 148 of the Act, if an order under Section 148A(d) has been passed with the prior approval ....
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....count, other documents or any assets are requisitioned under section 132A 98. Clauses (ii), (iii) & (iv) to Explanation 2 to Section 148 of the Act are not relevant for the purpose of this discussion. Therefore, no opinion is expressed with respect to Clause (ii) to Clause (iv) to Explanation 2 to Section 148 of the Act. For the sake of clarity, Explanation 1 and 2 to Section 148 of the Act are also reproduced below: Explanation 1 Explanation 2 For the purposes of this Section 148 and Section 148A, the information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment means,- (i) any information [***] in the case of the assessee for the relevant assessment year in accordance with the risk management strategy formulated by the Board from time to time;*or (ii) any audit objection to the effect that the assessment in the case of the assessee for the relevant assessment year has not been made in accordance with the provisions of this Act; or (iii) any information received under an agreement referred to in section 90 or section 90A of the Act; or (iv)any information made available to the Assessin....
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....ooks of accounts documents are seized or requisitioned. 100. Issuance of a notice under Section 148 of the Act, whether by following the procedure under Section 148A (a) to (d) of the Act or without following it in terms of the proviso to it, will apply, only if such procedure is warranted, where:- i. The time for completing the assessment under Section 153 in response to Return of Income has already expired and there is information available in the hands of the Assessing Officer/Authority that the income has escaped assessment; or ii. An assessee has not filed a Return of Income leading to an inference that income has escaped assessment; or iii. After Return of Income filed under Section 139 of the Act, either results in a) an intimation under Section 43(1) of the Act or; b) where a Scrutiny Assessment under Section 143(3) is made within the limitation under Section 153(1) of the Act and thereafter, a search or requisition is made under Section 132 and Section 132A of the Act respectively after 01.042021. 101. It is for the last mentioned instance the expression "if required, under clause (d) of Section 148A" has been employed und....
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.... of information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year and results of enquiry conducted, if any, as per clause (a); (b) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any money, bullion, jewellery or other valuable article or thing, seized in a search under section 132 or requisitioned under section 132A, in the case of any other person on or after the 1st day of April, 2021, belongs to the assessee; or (c) consider the reply of assessee furnished, if any, in response to the show-cause notice referred to in clause (b); (c) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any books of account or documents, seized in a search under section 132 or requisitioned under section 132A, in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information contained therein, relate to, the assessee. (d) decide, on the basis of material available on record including reply of the assessee, whether or not it ....
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....able to tax has escaped assessment in the case of the assessee for the relevant assessment year and the Assessing Officer has obtained prior approval of the Specified Authority under Section 151 of the Act. 110. Under Explanation 2(i) to Section 148 of the Act, the Assessing Officer is deemed to have information which suggest that the income chargeable to tax has escaped assessment in the case of the assessee where the search is initiated or books of account, other documents or any assets are requisitioned or survey is conducted in the case of the assessee or money, bullion, jewellery or other valuable article or thing or books of account or documents are seized or requisitioned in the case of any other person. 111. Thus, a notice under Section 148A(b) of the Act is to be issued in a case of an assessee in case of a search under Section 132 of the Act or requisition of information under Section 132A of the Act the time period under Section 153 has expired. 112. A main part of Section 148A and clause (a) to the 1st proviso to Section 148A, as extracted supra, cannot read together in isolation with Section 148 of the Act. 113. Issuance of a notice under Section 148, the p....