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2019 (2) TMI 1730 - AT - Income TaxReopening of assessment u/s 147 - period of limitation - HELD THAT - When the time limit for issuing notice u/s.148 has expired before any amendment in law from a prospective date will not revive. The time limit for those years for which limitation has already expired on the date of amendment. There was no challenge to vires of the amendment but still the Courts have held that notice issued u/s.148 is beyond limitation period. In the present case in our hand, prior to amendment in section 149 and the time limit for issuance of notice u/s.148 for AY 1996-97 expired on 31/03/2003 and that for 1997-98 expired on 31/03/2004. The amendment of section 149 is with effect from 01/07/2012 and is not retrospective in nature. Thus, the time limit which have already been expired could not have been revived by subsequent amendment. For all these reasons we hold that notice issued u/s.148 on 25/03/2013 for both the above years is beyond jurisdiction and accordingly quashed. Since the notice is held to be invalid, subsequent assessment order pursuant to the said notices are also quashed and set aside. - Appeals of the assessee are allowed.
Issues Involved:
1. Validity of the notice issued under Section 148 of the Income Tax Act, 1961. 2. Jurisdiction of the Commissioner of Income Tax (Appeals) in setting aside the Assessing Officer's order. 3. Taxability of funds held outside India for a 'Resident but not Ordinarily Resident' status. Detailed Analysis: 1. Validity of the Notice Issued Under Section 148 of the Income Tax Act, 1961: The assessee contended that the notice issued under Section 148 was barred by limitation as prescribed under Section 149 of the Act. The notice for reopening the assessment was issued on 25/03/2013 for the assessment years (AY) 1996-97 and 1997-98. The assessee argued that the reopening was based on borrowed satisfaction and not on the satisfaction of the Assessing Officer (AO), making it invalid. The assessee cited various case laws, including a judgment of the Hon’ble Gujarat High Court in the case of Induprasad Bhatt vs. J.P. Jani, which was approved by the Hon’ble Supreme Court. The Commissioner of Income Tax (Appeals) [CIT(A)] dismissed the assessee's contention, stating that the second proviso to Section 147, inserted by the Finance Act, 2012, allowed reopening of assessments related to assets located outside India within a 16-year time frame. The CIT(A) held that the notice issued was within the statutory provision and hence valid. However, the Tribunal differed with the CIT(A)'s view, citing the Supreme Court's decision in S.S. Gadgil vs. Lal & Co. and K.M. Sharma vs. ITO, which established that a subsequent amendment could not revive the time limit for reopening an assessment that had already become barred by limitation. The Tribunal held that the notices issued under Section 148 were beyond jurisdiction and quashed them, rendering the consequential assessment orders void. 2. Jurisdiction of the Commissioner of Income Tax (Appeals) in Setting Aside the Assessing Officer's Order: The Revenue argued that the CIT(A) erred in virtually setting aside the AO's order passed under Section 143(3) read with Section 147 of the Act, as no such power rests with the CIT(A) under the Act. The Tribunal did not specifically address this issue in detail, as it became moot following the quashing of the notices under Section 148. 3. Taxability of Funds Held Outside India for a 'Resident but not Ordinarily Resident' Status: The Revenue also raised an additional ground, arguing that the CIT(A) erred in holding that funds of the assessee outside India would not be taxable if the status was 'Resident but not Ordinarily Resident.' The Tribunal did not delve into this issue, as the primary ground regarding the validity of the notice under Section 148 was decided in favor of the assessee, rendering the subsequent assessments invalid. Conclusion: The Tribunal allowed the assessee's appeals, quashing the notices issued under Section 148 and the consequential assessment orders for AYs 1996-97 and 1997-98. The Tribunal dismissed the Revenue's appeals as infructuous, given the quashing of the assessments. The decision underscores the principle that amendments to tax laws cannot retrospectively revive time-barred assessments.
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