2018 (9) TMI 1933 - AT - Income Tax

Reopening of assessment u/s 147 - notice barred by limitation - time limit for issue of notice - scope of amendment - HELD THAT - In the instant case, the assessment involved is 2008-09 and the time limit for issue of notice u/s 148 i.e. 2 years has expired in 2010-11 before the amendment came into force. Since the time limit has already expired for issue of notice u/s 148, we hold that the notice issued u/s 148 is barred by limitation. Accordingly, the notice issued u/s 148 is quashed and the consequent assessment is annulled.

Summary

Issues Involved:
1. Validity of the notice issued under Section 148 of the Income Tax Act, 1961.
2. Applicability of the amendment to Section 149(3) of the Income Tax Act, 1961.
3. Limitation period for issuing notice under Section 148 in the case of a representative assessee under Section 163.

Issue-wise Detailed Analysis:

1. Validity of the notice issued under Section 148 of the Income Tax Act, 1961:
The primary issue revolves around the validity of the notice issued under Section 148 of the Income Tax Act, 1961. The Assessing Officer (AO) issued the notice to the representative assessees on 25.03.2015, directing them to file the return of income. The AO completed the assessment under Section 144 read with Section 147, raising the demand due to non-response from the representative assessees. The appellants argued that the notice under Section 148 was barred by limitation since the payments were made in the financial year 2006-07, corresponding to the assessment year 2008-09. The Tribunal cited the case of V. Pratima Rao and Others (ITA No.69 to 74/Viz/2018) to support the argument that the notice issued under Section 148 was invalid and requested to quash the notice and the orders passed by the lower authorities.

2. Applicability of the amendment to Section 149(3) of the Income Tax Act, 1961:
The appellants contended that the amendment to Section 149(3) extending the time limit for issuing a notice under Section 148 came into force on 01.04.2012 and was not retrospective. The Tribunal observed that the time limit for issuing the notice expired by the assessment year 2010-11, and the amendment could not revive the already time-barred assessment. The Tribunal referred to the Hon'ble Supreme Court's decision in the case of S.S. Gadgil Vs. Lal & Company, which held that the amendment could not give life to the dead proceedings unless made retrospective. The Tribunal concluded that the amendment made subsequent to the expiry of the time limit could not be applied to the assessments already barred by the date.

3. Limitation period for issuing notice under Section 148 in the case of a representative assessee under Section 163:
The Tribunal analyzed the limitation period for issuing a notice under Section 148 in the case of a representative assessee under Section 163. It was noted that the time limit for issuing the notice was two years from the end of the relevant assessment year. In this case, the relevant assessment year was 2008-09, and the time limit expired by the assessment year 2010-11. The Tribunal reiterated that the amendment to Section 149(3) extending the time limit to six years came into force on 01.04.2012 and was not retrospective. Therefore, the notice issued under Section 148 was barred by limitation, and the reassessment proceedings initiated by the AO were void ab initio.

Conclusion:
The Tribunal concluded that the notice issued under Section 148 was barred by limitation and quashed the notice and the consequent assessments. The appeals of the assessees were allowed, and the reassessment proceedings were held to be void ab initio. The Tribunal emphasized that the amendment to Section 149(3) could not be applied retrospectively to revive the already time-barred assessments. The order was pronounced in the open court on 5th September 2018.