2022 (8) TMI 1316 - HC - Income Tax

Reopening of assessment u/s 147 - treating the earlier notice to be under Clause (b) of Section 148-A - proceedings pertaining to assessment year 2013-2014 are time barred by virtue of the proviso to Section 149 - HELD THAT - The proviso to Section 149 specifically provides that no notice u/s 148 shall be issued if such notice could not have been issued at that time on account of being beyond the time limit specified under the provisions of Sub Section (1) (b) of the Section as it stood immediately before the commencement of Finance Act 2021 as such in terms of proviso to Section 149 as amended w.e.f. 01.04.2021 since more than 06 years had elapsed from the end of assessment year 2013-2014 on 31.03.2020, the re-assessment notice for assessment year 2013-2014 could not be issued. As vehemently asserted that the initiation of proceedings by issuance of notice under Section 148 A (d) for assessment year 2013-2014 are wholly without jurisdiction and are time barred. Department is purportedly proceeding on the basis of CBDT instructions dated 11.05.2022 (Annexure P-7) which in turn proceed directly in the teeth of the dictum laid down by Hon'ble Supreme Court in Ashish Agarwal 2022 (5) TMI 240 - SUPREME COURT and on a clear misleading thereof. On such ground a challenge to such circular dated 11.05.2022 at Annexure P-7 has also been raised in the instant petition. Notice of motion returnable for 13.12.2022. Mr. Vaibhav Gupta, Junior Standing Counsel, accepts notice on behalf of respondents No.2 and 3 and waives service. A complete copy of the writ paper-book already stands furnished. Further proceedings in the matter shall be kept in abeyance till further orders.

Summary

Issues:
Challenge to notice dated 13.04.2021 for assessment year 2013-2014; treatment of notice under Clause (b) of Section 148-A; order dated 28.07.2022 under Section 148-A(d) of the Income Tax Act 1961; time-barred proceedings under Section 149; challenge to CBDT instructions dated 11.05.2022.

Analysis:
The petitioner challenges the notice dated 13.04.2021 for the assessment year 2013-2014, along with subsequent proceedings, including the notice dated 17.05.2022 treating the earlier notice under Clause (b) of Section 148-A and the order dated 28.07.2022 passed under Section 148-A(d) of the Income Tax Act 1961. The petitioner argues that as per the Supreme Court's ruling in Union of India & others Vs. Ashish Agarwal, all defenses, including those under Section 149 of the Act, are available to the assessee even if the notice under Section 148 is treated as under Section 148-A.

The main contention revolves around the time-barred nature of the proceedings for the assessment year 2013-2014. The petitioner asserts that the proceedings are time-barred under the proviso to Section 149 of the Income Tax Act. The proviso states that no notice under Section 148 shall be issued if it could not have been issued due to exceeding the time limit specified under the provisions of Sub Section (1) (b) of the Section. Since more than six years had elapsed from the end of the assessment year 2013-2014 on 31.03.2020, the re-assessment notice could not be issued as per the amended proviso to Section 149.

Furthermore, the petitioner vehemently argues that the initiation of proceedings by issuing a notice under Section 148 A (d) for the assessment year 2013-2014 is without jurisdiction and is time-barred. The petitioner also challenges the department's reliance on CBDT instructions dated 11.05.2022, contending that they go against the Supreme Court's ruling in Ashish Agarwal and are misleading. A challenge to the circular dated 11.05.2022 at Annexure P-7 has been raised in the petition, indicating a discrepancy between the department's actions and the legal precedent set by the apex court.

The court has accepted the notice on behalf of respondents No. 2 and 3 and waived service. The proceedings in the matter are to be kept in abeyance until further orders, with a notice of motion returnable for 13.12.2022. The comprehensive analysis of the issues involved in the judgment highlights the legal complexities surrounding the assessment proceedings and the petitioner's strong arguments regarding the jurisdiction and time-barred nature of the actions taken by the department.