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2022 (10) TMI 1192 - HC - Income TaxReopening of assessment - income alleged to have escaped assessment was found to be less than Rs.50 lacs - Scope of new provision section 148A - Scope of amendment by the Finance Act, 2021 which has amended Income Tax Act by introducing new provisions i.e. sections 147 to 151 w.e.f. 1st April, 2021 - HELD THAT - There is no quarrel with the legal position existing and in force prior to 01.04.2021 that under the unamended provisions contained in Section 149, sub-section (1)(b) of the Act, proceedings u/s 148 of the Act could be initiated by issuance of notice even if four years had elapsed but not more than six years elapsed from the end of the relevant assessment year in cases where the income chargeable to tax which has escaped assessment amounts to or is likely to amount to Rupees One lac or more for that year. However the unamended provisions allowed the authority to reopen assessment by issuing notice under Section 148 of the Act under the pre-amended scheme only. The argument that since pre amended provision contained in Section 149 of the Act, permitted the authorities to reopen and issue notice under Section 148 of the Act, therefore, even after amendment of provisions of Section 149 of the Act, repealed provisions could be taken recourse to and in that case, provisions of Clause (a) sub-section (1) of Section 149 of the Act would not apply, prima facie appears to be against the legislative intention. In respect of income below Rs.50 lacs which is alleged to have escaped assessment, the new legislative regime is that notice under Section 149 of the Act shall not be issued if there is a bar as engrafled under Clause (a) thereof. It is only when the amount exceeds Rs.50 lacs, the provisions of Clause (b) stand attracted, subject to the limitation prescribed therein. Reliance placed on judgments of various High Courts, at this stage, we find to be distinguishable because none of those are cases where the income alleged to have escaped assessment was found to be less than Rs.50 lacs. The final order and the interim orders in certain cases have been passed on the facts and circumstances and the applicability of the provisions of Section 148 and 149 of the Act to those peculiar facts and circumstances. The argument that ASHISH AGARWAL 2022 (5) TMI 240 - SUPREME COURT has allowed that the reassessment proceedings should be continued by treating notices under Section 148 of the Act as notices under Section 148(A) of the Act, does not come to the aid of the respondents because even if the period of limitation has been extended from time to time by issuance of notifications extending time line as provided under Section 149 of the Act, in any case, present is a case where notice under Section 148 of the Act has been issued only on 26.07.2022, therefore, the source of authority would be Section 148 of the Act subject to the bar under Section 149 of the Act as is existed on the day when the notice was issued. Source of authority could not be traced to pre existing provision which was no longer in force and available when notice under Section 148 of the Act was issued on 26.07.2022. Thus we find no reason to depart from the orders which have been passed in other cases protecting assessee against the further proceedings where it pertains to relevant assessment year of 2016-2017 and the income alleged to have escaped assessment is found to be less than Rs.50 lacs. Accordingly, further proceedings pursuant to impugned notice dated 26.07.2022 u/s 148 of the Act, shall remain stayed till the final disposal of this writ petition.
Issues Involved:
1. Legality and validity of the notice under Section 148 of the Income Tax Act, 1961. 2. Applicability of the amended provisions of Section 149 of the Income Tax Act, 1961. 3. Impact of the Supreme Court's decision in Union of India & Others Vs. Ashish Agarwal on the present case. 4. Jurisdictional bar under Section 149(1)(a) of the Income Tax Act, 1961. Detailed Analysis: 1. Legality and Validity of the Notice under Section 148 of the Income Tax Act, 1961: The petitioner contended that the notice under Section 148 of the Income Tax Act, issued on 26.07.2022 for the assessment year 2016-2017, is barred by law. The argument was based on the amended provisions of Section 149, which stipulate that if three years have elapsed from the end of the relevant assessment year, a notice under Section 148 cannot be issued unless the case falls under Clause (b) of sub-section (1) of Section 149. The income alleged to have escaped assessment in this case is Rs.8 lacs, which is below the Rs.50 lacs threshold, thus invoking the bar under Clause (a). 2. Applicability of the Amended Provisions of Section 149 of the Income Tax Act, 1961: The revenue argued that the provisions of Section 149, sub-section 1(a) would not apply as the notice under Section 148 was initially issued on 19.04.2021, before the amendment came into effect. They contended that the notice should relate back to the initial date of issuance. However, the court noted that the notice issued on 19.04.2021 was deemed to be under Section 148A as per the Supreme Court's direction in Union of India & Others Vs. Ashish Agarwal. Consequently, the notice issued on 26.07.2022 must be judged based on the law in force on that date, which includes the amended Section 149. 3. Impact of the Supreme Court's Decision in Union of India & Others Vs. Ashish Agarwal on the Present Case: The Supreme Court in Union of India & Others Vs. Ashish Agarwal directed that notices issued under Section 148 after 01.04.2021 should be treated as notices under Section 148A. The court observed that the notice issued on 19.04.2021 was deemed to be under Section 148A, and the subsequent notice on 26.07.2022 must comply with the amended provisions. The court rejected the revenue's contention that the notice should be considered under the old regime, emphasizing that the amended Section 149 governs the current notice's legality. 4. Jurisdictional Bar under Section 149(1)(a) of the Income Tax Act, 1961: The court highlighted that the amended Section 149(1)(a) clearly bars the issuance of a notice under Section 148 if three years have elapsed from the end of the relevant assessment year unless the income exceeds Rs.50 lacs. The court found no provision allowing the reopening of assessments under the old regime post-amendment. The court concluded that the notice issued on 26.07.2022 is prima facie barred by the amended Section 149, as the income involved is only Rs.8 lacs. Conclusion: The court, considering the prima facie case and the legislative intent behind the amendments, stayed further proceedings pursuant to the notice dated 26.07.2022 under Section 148 of the Act until the final disposal of the writ petition. The court emphasized the need to adhere to the amended provisions and rejected the revenue's reliance on the old regime for the issuance of the notice. The case was listed for further proceedings after the service of Respondent No.3 is complete, with liberty for the revenue to apply for an early final disposal once pleadings are complete.
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