2020 (1) TMI 653 - HC - Income Tax

Reopening of assessment u/s 147 - limitation period prescribed under Section 149(3) - HELD THAT - As already noted, the Income Tax Appellate Tribunal, while allowing the appeal of the representative of the assessee, recorded a finding that the amendment to Section 149(3) of the Act, which came into force with effect from 01.04.2012, was not applicable retrospectively and that the amendment made subsequent to the expiry of time limit cannot be made applicable to the assessment, which was already closed. The Tribunal also enunciated the legal position obtaining in support of its findings by making a reference to a decided case wherein the case facts are identical to the instant case and also to the precedential guidance in the decision of the Supreme Court and further held that the assessment related to 2008-09 and that the time limit for issuance of notice under Section 148 of the Act which is two years, had expired in the year 2010-11, before the amendment came into force. Having regard to the facts, the legal position referred to in the impugned order and the contents of the Circular referred to supra, we are of the view that the contention of the appellant that this appeal is to be considered to be falling within the exceptions contemplated in Clause 10(a) of Circular No.3 of 2018 is devoid of merit. Having thus given earnest consideration, we hold that, in the facts and circumstances of the case, the contention that the appeal can be instituted on the above ground urged by the appellant is untenable, and that there is no substantial question of law involved and that therefore, the present appeal, in view of the contents of the afore-stated Circular and the well reasoned sustainable findings of the Income Tax Appellate Tribunal, is liable for dismissal at the stage of admission.

Summary

Issues:
1. Appeal against the order passed by the Income Tax Appellate Tribunal
2. Validity of the assessment proceedings under Section 147 of the Income Tax Act, 1961
3. Applicability of Circular No.3 of 2018 regarding the monetary limit for filing appeals
4. Exception under Clause 10 of the Circular for contesting appeals on merits
5. Retrospective application of the amendment to Section 149(3) of the Income Tax Act

Analysis:

1. The appeal was filed against the order passed by the Income Tax Appellate Tribunal regarding the assessment proceedings for the assessment year 2008-09. The Tribunal set aside the notice under Section 148 of the Income Tax Act, holding the assessment proceedings voidab initio. The present appeal was preferred against this decision.

2. The Tribunal found that the amendment to Section 149(3) of the Act, which came into force from 01.04.2012, was not applicable retrospectively. It held that the time limit for issuing a notice under Section 148 had expired before the amendment came into force. The Tribunal referred to precedents and legal positions to support its findings regarding the assessment related to 2008-09.

3. The Circular No.3 of 2018 set a monetary limit of ?50,00,000 for filing appeals before the High Court. The appeal in question was subject to this limit, and as per the Circular, such appeals should not be filed. However, exceptions under Clause 10 of the Circular allow certain appeals to be contested on merits despite the tax effect being below the monetary limit.

4. The appellant argued that the appeal falls within the exceptions under Clause 10 of the Circular due to the involvement of the amendment to Section 149(3) of the Act. The High Court examined this aspect but found the contention to be devoid of merit. It held that there was no substantial question of law involved, and the appeal was liable for dismissal at the admission stage.

5. After considering the facts, legal positions, and the Circular, the High Court concluded that the appeal could not be instituted on the grounds raised by the appellant. The well-reasoned findings of the Income Tax Appellate Tribunal and the contents of the Circular led to the dismissal of the appeal. Pending miscellaneous petitions were closed, and no costs were awarded.

This detailed analysis of the judgment highlights the key issues involved in the case and the reasoning behind the High Court's decision to dismiss the appeal.