2022 (3) TMI 1307 - AT - Income Tax

Reopening of assessment u/s 147 - Time limit for notice to be issued u/s 149 - escaped income from an asset outside India - time limit u/s 149 within which notice for reassessment can be issued in respect of income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment - HELD THAT - Section 149(1)(c) provides that no notice for reassessment can be issued if more than sixteen years, have elapsed from the end of the relevant assessment year unless the income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment . Therefore, as long as sixteen years from the end of the relevant assessment year have not expired, the reassessment notice is in a case involving income from assets located outside India. As for the retrospective application of this provision, Explanation to Section 149 unambiguously provides that the provisions of sub-sections (1) and (3), as amended by the Finance Act, 2012, shall also be applicable for any assessment year beginning on or before the 1st day of April, 2012 . The amendment in Section 149(1), introduced with effect from 1st July 2012, is thus expressly stated to be retrospective in nature, and there is, in our humble understanding, there is no bar on the validity of the retrospectivity of the taxing statute as long as it is clearly specified to be so. there is no bar on the retrospectivity of a statute, though, in the absence of any express intention to that effect, it is presumed to be only prospective. The validity of a statute being retrospective in effect cannot, as such, be questioned in principle. In any event, it is not open to a forum like this Appellate Tribunal-much less a Commissioner (Appeals), to contest validity of a retrospective amendment in law. Once the statute clearly provides that the amended section 153(1) and (3), as amended by the Finance Act 2012, shall also be applicable to any assessment year beginning on or before 1st day of April 2012, it cannot be open to us to hold otherwise. To suggest that this amendment was intended to be prospective in effect would mean that the legislature, which undisputedly has the powers to make amendments with retrospective effect, intended to introduce section 149(1)(c) to take full effect from 1st April 2022 - an incongruity by any standard. The interpretation adopted by the learned Commissioner (Appeals) is thus clearly contrary to the specific words of the statute and unambiguous intent of the legislature. We, therefore, vacate the relief, quashing the reassessment proceedings as time-barred, granted by the learned Commissioner (Appeals) and restore the stand of the Assessing Officer on this point. Our humble understanding is that so far as escaped income from an asset outside India is concerned, any completed assessment can be reopened as long as sixteen years have not elapsed from the end of the relevant assessment year. Admittedly, that is not the position in the present case, as the relevant assessment year was completed on 31st March 2000, and the assessment was reopened on 27th March 2015. The plea of the Assessing Officer is thus indeed well taken. Thus as there is no adjudication on merits by the learned Commissioner (Appeals), we did not consider it appropriate to deal with the same. In view of the fact that the respondent is a very senior citizen in his eighties, that the assessee s arguments on merits have not been dealt with at all on merits, that the assessee has a prima facie arguable case on merits, and to ensure the matter reaches finality within a reasonable time frame, we deem it fit and proper to direct, as a result of vacating the relief on the ground of reassessment having been quashed, the Commissioner (Appeals) to dispose of the matter on merits at the earliest and in no event later than 180 days from the date of service of this order.

Summary

Issues Involved:
1. Time limit for issuing reassessment notice under Section 149 of the Income Tax Act, 1961.
2. Retrospective application of Section 149(1)(c) as amended by the Finance Act, 2012.
3. Validity of the reassessment proceedings initiated by the Assessing Officer.
4. Binding nature of non-jurisdictional High Court judgments on the Appellate Tribunal.

Detailed Analysis:

1. Time limit for issuing reassessment notice under Section 149 of the Income Tax Act, 1961:
The core issue revolves around the interpretation of the time limit for issuing a reassessment notice under Section 149, specifically in cases involving income related to assets located outside India. The Assessing Officer contended that the time limit is sixteen years from the end of the assessment year, as per Section 149(1)(c). However, the assessee argued, and the Commissioner (Appeals) agreed, that this extended limit applies only to cases that could have been reopened as of 1st July 2012, effectively making the provision fully applicable only from 1st April 2022. The Tribunal, however, found this interpretation contrary to the statute's clear wording and legislative intent.

2. Retrospective application of Section 149(1)(c) as amended by the Finance Act, 2012:
The Tribunal emphasized that the amendment to Section 149(1)(c) is expressly retrospective, as indicated by the Explanation below Section 149(3). This Explanation clarifies that the provisions, as amended by the Finance Act, 2012, apply to any assessment year beginning on or before 1st April 2012. The Tribunal noted that the legislative intent for retrospective application is unambiguous and that there is no constitutional or legal bar against such retrospective amendments. The Tribunal cited authoritative legal texts and precedents to support this view, underscoring the legislature's plenary powers to enact retrospective laws.

3. Validity of the reassessment proceedings initiated by the Assessing Officer:
The Tribunal vacated the Commissioner (Appeals)' decision to quash the reassessment proceedings as time-barred. It held that since the relevant assessment year was 1999-2000 and the reassessment notice was issued on 27th March 2015, it fell within the sixteen-year limit specified in Section 149(1)(c). The Tribunal thus restored the Assessing Officer's stand, affirming that the reassessment notice was validly issued within the permissible time frame for income related to assets located outside India.

4. Binding nature of non-jurisdictional High Court judgments on the Appellate Tribunal:
The Tribunal addressed the reliance on the non-jurisdictional High Court judgment in Braham Dutt Vs ACIT, which construed the amendment as prospective. The Tribunal clarified that non-jurisdictional High Court decisions have persuasive value but are not binding. It highlighted that the Braham Dutt judgment did not consider the Explanation below Section 149(3), which explicitly makes the amendment retrospective. The Tribunal also noted that a mere dismissal of an SLP by the Supreme Court does not constitute a binding precedent. Consequently, the Tribunal did not find itself bound by the Braham Dutt decision and instead adhered to the clear statutory provisions and legislative intent.

Conclusion:
The Tribunal allowed the appeal, vacating the relief granted by the Commissioner (Appeals) on the grounds of the reassessment being time-barred. It directed the Commissioner (Appeals) to adjudicate the matter on merits within 180 days, considering the respondent's advanced age and the need for timely resolution. The Tribunal's decision underscores the retrospective application of Section 149(1)(c) and clarifies the non-binding nature of non-jurisdictional High Court judgments in this context.