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2022 (5) TMI 1181 - HC - Income TaxReopening of assessment u/s 147 - pre-condition to initiate proceedings under Section 147 - Scope of notices under Section 148A of the Act, 1961 as substituted by the Finance Act, 2021 - Notice not issued within period of limitation - Additional Solicitor General of India has made a statement that as per Clause-7.1 of the Board s circular dated 11.05.2022, the notices under Section 148 relating to the Assessment Years 2013-14, 2014-15 and 2015-16, shall not attract the judgment of Ashish Agarwal 2022 (5) TMI 240 - SUPREME COURT and the impugned notice under Section 148 issued on 01.04.2021 for the Assessment Year 2014-15 is, therefore, clearly barred by limitation - HELD THAT - As per Clauses 6.2 and 7.1 of the Board s Circular dated 11.05.2022, if a case does not fall under Clause (b) of sub-Section (i) of Section 149 of the Act, 1961 for the Assessment Years 2013-14, 2014-15 and 2015-16 (where the income of an assessee escaping assessment to tax is less than Rs.50,00,000/-) and notice has not been issued within limitation under the unamended provisions of Section 149, then proceedings under the amended provisions cannot be initiated. The impugned notice under Section 148 of the Act, 1961 issued on 01.04.2021 for the Assessment Year 2014-15 and the impugned notice dated 13.01.2022 under Section 144 of the Act, 1961 and the reassessment order dated 13.01.2022 under Section 147 read with Section 144B of the Act, 1961 for the Assessment Year 2014-15 passed by the respondent No.4 are hereby quashed. The writ petition is allowed.
Issues Involved:
1. Validity of the notice issued under Section 148 of the Income Tax Act, 1961. 2. Validity of the notice issued under Section 144 of the Income Tax Act, 1961. 3. Jurisdiction and limitation period for reassessment proceedings. 4. Applicability of the Supreme Court judgment in the case of Ashish Agarwal. 5. Compliance with procedural requirements under the amended provisions of the Act. 6. Implementation of the Central Board of Direct Taxes (CBDT) instructions. Detailed Analysis: 1. Validity of the Notice Issued Under Section 148: The petitioner challenged the notice issued under Section 148 of the Income Tax Act, 1961 for the assessment year 2014-15, arguing that it was issued without jurisdiction and beyond the period of limitation. The court noted that the "reasons to believe" recorded by the respondent indicated an income of Rs. 2,63,324/- had escaped assessment. The court referenced the Supreme Court judgment in the case of Ashish Agarwal, which held that notices issued after 1.4.2021 under Section 148 should be treated as notices under Section 148A of the Act, 1961 as substituted by the Finance Act, 2021. 2. Validity of the Notice Issued Under Section 144: The petitioner also sought to quash the notice issued under Section 144 of the Act, dated 13.01.2022. The court found that the re-assessment order dated 31.3.2022 was passed under Section 147 read with Section 144B of the Act, 1961 by the National Faceless Assessment Centre, Delhi. 3. Jurisdiction and Limitation Period for Reassessment Proceedings: The court examined the unamended and amended provisions of Section 149 of the Act, which provide the time limit for issuing notices under Section 148. The unamended Section 149 allowed notices to be issued within four to six years, depending on the amount of income that escaped assessment. The amended Section 149, effective from 01.04.2021, reduced the time limit to three years, with an extension to ten years only if the escaped income exceeded Rs. 50 Lacs. 4. Applicability of the Supreme Court Judgment in the Case of Ashish Agarwal: The court referred to the Supreme Court's judgment in Ashish Agarwal, which allowed notices issued under the unamended provisions to be treated as deemed notices under Section 148A of the amended Act. The judgment emphasized that the Revenue should not be left remediless and provided a framework for reassessment proceedings to continue under the new provisions. 5. Compliance with Procedural Requirements Under the Amended Provisions: The court observed that the CBDT issued Instruction No.01/2022 to implement the Supreme Court's judgment uniformly. The instruction clarified that notices for assessment years 2013-14, 2014-15, and 2015-16 could only be issued if the escaped income exceeded Rs. 50 Lacs. The court noted that the impugned notice for the assessment year 2014-15 did not meet this threshold and was therefore barred by limitation. 6. Implementation of the Central Board of Direct Taxes (CBDT) Instructions: The court acknowledged the statement made by the Additional Solicitor General, which aligned with the CBDT's circular stating that notices for the assessment years 2013-14, 2014-15, and 2015-16, where the escaped income was less than Rs. 50 Lacs, would not attract the judgment of the Supreme Court in Ashish Agarwal. Consequently, the court held that the impugned notice under Section 148 issued on 01.04.2021 and the subsequent proceedings were without jurisdiction and quashed them. Conclusion: The court quashed the impugned notices under Sections 148 and 144, as well as the reassessment order dated 31.03.2022, for being issued beyond the period of limitation and without jurisdiction. The writ petition was allowed, and all other arguments were left open for future consideration.
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