2023 (3) TMI 366 - HC - Income Tax

Reopening of assessment u/s 147 - condition specified u/s 149(1)(b) - income alleged to have escaped assessment should be Rs.50,00,000/- or more - HELD THAT - This Court is of the view that the reopening in the present case is in violation of CBDT Instruction No.01/2022 dated 11th May, 2022, wherein it has been clearly stated that notices in the cases pertaining to assessment years 2013-14, 2014-15 and 2015-16 cannot be issued, if the condition specified u/s 149(1)(b) is not fulfilled namely that income alleged to have escaped assessment should be Rs.50,00,000/- or more. Consequently, as the impugned order under Section 148A(d) of the Act has been passed contrary to the CBDT Instruction No.1/2022, the same is quashed. (See Simplex Castings Ltd. v. Commissioner of Customs Vishakapatnam , 2003 (4) TMI 107 - SUPREME COURT Commissioner of Customs v. Indian Oil Corporation Ltd 2004 (2) TMI 66 - SUPREME COURT Collector of Central Excise, Vadodara vs. Dhiren Chemical Industries 2002 (2) TMI 115 - SC ORDER AND Catholic Syrian Bank Ltd. vs. 2012 (2) TMI 262 - SUPREME COURT - WP allowed.

Summary

Issues:
Challenging notice under Section 148A(b) of the Income Tax Act, 1961; Barred by limitation under Section 149(1)(b) of the Act; Violation of CBDT Instruction No.01/2022 dated 11th May, 2022.

Analysis:
The petitioner filed a writ petition challenging a notice dated 7th April, 2021 issued under Section 148A(b) of the Income Tax Act, 1961, an order dated 29th July, 2022 passed under Section 148A(d) of the Act, and the initiation of reassessment proceedings for the assessment year 2013-14. The petitioner contended that the proceedings initiated by the Respondent No.1 were time-barred under Section 149(1)(b) of the Act as they were initiated after the expiry of three years from the relevant assessment year, and the alleged escaped income was below the threshold of Rs.50,00,000. The Respondent No.1 had observed that the amount alleged to have escaped assessment was below the threshold, yet issued a notice under Section 148 of the Act. The court noted that the reopening in this case violated CBDT Instruction No.01/2022 dated 11th May, 2022, which specified that notices for assessment years 2013-14, 2014-15, and 2015-16 cannot be issued if the income alleged to have escaped assessment is less than Rs.50,00,000. Citing relevant case laws, the court quashed the impugned order under Section 148A(d) of the Act due to the violation of the CBDT instruction.

The court acknowledged the petitioner's argument that the proceedings for the assessment year 2013-14 were time-barred under Section 149(1)(b) of the Act as the initiation of proceedings occurred after the expiration of three years from the relevant assessment year. The Respondent No.1 had admitted that the alleged escaped income was below Rs.50,00,000, which was the threshold for initiating proceedings under Section 149(1)(b). Despite this admission, the Respondent No.1 proceeded with issuing a notice under Section 148 of the Act, which was deemed improper by the court. The court emphasized the importance of adhering to statutory provisions and relevant instructions in conducting reassessment proceedings to ensure compliance with the law.

In light of the violation of CBDT Instruction No.01/2022, the court quashed the impugned order under Section 148A(d) of the Act. The court's decision was based on the clear directive in the instruction that notices for certain assessment years cannot be issued if the income alleged to have escaped assessment is below the specified threshold. By citing relevant case laws to support its decision, the court upheld the importance of following instructions and statutory provisions in initiating reassessment proceedings. Consequently, the writ petition challenging the notice and subsequent proceedings was disposed of in favor of the petitioner.