2023 (4) TMI 1002 - HC - Income Tax

Reopening of assessment u/s 147 - time limit for issuance of notice for reopening of the assessment - Validity of order u/s 148A - scope of new enactment of Section 148A - Period of limitation to issue notice issued u/s 148A(b) - notices issued u/s 148 referable to the old regime - HELD THAT - As already noted, the department took shelter of the time limit extended by Notifications of the Central Board of Direct Taxes to treat the above class of notices to be within time. In Keenara Industries Pvt. Ltd. 2023 (3) TMI 104 - GUJARAT HIGH COURT this Court proceeded to hold that enacting the provisions in Taxation and Other Laws (Relaxation Amendment of Certain Provisions) Act, 2020, was not the permissible device whereby the time limit could be legitimately extended for the purpose of issuing Notices under Section 148, which were otherwise barred in terms of Section 149, as it exists in the old regime. The Taxation and Other Laws Act, 2020 was rightly viewed to be a secondary legislation. It was therefore held that secondary legislation would not override the principal legislation-the Finance Act, 2021. Also negatived by the Division Bench in Keenara Industries Pvt. Ltd. (supra) as per observations in paragraph 36 of the judgment, the concept of freezing the time limit. It was held that it was not permissible in law for the Revenue to travel back in time. Nor does the Taxation and Other Laws Act endorse to such concept. It was held as per paragraphs 38 and 39 of the Keenara Industries Pvt. Ltd. (supra) that Notifications extending the due dates under the old provisions could not breath any more after the repeal of the old provisions. The point is no more res integra that all original notices under section 148 of the Act referable to the old regime and issued between 01.04.2021 to 30.06.2021 would stand beyond the prescribed permissible timeline of six years from the end of Assessment Year 2013-14 and Assessment Year 2014-15. Therefore, all such notices when they would relate to Assessment Year 2013-14 or Assessment Year 2014-15 would be time barred as per the provisions of the Act as applicable in the old regime prior to 01.04.2021. Furthermore, these notices cannot be issued as per the amended provision of the Act. Revenue was entirely at his receiving end, unable to dispute the position of law holding the field as above. All the impugned notices in the respective petitions under section 148 of the Act relatable to Assessment year 2013-14 or the assessment year 2014-15, as the case may be, are beyond the permissible time limit, therefore, liable to be treated illegal and without jurisdiction. Since the petitions deserve to be allowed on the aforesaid crisp legal ground alone, learned advocates for the parties submitted to agree that facts and other legal issues may not be gone into by the Court. Accordingly, they are neither delineated, nor are gone into in respect of the above petitions. All other questions on facts involved in the reasons weighed with Assessing Officer seeking to reopen the assessment are kept open in all cases.

Summary

Issues Involved:
1. Validity of notices issued under Section 148 of the Income Tax Act, 1961.
2. Applicability of limitation period for issuing such notices.
3. Impact of the Finance Act, 2021 and subsequent judicial decisions on the notices.

Summary:

1. Validity of Notices under Section 148:

All these Special Civil Applications challenge the notices issued for reopening the assessment for the assessment years concerned under Section 148 and the orders passed under Section 148A(d) of the Income Tax Act, 1961. The respective petitioners have called into question the notice issued by the respondent-assessing officer under Section 148 of the Income Tax Act, 1961, seeking to reopen the assessment in respect of assessment year 2013-14 or assessment year 2014-15. Also challenged are the orders passed under Section 148A(d) of the Income Tax Act, 1961.

2. Limitation Period for Issuing Notices:

At the outset, the learned advocate for the petitioner submitted that the notice issued under Section 148 of the Act and the consequential order under Section 148A(d) of the Act issued by the department for assessment years 2013-14 and 2014-15 are barred on the ground of limitation, the notices having been issued after the passage of six years from the end of the relevant assessment year. In view of the decision of the Division Bench of this Court in Keenara Industries Pvt Ltd. vs. The Income Tax Officer, the question of the legality of the notice issued in respect of Assessment Year 2013-14 and Assessment Year 2014-15 is covered, and the impugned notice is without jurisdiction as it is beyond the time limit prescribed.

3. Impact of Finance Act, 2021 and Judicial Decisions:

In Keenara Industries Pvt. Ltd., the Court held that the notice under section 148 of the Act could be issued on or after 01.04.2021 only if the limitation for issuing such notice under the old regime of reopening had not expired prior to the Finance Act, 2021, coming into force. It was observed that the new provisions substituted by the Finance Act, 2021, were remedial and benevolent in nature, intended to protect the rights and interests of the assessee. The Supreme Court in Ashish Agarwal's case held that all notices issued under Section 148 of the Act between 01.04.2021 to 30.06.2021 shall be deemed to have been issued under section 148A of the Act to be treated as show-cause notices under section 148A(b) of the Act. However, the First Proviso to section 149 of the Act, as introduced in the Finance Act, 2021, stipulates that no notice under section 148 shall be issued at any time in a case for the relevant Assessment Year beginning on or before 1st April 2021, if such notice could not have been issued at that time on account of being beyond the time limit specified under the provisions as they stood immediately before the commencement of the Finance Act, 2021.

Conclusion:

All the impugned notices in the respective petitions under section 148 of the Act, relatable to Assessment year 2013-14 or the assessment year 2014-15, as the case may be, are beyond the permissible time limit, therefore, liable to be treated as illegal and without jurisdiction. The petitions are allowed, and the respective notices and orders under Section 148 and Section 148A(d) of the Income Tax Act, 1961, are set aside. All other questions on facts involved in the reasons weighed with the Assessing Officer seeking to reopen the assessment are kept open in all cases.