2023 (9) TMI 985 - HC - Income Tax

Reopening of assessment - period of limitation - order under clause (d) of Section 148A beyond period of one month - Applicability of sixth proviso to Section 149(1) - HELD THAT - The notice under Section 148 of the Act (accompanied by an order under clause (d) of Section 148A) is required to be issued within the period of three years from the end of the relevant assessment year if the income escaping assessment is less than ₹50,00,000/-. The sixth proviso to Section 149(1) of the Act makes it amply clear that if the time available to the Assessing Officer to pass an order under Clause (d) of Section 148A is truncated to less than 7 days on account of the period of limitation available for issuing a notice under Section 148, the same shall be extended for the said period. In our view, the period of one month from the end of the month in which the time available to the assessee to respond to the notice under Clause (b) of Section 148A expires, is available to the Assessing Officer to pass an order under clause (d) of Section 148A of the Act only within the rubric of Section 149 of Act, that is, within the overall time available in terms of Section 149(1) of the Act for issuance of a notice under Section 148 of the Act. This is because a notice under Section 148 of the Act which is not accompanied with the order under Clause (d) of Section 148 of the Act would be non-compliant with the Act. And, no such notice can be issued beyond the period as specified under Section 149(1) of the Act.

Summary

Issues:
The judgment involves a review application seeking rectification of an order dismissing a petition challenging a notice issued under Section 148 of the Income Tax Act 1961 for reopening the assessment for the Assessment Year 2019-2020.

Details:
1. The impugned notice indicated transactions related to supplies from two parties, with the petitioner providing evidence that one set of supplies did not pertain to the relevant assessment year. The value of the other supplies was below the threshold for extending the limitation period for reopening the assessment.
2. The court found the impugned notice was issued within the stipulated period after excluding the time for the petitioner to respond to the notice and for passing the order, thus rejecting the petition.
3. The petitioner sought review on grounds including lack of accommodation entries, vagueness of the notice, absence of approval details, and disputing the amount of income allegedly escaping assessment.
4. The court held that the claim of no income escapement is a matter for the Assessing Officer to decide, and the notice was not vague. The petitioner can request approval details separately.
5. The court clarified that the period for issuing the notice was within the limitation period, as per the provisions of the Act, rejecting the petitioner's contentions.
6. The court explained the application of provisos to Section 149(1) of the Act, extending the limitation period for responding to the notice and passing the order under Section 148A.
7. The petitioner's argument against the period of limitation was refuted by the Revenue, emphasizing compliance with the three-year limit for issuing the notice.
8. The court analyzed the provisions of Section 148A and Section 148, highlighting the necessity of an order under Section 148A preceding the notice under Section 148.
9. The court concluded that the notice was issued within the prescribed period, dismissing the application for review based on the petitioner's contentions.