2024 (1) TMI 159 - HC - Income Tax

Validity of reopening of assessment - period of limitation for issuance of notice u/s 148 - Scope of new regime u/s 148A - HELD THAT - Limitations for issuance of notice under Section 148 of the IT Act, 1961, was to be governed by Section 149 as it stood till 31.03.2021. Substituted Section 149 of the IT Act, 1961 w.e.f reduced the permissible time limit for issuance of such a notice to three years. Such notice could be issued only in exceptional case within ten years from the end of the relevant year. It also provides further additional safeguards which were absent under the earlier regime pre-Finance Act, 2021. The last date for issuance of the notice under Section 148 of the IT Act, 1961 for the Assessment Year 2014-2015 to the petitioner was on 31.03.2021 under the old regime prior to 1.4.2021. The impugned notice was delivered to the petitioner on the following date at 7.12.04 a.m, the day on which old provisions stood substituted with new provisions. The hard copy of the same notice was also despatched to the petitioner on 07.04.2021 and was also received by the petitioner on the following day. As per Sub-section (2) to Section 282 Board may make rules providing for the addresses (including the address for electronic mail or electronic mail message) to which the communication referred to in sub-section (1) may be delivered or transmitted to the person therein named. As per Rule 127A(1)(a)(i) of the IT Rules, 1962, every notice or other document communicated in electronic form by an authority under the Act shall be deemed to be authenticated in case of electronic mail or electronic mail message (e-mail), if the name and office of such income tax authority is printed on the e-mail body, if the notice or other document is in the e-mail body itself and the e-mail, is issued from the designated e-mail address of such income tax authority. Similarly, every notice or other document communicated in electronic form by an authority under the Act shall be deemed to be authenticated in case of electronic mail or electronic mail message (email), if the name and office of such income tax authority is printed on the attachment to the e-mail, if the notice or other document is in the attachment and the e-mail, is issued from the designated e-mail address of such income tax authority. It is not the actual communication of the notice that is relevant. It is the issuance of the notice. - Once the notice was signed and delivered for being despatched whether through post or through e-mail it is deemed to have been issued for the purpose of Section 149. Communication and delivery of such communication can be on a date after it is issued. Section 149 as it stood prior to its substitution with effect from 01.04.2021 which has been extracted above also makes it clear no notice under Section 148 shall be issued for the relevant assessment year in terms of the sub-clause (a), (b) (c) to Section 149(1) of the IT Act, 1961 It is not the actual communication of the notice that is relevant. It is the issuance of the notice. Notice can be issued on the last date. All that is required is that it should be dispatched. Once the notice has been dispatched either electronically or through post on the last date prescribed u/s 149 the proceeding cannot be questioned as time barred. The decision of the Supreme Court in Ashish Agarwals Case 2022 (5) TMI 240 - SUPREME COURT which was in the context of delay due TLA Act, 2020 will not come to the rescue of the petitioner. It therefore cannot be said that either the impugned notice that was issued to the petitioner on 31.03.2021 was time barred or that the assessment had to be completed under the amended provisions of the IT Act, 1961 with effect from 01.04.2021. A Division Bench of this Court in Malavika Enterprises Vs. Central Board of Direct Taxes 2022 (8) TMI 586 - MADRAS HIGH COURT dismissed the writ petition while dealing with a case under similar circumstances. Therefore, the challenge to the impugned notice in this writ petition has to fail. The petitioner has also participated in the proceedings by filing a response on 24.04.2021 along with a Return of Income. The petitioner has also received notices and has also been served with the reasons for reopening the assessment on 27.01.2022. The petitioner has also received another notice on 13.02.2022 u/s 142(1).

Summary

Issues Involved:
1. Validity of the notice under Section 148 of the Income Tax Act, 1961.
2. Timeliness and issuance of the notice.
3. Applicability of amended provisions of the Finance Act, 2021.

Summary:

Validity of the Notice:
The petitioner challenged the notice dated 31.03.2021 issued under Section 148 of the Income Tax Act, 1961, arguing it was time-barred and should have been issued under the amended provisions effective from 01.04.2021. The petitioner contended that the notice was digitally signed at 8.16 p.m. on 31.03.2021 but was received only on 01.04.2021, thus beyond the prescribed period of limitation.

Timeliness and Issuance of the Notice:
The court observed that the notice was digitally signed and issued on 31.03.2021, which was within the permissible time limit under the old regime. The notice was dispatched electronically on 01.04.2021 and physically on 07.04.2021. The court emphasized that issuance is deemed complete once the notice is ready for dispatch, irrespective of the actual date of receipt by the petitioner.

Applicability of Amended Provisions:
Referring to the Supreme Court's decision in Union of India vs. Ashish Agarwal, the court noted that the new provisions of the Finance Act, 2021, are remedial and should apply to notices issued after 01.04.2021. However, since the petitioner's notice was issued on 31.03.2021, it fell under the old provisions. The court distinguished the petitioner's case from those covered by the Supreme Court's decision, as the notice was validly issued before the amendment came into force.

Conclusion:
The court held that the notice issued on 31.03.2021 was valid and not time-barred. The petitioner had participated in the proceedings by filing a return of income and responding to subsequent notices. Therefore, the writ petition was dismissed, and the challenge to the impugned notice failed.