2024 (12) TMI 1539 - AT - Income Tax

Validity of reassessment proceedings u/s 147 beyond period of limitation - scope of new regime/law for reopening - HELD THAT - Test for checking the validity of notices issued u/s 148 under new regime for AYs 2021-22 or prior years is whether the period of six years has expired at the time of issue of such notice and in that case the notice u/s 148 becomes invalid. These observations also makes it clear that the time limit of ten years as per the amended provisions of section 149(1)(b) can be applied only prospectively. In assessee s case when we apply this test for AY 2015-16 the period of six years has expired on 31.03.2022 and therefore the notice dated 29.07.2022 u/s 148 of the Act for AY 2015-16 is invalid since it is barred by limitation. Accordingly the assessment completed u/s 147 of the Act is liable to be quashed. Reassessment without obtaining approval of the appropriate authority for the purpose of issuing u/s 148 - AY 2016-17 - In assessee s case for AY 2016-17 pursuant to the directions in the case of Ashish Agrawal 2022 (5) TMI 240 - SUPREME COURT the AO passed an order under section 148(d) of the Act and issued a notice u/s 148 on 30.07.2022. From the above observations of the Hon ble Supreme Court it is clear that the though the prior approval u/s 148A(b) and 148(d) were waived in terms of the decision of Ashish Agarwal (supra) for issue of notice under section 148A(a) and u/s 148 on or after 1 April 2021 the prior approval should be obtained from the appropriate authorities specified u/s 151 of the new regime. Thus the approval should have been obtained under the amended provisions of section 151(ii) of the Act i.e. the approval should have been obtained from the Principal Chief Commissioner whereas the approval has been obtained from CIT as stated in the notice under section 148 itself. Therefore we see merit in the contention of the assessee that the notice u/s 148 for AY 2016-17 is issued without obtaining the prior approval from the appropriate authority. Accordingly we hold that the notice u/s 148 is invalid and the consequent assessment u/s 147 is liable to be quashed. Decided in favour of assessee.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment include:

1. Whether the notice issued under section 148 of the Income Tax Act for Assessment Year (AY) 2015-16 was barred by limitation as per the provisions of section 149.

2. Whether the notice issued under section 148 for AY 2016-17 was invalid due to the lack of appropriate approval under section 151 of the Act.

ISSUE-WISE DETAILED ANALYSIS

1. Validity of Notice under Section 148 for AY 2015-16

- Relevant Legal Framework and Precedents: The legal framework revolves around section 148 and section 149 of the Income Tax Act, which govern the issuance of notices for reassessment. The Supreme Court's decision in Union of India vs. Rajeev Bansal was pivotal, emphasizing that notices issued after the expiration of the six-year period are invalid.

- Court's Interpretation and Reasoning: The Tribunal noted that the notice dated 29.07.2022 was issued beyond the six-year period allowed under the old regime of section 149, which expired on 31.03.2022. The Tribunal relied on the Supreme Court's interpretation that the ten-year period under the new regime applies prospectively.

- Key Evidence and Findings: The Tribunal referenced the Supreme Court's observations and the decision of the Co-ordinate Bench in Pushpak Realities Pvt. Ltd., which held that notices issued after 01.04.2021 for AY 2015-16 are barred by limitation.

- Application of Law to Facts: Applying the Supreme Court's ruling, the Tribunal concluded that the notice issued on 29.07.2022 was invalid as it was beyond the permissible period.

- Treatment of Competing Arguments: The Tribunal considered the Revenue's argument that the notice was within the extended period under TOLA but found it unpersuasive, given the Supreme Court's clear directive.

- Conclusions: The Tribunal quashed the reassessment order for AY 2015-16, deeming the notice under section 148 as time-barred.

2. Validity of Notice under Section 148 for AY 2016-17

- Relevant Legal Framework and Precedents: The focus here is on section 151 of the Income Tax Act, which mandates obtaining approval from specified authorities before issuing a notice under section 148. The Supreme Court's decision in Rajeev Bansal clarified the requirements for such approvals under the new regime.

- Court's Interpretation and Reasoning: The Tribunal emphasized that for notices issued after 01.04.2021, approval must be obtained from the higher authority specified under section 151(ii) if more than three years have elapsed since the relevant AY.

- Key Evidence and Findings: The Tribunal found that the notice for AY 2016-17 was issued with approval from the Principal Commissioner, rather than the required Principal Chief Commissioner, rendering it invalid.

- Application of Law to Facts: The Tribunal applied the Supreme Court's directives, noting that the approval obtained did not meet the statutory requirements under the new regime.

- Treatment of Competing Arguments: The Revenue's argument that the original notice was correctly issued under the old regime was rejected, as the approval process under the new regime was not followed.

- Conclusions: The Tribunal quashed the reassessment order for AY 2016-17 due to the invalidity of the notice issued without proper approval.

SIGNIFICANT HOLDINGS

- Preserve Verbatim Quotes of Crucial Legal Reasoning: The Tribunal quoted the Supreme Court's decision in Rajeev Bansal, emphasizing that all notices issued on or after 01.04.2021 for AY 2015-16 must be dropped as they do not comply with TOLA's prescribed period.

- Core Principles Established: The judgment reinforced that the time limits for issuing reassessment notices must strictly adhere to the statutory provisions and that approvals must be obtained from the correct authority as per the amended law.

- Final Determinations on Each Issue: The Tribunal determined that the notices for both AY 2015-16 and AY 2016-17 were invalid, leading to the quashing of the reassessment orders for both years.