2025 (1) TMI 1529 - AT - Income Tax

Validity of Reopening of assessment u/s 147 - notice issued beyond the period of limitation - HELD THAT - The said notice has not been generated as per the prescribed procedure on the income tax portal rather the same has been created manually in violation of the provisions of the Income Tax Act and procedure prescribed thereto. Even the said notice is in the name of the same another assessee and not in the name of the assessee hence the same can not be treated as valid notice. Even the said notice is time barred by limitation. The last date to issue the notice u/s 148 in this case was 31.03.2022 whereas the notices u/s 148A(b) was issued on 29.05.2022 and notice u/s 148 was issued on 28.07.2022. As observed even the said notice dated 28.07.2022 has not been issued to the assessee but in the name of other person. Therefore the reopening of the assessment is bad in law on both counts. The notice u/s 148 of the Act in this case is bad in law and therefore the consequential assessment framed u/s 147 of the Act is bad in law and the same is hereby quashed the appeal of the assessee stands allowed.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment include:

• Whether the notice issued under Section 148 of the Income Tax Act, 1961, was valid, given it was allegedly issued beyond the period of limitation.
• Whether the notice issued under Section 148 was validly addressed to the correct assessee.
• Whether the procedural requirements for issuing a notice under the amended provisions of Section 148A were followed.

ISSUE-WISE DETAILED ANALYSIS

Validity of Notice under Section 148 due to Limitation Period

• Relevant Legal Framework and Precedents: The legal framework involves Section 148 of the Income Tax Act, which deals with the reopening of assessments. The amendments effective from 01.04.2021 introduced Section 148A, altering the procedural requirements. The Tribunal considered precedents, including the Supreme Court's decision in the case of Rajeev Bansal, which clarified the application of limitation periods under the old and new regimes.
• Court's Interpretation and Reasoning: The Tribunal emphasized that any notice under the new regime for assessment years prior to 2021-2022 must adhere to the limitation periods specified under the old regime. Specifically, if the six-year period had expired by the time the notice was issued, it would be invalid.
• Key Evidence and Findings: The Tribunal found that the notice for the assessment year 2015-16 was issued on 28.07.2022, which was beyond the permissible six-year period that expired on 31.03.2022. This rendered the notice time-barred.
• Application of Law to Facts: Applying the legal principles, the Tribunal concluded that the notice dated 28.07.2022 was invalid as it was issued after the expiration of the six-year limitation period.
• Treatment of Competing Arguments: The Tribunal considered the Department's arguments but found them unconvincing in light of the Supreme Court's clarification on the application of the limitation period.
• Conclusions: The Tribunal held that the notice was invalid due to being time-barred, leading to the quashing of the assessment under Section 147.

Validity of Notice Addressed to the Correct Assessee

• Relevant Legal Framework and Precedents: The notice must be addressed to the correct assessee as per procedural requirements under the Income Tax Act.
• Court's Interpretation and Reasoning: The Tribunal noted that the notice was erroneously addressed to a different entity, Caramel Merchant Pvt. Ltd., instead of the assessee.
• Key Evidence and Findings: The Tribunal observed that the notice lacked a DIN number and appeared to be manually created, which violated prescribed procedures.
• Application of Law to Facts: The misaddressing of the notice further invalidated it, as it was not issued in the name of the correct assessee.
• Treatment of Competing Arguments: The Tribunal did not find any compelling arguments from the Department to justify the procedural lapse.
• Conclusions: The Tribunal concluded that the notice was invalid due to incorrect addressing, further supporting the quashing of the assessment.

Procedural Requirements under Amended Provisions

• Relevant Legal Framework and Precedents: The amendments introduced procedural steps under Section 148A that must be followed for valid issuance of notices.
• Court's Interpretation and Reasoning: The Tribunal highlighted the procedural lapses, including the manual creation of the notice and lack of adherence to the prescribed process.
• Key Evidence and Findings: The Tribunal found that the notice was not generated through the income tax portal, indicating non-compliance with procedural requirements.
• Application of Law to Facts: The failure to follow the amended procedural requirements contributed to the notice's invalidity.
• Treatment of Competing Arguments: The Tribunal did not find any justification for the procedural deviations presented by the Department.
• Conclusions: The Tribunal held that the procedural non-compliance further invalidated the notice, reinforcing the decision to quash the assessment.

SIGNIFICANT HOLDINGS

• The Tribunal held that the notice under Section 148 was invalid due to being time-barred, incorrectly addressed, and procedurally flawed.
• Core principles established include the strict adherence to limitation periods and procedural requirements under the Income Tax Act.
• The Tribunal quashed the assessment under Section 147, allowing the appeal filed by the assessee.

The Tribunal's decision underscores the importance of compliance with statutory time limits and procedural requirements in the issuance of notices under the Income Tax Act.