2024 (8) TMI 1188 - HC - Income Tax

Reopening of assessment beyond period of limitation - Section 148 notice was issued on 25 July, 2022, which is almost two years after the limitation period had expired on 31 March, 2020, which was further extended upto 31 March, 2021 because of the notification issued as a result of Covid-19 pandemic. HELD THAT - The period of six years relevant to the assessment year 2013-14 expired on 31 March, 2020. Thus, the amendment as incorporated in Section 149 (1) (b) was not applicable for the re-opening/reassessment in question, which was for the assessment year 2013-14. It appears that overlooking such position, the Assessing officer, under the presumption that the amendment to the said provision as incorporated by Finance Act, 2022 with effect from 1 April, 2022 had become applicable to the facts in hand, i.e., A.Y. 2013-14, issued notice under section 148 dated 25 July, 2022 inter alia considering the decision of Supreme Court in Union of India vs. Ashish Agarwal 2022 (5) TMI 240 - SUPREME COURT . Being a jurisdictional issue, looked from any angle, the notice dated 25 July, 2022 under Section 148 of the Act could not have been issued for the assessment year 2013-14. It is on such notice, the assessment order dated 26 May, 2023 has been passed. We may observe that this is clearly a case where the Assessing Officer has proceeded without jurisdiction and possibly applying the amended provisions of Section 149 as incorporated by the Finance Act to the case in hand when he issued notice dated 25 July, 2022 overlooking the fact that in the present case as the law would stand, the limitation had already expired and within the extended period of limitation as noted by us herein. Thus, once the notice itself was inherently without jurisdiction, the order passed on such notice although was passed without granting hearing to the petitioner, would obviously be rendered illegal. Thus applying the principles as laid down in New India Assurance Co. Ltd. 2024 (1) TMI 803 - BOMBAY HIGH COURT there is no manner of doubt that the petition would be required to be allowed.

Summary

Issues:
1. Challenge to order under Income-tax Act
2. Validity of notice under Section 148 for assessment year 2013-14
3. Delay in filing petition

Analysis:
Issue 1: The petitioner challenged an order passed under the Income-tax Act, specifically under Section 147 read with Section 144 and Section 144B. The petitioner sought various reliefs, including quashing of notices, assessment orders, penalty orders, and demand notices issued under different sections of the Act.

Issue 2: The primary grievance of the petitioner was regarding the validity of the notice issued under Section 148 for the assessment year 2013-14. The petitioner argued that the notice was issued beyond the limitation period prescribed under Section 149 of the Act. The petitioner contended that the notice was issued almost two years after the limitation period had expired, and the Assessing Officer had overlooked the relevant provisions while issuing the notice.

Issue 3: The respondent argued that the petition should not be entertained due to a delay in filing, as the assessment order was passed against the petitioner before filing the petition. However, the petitioner argued that the order was illegal, and new causes of action arose after subsequent penalty orders were issued. The court noted that the notice under Section 148 was inherently without jurisdiction, rendering the subsequent assessment order illegal. The court emphasized that an illegal order cannot be enforced, even if there is a delay in challenging it, as illegality cannot be extinguished by acquiescence.

Conclusion:
The court, after considering the arguments and relevant legal provisions, allowed the petition in favor of the petitioner. The court held that the notice under Section 148 for the assessment year 2013-14 was issued without jurisdiction, making the subsequent assessment order illegal. The court emphasized that an inherently void order cannot be enforced, and the petition was allowed in line with previous judgments on similar issues.