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2024 (9) TMI 1193 - HC - Income TaxReopening of assessment u/s 147 - reassessment proceeding being barred by limitation - mere 'change of opinion' without any new material on record - HELD THAT - As per first proviso to Section 148 of the Income Tax Act, 1961 as amended, no notice under this Section shall be issued unless there is information with the AO which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the relevant assessment year and the AO has obtained prior approval of the specified authority to issue such notice. Thus, if information is available with the AO which suggests that the income chargeable to tax has escaped assessment after obtaining obtained prior approval of the specified authority to issue such notice. As per second proviso, no such approval shall be required where the Assessing Officer, with the prior approval of the specified authority, has passed an order under clause (d) of Section 148A to the effect that it is a fit case to issue a notice under this Section. Thus, if an order under clause (d) of Section 148A of the Income Tax Act, 1961 has been passed with the prior approval of the specified authority also no such approval under the first proviso shall be required for issuing notice under Section 148 of the Income Tax Act, 1961. As per third proviso, any return of income, required to be furnished by an assessee under this section and furnished beyond the period allowed shall not be deemed to be a return under Section 139. Thus, a notice issued under Section 148 of the Income Tax Act, 1961, has to precede an enquiry after an opportunity of being heard and an opportunity of reply under Section 148A of the Income Tax Act, 1961. The notice under Section 148 also has to satisfy the time limit under Section 149 of the Income Tax Act, 1961. As per Section 151 of the Income Tax Act, 1961, before issuing the notice both under Sections 148 and 148A of the Income Tax Act, 1961, sanction of the specified authority also has to be obtained. Section 151 of the Income Tax Act, 1961, as amended contemplates sanction of the specified authority . Unless, fresh and tangible materials were available with the Assessing Officer as is contemplated under Explanations 1, 2 3 to Section 148 of the Income Tax Act, 1961 reopening of the complete assessment cannot be allowed for the period which would have been covered by the old provisions, if there was no amendment. The test in Kelvinator of India Ltd 2010 (1) TMI 11 - SUPREME COURT cannot be ignored as the language used is still the same in the amended in the first proviso to Section 149(1) of the Income Tax Act, 1961, the test in Kelvinator of India Ltd 2010 (1) TMI 11 - SUPREME COURT is both pristine and still contemporary in the context of amended provisions of Income Tax Act, 1961 with effect from 01.04.2021. The Division Bench of the Bombay High Court, in Siemens Financial Services (P). Ltd., 2023 (9) TMI 552 - BOMBAY HIGH COURT reiterated the principles of law that were applicable to the provisions of the Income Tax Act, 1961 after 1989 amendment and for the period immediately prior to 01.04.2021. Similarly, the decision of Usha International Limited. 2012 (9) TMI 767 - DELHI HIGH COURT is also relevant for the decision under the old regime. The decisions cited by petitioner rendered in the context of old regime are still relevant and therefore, they cannot be ignored as there has to be reasoned to believe that any tax has escaped assessment for any assessment year. This view has been reiterated in Hexaware Technologies Ltd. 2024 (5) TMI 302 - BOMBAY HIGH COURT Since there are no fresh and tangible material were available for the AO to form an opinion that income escaped assessment, it has to be held attempt is to review the assessment completed u/s 143(3) of the Income Tax Act, 1961. Therefore, the impugned proceedings are held without jurisdiction and are liable to be quashed as prayed.
Issues Involved:
1. Jurisdiction of the impugned proceedings. 2. Limitation period for initiating reassessment proceedings. 3. Change of opinion without new tangible material. 4. Validity of reassessment proceedings under amended provisions of the Income Tax Act, 1961. Detailed Analysis: 1. Jurisdiction of the Impugned Proceedings: The petitioner challenged the impugned notice dated 23.02.2024 under Section 148A(b) of the Income Tax Act, 1961, and the consequential order dated 26.03.2024 under Section 148A(d) for the Assessment Year 2017-2018. The petitioner argued that the proceedings were without jurisdiction, asserting that the respondent misconstrued the provisions of Section 148A(d). The petitioner contended that the major borrowings and expenses were already scrutinized and accepted in the original assessment order dated 27.12.2019 under Section 143(3). The learned Senior Counsel for the petitioner cited several judgments supporting the argument that reassessment cannot be initiated without new tangible material and that the proceedings were a mere review in disguise. 2. Limitation Period for Initiating Reassessment Proceedings: The petitioner argued that under the amended provisions of the Income Tax Act, 1961, effective from 01.04.2021, a notice under Section 148 could only be issued if it could have been validly issued under the old regime prior to 01.04.2021. The petitioner referred to the first proviso to Section 149(1) and contended that the reassessment proceedings were barred by limitation as the time limit for initiating reassessment for the Assessment Year 2017-2018 expired on 31st March 2022. The respondent, however, argued that the time limit under the old Section 149 was six years from the end of the relevant Assessment Year, which would lapse only on 31.03.2024, making the notice issued on 26.03.2024 within time. 3. Change of Opinion Without New Tangible Material: The petitioner asserted that the reassessment proceedings were based on a mere change of opinion without any new material. The petitioner cited the decision of the Hon'ble Supreme Court in CIT vs. Kelvinator of India Ltd., emphasizing that reassessment should be based on new tangible material and not a review of the original assessment. The petitioner highlighted that all relevant details were furnished during the original assessment, and no new information was available to justify the reassessment. The respondent countered that the original assessment was a "Limited Scrutiny" under CASS, and the reassessment was based on tangible information regarding processing charges, legal and professional charges, and borrowings. 4. Validity of Reassessment Proceedings Under Amended Provisions: The court examined the amended provisions of the Income Tax Act, 1961, effective from 01.04.2021, which introduced significant changes to Sections 147, 148, 148A, 149, and 151. The court noted that the amended Section 147 no longer required the Assessing Officer to have "reason to believe" that income had escaped assessment and emphasized the new procedural requirements under Sections 148 and 148A. The court referred to the decisions of the Hon'ble Supreme Court and High Courts, emphasizing that reassessment should not be based on a mere change of opinion and should be supported by new tangible material. Conclusion: The court concluded that the impugned proceedings were without jurisdiction as they were based on a mere change of opinion without new tangible material. The court quashed the impugned notice and order, allowing the writ petition. The court emphasized that the reassessment proceedings under the amended provisions of the Income Tax Act, 1961, should be based on new tangible material and not a review of the original assessment. The court also highlighted the procedural requirements under the amended Sections 148 and 148A, ensuring that reassessment proceedings are initiated within the prescribed time limits and with proper approval from the specified authority.
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