2025 (3) TMI 920 - AT - Income Tax

Reopening of assessment u/s 147 as barred by limitation - application of TOLA - scope of new law/regime - HELD THAT - It is an admitted fact that earlier the notice u/s 148 in the case of assessee was issued on 30/06/2021 which was dropped and proceedings u/s 148 of the Act were initiated in terms of order of Hon ble Supreme Court in the case of Union of India vs. Ashish Agarwal 2024 (10) TMI 264 - SUPREME COURT (LB) and finally the notice u/s 148 was issued on 25/07/2022. Additional Solicitor General of India in the case of Rajiv Bansal 2022 (5) TMI 240 - SUPREME COURT has made categorical statement at Bar before the Hon ble Supreme Court that all the notices issued for Asst. Year 2015-16 on or after 1st April 2021 will be dropped however in the instant case no such action has been taken and re-assessment order has been framed in the case of the assessee on the basis of the notice issued u/s 148 of the Act on 25/07/2022. As considering the assessment year involved is 2015-16 notice issued in the case of originally on 30/06/2021 and later on 25/07/2022 which both the dates have fallen on or after 1st April 2021 therefore both the notice deserves to be dropped in view of the admission made by the Revenue before the Hon ble Supreme Court. Further for Assessment Year 2015-16 no notice u/s 148 of the Act could be issued after the expiring of six years from the end of the relevant assessment year which limitation expired on 31st March 2022. As the Hon ble Supreme Court in the case of Rajiv Bansal (supra) has observed that Tola is not applicable for Asst. Year 2015-16 therefore even otherwise under the old provisions of section 149 of the Act the notice issued u/s 148 of the Act for Asst. Year 2015-16 on 25/07/2022 is barred by limitation. Appeal of the assessee is allowed.

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 barred by limitation and thus invalid.
Whether the reassessment proceedings initiated based on such a notice were valid.
Whether the principles of natural justice were violated by not providing the appellant with a proper opportunity to be heard.
Whether the additions made to the appellant's income were justified.
Whether the notices and orders issued by the Jurisdictional Assessing Officer (JAO) instead of the Faceless Assessing Officer (FAO) were valid under the amended provisions of the Income Tax Act.

ISSUE-WISE DETAILED ANALYSIS

1. Validity of Notice under Section 148

Relevant legal framework and precedents: The legal framework involves Section 148 of the Income Tax Act, which allows for reopening assessments, and Section 149, which sets the time limits for issuing such notices. The Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (TOLA), and the Supreme Court's decision in Union of India vs. Ashish Agarwal are also pertinent.
Court's interpretation and reasoning: The Tribunal noted that the notice issued on 25/07/2022 was beyond the limitation period as per the old provisions of Section 149, which expired on 31/03/2022. The Tribunal referenced the Supreme Court's observation in the Rajiv Bansal case, where it was stated that notices issued for the Assessment Year 2015-16 on or after 1 April 2021 should be dropped.
Application of law to facts: The Tribunal concluded that the notice dated 25/07/2022 was barred by limitation and thus invalid, as the six-year limitation period had expired.
Conclusions: The Tribunal quashed the notice issued under Section 148 dated 25/07/2022, allowing the legal ground raised by the assessee.

2. Principles of Natural Justice

Relevant legal framework: The principles of natural justice require that parties be given a fair opportunity to present their case.
Court's interpretation and reasoning: The Tribunal noted that the CIT(A) dismissed the appeal ex-parte due to non-compliance by the assessee. However, it decided to address the legal issue concerning the validity of the notice.
Conclusions: Since the legal issue was decided in favor of the assessee, the Tribunal did not delve into the merits of whether the principles of natural justice were violated.

3. Validity of Additions Made

Relevant legal framework: The additions were made under Sections 69C and 10(38) of the Income Tax Act.
Court's interpretation and reasoning: The Tribunal did not address the merits of the additions due to the resolution of the legal issue regarding the notice's validity.
Conclusions: The Tribunal found the matter academic, given the quashing of the notice, and did not adjudicate this issue further.

4. Jurisdictional Authority of Notices

Relevant legal framework: The amended provisions of Section 151A read with Section 144B of the Income Tax Act require that notices be issued by the FAO.
Court's interpretation and reasoning: The Tribunal did not explicitly address this issue, as the primary legal ground concerning the notice's validity was resolved in favor of the assessee.
Conclusions: The issue was rendered moot by the decision on the notice's validity.

SIGNIFICANT HOLDINGS

Core principles established: The Tribunal reinforced the principle that notices issued beyond the statutory limitation period are invalid. It also highlighted the binding nature of statements made by the Revenue before the Supreme Court regarding the dropping of certain notices.
Final determinations on each issue: The Tribunal quashed the notice issued under Section 148 dated 25/07/2022, rendering the reassessment proceedings invalid. Consequently, other issues became academic and were not adjudicated.

Order Pronouncement

The appeal of the assessee was allowed, and the order was pronounced on 12/02/2025.

← Previous Next →