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2025 (3) TMI 1275 - AT - Income TaxValidity of Reopening of assessment u/s 147 - barred by the limitation as notice u/s 148 was not issued within the prescribed time - HELD THAT - Though the notice was issued u/s 148 of the Act on 31.03.2021 but the same was dispatched on 01.04.2021 as is apparent from print out of the Email received by the assessee from the department. A perusal of the said email showed that the DCIT Kolkata sent the said notice on 1st April 2021 at 3.28 AM which should have been issued on or before 31st March 2021. Therefore the notice is barred by limitation. The case of the assessee find support from the decision of Marudhar Vintrade Private Limited 2022 (7) TMI 64 - CALCUTTA HIGH COURT wherein held that notice issued u/s 148 of the Act which signed on 31.3.2021 but communicated on 1.4.2021 at 3.00 a.m.is and all subsequent proceedings are not sustainable and are quashed. However there was no bar in issuing fresh notice in accordance with law. Scope of extended period as per TOLA - So far as the second peal is concerned for A.Y. 2015-16 is barred by limitation in our opinion the extended period for issuing notice u/s 148 of the Act is not available and therefore the proceedings are barred by limitation even on this count the proceedings as well as consequential assessment has to be quashed. The case of the assessee find force from the decision of the Hon ble Apex Court in the case of Union of India Ors. Vs. Rajeev Bansal 2024 (10) TMI 264 - SUPREME COURT (LB) wherein it has been held that the reopening for A.Y. 2015-16 is not permissible in the extended period as per TOLA on and form 01.04.2021 and therefore the assessment order for A.Y. 2015-16 is barred by limitation. Notice issued beyond period of four years - Thirdly in this case the assessment has been made u/s 143(3) of the Act vide order dated 26.12.2017 and apparently the case was reopened after a period of four years from the end of the relevant assessment year which can only be made subject to the satisfaction of the conditions as provided in proviso to Section 147 of the Act which shows that the reopening of assessment where the assessment is framed u/s 143(3) of the Act can only be made if the escapement of income is attributed to the failure of the assessee to truly and materially disclose any information during the assessment proceedings. However in this case there is no such failure is reported by AO in the reasons recorded and accordingly the reopening has been made in violation of first proviso to Section 147 of the Act. The case of the assessee find support from the decision of CEAT Ltd. 2023 (1) TMI 73 - SC ORDER wherein held that the reopening u/s 147 of the Act beyond four years from end of the relevant assessment year could be made subject to the satisfaction of the conditions as provided in first proviso to Section 147 of the Act and not otherwise. Therefore we are inclined to quash the reopening of assessment. Hence the appeal of the assessee is allowed.
ISSUES PRESENTED and CONSIDERED
The core legal issues considered in this judgment are:
ISSUE-WISE DETAILED ANALYSIS 1. Limitation on Notice Issuance under Section 148 The relevant legal framework involves Section 148 of the Income Tax Act, which requires notices to be issued and served within specified time limits. The Court noted that the notice in question was issued on March 31, 2021, but dispatched on April 1, 2021, at 3:28 AM. The Court referenced the decision in Marudhar Vintrade Private Limited vs. Union of India & Ors., where a similar issue led to the quashing of proceedings due to the notice being communicated after the deadline. The Court concluded that the notice was indeed barred by limitation as it was not dispatched within the required timeframe, rendering subsequent proceedings unsustainable. 2. Reassessment Permissibility under TOLA 2021 The second issue concerned whether the reassessment for AY 2015-16 was permissible under the extended period provided by TOLA 2021. The Court examined the decision in Union of India & Ors. Vs. Rajeev Bansal, which held that reopening for AY 2015-16 was not permissible after April 1, 2021, under TOLA. The Court also considered the Delhi High Court's decision in Ibibo Group Pvt Ltd. Vs ACIT, which supported this view. Based on these precedents, the Court found that the reassessment proceedings for AY 2015-16 were barred by limitation and thus quashed the assessment. 3. Reopening of Assessment Beyond Four Years The third issue involved the validity of reopening the assessment after four years from the end of the relevant assessment year without meeting the conditions in the proviso to Section 147. The Court noted that the original assessment was completed under Section 143(3) on December 26, 2017, and the reopening was initiated without demonstrating any failure by the assessee to disclose material facts. The Court referenced the decision in ACIT Vs. CEAT Ltd., which established that reopening beyond four years requires proof of such failure. Since no such failure was reported, the Court concluded that the reopening was invalid. SIGNIFICANT HOLDINGS The Court made the following significant holdings:
The appeal of the assessee was allowed, and the assessment proceedings were quashed based on these findings.
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