2025 (4) TMI 88 - HC - Income Tax

Reopening of assessment u/s 147 - notice issued beyond the period of limitation - applicability of TOLA - HELD THAT - In the present case the impugned notice was issued on 30.07.2022 which is admittedly beyond the period of limitation as prescribed under Section 149(1) of the Act. And TOLA is not applicable in respect of the said notice as was conceded by the Revenue in the case of Union of India v. Rajeev Bansal 2024 (10) TMI 26 4 - SUPREME COURT (LB ) . The impugned notice is liable to be set aside.

ISSUES PRESENTED and CONSIDERED

The primary legal question considered in this judgment is whether the notice issued under Section 148 of the Income Tax Act, 1961, for the Assessment Year (AY) 2015-2016, is barred by limitation. The court also examined the applicability of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) to the said notice.

ISSUE-WISE DETAILED ANALYSIS

Relevant legal framework and precedents:

The legal framework involves Sections 147-151 of the Income Tax Act, which govern the reassessment of income. The Finance Act 2021 introduced a new regime for reassessment, and the Supreme Court's decision in Union of India & Others v. Ashish Agarwal directed that notices issued under the old regime be treated as notices under Section 148A(b) of the new regime. Furthermore, the applicability of TOLA, which provides extensions for certain time limits, was crucial in determining the validity of the notice.

Court's interpretation and reasoning:

The Court interpreted the law in light of the Supreme Court's directions and the concessions made by the Revenue in Union of India and Others v. Rajeev Bansal. The Court noted that the Supreme Court had directed that notices issued under the old regime be treated under the new provisions, and further, the Revenue had conceded that TOLA was not applicable for AY 2015-16.

Key evidence and findings:

The Court found that the notice dated 30.07.2022 was issued beyond the period of limitation as prescribed under Section 149(1) of the Act. The Revenue's concession that TOLA was not applicable for AY 2015-16 played a significant role in this determination.

Application of law to facts:

The Court applied the law by considering the timeline of the notices and the applicability of TOLA. It concluded that since the notice was issued after the prescribed period and TOLA did not apply, the notice was invalid.

Treatment of competing arguments:

The Court primarily relied on the concessions made by the Revenue and the legal precedents set by the Supreme Court, which left little room for competing arguments from the Revenue.

Conclusions:

The Court concluded that the notice was barred by limitation and not saved by TOLA. Consequently, the notice and the proceedings initiated pursuant thereto were set aside.

SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning:

The Court noted: "The impugned notice was issued on 30.07.2022 which is admittedly beyond the period of limitation as prescribed under Section 149(1) of the Act. And, TOLA is not applicable in respect of the said notice, as was conceded by the Revenue in the case of Union of India v. Rajeev Bansal: 2024 INSC 754 (supra). The impugned notice is liable to be set aside."

Core principles established:

The judgment reinforces the principle that reassessment notices must adhere to the statutory time limits unless expressly extended by applicable legislation. The decision underscores the importance of adhering to procedural timelines and the binding nature of concessions made by the Revenue in higher courts.

Final determinations on each issue:

The Court determined that the notice issued under Section 148 for AY 2015-16 was invalid due to being issued beyond the statutory period of limitation, and TOLA did not apply to extend the limitation period for this assessment year. The petition was allowed, and the impugned notice and proceedings were set aside.

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