2022 (3) TMI 1334 - AT - Income Tax

Reopening of assessment u/s 147 - Time limit for notice to be issued u/s 149 - escaped income from an asset outside India - time limit u/s 149 within which notice for reassessment can be issued in respect of income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment - HELD THAT - Section 149(1)(c) provides that no notice for reassessment can be issued if more than sixteen years, have elapsed from the end of the relevant assessment year unless the income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment . Therefore, as long as sixteen years from the end of the relevant assessment year have not expired, the reassessment notice is in a case involving income from assets located outside India. As for the retrospective application of this provision, Explanation to Section 149 unambiguously provides that the provisions of sub-sections (1) and (3), as amended by the Finance Act, 2012, shall also be applicable for any assessment year beginning on or before the 1st day of April, 2012 . The amendment in Section 149(1), introduced with effect from 1st July 2012, is thus expressly stated to be retrospective in nature, and there is, in our humble understanding, there is no bar on the validity of the retrospectivity of the taxing statute as long as it is clearly specified to be so. there is no bar on the retrospectivity of a statute, though, in the absence of any express intention to that effect, it is presumed to be only prospective. The validity of a statute being retrospective in effect cannot, as such, be questioned in principle. In any event, it is not open to a forum like this Appellate Tribunal-much less a Commissioner (Appeals), to contest validity of a retrospective amendment in law. Once the statute clearly provides that the amended section 153(1) and (3), as amended by the Finance Act 2012, shall also be applicable to any assessment year beginning on or before 1st day of April 2012, it cannot be open to us to hold otherwise. To suggest that this amendment was intended to be prospective in effect would mean that the legislature, which undisputedly has the powers to make amendments with retrospective effect, intended to introduce section 149(1)(c) to take full effect from 1st April 2022 - an incongruity by any standard. The interpretation adopted by the learned Commissioner (Appeals) is thus clearly contrary to the specific words of the statute and unambiguous intent of the legislature. We, therefore, vacate the relief, quashing the reassessment proceedings as time-barred, granted by the learned Commissioner (Appeals) and restore the stand of the Assessing Officer on this point. Our humble understanding is that so far as escaped income from an asset outside India is concerned, any completed assessment can be reopened as long as sixteen years have not elapsed from the end of the relevant assessment year. Admittedly, that is not the position in the present case, as the relevant assessment year was completed on 31st March 2000, and the assessment was reopened on 27th March 2015. The plea of the Assessing Officer is thus indeed well taken. Thus respectfully following the views so taken by the coordinate bench in the case of DCIT vs. Dilip J Thakkar 2022 (3) TMI 1307 - ITAT MUMBAI , we uphold the plea of the appellant in the terms indicated above. The impugned order accordingly stands were taken and the matter stands restored to the file of the Assessing Officer for adjudication on merits. In the light of our observations.

Summary

Issues Involved:
1. Validity of reassessment notice under section 149 of the Income Tax Act, 1961.
2. Retrospective application of the amendment to section 149(1)(c) introduced by the Finance Act, 2012.
3. Binding nature of non-jurisdictional High Court judgments on the Tribunal.

Detailed Analysis:

1. Validity of Reassessment Notice under Section 149 of the Income Tax Act, 1961:

The appeal questioned the correctness of the order dated 26th November 2019, passed by the CIT(A) under section 143(3) read with section 147 for the assessment year 1999-2000. The core issue was whether the reassessment notice issued on 27th March 2015, based on income related to assets located outside India, was valid under the extended time limit of sixteen years as per section 149(1)(c) of the Income Tax Act, 1961.

The Tribunal noted that the statutory provisions of section 149(1)(c) were clear and unambiguous, allowing reassessment notices to be issued within sixteen years from the end of the relevant assessment year if the income escaping assessment was related to assets located outside India. The Tribunal emphasized that the amendment introduced by the Finance Act, 2012, explicitly stated the retrospective application of this provision, making it applicable to any assessment year beginning on or before 1st April 2012.

2. Retrospective Application of the Amendment to Section 149(1)(c):

The Tribunal held that the amendment to section 149(1)(c) was expressly stated to be retrospective in nature. The Explanation to Section 149 clarified that the provisions of sub-sections (1) and (3), as amended by the Finance Act, 2012, shall also be applicable for any assessment year beginning on or before the 1st day of April 2012.

The Tribunal referred to various judicial precedents and legal principles, noting that there is no bar on the retrospective application of a statute as long as it is clearly specified to be so. The Tribunal disagreed with the interpretation adopted by the learned Commissioner (Appeals), which held the amendment to be prospective in effect. The Tribunal vacated the relief granted by the learned Commissioner (Appeals) and restored the stand of the Assessing Officer.

3. Binding Nature of Non-Jurisdictional High Court Judgments on the Tribunal:

The Tribunal addressed the applicability of the Hon'ble non-jurisdictional High Court judgment in the case of Braham Dutt Vs. ACIT, which construed the amendment to be prospective. The Tribunal noted that the non-jurisdictional High Court decisions do not constitute a binding judicial precedent in all cases. The Tribunal emphasized that the Explanation below Section 149(3), which categorically made the amendment retrospective, was not considered in the Braham Dutt case.

The Tribunal also referenced the Hon'ble jurisdictional High Court's observations in the case of Thana Electricity Co. Ltd., which stated that the decision of a High Court is binding only within its territorial jurisdiction and may have a persuasive effect outside its jurisdiction. The Tribunal concluded that on the peculiar facts of this case, it was not open to disregard the Explanation below Section 149(3) based on a non-jurisdictional High Court judgment.

Conclusion:

The Tribunal allowed the appeal, vacating the relief granted by the learned Commissioner (Appeals) and restoring the stand of the Assessing Officer. The matter was directed to be adjudicated on merits by the Commissioner (Appeals) within 180 days from the date of service of this order. The Tribunal upheld the plea of the appellant in the terms indicated, emphasizing the retrospective application of the amendment to section 149(1)(c) and the limited binding nature of non-jurisdictional High Court judgments.