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2023 (4) TMI 1175 - HC - Income TaxReopening of assessment u/s 147 - Validity of order u/s 148A - scope of new enactment of Section 148A - Period of limitation to issue notice issued u/s 148A(b) - notices issued u/s 148 referable to the old regime - HELD THAT - As already noted, the department took shelter of the time limit extended by Notifications of the Central Board of Direct Taxes to treat the above class of notices to be within time. In Keenara Industries Pvt. Ltd. 2023 (3) TMI 104 - GUJARAT HIGH COURT this Court proceeded to hold that enacting the provisions in Taxation and Other Laws (Relaxation Amendment of Certain Provisions) Act, 2020, was not the permissible device whereby the time limit could be legitimately extended for the purpose of issuing Notices under Section 148, which were otherwise barred in terms of Section 149, as it exists in the old regime. The Taxation and Other Laws Act, 2020 was rightly viewed to be a secondary legislation. It was therefore held that secondary legislation would not override the principal legislation-the Finance Act, 2021. Also negatived by the Division Bench in Keenara Industries Pvt. Ltd. (supra) as per observations in paragraph 36 of the judgment, the concept of freezing the time limit. It was held that it was not permissible in law for the Revenue to travel back in time. Nor does the Taxation and Other Laws Act endorse to such concept. It was held as per paragraphs 38 and 39 of the Keenara Industries Pvt. Ltd. (supra) that Notifications extending the due dates under the old provisions could not breath any more after the repeal of the old provisions. This Court is in agreement with the decision in Keenara Industries Pvt. Ltd. (supra), of this Court as well with Allahabad High Court decision in Rajeev Bansal (supra). Therefore, the point is no more res integra that all original notices under section 148 of the Act referable to the old regime and issued between 01.04.2021 to 30.06.2021 would stand beyond the prescribed permissible timeline of six years from the end of Assessment Year 2013-14 and Assessment Year 2014-15. Therefore, all such notices when they would relate to Assessment Year 2013-14 or Assessment Year 2014-15 would be time barred as per the provisions of the Act as applicable in the old regime prior to 01.04.2021. Furthermore, these notices cannot be issued as per the amended provision of the Act. Revenue was entirely at his receiving end, unable to dispute the position of law holding the field as above. All the impugned notices in the respective petitions under section 148 of the Act relatable to Assessment year 2013-14 or the assessment year 2014-15, as the case may be, are beyond the permissible time limit, therefore, liable to be treated illegal and without jurisdiction.
Issues Involved:
1. Legality of notices issued under Section 148 of the Income Tax Act, 1961 for reopening assessments for the years 2013-14 and 2014-15. 2. Validity of orders passed under Section 148A(d) of the Income Tax Act, 1961. 3. Applicability of the time limit for issuing such notices under the old and new regimes of the Income Tax Act. Summary: Issue 1: Legality of Notices Issued Under Section 148 The petitions challenge the notices issued for reopening assessments for the years 2013-14 and 2014-15 under Section 148 of the Income Tax Act, 1961. These notices were issued after the passage of six years from the end of the relevant assessment years, which is beyond the permissible time limit under the old regime of the Act. The Court referred to the Supreme Court's decision in Union of India vs. Ashish Agarwal, which stated that notices issued between 01.04.2021 to 30.06.2021 should be treated as show-cause notices under Section 148A(b) of the Act. However, the Court held that notices which had become time-barred under the old regime could not be revived under the new regime. Issue 2: Validity of Orders Passed Under Section 148A(d) The orders passed under Section 148A(d) of the Income Tax Act were also challenged. The Court noted that these orders were based on notices that were time-barred under the old regime. Therefore, the orders under Section 148A(d) were also deemed to be without jurisdiction and illegal. Issue 3: Applicability of Time Limit Under Old and New Regimes The Court discussed the changes in the time limits for issuing notices under Section 148 before and after the Finance Act, 2021. Under the old regime, notices could be issued within six years from the end of the relevant assessment year if the escaped income exceeded one lakh rupees. The new regime, effective from 01.04.2021, reduced this period to three years, with an extension up to ten years if the escaped income exceeded fifty lakh rupees. The Court held that the first proviso to Section 149 of the new regime maintained the old regime's time limits for assessment years before 01.04.2021. Therefore, notices that were time-barred under the old regime could not be issued under the new regime. Conclusion The Court set aside all the impugned notices and orders under Sections 148 and 148A(d) of the Income Tax Act for the assessment years 2013-14 and 2014-15, as they were beyond the permissible time limit and thus without jurisdiction. The petitions were allowed, and the rule was made absolute in each petition.
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