2023 (10) TMI 276 - HC - Income Tax

Time limit for completion of assessment u/s 153A - Limitation as computed in terms of Section 153B, r/w Explanation thereunder and the extension provided by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 ( TOLA ) - whether the extension of time under TOLA is to be given effect, prior to exclusion of the period mentioned u/s 153B, or after? - HELD THAT - It is the statutory time that must be taken into account for the purposes of TOLA, that is, the date as per the main provision of Section 153B only. The Explanation provides for exclusions in various situations. The application of the exclusions will result in expansion of the period taking note of various intervening events and the ultimate date would thus fluctuate depending on the exclusions taken into account and applied. This cannot be equated to statutory prescription and the date of limitation is determined only by the main provision which is inflexible. In the present case, the last date for completion of assessment as prescribed by Section 153B is within a period of twenty-one months from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed. The last date of the 21 month period as prescribed admittedly falls on 30.09.2020. This date falls within the range of dates as stipulated in the TOLA, extended by virtue of subsequent notifications, to 30.09.2021. The extension, by taking benefit of the period of interim protection will follow only thereafter. With this, the date stands extended by 16 months and 24 days to 20.04.2023. The orders of assessment have been passed on 29.01.2022, well within time. The differences between the parties in regard to the periods of interim protection are minor and rendered irrelevant in light of my conclusion that it is TOLA Act that is to be taken into account first. The argument on limitation is rejected and the impugned orders of assessment for AYs 13-14 to 18-19 are found to be passed in time. The orders of assessments for AYs 13-14 to 18-19 are thus confirmed as are the impugned orders of penalty and the writ petitions pertaining to those notices, orders of assessments and orders of penalty, are dismissed. The petitioner is permitted to file statutory appeals on merits and such appeals, if filed within a period of four weeks from date of receipt of this order, shall be entertained by the appellate authority without reference to limitation but ensuring compliance with all other statutory requirements. For the assessments for the period 2011-12, 2012-13 and 2019-20 are concerned, no writ petitions have been filed by the petitioner at the original instance. Thus, and applying the limitation under Section 153B, the date for statutory time limit for assessment would expire on 30.09.2020, though extended upto 30.09.2021 by virtue of the TOLA and subsequent extensions. The question of any period available thereafter to the revenue would not arise seeing as no writ petitions have been filed at the original instance, and hence, the last date for completion of assessments for the period 2011-12, 2012-13 and 2019-20 would be 30.09.2021. The impugned assessments have been framed on 29.01.22, beyond the stipulated time and are hence barred by time. As far as the defence of the revenue based upon Clause (xi) to Explanation to Section 153B is concerned, that clause relates to exclusion of the period taken for handing over seized material the assessing officer. The clause has been inserted with effect from 01.04.2021 and hence operates prospectively only, being a substantive provision. The benefit of the exclusion under that clause thus, would not be available to the revenue in the present assessments. The impugned orders of assessment passed on 28.01.2022 in respect of AYs 11-12, 12-13 and 19-20 are hence held to be barred by limitation qua these three assessment years and are set aside. The writ petitions challenging those notices, orders of assessment and penalties are allowed.

Issues Involved:
1. Challenge to notices issued under the Income Tax Act, 1961.
2. Challenge to orders of assessment.
3. Challenge to penalty orders under Section 271(1)(c) of the Act.
4. Challenge to penalty orders under Section 271B of the Act.
5. Legal issue of limitation for completion of assessment.

Summary:

1. Challenge to Notices Issued Under the Income Tax Act, 1961:

This batch of Writ Petitions has been filed by Agni Estates and Foundations Private Ltd. challenging notices, all dated 22.12.2021, issued under the provisions of the Income Tax Act, 1961 (in short 'Act') and seek a prohibition as against the Income Tax Department from passing orders of assessment.

2. Challenge to Orders of Assessment:

Technically, the above writ petitions are infructuous as they have culminated in orders of assessment, all dated 28.01.2022, passed under Section 153A read with Section 143(3) of the Act, challenged in the following Writ Petitions.

3. Challenge to Penalty Orders Under Section 271(1)(c) of the Act:

The following Writ Petitions challenge penalty orders under Section 271(1)(c) of the Act, all dated 27.07.2022.

4. Challenge to Penalty Orders Under Section 271B of the Act:

The following Writ Petitions challenge penalty orders under Section 271B of the Act, all dated 27.07.2022.

5. Legal Issue of Limitation for Completion of Assessment:

The premises of the petitioner had been subject to a search u/s 132 of the Act on 05.07.2018 and notices u/s 153A had been issued pursuant to the same. The challenge to the assessments raises one legal issue which goes to the root of the matter, relating to the bar of limitation.

Details:

A. Limitation Computation:

Limitation is to be computed in terms of Section 153B, read with the Explanation thereunder and the extension provided by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (in short 'TOLA').

B. Statutory Provisions:

Section 153B and the Explanation, to the extent to which it is relied upon by the revenue, are extracted below:

Time limit for completion of assessment under section 153A

153B. (1) Notwithstanding anything contained in section 153, the Assessing officer shall make an order of assessment or reassessment-

(a) in respect of each assessment year falling within six assessment years 64[and for the relevant assessment year or years] referred to in clause (b) of sub-section (1) of section 153A, within a period of twenty-one months from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed;

(b) in respect of the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A, within a period of twenty-one months from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 1324 was executed:

C. Petitioner's Argument:

The petitioners argue that effect is first to be given to the exclusion under the Explanation to Section 153B and in such an event, the resultant date would fall on 07.05.2021/19.08.2021, both dates falling outside the range stipulated in the TOLA. Thus the benefit of TOLA would be unavailable to the revenue.

D. Court's Conclusion:

In my considered view, it is the statutory time that must be taken into account for the purposes of TOLA, that is, the date as per the main provision of Section 153B only. The Explanation provides for exclusions in various situations. The application of the exclusions will result in the expansion of the period taking note of various intervening events and the ultimate date would thus fluctuate depending on the exclusions taken into account and applied. This cannot be equated to statutory prescription and the date of limitation is determined only by the main provision which is inflexible.

E. Final Decision:

The orders of assessment for AYs 13-14 to 18-19 are confirmed as are the impugned orders of penalty and the writ petitions pertaining to those notices, orders of assessments, and orders of penalty, are dismissed. The petitioner is permitted to file statutory appeals on merits and such appeals, if filed within a period of four weeks from the date of receipt of this order, shall be entertained by the appellate authority without reference to limitation but ensuring compliance with all other statutory requirements.

The impugned orders of assessment passed on 28.01.2022 in respect of AYs 11-12, 12-13 and 19-20 are hence held to be barred by limitation qua these three assessment years and are set aside. The writ petitions challenging those notices, orders of assessment, and penalties are allowed.

MPs closed with no order as to costs.

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