2025 (1) TMI 1345 - AT - Income Tax

Validity of Reopening of assessment beyond limitation period - limitation period under TOLA for AY 2014-15 - time limit for issuance of re-assessment notice under new regime - HELD THAT - As relying on ASHISH AGARWAL 2022 (5) TMI 240 - SUPREME COURT notice u/s 148 of the Act was issued on 29/07/2022 whereas the original time limit for six years was 31/03/2021. Therefore even under the TOLA the time limit for issuance of notice u/s 148 of the Act had expired on 30/06/2021 and as per the concession made by the revenue before the Hon ble Supreme Court all notices issued on or after 01/04/2021 will have to be dropped as they will not fall for concession during the period prescribed under TOLA. Hence the impugned notice dated 29/07/2022 is admittedly barred by limitation and is accordingly set aside.Appeal of the assessee is allowed.

Summary

ISSUES PRESENTED and CONSIDERED

The Tribunal considered several core legal issues in this case:

1. Whether the notice issued under Section 148 of the Income Tax Act was valid, given the time limitations prescribed by the relevant legal framework, including the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA).

2. Whether the assessment order for the Assessment Year (AY) 2014-15 was barred by limitation as per Section 149 of the Income Tax Act.

3. Whether the Tribunal should uphold the addition made by the Assessing Officer under Section 69A of the Act.

ISSUE-WISE DETAILED ANALYSIS

1. Validity of Notice under Section 148

Relevant Legal Framework and Precedents:

The Tribunal examined the legal framework surrounding the issuance of notices under Section 148 of the Income Tax Act, particularly in the context of the amendments introduced by the Finance Act, 2021, and the relaxations provided under TOLA. The Tribunal also referenced the Supreme Court's rulings in Union of India vs. Ashish Agarwal and UOI vs. Rajeev Bansal, which clarified the applicability of TOLA's provisions.

Court's Interpretation and Reasoning:

The Tribunal noted that the Supreme Court had established that TOLA's provisions apply to reassessment notices issued between April 1, 2021, and June 30, 2021. The Tribunal also highlighted that the Supreme Court's decision in Ashish Agarwal treated notices issued during this period as show-cause notices under Section 148A(b).

Key Evidence and Findings:

The Tribunal found that the notice under Section 148 in this case was issued on July 29, 2022, beyond the extended time limit of June 30, 2021, as per TOLA.

Application of Law to Facts:

The Tribunal applied the Supreme Court's interpretation of TOLA and concluded that the notice issued on July 29, 2022, was time-barred, as the extension provided by TOLA had expired on June 30, 2021.

Treatment of Competing Arguments:

The Tribunal acknowledged the Revenue's concession before the Supreme Court that notices issued after April 1, 2021, would be time-barred if they did not fall within the period extended by TOLA.

Conclusions:

The Tribunal concluded that the notice dated July 29, 2022, was barred by limitation and thus invalid.

2. Assessment Order Barred by Limitation

Relevant Legal Framework and Precedents:

The Tribunal considered the time limitations for reassessment under Section 149 of the Income Tax Act, as modified by the Finance Act, 2021, and TOLA.

Court's Interpretation and Reasoning:

The Tribunal referred to the Supreme Court's interpretation, which clarified that the time limit for issuing reassessment notices for AY 2014-15 expired on March 31, 2021, and was extended to June 30, 2021, by TOLA.

Key Evidence and Findings:

The Tribunal found that the assessment order was based on a notice issued beyond the permissible time frame.

Application of Law to Facts:

The Tribunal applied the Supreme Court's interpretation and determined that the assessment order was barred by limitation.

Conclusions:

The Tribunal concluded that the assessment order for AY 2014-15 was invalid due to being time-barred.

3. Addition under Section 69A

Relevant Legal Framework and Precedents:

The Tribunal considered the legal provisions under Section 69A of the Income Tax Act, which deals with unexplained money.

Court's Interpretation and Reasoning:

Since the notice itself was quashed, the Tribunal found it unnecessary to delve into the merits of the addition under Section 69A.

Conclusions:

The Tribunal did not address the merits of the addition under Section 69A due to the quashing of the notice.

SIGNIFICANT HOLDINGS

The Tribunal's significant holdings include:

- The notice issued under Section 148 on July 29, 2022, was invalid as it was barred by limitation, following the Supreme Court's interpretation of TOLA and the Finance Act, 2021.

- The assessment order for AY 2014-15 was invalid due to being based on a time-barred notice.

- The Tribunal did not address the merits of the addition under Section 69A due to the quashing of the notice.

The Tribunal concluded that the appeal of the assessee was allowed, setting aside the impugned notice and assessment order.