9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2025 (4) TMI 1222 - HC - Income TaxReopening of assessment - Period of limitation - HELD THAT - We find that in Union of India v. Rajeev Bansal 2024 (10) TMI 264 - SUPREME COURT (LB) the Supreme Court had principally identified three block periods which were liable to be excluded for the purposes of examining a challenge based on the Proviso to Section 149 of the Act. The first of those periods was 20 April 2020 to 30 June 2021 and which essentially was the outcome of Section 3(1) of Taxation and Other Laws Relaxation and Amendment of Certain Provisions Act 2021 TOLA . Second period which the Supreme Court took into consideration was the date of the issuance of the original notice upto 04 May 2022 when it came to render judgment in Union of India Ors. v. Ashish Agarwal 2022 (5) TMI 240 - SUPREME COURT The third period which was identified as being liable to be taken into account was that factored in by the Third Proviso to Section 148 of the Act and which deals with the exclusion of time which is connected to the opportunity granted to the assessee to file a response to a notice under Section 148A(b). Even if the period of 14 days and which represented the time within which the petitioner was called upon to furnish a response to the Section 148A(b) notice were to be added the re-assessment notice which ultimately came to be issued on 23 July 2022 would not be within the period of limitation as prescribed. The aforesaid factual position is conceded to even by the respondents. We allow the instant writ petition and quash the notice under Section 148.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Court were:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Validity of reassessment notice under Section 148 for AY 2013-14 in light of limitation period prescribed under Section 149 Relevant legal framework and precedents: Section 148 of the Income Tax Act empowers the Assessing Officer (AO) to issue a notice for reassessment if there is reason to believe that income has escaped assessment. Section 149 prescribes the limitation period for issuance of such notice. The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2021 (TOLA) introduced statutory extensions and exclusions of time periods for certain acts, including reassessment notices, especially due to the COVID-19 pandemic. The Supreme Court in Union of India v. Rajeev Bansal (2024) and Union of India v. Ashish Agarwal (2023) clarified the computation of limitation periods for reassessment notices issued under the amended regime, emphasizing the exclusion of certain block periods and the concept of 'surviving period' or 'surviving time limit' for issuance of notices. Court's interpretation and reasoning: The Court analyzed the timelines in the instant case against the backdrop of the three key block periods identified in Rajeev Bansal:
The Court relied heavily on the detailed exposition of these principles as elucidated in Rajeev Bansal and further applied in Kanwaljeet Kaur and Ram Balram decisions by the Delhi High Court. Key evidence and findings: The petitioner submitted a tabular statement demonstrating the timeline of notices issued, responses filed, and limitation expiry dates computed in accordance with the principles laid down in Rajeev Bansal and Ram Balram. The respondents conceded that even after accounting for the surviving period and exclusions, the reassessment notice dated 23 July 2022 fell outside the permissible limitation period. Application of law to facts: Applying the exclusion periods to the facts, the Court noted that:
Thus, the reassessment notice was time-barred. Treatment of competing arguments: The respondents argued for the validity of the reassessment notice, presumably relying on the extended timelines and procedural compliances. However, the Court found their arguments untenable in light of the clear legal framework and admitted facts. The petitioner's reliance on the Supreme Court and Division Bench decisions was accepted as authoritative and controlling. Conclusions: The Court concluded that the reassessment notice issued on 23 July 2022 was barred by limitation and hence invalid. The petitioner's challenge to the reassessment proceedings was upheld. Issue 2: Computation and effect of 'surviving period' and exclusion of block periods under Section 149 and TOLA Relevant legal framework and precedents: The Supreme Court in Rajeev Bansal and Ashish Agarwal clarified the concept of 'surviving period' - the remaining time available to the AO to issue reassessment notices after excluding block periods and statutory suspensions. Section 3(1) of TOLA suspended limitation from 20 March 2020 to 30 June 2021. The Third Proviso to Section 149(1) excludes the period during which the assessee is given an opportunity to respond to notices under Section 148A(b). Court's interpretation and reasoning: The Court adopted the detailed analysis from Rajeev Bansal, which held: "The effect of the creation of the legal fiction in Union of India v. Ashish Agarwal was that it stopped the clock of limitation with effect from the date of issuance of section 148 notices under the old regime... The period from the date of the issuance of the deemed notices till the supply of relevant information and material by the Assessing Officers to the assessees... has to be excluded from the computation of the period of limitation. Moreover, the period of two weeks granted to the assessees to reply to the show-cause notices must also be excluded... The clock started ticking for the Revenue only after it received the response of the assessees..." It further illustrated with an example that the AO has a limited surviving time (e.g., 61 days) to issue a reassessment notice after receiving the assessee's reply. Key evidence and findings: The Court referred to the timelines in the present case, showing that the surviving period expired before the reassessment notice was issued. The Division Bench in Ram Balram applied the same principles to a factually similar case and held the reassessment notice invalid for being issued beyond the surviving period. Application of law to facts: The Court applied the three exclusion periods cumulatively to compute the surviving period. It found that even allowing for the statutory two weeks for response to the Section 148A(b) notice, the reassessment notice dated 23 July 2022 was beyond the surviving period. Treatment of competing arguments: The respondents' contention that the reassessment notice was valid despite the timeline was rejected based on the authoritative Supreme Court precedent and admitted facts. Conclusions: The Court held that the surviving period and statutory exclusions must be strictly adhered to and that the reassessment notice issued beyond this period is invalid. 3. SIGNIFICANT HOLDINGS The Court's crucial legal reasoning, preserving verbatim excerpts from Rajeev Bansal, includes: "110. The effect of the creation of the legal fiction in Union of India v. Ashish Agarwal was that it stopped the clock of limitation with effect from the date of issuance of section 148 notices under the old regime... The period from the date of the issuance of the deemed notices till the supply of relevant information and material by the Assessing Officers to the assessees... has to be excluded from the computation of the period of limitation. Moreover, the period of two weeks granted to the assessees to reply to the show-cause notices must also be excluded in terms of the third proviso to section 149. 111. The clock started ticking for the Revenue only after it received the response of the assessees to the show-causes notices... The surviving time limit... was available to the Assessing Officers to issue the reassessment notices under section 148 of the new regime. 113. ... To assume jurisdiction to issue notices under section 148... an Assessing Officer has to: (i) issue the notices within the period prescribed under section 149(1)... and (ii) obtain the previous approval of the authority specified under section 151. A notice issued without complying with the preconditions is invalid as it affects the jurisdiction of the Assessing Officer. Therefore, the reassessment notices issued under section 148... ought to be issued within the time limit surviving under the Income-tax Act read with TOLA. A reassessment notice issued beyond the surviving time limit will be time-barred." Core principles established include:
Final determinations on the issues were:
|
