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TMI Blog2023 (3) TMI 1198X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 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 ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2014-15. The said notice was treated as show-cause notice under section 148A(b) of the Act in light of the decision of the Supreme Court in Union of India vs. Ashish Agarwal[(2023) 1 SCC 617 : (2022) 444 ITR 1 (SC)], and that thereupon, the order under section 148A(d) was passed. 4. At the outset, learned senior advocate for the petitioner submitted that the notice issued under section 148 of the Act and the consequential order under section 148A(d) of the Act issued by the department for assessment year 2014-15 is barred on the ground of limitation, the notice having been issued after passage of six years from the end of the relevant assessment year. 4.1 It was submitted that in view of the decision of the Division Bench of this Court in Keenara Industries Pvt Ltd. vs. The Income Tax Officer being Special Civil Application No. 17321 of 2021 and allied petitions, decided on 07.02.2023, the question of legality of the notice issued in respect of Assessment Year 2013-14 and Assessment Year 2014-15 is covered and the impugned notice is without jurisdiction as it is beyond the time limit prescribed. 5. In order to properly understand the controversy and the applicable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice shall not be issued after the expiry of a period of six years from the end of the relevant assessment year. Explanation -For the removal of doubts, it is hereby clarified that the provisions of subsections (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. 5.1.2 The above section deals with time limit for issuance of notice for reopening of the assessment. The assessing officer thereunder could reopen the case of the assessee beyond four years, but within six years from the end of the relevant assesssment year in case the amount escaped the assessment is likely to exceed rupees one lakh. 5.2 In the Finance Act, 2021, passed on 28.03.2021, and made applicable with effect from 01.04.2021, Section 148A came to be brought into force under section 42 of the Finance Act. It relates to conducting of inquiry and providing opportunity to the assessee before notice under section 148 of the Act could be issued. Along with substitution of new section 148A, section 149 of the Act was also recast by the legislature. 5.2.1 Section 149 of the Act, as inducted by the Finance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being land or building or both, shares and securities, loans and advances, deposits in bank account. (2) The provisions of sub-section (1) as to the issue of notice shall be subject to the provisions of section 151. Sanction for issue of notice 151. 5.2.2 As per the aforesaid amended section 149, notice under section 148 of the Act could be issued within three years from the end of the relevant assessment year. What is contemplated is that the assessing officer could reopen the case of the assessee beyond three years, but within 10 years from the end of the relevant assessment year. This could be done by the assessing officer within 10 years provided he is in possession of the books of accounts or documents or evidence revealing that income escaped assessment represented in form of asset was likely to exceed Rs. 50 lakhs. Further condition needed to be satisfied is the approval of the competent authority of the Income Tax under section 151 of the Act, which enable the assessing officer to assume the jurisdiction. 5.2.3 What is to be noticed with relevance is that the First Proviso to section 149 of the Act as introduced in Finance Act, 2021, inter alia stipulated t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otices issued during the period from 01.04.2021 to 30.06.2021 in relation to the earlier assessment years were challenged. The provisions post-Finance Act, 2021, under the new regime had come into force. This controversy before the Apex Court culminated into decision in Ashish Agarwal (supra). 5.4.1 The Supreme Court striking balance between the notices issued by the Department under the old regime and the provisions brought into force under the new regime held that all notices issued under Section 148 of the Act between 01.04.2021 to 30.06.2021 shall be deemed to have been issued under section 148A of the Act to be treated as show-cause notices under section 148A(b) of the Act. The Supreme Court observed that new provisions substituted by the Finance Act, 2021 were remedial and benevolent in nature, came to be inserted with an object to protect the right and interests of the assessee as well to sub-serve the public interest. 5.4.2 While allowing various appeals in part, the Supreme Court in Ashish Agarwal (supra), modified the judgment and orders passed by the different High Courts from where the matters had travelled by issuing the following directions, extracting from SCC, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apitulated, Provided that no notice under section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April, 2021, if such notice could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause (b) of sub-section (1) of this section, as they stood immediately before the commencement of the Finance Act, 2021 5.4.6 In simple words, the notice which could not have been issued in the old regime period due to becoming time barred as per then operating provision, would also not be permissible to be issued post- 01.04.2021. 5.4.7 As already noticed, Section 149 as it stood immediately before commencement of Finance Act, 2021, that is before 01.04.2021 in the old regime inter alia provided for time limit for notice. It stated inter alia that no notice under section 148 shall be issued for the relevant assessment year, as per clause (b), if four years, but not more than six years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax, which has escaped assessment, amounts to or is likely to amount to one lakh rupees or more ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Finance Act, 2021 came into force with effect from 01.04.2021. 5.6.1 In other words, it was the contention that as per the provisions of Section 149 of the Act in the old regime, a notice under Section 148 could have been issued to the assesse, if four years had elapsed from the end of the Assessment Year, but not six years. After six years from the end of the Assessment Year, notice under section 148 was barred. 5.6.2 Stating differently, as per the old regime, for issuance of notice under section 148, in relation to Assessment Year 2013-14, the outer time limit would expire on 31.03.2020 and for issuing such notice in relation with Assessment Year 2014-15, the time period would conclude on 31.03.2021. 5.7 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. 5.8 In Keenara Industries Pvt. Ltd. (supra), 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... coming into force, which means w.e.f. 01.04.2021. As per the old regime of reopening, the reopening notice under section 148 of the Act could have been issued before the expiry of six years from the end of relevant assessment year. In other words, no notice could have been issued after expiry of period of six years from the end of the relevant assessment year. 20.1. In other words, if the period of six years from the end of relevant assessment year expired on 31.03.2021, then notice under section 148 of the Act could not have been issued under the new regime for the said assessment year. 20.2 The example given in para 2.18 has already been given for appreciating these legal provisions for the assessment year 2013-14 and 14-15. In case of assessment year 2013-14, the date of expiry of the assessment year is 31.03.2014 and therefore, six years from the end of assessment year would expire on 31.03.2020. Whereas for the assessment year 2014-15, the date of expiry of assessment year is 31.03.2015 and the six years would expire on 31.03.2021. The new provision introduce by Finance Act, 2021 came into force on 01.04.2021 therefore, the limitation for issuance of notice under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 149 as inserted by the Finance Act 2021, in such cases. 6.3 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). 6.4 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. 6.5 Learned advocate for the Revenue was entirely at his receiving end, unable to dispute the position of law holding the field as above. 7. In view of the above, the impugned notice in this petition under section 148 of the Act relatable to Assessment year 2014-15 is beyond the permissible time limit, therefore, liable to be treated ille ..... X X X X Extracts X X X X X X X X Extracts X X X X
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