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TMI Blog2023 (4) TMI 1001X X X X Extracts X X X X X X X X Extracts X X X X ..... de 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 cannot be issued as per the amended provision of the Act. Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s forthwith. Learned advocate Mr. Varun K. Patel with learned advocate Mr.Dev Patel for the respondent Revenue and learned advocate Mr.Nikunt Raval with learned advocate Ms.Kalpana Raval for the respondent in respective matter, waives service of Rule in all. 2.1 Heard learned advocate Mr.Hiren Trivedi for the petitioners and learned advocate for the respondent. 3. In the present petitions filed under Article 226 of the Constitution, the respective petitioners have called in question the notice issued by respondent assessing officer under Section 148 of the Income Tax Act, 1961 seeking to reopen the assessment in respect of assessment year 2013-14 or assessment year 2014-15 as the case may be. Also challenged are the orders passed under Section 148A(d) of the Income Tax Act, 1961 (hereinafter referred to as the Act ). 3.1 The details of date of notice, date of order under Section 148A(d) of the Act, assessment year, etc., in respect of all the petitioners are given in the table below, Sr. No. Special Civil Application No. Date of Notice under Section 148 Date of Order under Section 148A(d) Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 provisions in particular, prior to coming into force of Finance Act, 2021 called old regime as well as the provisions introduced in the Finance Act, 2021 described as new regime, the development of the law emanating from Keenara Industries Pvt. Ltd. (supra) in that regard may be revisited with, by noticing the aspects considered and decided in the said decision. 5.1 Section 147 of the Act empowers the assessing officer to reassess the income of the assessee subject to the provisions of Sections 148 to 151 of the Act in case any income chargeable to tax has escaped assessment. 5.1.1 Prior to the applicability of Finance Act, 2021 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Act, 2021 in the statute book and made applicable with effect from 01.04.2021 is as under, 149. Time limit for notice- (1) No notice under section 148 shall be issued for the relevant assessment year, (a) if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b); (b) if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of asset, which has escaped assessment amounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ided 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 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 provision as it stood immediately before the commencement of the Finance Act, 2021. 5.2.4 In other words, in respect of the notice under section 148 of the Act relating to the assessment year beginning on or before 01.04.2021, the operational conditions in the provision as they stood before 01.04.2021 were maintained. It thus included the factor of prescription of time limit-the limitation. 5. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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, The impugned section 148 notices issued to the respective assessees which were issued under unamended section 148 of the IT Act, which were the subject matter of writ petitions before the various respective High Courts shall be deemed to have been issued under section 148A of the IT Act as substituted by the Finance Act, 2021 and construed or treated to be show cause notices in terms of section 148A(b). The assessing officer shall, within thirty days from today provide to the respective assessees information and material relied upon by the Revenue, so that the assesees can reply to the show cause notices within two weeks thereafter; The requirement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eady 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 for that year. 5.4.8 In other words, limitation of six years from the end of relevant assessment year operated as timeline in the old regime for issuance of notice under section 148 beyond which period, it was not competent for the assessing officer to issue notice for reassessment. This embargo is made to continue in the new regime also. 5.5 Now the reopening notices which related to the period prior to 01.04.2021, but issued between 01.04.2021 to 30.06.2021 came to be challenged before the Division Bench of this Court in Keenara Industries Pvt. Ltd. (supra), by placing reliance on directions in paragraph 28.5 of Ashish Agarwal (supra:SCC), and thus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 purpose of issuing Notices under Section 148, which were otherwise barred in terms of Section 149, as it exists in the old regime. 5.8.1 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 concep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 section 148 of the Act prescribed under the old regime of reopening expired on 01.04.2021 for assessment year 2013-14 and 2014-15. 20.3 Therefore, in plain words, a notice which had become time barred prior to 01.04.2021 as per the then provisions cannot be revived under new regime by applying section 149 (1)(b) of the Act which came into effect from 01.04.2021. 6.1 Keenara Industries Pvt. Ltd. (supra) thus considered the question of limitation vis-a-vis notices for reopening of the assessment issued for the Assessment Year 2013-14 and Assessment Year 2014- 15. The final statement of law could be said to be contained in para 52 of Keenara Industr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, 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. 8. Since the petitions deserve to be allowed on the aforesaid crisp legal ground alone, learned advocates for the parties submitted to agree that facts and other legal issues may not be gone into by the Court. Accordingly, they are neither delineated, nor are gone into in respect of the above petitions. 9. All other questions on facts involved in the reasons weighed with Assessing Officer seeking to reopen the assessment are kept open in all cases. 10. As a result, the following order is passed, (i) Notice dated 31.07.2022 under Section 148 and Order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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