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TMI Blog2024 (7) TMI 1224X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 147 of the Act 2. failed to appreciate that the impugned proceedings have been initiated beyond the time limit prescribed under provisions of section 149 of the Act and thereby, vitiating the impugned proceedings and making it liable to be quashed; 3. failed to appreciate that notice under section 148 of the Act dated 29 July 2022 issued manually without mentioning the mandatory Document Identification Number and in contravention to the Circular No. 19/2019 dated 14 August 2019 shall be deemed never to have existed and therefore, the impugned proceedings based on such jurisdictionally defective notice is bad in law and liable to be quashed; 4. failed to specify the nature of information which suggests income chargeable to tax has escaped assessment and instead indicating that the proceedings have been initiated on account of "information which requires action in consequence of the judgement of the Hon'ble Supreme Court in the case of Union of India Vs. Ashish Agarwal, Civil Appeal 3005/;2022, dated 4th May 2022" and such jurisdictional error goes to the root of the matter, vitiating the impugned proceedings and making it liable to be quashed; 5. erred in initiatin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 234A of the Act amounting to Rs. 32,53,03,275 without appreciating the Appellant's return of income has been filed within the due date of filing the return of income; Ground of Appeal No. 14; Levy of Interest under section 234B of the Act. 14. erred in levying interest under section 234B of the Act amounting to Rs. 41,09,09,400; Each of the grounds of appeal referred above is separate and may kindly be considered independent of each other. The Appellant craves leave to add, alter, vary, omit, substitute, amend or withdraw any or all of the above grounds of appeal and to submit such statements, documents and papers as may be considered necessary either at or before the hearing of this appeal so as to enable the Hon'ble Income-tax Appellate Tribunal to decide this appeal acceding to law." 3. Ground No. 1 is general in nature and needs no separate adjudication. 4. Vide Ground No. 2, assessee has challenged the validity of the assessment order, strongly contending that the proceedings have been initiate beyond the time limit prescribed under provision of Section 149 of the Act. 5. Representatives of both the sides were heard at length. Case records carefully perused. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r (iii) an entry or entries in the books of account, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more:] 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 74[a notice under section 148 or section 153A or section 153C 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 or section 153A or section 153C, as the case may be], as they stood immediately before the commencement of the Finance Act, 2021:" 7.1. In the memorandum explaining the provisions in the Finance Bill, 2021, it has been interalia explained that another restriction has been provided that the notice under section 148 of the Act cannot 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 prescribed under the provisions of clause (b), as they stood immediately before the proposed amendment. 8. In our und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act and the Assessing Officer was directed to provide within 30 days to the respective assessee the information and material relied upon by the Revenue so that the assessee could reply to the show cause notices within two weeks thereafter. The Apex Court held that the Assessing Officer shall thereafter, pass orders in terms of Section 148A(d) in respect of each of the concerned assessees and having followed the procedure as required under section 148A of the Act may issue notice under section 148 of the Act. The Apex Court also kept open expressly all contentions which may be available to the assessee including those available under section 149 of the Act and all rights and contentions, which may be available to the concerned assessee and Revenue under the Finance Act, 2021 and in law, shall be continued to be available. This was done by the Apex Court to strike a balance between the rights of both the parties. Therefore, the validity of the reopening notice to petitioner must be decided on the basis of law which exists at the time when such a notice was issued, i.e., 28th July 2022. 22. As per the unamended Section 149(1)(b) of the Act, the outer time limit to issue a not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mits for issuing notice under section 148 would not change this position that obtains in law. The Court held that a notice, which had become time barred prior to 1st April 2021 as per the then prevailing provisions, would not be revived by virtue of application of Section 149(1)(b) effective from 1st April 2021. We respectfully agree with this view. As noted earlier in Ashish Agarwal (supra), the Hon'ble Supreme Court categorically confirmed the view taken by various High Courts including the Hon'ble Rajasthan High Court. Therefore, the impugned notices pertaining to AY 2013-14 pursuant to Ashish Agarwal (supra) are barred by limitation. 24. We could also note that the provisions of TOLA have no application relating to AY 2013-14. Section 3(1) of TOLA reads as under: ** ** ** 25. The limitation for AY 2013-14 expired on 31st March 2020, which by virtue of Section 3(1) of TOLA, got extended to 31st March 2021. This was followed by a Notification dated 31st March 2021 being Notification S.O. 1432(E) [No. 20/2021/F. No. 370142/35/2020-TPL], which read as under: ** ** ** This Notification, therefore, says that where the specified Act is the Income-tax Act, 1961 and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1432(E) was not applicable to AY 2013-14, the question of time limit for AY 2013-14 being extended beyond 31st March 2021 does not arise. 27. Therefore, under the Income-tax Act, when the completion of any action relates to issuance of notice under section 148 as per time limit specified in Section 149 was 31st March 2021, it shall stand extended to 30th April 2021. The time limit under section 149 expired on 31st March 2021 only for AY 2014-15 (and not for AY 2013-14, which expired on 31st March 2020) and has got extended by virtue of clause (a) of sub-section (1) of Section 3 of TOLA. The Notification does not say "issuance of notice under section 148 as per time limit specified in Section 149 as extended under sub-section (1) of Section 3 of TOLA". Therefore, the provisions of TOLA cannot apply. Also the Notifications thereunder do not apply to the case at hand for AY 2013-14. 28. It is required to be noted that the Apex Court, while enabling the Revenue to restart the reassessment proceedings in Ashish Agarwal (supra), categorically held that the old Section 148 notices were to be treated as show cause notices in terms of Section 148A(b) and not a notice under section 148 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the decision of the Delhi High Court. Paragraphs 44.4, 49, 51, 52 and 55 of Ganesh Dass Khanna (supra) read as under : ** ** ** Paragraphs 6 and 8 of Group M Media India P. Ltd. (supra) read as under : ** ** ** 34. It will be also useful to note that even in Hindustan Aeronautics Ltd. (supra) the Apex Court has held that circulars/instructions are only binding on the Revenue and not on the assessees and certainly not on the Hon'ble Courts. 35. The Revenue's contention that the reopening notice was to relate back to an earlier date is entirely flawed and unacceptable. Thus, the reassessment notices issued for AY 2013-14 are patently barred by limitation as the six years limitation period under the Act (as extended by Section 3 of TOLA) expired by 31st March 2021. However, even on the Revenue's demurrer and assuming that such reopening notices could travel back in time and that the provisions of TOLA protected such reopening notices (we do not agree), even then, in so far as the notices issued for AY 2013-14 is concerned, would in any case be barred by limitation. As stated earlier, under the erstwhile Section 149, a notice under section 148 could have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or Assessment Years 2013-2014 and 2014-2015 had already been barred by limitation on 1st April 2021. Accordingly, the extended period of ten years as provided in Section 149(1)(b) of the Act would not have been applicable to Assessment Years 2013-2014 and 2014-2015, de hors the proviso. It is a settled principle of law that when limitation has already expired, it cannot be revived by way of a subsequent amendment and, hence, for Assessment Years 2013-2014 and 2014-2015 proviso to Section 149 of the Act was not required. Hence, to give meaning to the proviso it has to be interpreted to be applicable for Assessment Years upto 2021-2022. In CIT v. Onkarmal Meghraj (H.U.F.) [1974] 93 ITR 233 (SC), the Hon'ble Apex Court was dealing with the question whether a proviso could be applied without reference to any period of limitation. It held that "it is a well-settled principle that no action can be commenced where the period within which it can be commenced has expired. It is unnecessary to cite authorities in support of this position. Does the fact that the second proviso says that there is no period of limitation make a difference?" The interpretation canvassed by the Revenue woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as the said notice was issued within the period of six years from the end of the relevant assessment year, which was expiring on 31st March 2022, the reassessment proceedings are within the period of limitation prescribed in Section 149 of the Act. It is not acceptable. Section 149 of the Act sets out, inter alia, the time limit for issuing notice under section 148 of the Act. Apart from the period of limitation set out in the said Section, the first proviso lays down a further restriction on the issue of a notice under section 148 of the Act. The period of limitation as well as the said further restriction is framed/provided in respect of a notice under 148 of the Act, and not for a notice under section 148A of the Act. The notice dated 8th April 2021, which though originally issued as a notice under section 148 of the Act, (under the provisions of the Act prior to the amendments made by the Finance Act, 2021), has now been treated as a notice issued under section 148A(b) of the Act in accordance with the decision of the Hon'ble Apex Court in Ashish Agarwal (supra). Once the notice dated 8th April 2021 has been treated as having been issued under section 148A(b) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce, if a notice is not within the time prescribed under the first proviso to Section 149(1) of the Act, then such period cannot be extended by fifth proviso and sixth proviso. In Godrej Industries Ltd. (supra) paragraph 15 reads as under : 15. Based on petitioner's facts, the show cause notice under section 148A(b) of the Act was issued on 24th May 2022 asking petitioner to furnish a reply by 8th June 2022. Petitioner filed a detailed reply in response to the show cause notice on 8th June 2022 and, therefore, only the period from 24th May 2022 to 8th June 2022 could be excluded by virtue of the first limb of the fifth proviso to Section 149 of the Act. Subsequently, petitioner received another letter dated 28th June 2022 which annexed certain details and provided further time for making detailed submissions upto 8th July 2022. Petitioner replied to the letter and made detailed submissions on 2nd July 2022. Therefore, even assuming this period is to be excluded, the period which could be excluded is only from 24th May 2022 to 8th June 2022. Even after considering the letter dated 28th June 2022 and the reply dated 2nd July 2022, at the highest a further period from 28th June ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the proceeding under section 148A of the Act is stayed. The original stay granted by this Court was not with respect to the proceeding under section 148A of the Act, but with respect to the proceeding initiated as per the erstwhile provision of Section 148 of the Act and, hence, such stay would not extend the period of limitation as per the fifth proviso to Section 149 of the Act. The question of applicability of the sixth proviso does not arise on the facts of the present case. We find support for this in Godrej Industries Ltd. (supra). In view of the aforesaid, the impugned notice dated 27th August 2022 is clearly barred by the law of limitation." 11. Considering facts of the case in totality in the light of the judicial decisions discussed hereinabove, we hold that the impugned notice and the proceedings have been initiated beyond the time limit prescribed under the provisions of Section 149 of the Act making the impugned proceedings vitiated and liable to be quashed. Since we have quashed the impugned assessment order, we do not find it necessary to dwell into the merits of the case. 12. In the result, appeal of the assessee is allowed. Order pronounced on 22nd July, 2024 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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