9911796707
TMI Blog2024 (8) TMI 1363X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act. This issue has been duly considered in the case of Ganesh Dass Khanna [ 2023 (11) TMI 763 - DELHI HIGH COURT] as decided that new regime for reopening assessments was enacted is that where escapement of income was below Rs. 50 lakhs, the normal period of limitation, i.e., three (03) years was to apply. In comparison, the extended period of ten (10) years would apply in serious tax evasion cases where there was evidence of concealment of income of Rs. 50 lakhs or more in the given period. Thus we are of the considered view that the impugned notice issued u/s 148 of the Act is without jurisdiction and hence set aside making the resultant re-assessment order null and void - Decided in favour of assessee. - Shri Narendra Kumar Billaiya, Hon ble Accountant Member And Shri Rahul Chaudhary, Hon ble Judicial Member For the Assessee : Ms. Kinjal Bhuta, A/R For the Revenue : Shri Anil Sant, Addl. CIT D/R ORDER PER NARENDRA KUMAR BILLAIYA, AM: This appeal by the assessee is preferred against the order dt. 13/03/2024 framed u/s 147 r.w.s. 144C(13) of the Act, pertaining to Assessment Year 2017-18. 2. The grievance of the assessee reads as under:- 1. The Ld. Assessing Officer erred in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use notice is based, were provided to the assessee on 28/05/2022. The entire quarrel revolves around this notice. 6. The bone of contention is the sanction accorded u/s 151 of the Act. As the assessment was reopened beyond three years, sanction is required from Pr. CCIT whereas in the case of assessee, sanction has been obtained from Pr. CIT. this issue has been considered by the Hon ble Bombay High Court in the case of Siemens Financial Services (P.) Ltd. vs. DCIT [2023] 154 taxmann.com 159 (Bom.). The relevant findings of the Hon ble High Court reads as under:- 28. The interpretation placed by the CBDT in paragraph 6.1 of Instruction No. 1/2022 dated 11th May 2022 cannot be countenanced as it is not open to them to clarify that the law laid down by the Apex Court means that the extended reassessment notices will travel back in time to their original date when such notices were to be issued and, then, the new section 149 of the Act is to be applied as this is contrary to the judgment of this court in Tata Communications Transformation Services (P.) Ltd. (supra) wherein it is held that TOLA does not envisage traveling back of any notice. However, even assuming that it is held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Central Government to notify the period during which actions are required to be taken that can fall within the ambit of TOLA, and the power to extend the time limit within which those actions are to be taken. There was no amendment to the provisions of sections 147 to 151 of the Act. The court also observed that amendments to the substantive provisions of the Act were envisaged under section 3 of TOLA, which was only a relaxation provision dealing with time limits under various enactments. The Assessing Officer could have assumed jurisdiction while issuing the impugned notices only after complying with the amended section 147 which has not been done. In Tata Communications (supra), this court also held that TOLA was not applicable for A.Y.-2015-2016 or any subsequent years. Hence question of applicability of notification issued under TOLA also would not arise. Paragraphs 34 to 49 of Tata Communications Transformation Services (P.) Ltd. (supra) read as under: 34. It is well settled that the validity of a notice issued under section 148 of the Act must be judged on the basis of the law existing on the date on which such notice is issued. Even the Revenue accepts this well set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce issued after 1st April 2021 relates back to an earlier period. 38. The Delhi High Court has considered and rejected this argument of the Revenue that Relaxation Act creates a legal fiction such that the notices issued under section 148 of the Act are deemed to be issued on 31st March, 2021. The so called legal fiction is directly contrary to the Revenue's own Circular No. 549 of 1989, which is binding on them as well as the well settled principle that the validity of a notice is to be judged on the basis of the law that prevails at the time of its issue. 39. Even though Relaxation Act was in existence when the Finance Act, 2021 was passed, the parliament has specifically made the amended provisions of sections 147 to 151 of the Act as being applicable with effect from 1st April, 2021. Therefore, the intention of the legislature is clear that substituted provisions must apply to notices issued with effect from 1st April, 2021. No savings clause has been provided in the Act for saving the erstwhile provisions of sections 147 to 151 of the Act, like in section 297 of the Act where, the Parliament when it intended, has specifically provided the savings clause. 40. On a plain rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed), afresh, then no liberty is required to be granted by the Court, and it would be within the Assessing Officer's powers to initiate proceedings as per the amended law. The Madras High Court has considered this very plea and granted liberty to initiate reassessment proceedings in accordance with the provisions of the amended Act, if limitation for it survives . 44. As submitted by Mr. Mistri, with whom we agree, Chapter II of Relaxation Act provide for - Relaxation of Certain Provisions of Specified Act and section 3 forms part of this Chapter. Further Chapter III provides for amendment to Income-tax Act, 1961 and various sections of the Act have been amended in Chapter III. From this the following propositions emerge : (a) Wherever the Parliament thought fit, the Parliament has itself amended the provision of the Income-tax Act, 1961 and not left it for the CBDT to make the amendment. Therefore, it is clear that no power is given under Relaxation Act to postpone the applicability of provisions of the Income-tax Act. (b) Chapter II of Relaxation Act is only for 'Relaxation of Certain Provisions of Specified Act' and, therefore, there is no question of the Revenue rely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to note that section 3 of Relaxation Act falls in Chapter II of the said Act, which is titled 'Relaxation of Certain Provisions of Specified Act'. In contradistinction, section 4 of Relaxation Act which does amend several provisions of the Act falls in Chapter III, which is titled 'Amendments to the Income-tax Act, 1961'. It will be apposite to notice that the amendments provided for in section 4 were made by the Legislature itself in terms of the said Section and no such power to amend the Act was delegated to the Central Government. Therefore, we would agree with Mr. Pardiwalla that it is only section 4 of Relaxation Act which amended the Act and no such amendments to the substantive provisions of the Act were envisaged under section 3 of Relaxation Act, which was only a relaxation provision dealing with time limits under various enactments. 48. Mr. Pardiwalla submitted that even assuming for a moment that the primary contention of petitioners that the Explanations in the notifications are invalid is not accepted, still the impugned notices will be bad in law as the Explanation only seeks to effectuate the provisions of the erstwhile sections 148, 149 and 151 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation for such assessment years. These findings of the Bombay High Court have not been disturbed by the Apex Court in Ashish Agarwal (supra). The Apex Court only modified the orders passed by the respective High Courts to the effect that the notices issued under section 148 of the Act which were subject matter of writ petitions before various High Courts shall be deemed to have been issued under section 148A(b) 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. Thereafter, after following the procedure as required under section 148A may issue notice under section 148 (as substituted). The Apex Court also expressly kept open 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 A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 56 taxmann.com 417 (Delhi HC). The relevant findings reads as under:- 52. A careful perusal of the judgment of the Supreme Court rendered in Ashish Agrawal's case and the provisions of TOLA would show that neither the said judgment nor TOLA allowed for any such modality to be taken recourse to by the revenue, i.e., that extended reassessment notice would travel back in time to their original date when such notices were to be issued and thereupon the provisions of amended Section 149 would apply. 52.1 Apart from anything else, the aforesaid provisions contained in the Instruction dated 11-5- 2022 are beyond the powers conferred on the CBDT under section 119 of the 1961 Act. The paragraphs mentioned above are clearly ultra vires the provisions of Section 149(1) of the amended 1961 Act. 52.2 Furthermore, a perusal of the judgment of the Supreme Court rendered in Ashish Agrawal's case would show that it did not rule on the provisions contained in TOLA or the impact they could have on the reassessment proceedings. In any event, TOLA conferred no such power on the CBDT. 52.3 Besides this, as correctly argued on behalf of the assessees, there is no clarity in the aforementioned In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. The salient features of [the] new procedure are as under:- ** ** (iii) Section 147 proposes to allow the Assessing Officer to assess or reassess or re-compute any income escaping assessment for any assessment year (called relevant assessment year). ** ** (vii) New Section 148A of the Act proposes that before issuance of notice the Assessing Officer shall conduct enquiries, if required, and provide an opportunity of being heard to the assessee. After considering his reply, the Assessing Office shall decide, by passing an order, whether it is a fit case for issue of notice under section 148 and serve a copy of such order along with such notice on the assessee. The Assessing Officer shall before conducting any such enquiries or providing opportunity to the assessee or passing such order obtain the approval of specified authority. However, this procedure of enquiry, providing opportunity and passing order, before issuing notice under section 148 of the Act, shall not be applicable in search or requisition cases. in normal cases, no notice shall be issued if three years have elapsed from the end of the relevant assessment year. Notice beyond the period of three years from the end of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aken before invoking the extended period of limitation, the proposal was that approval should be obtained from the Principal Chief Commissioner of Income Tax, at the highest hierarchical level of the department. Likewise, the Memorandum emphasized that the new regime was forged with the hope that it would result in less litigation and would provide ease of doing business to tax payers, as there was a reduction in the time limit by which notice for assessment, reassessment and re-computation could be issued. 53.2 Thus, as per the Memorandum, in normal cases , no notice was intended to be issued if three (03) years had elapsed from the end of the relevant AY. Notice, beyond the prescribed three (03) years from the end of the relevant AY, could be issued only in a few specific cases; one such example which is given in the Bill is where the AO was in possession of evidence that escaped income amounted to Rs. 50 lakhs or more. 53.3 In sum, the sense that one gets upon a holistic reading of the backdrop in which the new regime for reopening assessments was enacted is that where escapement of income was below Rs. 50 lakhs, the normal period of limitation, i.e., three (03) years was to app ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
