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TMI Blog2024 (9) TMI 347X X X X Extracts X X X X X X X X Extracts X X X X ..... ued a reopening notice beyond the period of three years, approval was required to be taken as per provisions of amended section 151 from the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General. We find no merits in the reliance placed by the Revenue on the provisions of TOLA. As, in the present case, the period of three years has elapsed from the end of the relevant assessment year and the order dated 23/05/2022 was passed under section 148A(d) of the Act after obtaining the approval of the Principal CIT-1, Mumbai we are of the considered view that the Revenue has not followed the mandatory provisions of the Act while initiating the reassessment proceedings and sanction of the Specified Authority is not in conformity with the law prevalent at the time of grant of sanction. Also no u/s 148 shall be issued after the expiry of three years but not more than ten years, unless the AO is in the position of documents or evidence which reveal that income amounting to Rs. 50 lakh or more chargeable to tax has escaped assessment. As noted above in the present case, the income which is alleged to have escaped assessment is less than Rs. 50 lakh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ON MERITS: 4. The learned CIT(DRP-3) has failed to appreciate the Permanent Alternative Accommodation Agreement, which has become a non-starter as the assessee has neither surrendered his tenancy rights nor given possession of existing premises and still continues to enjoy his occupation rights as on day and the developer has not started any development work, as the obligation of assessee in PAA is not discharged till day, therefore, Ld FAO erred in applying section 56(2)(vii)(b) of the Act. 5. The learned CIT(DRP-3) has failed to considered that as tenancy rights are not surrendered by the assessee, the assessee is continued to pay rent, therefore, there was no question of acquiring new residential premises in lieu thereof. 6. Alternatively assessee submits that execution of agreement happened in AY. 2016-17 and registration relates back to date of execution, therefore, section 56(2)(vii) is wrongly invoked in AY 2017-18. 3. In the present case, the assessee has challenged the validity of the reopening of assessment under section 147 of the Act on various grounds and has also challenged the addition made by the AO under section 57(2)(vii)(b) of the Act. Since the grounds challeng ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sdictional Assessing Officer. The final assessment order was passed under section 147 r/w section 144C(13) of the Act assessing the total income of the assessee at Rs. 43,57,950 after making an addition of Rs. 43,32,000 under section 57(2)(vii)(b) of the Act. 7. During the hearing, the learned Authorised Representative ( learned AR ) submitted that the reopening of assessment under section 147 of the Act, in the present case, is bad in law, inter-alia, on the following basis: (a) As per the provisions of section 149(1)(b), notice under section 148 of the Act can only be issued after three years from the end of the relevant assessment year, if the income escaping assessment is Rs. 50 lakh or more. However, in the present case, as per the order dated 18/07/2022 passed under section 148A(d) of the Act, the income escaping assessment is only to the tune of Rs. 43,32,000 and notice under section 148 of the Act was issued after the expiry of three years from the end of the relevant assessment year. Thus, it was submitted that the notice issued under section 148 of the Act is time-barred. (b) As per the provisions of section 151(ii) of the Act, if more than three years have elapsed from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as being under Section 148A(b) and where proceedings were to be taken forward in accordance with law thereafter. Under the old Section 149(1)(b) as it stood prior to 1/4/2021, the period for which a notice u/s 148 could have been issued as on 31/3/2021 was up to AY 2015-16. Extension of time limit: The time limit for issuing notice under un-amended Section 149 which was falling from 20th March 2020 till 31st March 2021 was extended by Section 3 of the Taxation and Other Laws (Relaxation and Amendment of certain provisions Act), 2020 (TOLA) read with Notification No.20 of 2021 dated 31st March 2021 and Notification No.38 of 2021 dated 27th April 2021, until 30th June 2021. The power of reassessment that existed prior to 31st March 2021 continued to exist till the extended period, i.e., till 30th June 2021. In the present case notice u/s 148 was issued on 15.06.2021. Thus, all notices issued on or after 1st July 2021 would have to necessarily follow the requirements as per changed procedure. The Finance Act, 2021, had merely changed the procedure to be followed prior to issuance of notice with effect from 1st April 2021. Subsequently, the Hon'ble Apex Court in Ashish Agarwal (Sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation made in this regard by the assessee, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139: Provided that no notice under this section shall be issued unless there is information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the relevant assessment year and the Assessing Officer has obtained prior approval of the specified authority to issue such notice: Provided further that no such approval shall be required where the Assessing Officer, with the prior approval of the specified authority, has passed an order under clause (d) of section 148A to the effect that it is a fit case to issue a notice under this section: . Explanation 3. For the purposes of this section, specified authority means the speci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more: . 14. Therefore, in a case where three years have elapsed no notice under section 148 of the Act can be issued unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to Rs. 50 lakh or more. 15. In light of the aforenoted relevant provisions of the Act, the actual delineation of the pertinent facts in the present case are as follows: - (i) On 15/06/2021, notice under section 148 of the Act was issued to the assessee as per the old provisions of the Act, after the expiry of three years from the end of the relevant assessment year, i.e. 2017-18. (ii) The Hon ble Supreme Court in Ashish Agarwal (supra) held that notices issued under section 148 of the Act after 01/04/2021 as per the erstwhile provisions shall be deemed to be show cause notice issued under section 148A(b) of the Act. (iii) On 23/05/2022, the AO granted the opportunity to the assessee to show cause in light of the information received, as required under section 148A(b) of the Act. (iv) On 15/07/2022, prior approval of Principal CIT 1, Mumbai was granted to pass the order under 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act also requires the Assessing Officer to pass an order after considering the reply of the assessee as to whether or not it is a fit case to issue a notice under section 148 of the Act and such an order under section 148A(d) of the Act has to be passed with the prior approval of the specified authority. The Explanation to section 148A of the Act also incorporates the meaning of 'specified authority' as provided for in section 151 of the Act. 24. As per section 151 of the Act, the 'specified authority' who has to grant his sanction for the purposes of section 148 and section 148A is the Principal Chief Commissioner or Principal Director General or where there is no Principal Chief Commissioner or Principal Director General, the Chief Commissioner or Director General if more than three years have elapsed from the end of the relevant assessment year. The present petition relates to the AY 2016-17, and as the impugned order and impugned notice are issued beyond the period of three years which elapsed on 31st March, 2020 the approval as contemplated in section 151(ii) of the Act would have to be obtained which has not been done by the Assessing Officer. The imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e order dated 23/05/2022 was passed under section 148A(d) of the Act after obtaining the approval of the Principal CIT-1, Mumbai vide letter dated 15/07/2022, we are of the considered view that the Revenue has not followed the mandatory provisions of the Act while initiating the reassessment proceedings and sanction of the Specified Authority is not in conformity with the law prevalent at the time of grant of sanction. 18. From the perusal of the order dated 23/05/2022 passed under section 148A(d) of the Act, it is further evident that based on the information in possession of the AO, it was concluded that there is an escapement of income to the tune of Rs. 43,32,000 under section 56(2)(vii)(b) of the Act. The aforesaid order further mentions that the conditions of section 149(1) are satisfied in this case for the assessment year 2017-18. However, undisputedly three years from the end of the relevant assessment year elapsed in the present case even at the time of issuance of the first notice under section 148 of the Act. Subsequently, after completion of the process, as per the existing provisions dealing with reassessment, the Jurisdictional AO issued notice under section 148 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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