9911796707
TMI Blog2024 (9) TMI 1282X X X X Extracts X X X X X X X X Extracts X X X X ..... ces and those being viewed as having been issued and dispatched after 01 April 2021. However, and in our considered opinion, the same would be of little relevance or significance when one bears in mind the indubitable fact that all the notices were approved by the JCIT and which was an authority recognised under the unamended Section 151. The answer to the argument based on the provisions of TOLA would also largely remain unimpacted by our finding on this score as would become evident from the discussion which ensues. We thus proceed on the demurrer that it was the unamended Section 151 which would be applicable to the impugned proceedings. However, and before proceeding ahead, it would be appropriate to briefly notice the provisions of TOLA and on which the defence of the respondents is founded. TOLA, being Act No. 38 of 2020, came to be promulgated on 29 September 2020. On a fundamental plane, it was a remedial measure aimed at overcoming a position of irretrievable and irreversible consequences which were likely to befall during the nationwide lockdown. It was principally aimed at enabling authorities to take and commence action within the extended timelines that TOLA introduced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been initiated and which would have otherwise and ordinarily been governed and regulated by Sections 148 and 149 of the Act. If the contention of the respondents were to be accepted it would amount to us virtually ignoring the date when reassessment is proposed to be initiated and the same being indelibly tied to the end of the relevant AY. Once it is conceded that the notice came to be issued four or three years after the end of the relevant assessment year, the approval granted by the JCIT would not be compliant with the scheme of Section 151. We thus find ourselves unable to sustain the grant of approval by the JCIT. The respondents had feebly sought to urge that the use of the expression sanction in Section 3 of TOLA also merits due consideration and is liable to be read as supportive of the contentions that were addressed on their behalf. The argument is however clearly meritless when one bears in consideration the indisputable fact that the set of provisions with which we are concerned nowhere prescribe a timeframe within which sanction is liable to be accorded. Sanction when used in Section 3 of TOLA caters to those contingencies where a specified Act may have prescribe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... officer which would be liable to accord sanction for reassessment and which expression was defined by Section 151. In terms of Section 151 (i) after the passing of the Finance Act 2021, if the notices for reassessment were issued where three years or less than three years had elapsed from the end of the relevant AY, the action would have to be based on the approval of the Principal Commissioner/Principal Director/Commissioner/Director. In all other cases, and which would relate to those reassessments which were proposed to be commenced if more than three years had elapsed from the end of the concerned AY, the authorities empowered to accord approval were specified to be the Principal Chief Commissioner/ Principal Director General/ Chief Commissioner/ Director General. The petitioners would contend that viewed from any angle and irrespective of whether the unamended Section 151 or the provision as it came to form part of the statute post Finance Act 2021, the approval of reassessment by the JCIT would not sustain. 4. The petitioners would assert that the provision for sanction which stands engrafted in Section 151 assumes significance in light of the statute clearly stipulating tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As Amended by Finance Act 2021 [Sanction for issue of notice. 151. (1) No notice shall be issued under section 148 by an Assessing Officer, after the expiry of a period of four years from the end of the relevant assessment year, unless the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner is satisfied, on the reasons recorded by the Assessing Officer, that it is a fit case for the issue of such notice. (2) In a case other than a case falling under subsection (1), no notice shall be issued under section 148 by an Assessing Officer, who is below the rank of Joint Commissioner, unless the Joint Commissioner is satisfied, on the reasons recorded by such Assessing Officer, that it is a fit case for the issue of such notice. (3) For the purposes of sub-section (1) and subsection (2), the Principal Chief Commissioner or Chief Commissioner or the Principal Commissioner or Commissioner or the Joint Commissioner, as the case may be, being satisfied on the reasons recorded by the Assessing Officer about fitness of a case for the issue of notice under section 148, need not issue such notice himself. ] [Sanction for issue of notice. 151. Specified auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y virtue of Finance Act 2021 with effect from 01 April 2021. The aforesaid objections came to be disposed of with the AO holding that the commencement of action under the statutory regime as it existed prior to 01 April 2021 was valid and would be in accordance with Central Board of Direct Taxes [CBDT] Circular F. No. 225/40/2021/ITA-II dated 04 March 2021. 11. While the controversy with respect to the applicability of the changed regime of reassessment and which would govern all notices issued after 01 April 2021 is no longer res integra and stands conclusively settled by virtue of the decision of the Supreme Court in Union of India vs. Ashish Agarwal (2023) 1 SCC 617, the challenge in the present set of writ petitions stands confined to the aspect of sanction and approval as contemplated under Section 151 of the Act. We have, therefore, alluded to Ashish Agarwal only for the sake of completeness. 12. The respective sides also take contrary positions with respect to whether Section 151 in its unamended or its rescripted version would apply. While the writ petitioners assert that since the notice was digitally signed on and dispatched after 01 April 2021, it would be Section 151 as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the above extract would show that after the amendment, section 151 has been split and the part which enjoins that the approval of the specified authority is mandatory stands embedded in the first proviso to section 148. 7.1. The concerned specified authorities, depending on the applicable timeframe, are adverted to in section 151 of the Act. 8. The first proviso to section 148 and section 151, when read conjointly, demonstrate the untenability of the submission made on behalf of the Revenue. xxxx xxxx xxxx 12. Clearly, the Revenue advanced the argument of interlinkage between limitation and the ascertainment of the specified authority due to the plain language of the amended section 151 of the Act. Section 151, when read alongside the first proviso to section 148, brings the aspect of inextricable linkage to the fore. xxxx xxxx xxxx 12.1. Clauses (i) and (ii) of section 151 of the amended Act (which has been extracted hereinabove) clearly specify the authority whose approval can trigger the reassessment proceedings. Thus, if three (3) years or less have elapsed from the end of the relevant assessment year, the specified authority who would grant approval for initiation of reasses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpiring on 31st March 2020. In the case at hand, the assessment year is 2015-2016 and, therefore, the six years limitation will expire only on 31st March 2022. Certainly, therefore, the Relaxation Act provisions may not be applicable. In any event, the time to issue notice may have been extended but that would not amount to amending the provisions of Section 151 of the Act. 7. In our view, since four years had expired from the end of the relevant assessment year, as provided under Section 151 (1) of the Act, it is only the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner who could have accorded the approval and not the Additional Commissioner of Income Tax. On this ground alone, we will have to set aside the notice dated 31st March 2021 issued under Section 148 of the Act, which is impugned in this petition. In view thereof, the consequent orders and notices will also have to go. 19. The decision in J M Financial came to be re-affirmed by that High Court in Siemens Financial Services Pvt. Ltd. vs. Deputy Commissioner of Income-Tax Ors. 2023 SCC OnLine Bom 2822. We deem it apposite to extract the following passages from that decision:- 24. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce, the Assessing Officer cannot seek to take the shelter of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act as a subordinate legislation cannot override any statute enacted by Parliament. Further, the notification extending the dates from March 31, 2021 till June 30, 2021 cannot apply once the Finance Act, 2021 is in existence. The sanction of the specified authority has to be obtained in accordance with the law existing when the sanction is obtained and, therefore, the sanction is required to be obtained by applying the amended section 151 (ii) of the Act and since the sanction has been obtained in terms of section 151 (i) of the Act, the impugned order and impugned notice are bad in law and should be quashed and set aside. 20. Dealing with an identical controversy the Madras High Court in Ramachandran Shivam vs. Income Tax Officer Citation, explained the legal position in the following terms:- 13. The orders and notices are challenged herein not on the ground that the time limit under preamended section 149 does not apply, but on the ground that sanction was not granted by the specified authority. Therefore, it remains to be considered as to whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 024) 463 ITR 702 (Delhi); 2024 SCC OnLine Del 330.]. Consequently, the validity of sanction for issuing the orders under section 148A (d) and the notices under section 148 should be tested with reference to amended section 151. If so tested, it is evident that sanction was not granted by an authority specified under clause (ii) of section 151. Hence, the orders under section 148A (d) and the notices under section 148 are quashed. As a corollary, the draft assessment orders under section 144B/144C cannot survive and are also quashed. 16. These writ petitions are allowed on the above terms. There will be no order as to costs. Consequently, the connected miscellaneous petitions are also closed. 21. The Orissa High Court too in Ambika Iron and Steel Pvt. Ltd. vs. Principal Commissioner of Income Tax 2022 SCC OnLine Ori 4162 has taken an identical view while holding in favour of the assessees as would be apparent from the following passages of that decision:- 2. In each of these cases, the challenges to a notice issued by the Income-tax Department (hereinafter Department ) under section 148 of the Income-tax Act, 1961, (IT Act) as it stood prior to the amendment by the Finance Act of 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action of the Joint Commissioner of Income-tax Range-I, Cuttack whereas the Officer authorized to record the necessary satisfaction had to be the Chief Commissioner of Income-tax/Commissioner of Income-tax. 7. For all the aforesaid reasons, in each of the above cases, the impugned notice under section 148 of the Income-tax Act is hereby quashed. The writ petitions are allowed, but in the circumstances, with no order as to costs. 22. In Twylight Infrastructure, the Division Bench of our Court while dealing with a challenge to reassessment action and whether reassessment would sustain in case escaped income be less than INR 50 lakhs also had an occasion to deal with the aspect of specified authority under Section 151 of the Act. It ultimately answered the latter issue as under:- 10. As indicated above, the specified authority changes depending on the time limit prescribed in section 151 of the Act. It is on this account that there is a linkage between ruling rendered in Ganesh Dass Khanna [Ganesh Dass Khanna v. ITO, (2024) 460 ITR 546 (Delhi); 2023 SCC OnLine Del 7286; 2023 : DHC : 8187-DB.] and the instant matters. 11. It may also be noted that in Ganesh Dass Khanna [Ganesh Dass Kha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ases, there is no dispute that although three (3) years had elapsed from the end of the relevant assessment year, the approval was sought from the authorities specified in clause (i), as against clause (ii) of section 151. 12.4. Before us, the counsel for the Revenue continue to hold this position. The only liberty that they seek is that if, based on the judgment in Ganesh Dass Khanna [Ganesh Dass Khanna v. ITO, (2024) 460 ITR 546 (Delhi); 2023 SCC OnLine Del 7286; 2023 : DHC : 8187-DB.], the impugned orders and notices are set aside, liberty be given to the Revenue to commence the reassessment proceedings afresh. 13. Therefore, having regard to the aforesaid, the impugned notices and orders in each of the above-captioned writ petitions are quashed on the ground that there is no approval of the specified authority, as indicated in section 151 (ii) of the Act. The direction is issued with the caveat that the Revenue will have liberty to take steps, if deemed necessary, albeit as per law. 23. As is manifest from the aforesaid discussion, High Courts appear to have consistently taken the position that TOLA does not impact the working of Section 151 and that the operation of the latter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ignature was put on the notice on the portal by the AO on or before 08:56 pm on.31.03.2021 which on account of system delay was recorded as 12:42 am (about after 4 hours) on the portal. It is pertinent to mention here that the notice was uploaded and signed by the AO on the system on or before 08:56 pm and thus the notice was out for dispatch on the system beyond the control of the AO on or before 08:56 pm on 31.03.2021. Therefore, the impugned notice was issued on 31.03.2021 itself and not on or after 01.04.2021 as claimed by the Petitioner. 9. Besides, as the impugned notice was not getting processed on the portal, the AO therefore signed the impugned 148 notice manually on 31.03.2021 which was sent to the assessee through speed post on 07.04.2021. Copy of manually singed impugned notice under Section 148 dated 31.03.2021 along with speed post booking receipt dated 07.04.2021 is annexed herewith as Annexure-R2 (Colly). 26. As is apparent from the above, while a document with a DIN number appears to have been drawn up on 31 March 2021, as per the respondents themselves, the document was digitally signed on 01 April 2021. They further concede to the fact that although the DSC was e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of section 13 of the Act of 2000, held that, since the impugned notice therein though dated March 31, 2021, was issued through e-mail on April 6, 2021, the same was time barred and therefore liable to be quashed. The court at paragraphs 29 and 30 held as under (page 54 of 444 ITR) : Thus, considering the provisions of sections 282 and 282A of the Act, 1961 and the provisions of section 13 of the Act, 2000 and meaning of the word 'issue we find that firstly notice shall be signed by the assessing authority and then it has to be issued either in paper form or be communicated in electronic form by delivering or transmitting the copy thereof to the person therein named by modes provided in section 282 which includes transmitting in the form of electronic record. Section 13 (1) of the Act, 2000 provides that unless otherwise agreed, the despatch of an electronic record occurs when it enters into computer resources outside the control of the originator. Thus, the point of time when a digitally signed notice in the form of electronic record is entered in computer resources outside the control of the originator, i. e., the assessing authority that shall be the date and time of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned notices were not issued on March 31, 2021. 25.14. The Department has not disputed the correctness of the law settled by the Supreme Court in the case of R. K. Upadhyaya (supra) in which the court was concerned with issuance of the section 148 notice in paper form and concluded that, since the date of despatch was within the prescribed period of limitation, the notice was validly issued for the purpose of section 149 of the Act of 1961, and held that the date of service of notice was not relevant. In fact, the Department has relied upon the said judgment. The said judgment squarely applies to the notice classified as category E . The amendments to the Act of 1961 including section 282A was to enable the Income-tax authority to issue notice either in paper form or electronic form and were made to provide an adequate legal framework for paperless assessment. Similarly, setting up of the digital platform of Income Tax Business Application portal and the e-filing portal is for facilitating assessment proceedings electronically. The said amendments or the use of Income Tax Business Application portal by the Department for issuing notice in no manner mitigates against or dispense with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paragraph 8 of this judgment reads as follows (page 653 of 445 ITR): Coming to the facts of the case, it is stated that notice under section 148 of the Act of 1961 is said to have been issued on March 31, 2021 for the assessment year 2013-14, followed by consequential notices. It is the case of the petitioner that the notice is said to have been issued vide e-mail at 6.42 p. m., but was served on April 1, 2021 at 2 am and, therefore, the unamended provisions of section 148 of the Act of 1961 would not be applicable to the case. . . We do not find that this judgment takes the case of the Department any further as the section 148 notice in the case was duly despatched on March 31, 2021. 25.17. The Department has not cited any judgment which would support its contention that mere drawing up of notice and signing it (pending despatch) amounts to issuance. The counsel for the respondent placed heavy reliance on the judgment of the Supreme Court in M. M. Rubber and Co. (supra). In the said case as well, the apex court was concerned with the issue of limitation while determining if the impugned order therein had been passed within time. However, the provision under consideration was sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er April 1, 2021, the notices are to be considered as show-cause notices under section 148A (b) as per the directions of the apex court in the Ashish Agarwal (supra) judgment. 31.3. Category C : The petitions challenging notices falling under category C which were digitally signed on March 31, 2021, are disposed of with the direction to the jurisdictional Assessing Officers to verify and determine the date and time of despatch as recorded in the Income Tax Business Application portal in accordance with the law laid down in this judgment as the date of issuance. If the date and time of despatch recorded is on or after April 1, 2021, the notices are to be considered as show-cause notices under section 148A (b) as per the directions of the apex court in the Ashish Agarwal (supra) judgment. 31.4. Category D : The petitions challenging notices falling under category D which were only uploaded in the e-filing portal of the assessees without any real time alert, are disposed of with the direction to the jurisdictional Assessing Officers to determine the date and time when the assessees viewed the notices in the e-filing portal, as recorded in the Income Tax Business Application portal and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... June 30, 2021 shall be deemed to have been issued under section 148A of the Act of 1961 as substituted by the Finance Act, 2021 and construed to be show-cause notices in terms of section 148A (b) as per the judgment of the apex court in Ashish Agarwal (supra) and the jurisdictional Assessing Officers shall thereafter follow the procedure set down by the Supreme Court in the said judgment which reads as follows (page 21 of 444 ITR) : In view of the above and for the reasons stated above, the present appeals are allowed in part. The impugned common judgments and orders passed by the High Court of Judicature at Allahabad in W. T. No. 524 of 2021 and other allied tax appeals/petitions, is/are hereby modified and substituted as under : (i) The impugned section 148 notices issued to the respective assessees which were issued under unamended section 148 of the Income-tax 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 Income-tax 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, wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e are in this batch of matters principally concerned with Section 3 thereof and which reads as follows:- 3. Relaxation of certain provisions of specified Act. ( 1) Where, any time-limit has been specified in, or prescribed or notified under, the specified Act which falls during the period from the 20th day of March, 2020 to the 31st day of December, 2020, or such other date after the 31st day of December, 2020, as the Central Government may, by notification, specify in this behalf, for the completion or compliance of such action as (a) completion of any proceeding or passing of any order or issuance of any notice, intimation, notification, sanction or approval, or such other action, by whatever name called, by any authority, commission or tribunal, by whatever name called, under the provisions of the specified Act; or (b) filing of any appeal, reply or application or furnishing of any report, document, return or statement or such other record, by whatever name called, under the provisions of the specified Act; or (c) in case where the specified Act is the Income-tax Act, 1961 (43 of 1961), (i) making of investment, deposit, payment, acquisition, purchase, construction or such other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall have the effect as if for the figures, letters and words 31st day of March, 2021 , the figures, letters and words 15th day of July, 2020 had been substituted; (iii) delivering of statement of deduction of tax at source under sub-section (3) of section 200 of that Act or statement of collection of tax at source under proviso to sub-section (3) of section 206C thereof for the month of February or March, 2020, or for the quarter ending on the 31st day of March, 2020, as the case may be, the provision of this sub-section shall have the effect as if for the figures, letters and words 31st day of March, 2021 , the figures, letters and words 31st day of July, 2020 had been substituted; (iv) furnishing of certificate under section 203 of that Act in respect of deduction or payment of tax under section 192 thereof for the financial year commencing on the 1st day of April, 2019, the provision of this sub-section shall have the effect as if for the figures, letters and words 31st day of March, 2021 , the figures, letters and words 15th day of August, 2020 had been substituted; (v) sections 54 to 54GB of that Act, referred to in item (I) of sub-clause (i) of clause (c), or sub-clause (ii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds 30th day of December, 2020 had been substituted for the time limit for the completion or compliance of the action; and (b) for the figures, letters and words 31st day of March, 2021 , the figures, letters and words 31st day of December, 2020 had been substituted for making such completion or compliance. (2) Where any due date has been specified in, or prescribed or notified under the specified Act for payment of any amount towards tax or levy, by whatever name called, which falls during the period from the 20th day of March, 2020 to the 29th day of June, 2020 or such other date after the 29th day of June, 2020 as the Central Government may, by notification, specify in this behalf, and if such amount has not been paid within such date, but has been paid on or before the 30th day of June, 2020, or such other date after the 30th day of June, 2020, as the Central Government may, by notification, specify in this behalf, then, notwithstanding anything contained in the specified Act, (a) the rate of interest payable, if any, in respect of such amount for the period of delay shall not exceed three-fourth per cent. for every month or part thereof; (b) no penalty shall be levied and no pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that light, was neither aimed at nor designed or intended to confer a new jurisdiction or authority upon an officer under a specified enactment. On a fundamental plane, it was a remedial measure aimed at overcoming a position of irretrievable and irreversible consequences which were likely to befall during the nationwide lockdown. It was principally aimed at enabling authorities to take and commence action within the extended timelines that TOLA introduced. However, it neither altered nor modified or amended the distribution of functions, the command structure or the distribution of powers under a specified Act. It was in that light that we had spoken of the carving or conferral of a new or altered jurisdiction. 38. It would therefore be wholly incorrect to read TOLA as intending to amend the distribution of power or the categorisation envisaged and prescribed by Section 151. The additional time that the said statute provided to an authority cannot possibly be construed as altering or modifying the hierarchy or the structure set up by Section 151 of the Act. The issue of approval would still be liable to be answered based on whether the reassessment was commenced after or within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and the same being indelibly tied to the end of the relevant AY. Once it is conceded that the notice came to be issued four or three years after the end of the relevant assessment year, the approval granted by the JCIT would not be compliant with the scheme of Section 151. We thus find ourselves unable to sustain the grant of approval by the JCIT. 41. It is pertinent to note that the respondents had feebly sought to urge that the use of the expression sanction in Section 3 of TOLA also merits due consideration and is liable to be read as supportive of the contentions that were addressed on their behalf. The argument is however clearly meritless when one bears in consideration the indisputable fact that the set of provisions with which we are concerned nowhere prescribe a timeframe within which sanction is liable to be accorded. Sanction when used in Section 3 of TOLA caters to those contingencies where a specified Act may have prescribed a particular time limit within which an action may be approved. That is clearly not the position which obtains here. We thus find ourselves unable to sustain the impugned action of reassessment. The impugned notices which rest on a sanction obtai ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
