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TMI Blog2023 (12) TMI 1362X X X X Extracts X X X X X X X X Extracts X X X X ..... er period mentioned in the notice. Therefore, not permissible to quash the impugned notice merely on the ground that the period specified u/s 148 when the notice was issued, more particularly, when such notice would relate back to the assessment period, the time period provided for filing return was admittedly for 30 days, admittedly, such period, as may be specified in such notice. Therefore, the period of 30 days mentioned in the notice u/s 148 cannot be said to be fatal to the assumption of the jurisdiction by the AO in the facts of the case. Therefore, this contention raised on behalf of the petitioner is rejected. Assumption of jurisdiction by the AO while issuance of notice u/s 148A(b) - As notice dated 28th March 2023 along with the Annexures issued under Section 148A(b) of the Act cannot be said to be the notice requiring the assessee to provide an opportunity of hearing to show cause as to why the notice under Section 148 of the Act should not be issued on the basis of the information which suggests that the income chargeable is escaped assessment. The notice is only in the nature of inquiry as contemplated under Section 148A(a) of the Act, which provides that before issua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner is based upon the legal contentions that the notice u/s 148A(b) is in the nature of notice u/s 148A(a) and that the notice issued u/s 148A(b) is without considering the contentions raised by the assessee in the reply to the notice under Section 148A(b) as per Clause (c) of Section 148A - On perusal of the notice under Section 148A(b) of the Act, it is clearly seen that the annexures do not contain any information, it is a questionnaire requiring the petitioner to provide details as sought for and therefore, it was an intention of the Assessing Officer who was to conduct an inquiry after receiving information from the assessee and therefore, notice is deemed to be the notice under Section 148A(a) of the Act. Thus, there is a gross procedural error from the very inception of the procedure rendering the same is bad in law. [39] For the reasons recorded as above, as the notice dated 28th March 2023, though stated to be issued under Clause (b) of Section 148A of the Act, the same is, in fact, a notice under Clause (a) of Section 148A of the Act can be treated as such. As the time to issue notice under Section 148A(b) of the Act has already expired, no purpose would be served b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment proceeding, documents, as required, were submitted by the petitioner and thereafter, the assessment order under Section 153C read with Section 143(3) of the Act was passed on 26th December 2019 without making any addition. [4.4] Subsequently, the impugned notice under Section 148A(b) of the Act dated 28th March 2023 was issued for the Assessment Year 2016-17 requiring the petitioner to file a reply on or before 21st April 2023. [4.5] The petitioner filed a petition challenging the impugned notice issued under Section 148A(b) being Special Civil Application No. 7973 of 2023 before this Court on 28th April 2023 and before any notice could be issued in the said petition, the impugned order under Section 148A(d) of the Act has also been passed by the respondent authorities on 16th May 2023 and therefore, the petitioner withdrew the said petition on 26th June 2023. [4.6] The petitioner, in response to the impugned notice, sought for adjournments on 21st April 2023 and 4th May 2023 and thereafter, on 9th May 2023, the petitioner furnished a detailed reply explaining that there is no income escaping assessment for the Assessment Year 2016-17 and that the notice under Section 148A(b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at condition is mandatory since it provides that any return furnished subsequent to the time period provided shall not be deemed to be a return under Section 139 of the Act. [7] Learned Senior Advocate Mr. Soparkar, therefore, submitted that the notice under Section 148 of the Act dated 16th May 2023 is illegal and ab initio void since it does not comply with the statutory mandate and therefore, no assessment proceedings can be made pursuant to the notice under Section 148 of the Act and the notice is liable to be quashed and set aside. [8] In support of his submissions, learned Senior Advocate Mr. Soparkar has referred to and relied upon the following decisions, to submit that the impugned notice under Section 148 of the Act is not valid. [8.1] In the case of Commissioner of Income Tax, Bombay City vs. M/s. Ramsukh Motilal reported in 27 ITR 54 (Bom), wherein the Hon ble Bombay High Court held that notice under Section 34 of the Income Tax Act, 1922 which is para materia with Section 148 of the Act is a condition precedent to the assumption of jurisdiction by the Assessing Officer and failure to give a proper notice is not just a procedural defect, but it amounts to a failure to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssued and the word served , occurring in section 34 (1) are inter changeable words and, therefore, it is obvious that the relevant date for the purpose of computing the period of thirty days under section 22 (2) is the date on which the notices were served upon the assessee concerned. Under these circumstances, it is also obvious that the notices which were received by the assessee, Hindu undivided family, on April 1, 1954, called upon the assessee to file the return under section 22 (2) in the reassessment proceedings on or before, April 15, 1954, were not in accordance with law inasmuch as the statutory period of thirty days from the date of the receipt of the notice by the assessee was not complied with. [8.3] Reliance was placed on the decision of the Hon ble Supreme Court in the case of Y. Narayana Chetty and another vs. Income Tax Officer, Nellore and others reported in (1959) 35 ITR 388, wherein it is held as under: 5. The first point raised by Mr. Sastri is that the proceedings taken by respondent 1 under Section 34 of the Act are invalid because the notice required to be issued under the said section has not been issued against the assessees contemplated therein. In the, p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2014 to 31st March 2016. It was submitted that for the time period of 1st April 2014 to 31st March 2015, no notice can be initiated since the time limit to issue any reassessment notice for the Assessment Year 2015-16 is only upto 31st March 2022 as per Section 149 of the Act and therefore, as per notice under Section 148A(b) of the Act dated 28th March 2023, the details sought for the period prior 1st April 2015 was contrary to the provisions of Section 149 of the Act. [11] It was, therefore, submitted that if the notice could not have been issued as per the provisions of Section 148 of the Act for the Assessment Year 2016-17 prior to the commencement of the Finance Act, 2021, then even subsequent to the amendment under the Finance Act, 2021, notice under Section 148 of the Act cannot be issued and therefore, by application of the proviso, after 31st March 2023, no notice under Section 148A(b) of the Act can be issued in the case of the petitioner. [12] It was further submitted that the Assessing Officer, in the order passed under Section 148A(d) of the Act, observed that the petitioner assessee did not provide any information with regard to the bank transaction which was required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s getting time barred on 31st March 2023. [16] It was submitted that in response to the notice issued under Section 148A(b) of the Act, the petitioner assessee was given time for 25 days to furnish its reply and after granting adjournment, as requested by the petitioner, the petitioner filed reply after 45 days from issuance of notice under Section 148A(b) of the Act on 9th May 2023. It was pointed out that after considering the reply of the petitioner- assessee, the Assessing Officer passed the impugned order under Section 148A(d) of the Act dated 16th May 2023 and the notice under Section 148 of the Act dated 16th May 2023 and therefore, no interference is required to be made in this petition as the impugned notice and the order are issued as per the provisions of the Act. [17] Learned advocate Mr. Patel submitted that reference to the assessment under Section 153C of the Act by the petitioner assessee cannot prevent the respondent from assumption of the jurisdiction under Section 147 of the Act as the said assessment order was confined to the specific material pertaining to the assessee found during the course of search carried out in the case of Claris Group. [18] It was submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... averments made in the affidavit in sur-rejoinder filed on behalf of the respondent: 25. With reference to para 23, the respondent denies each and every averment, allegation and contention raised therein. It is hereby reiterated again that notice under Section 148 was issued to the assessee on 16.05.2023 requesting the assessee to file ITR within 30 days of receipt of notice under Section 148 of the Act. The provision of 90 days was inserted by the Finance Act, 2023 w.e.f. 01.04.2023. In this regard, it is hereby clarified that the proceedings u/s 148A(b) of the Act was initiated before the said date i.e. on 28.03.2023 and therefore, the notice u/s 148 of the Act was issued on 16.05.2023 in consequence to proceedings initiated u/s 148A(b) of the Act i.e. prior to the insertion of the Finance Act, 2023 w.e.f. 01.04.2023. Without prejudice to the above, it is further submitted that assessment proceedings in the case of the assessee have not been completed and same are due to be completed by March 2024. The assessee has sufficient time to furnish further explanations and responses. If the assessee feels that it is eligible for more time for filing the return of Income as per law, then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any relief including interim relief as prayed in present petition. 28. It is further submitted that the assessee has option to represent its case on factual as well as legal position before the Assessing Officer during the assessment proceedings u/s 147. Thereafter, the assessee has option to file appeal before the CIT (A) and thereafter the ITAT, if it feels that its concern has not been addressed. However, instead of exercising the remedies available under the Income Tax Act, the assessee has challenged the proceedings through filing present petition before this Hon'ble High Court. As the assessee has an alternate remedy available, the writ filed by the assessee is not maintainable. Further, reliance is placed on the recent Judgement of Hon'ble Supreme Court in case of Anshul Jain vs. Principal Commissioner of Income Tax Anr, petition for Special Leave to Appeal (C) No(s), 14823 of 2022, Hon'ble Supreme Court has dismissed the SLP of the assessee against order under Section 148A(d) of the Act and held that: What is challenged before the High Court was the reopening notice under Section 148A(d) of the Income Tax Act, 1961. The notices have been issued, after considerin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that in the case of Gian Castings (P.) Ltd. Vs. Central Board of Direct Taxes [(2022) 140 taxmann.com 318 (Punj Har.)], the Hon'ble High Court of Punjab and Haryana has held that where reassessment proceeding initiated by issue of a notice under section 148 was at its intermediate stage and was yet to be concluded by statutory authority, there was no reason to warrant interference in same by exercise of jurisdiction under Article 226 of the Constitution of India. Further, the SLP filed against the aforesaid decision [SLP APPEAL (C) NO.10762 OF 2022] by the assessee has been dismissed by the Hon ble Supreme Court. [22] Learned advocate Mr. Patel has relied upon the decision of the Hon ble Punjab and Haryana High Court in the case of Commissioner of Income-tax vs. Naveen Verma reported in [2013]33 taxmann.com 527 (Punjab Haryana), wherein the Hon ble High Court has held that it is not permissible to quash block assessment proceedings merely on the ground that period mentioned in the notice was lesser than statutory period specified under Section 158BC(a) of the Act. It was submitted in the facts of the case before the Hon ble High Court that the contention was raised t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thin such period, as may be specified in such notice, 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 1. For the purposes of this section and section 148A, the info ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... For the purposes of this section, specified authority means the specified authority referred to in section 151.] [27] By the Finance Act, 2023 with effect from 1st April 2023, substituted the words such period, as may be specified in such notice by the words a period of three months from the end of the month in which such notice is issued, or such further period as may be allowed by the Assessing Officer on the basis of an application made in this regard by the assessee . Para 2 of the impugned notice dated 16th May 2023 reads as under: 2. I, therefore, propose to assess or reassess such income or recompute the loss or the depreciation allowance or any other allowance or deduction for the Assessment Year 2016-17 and I, hereby, require you to furnish, within 30 days from the service of this notice, a return in the prescribed form for the Assessment Year 2016-17. [28] Therefore, on perusal of the above paragraph No. 2 of the impugned notice mentioning 30 days time for filing return, at first blush, would make, prima facie, such notice invalid in view of the various decisions cited on behalf of the petitioner assessee. However, in the facts of the case, notice under Section 148A(b) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... month from the end of the month in which the reply referred to in clause (c) is received by him. In the facts of the case, the assessee filed reply to the notice under Section 148A(b) of the Act on 9th May 2023 and therefore, within one month from 16th May 2023, the order under Section 148A(d) of the Act was passed and the impugned notice as provided under the provisions of Section 148 is also issued. It reads as under: 148. Issue of notice where income has escaped assessment. Before making the assessment, reassessment or recomputation under section 147, and subject to the provisions of section 148A, the Assessing Officer shall serve on the assessee a notice, along with a copy of the order passed, if required, under clause (d) of section 148A, requiring him to furnish within [a period three months from the end of the month in which such notice is issued, or such further period as may be allowed by the Assessing Officer on the basis of an application 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to or is likely to amount to fifty lakh rupees or more:] [33] Therefore, considering the provisions of Sections 148, 148A and 149 of the Act, the notice under Section 148A(b) of the Act dated 28th March 2023 shall not be invalid and on that ground, the reassessment proceedings cannot be quashed and set aside. The Punjab and Haryana High Court, in the case of Naveen Verma (supra), in the facts of the case before it, upon issuance of notice under Section 158BD of the Act by the Assessing Officer giving lesser period of 15 days for filing return, held as under: 8. The above provisions are statutory of the principles of natural justice which are applicable to assessment proceedings under the Act. The affected party is entitled to the fair opportunity and fair procedure. Since the period of 15 days has been specified statutorily, it may not be fair to expect filing of return in shorter period. At the same time, the effect of violation of the principles of natural justice is not to always nullify the exercise of jurisdiction unless prejudice is caused. Where period specified in the notice is less than the statutory period, no prejudice is caused if return filed is taken in account. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the point of view of directory and mandatory provisions, if one is so inclined. The principle stated under (4) hereinbelow is only another way of looking at the same aspect as is dealt with herein and not a different or distinct principle. [34] Considering the above decision, the petitioner assessee, in the facts of the case, if notice is duly served, the assessee can either avail of the statutory time for filing of the return irrespective of shorter period mentioned in the notice or can be given fresh opportunity if it is held that the assessee suffered prejudice on account of shorter period mentioned in the notice. In any situation, it is, therefore, not permissible to quash the impugned notice merely on the ground that the period specified under Section 148 of the Act when the notice was issued, more particularly, when such notice would relate back to the assessment period, the time period provided for filing return was admittedly for 30 days, admittedly, such period, as may be specified in such notice. Therefore, the period of 30 days mentioned in the notice under Section 148 of the Act cannot be said to be fatal to the assumption of the jurisdiction by the Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide an opportunity of hearing to show cause as to why the notice under Section 148 of the Act should not be issued on the basis of the information which suggests that the income chargeable is escaped assessment. The notice is only in the nature of inquiry as contemplated under Section 148A(a) of the Act, which provides that before issuance of any notice under Section 148 of the Act, the Assessing Officer shall conduct an inquiry, if required, with prior approval of the specified authority with respect to the information which states that the income chargeable is escaped assessment. Therefore, though the notice was issued under the provisions of Section 148A(b) of the Act, in fact, such notice is under Section 148A(a) of the Act as the ingredients of notice which requires as per the statutory provisions of Section 148A(b) are not mentioned. The Assessing Officer has not provided any details with regard to income which has escaped assessment, but has called for the details for the period from the Financial Year 2014-15 to 2015-16 without mentioning the income as escaped assessment for the relevant Assessment Year 2016-17. [37] The Assessing Officer, for the first time, in the order p ..... 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