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TMI Blog2025 (1) TMI 827X X X X Extracts X X X X X X X X Extracts X X X X ..... complied with the principles underlying Section 148A (b) and (d) by providing an opportunity to the petitioner to question the assumption of jurisdiction under Section 148. We are thus of the firm opinion that, notwithstanding a formal communication having not been addressed to the petitioner of the 09 April 2021 notice being liable to be treated as one under Section 148A (b), the impugned notice and the consequential proceedings are not liable to be faulted on this score. Validity of approval for reassessment granted by the Joint Commissioner was valid u/s 151 - The reasons to believe which were provided to the writ petitioner had pegged the escaped assessment at INR 46,17,000/- and thus ex facie falling below the threshold prescribed by Section 149 (1) (b). The Supreme Court in Rajeev Bansal [ 2024 (10) TMI 264 - SUPREME COURT (LB)] has categorically held that an action of reassessment commenced post 01 April 2021 would have to be compliant with the pecuniary threshold which now applies. Tested on that basis it becomes apparent that the impugned action would not sustain on this score. Supreme Court in Rajeev Bansal had merely alluded to the time frames within which approval coul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it petitioner, had contended that since the notice had been digitally signed on 09 April 2021, it would be that date which would be liable to be viewed as the date of issuance of notice. It was his contention that this issue in any case stands conclusively settled in light of the judgment of the Court in Suman Jeet Agarwal vs. Income Tax Officer and Ors 2022 SCC OnLine Del 3141 and where the Court had held as follows:- 25.24. With respect to impugned notices falling in category A , there is an additional factor which evidence that the said notices were admittedly not issued on March 31, 2021. The said notices were digitally signed on April 1, 2021, or thereafter. The note appearing at the foot of each notice clearly declares that the date of the affixation of digital signature shall be treated as the date of the notice. The note reads if digitally signed, the date of signature may be taken as date of document . In these notices therefore, the date of the notice itself is determined by the date of affixation of digital signature and not the date of generation. The contention of the Department that, the said note appearing at the footer of the notice has no basis in law and should be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidered as show-cause notices under section 148A (b) of the Act as per the directions of the apex court in the Ashish Agarwal, (supra) judgment 3. It was further submitted that from the reasons which had been supplied it is apparent that the income which is alleged to have escaped assessment was spelt out as INR 46,17,000/- and thus falling below the threshold of INR 50 lakhs which forms part of the amended Section 149 (1) (b) as that provision came to exist in the statute post 01 April 2021. According to Mr. Aggarwal, the reassessment action is thus liable to be additionally struck down on this score. 4. Learned senior counsel then submitted that the challenge raised in the present petition would in any event be liable to be answered in favour of the writ petitioner in light of the concession made on behalf of the respondent before the Supreme Court in Union of India and Ors. vs. Rajeev Bansal 2024 SCC OnLine SC 2693 and when it had been categorically stated that reassessment notices issued for AY 2015-16 would not sustain. 5. Mr. Agarwal also assailed the reassessment action on the ground of the proposed reassessment having been approved by the Joint Commissioner and who, accordi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nge originally appears to have been addressed on grounds which ultimately found favour with this Court in Mon Mohan Kohli vs. Assistant Commissioner of Income Tax and Anr. 2021 SCC OnLine Del 5250 . Mon Mohan Kohli was a decision which was concerned with the validity of reassessment notices issued after the promulgation of Finance Act, 2021 and thus at a time when section 148A had come to exist on the statute and yet the respondents having chosen to commence proceedings based on the erstwhile regime of reassessment which had prevailed. The Court in Mon Mohan Kohli ultimately held that any notice issued after 01 April 2021 would have to be in accordance with the procedure prescribed under Section 148A. 10. The decision of this Court as well as similar judgments rendered by different High Courts ultimately travelled upto the Supreme Court and where those appeals ultimately came to be decided in terms of a judgment handed down in Ashish Agarwal. In Ashish Agarwal, the Supreme Court ultimately passed the following directions: - 28. In view of the above and for the reasons stated above, the present appeals are allowed in part. The impugned common judgments and orders [Ashok Kumar Agarwa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... followed. 12. It would be relevant to note that the judgment of the Supreme Court in Ashish Agarwal came to be pronounced in May 2022 and by which time the reassessment proceedings drawn against the writ petitioner pursuant to liberty accorded by us came to be completed and an order of assessment passed on 31 March 2022 making additions of INR 49,98,000/- on account of unexplained cash credits under Section 69 of the Act as well as INR 3,68,750/- on account of income from other sources. 13. It was perhaps in the aforesaid backdrop that Mr. Panda had contended that since an order of assessment had already come to be passed prior to judgment being pronounced in Ashish Agarwal, the respondents were clearly not obliged to retrace their steps and commence proceedings on the basis that the notice of 09 April 2021 was liable to be treated as one referable to Section 148A (b) of the Act. It is in the aforesaid context that Mr. Panda had referred to the following conclusions that we had come to render in Anindita Sengupta:- 22. As is manifest from a reading of the aforesaid passages forming part of the decision in Union of Indiav. Ashish Agarwal [(2022) 444 ITR 1 (SC); (2023) 1 SCC 617.], ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o draw proceedings afresh. A majority of the High Courts, however, do not appear to have made such a provision or provide the Revenue with a right of recourse. The Supreme Court was thus faced with a peculiar and an unprecedented situation where the Revenue was rendered remediless to assess escaped income even though material may have merited such an action being pursued solely on account of a misinterpretation of the correct legal position. It was these factors which clearly appear to have weighed upon the Supreme Court to mould and sculpt a procedure which would strike a just balance between competing interests. 24. In order to carve out an equitable solution which would redress the deadlock, the Supreme Court invoked its powers conferred by article 142 of the Constitution and ordained that all such notices would be treated as being under section 148A (b) and for proceedings to be taken forward in accordance with law thereafter. The direction so framed thus enabled the assessee to question the assumption of jurisdiction under section 148 and take advantage of the beneficial measures embodied in section 148A. The assessee thus derived a right to assail the initiation of reassessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further with the reassessment proceedings as per the substituted provisions . Our view of the judgement being confined to proceedings at the stage of notice is further fortified from the Supreme Court providing in paragraph 8 of the report that The respective impugned section 148 notices issued to the respective assessees shall be deemed to have been issued under section 148A of the Income-tax Act as substituted by the Finance Act, 2021 ((2021) 432 ITR (Stat) 52) and treated to be show-cause notices in terms of section 148A (b) . As would be manifest from the aforesaid extract, the emphasis clearly was on the notices which formed the subject matter of challenge before various High Courts and the aim of the Supreme Court being to salvage the process of reassessment. This is further evident from the Supreme Court observing that the Assessing Officer would thereafter proceed to pass orders referable to section 148A (d). We consequently find ourselves unable to construe Union of India v. Ashish Agarwal [(2022) 444 ITR 1 (SC); (2023) 1 SCC 617.] as an edict which required completed assessments to be invalidated and reopened. Union of India v. Ashish Agarwal [(2022) 444 ITR 1 (SC); (202 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assed cannot be annulled especially when they may not even have been parties to the cause. This too convinces us to hold in favour of the petitioner and come to the inevitable conclusion that the writ petition must succeed. 14. The disputation on the aforenoted issues again arose for the consideration of the Supreme Court in Rajeev Bansal. The petitioner seeks to draw support from the recordal of submissions advanced by the Additional Solicitor General of India as appearing in paragraph 19 of the report and where it appears to have been contended that notices issued for AY 2015-16 on or after 01 April 2021 would have to be dropped as they would not fall within the protective umbrella of TOLA. 15. It becomes pertinent to note that the provisions of TOLA had saved the time limit for effecting compliance with statutory obligations which fell for completion within the period 20 March 2020 upto 31 March 2021. The date of 31 March 2021 was thereafter further extended upto 30 June 2021. In order to appreciate the submissions which were addressed on this score, it would be beneficial to reproduce paragraph 19 of the report hereinbelow: - 19. Mr. N. Venkataraman, learned Additional Solicito ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulation below: Assessment Year Within Years Expiry of Limitation read with TOLA for (2) (3) Within Six Years (4) Expiry of Limitation read with TOLA for (4) (5) 2013-2014 31.03.2017 TOLA not applicable 31.03.2020 30.06.2021 2014-2015 31.03.2018 TOLA not applicable 31.03.2021 30.06.2021 2015-2016 31.03.2019 TOLA not applicable 31.03.2022 TOLA not applicable 2016-2017 31.03.2020 TOLA not applicable 31.03.2023 TOLA not applicable 2017-2018 31.03.2021 TOLA not applicable 31.03.2024 TOLA not applicable (f) The Revenue concedes that for the assessment year 2015-2016, all notices issued on or after April 1, 2021 will have to be dropped as they will not fall for completion during the period prescribed under the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020; (g) Section 2 of the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 defines specified Act to mean and include the Income-tax Act. The new regime, which came into effect on April 1, 2021, is now part of the Income-tax Act. Therefore, Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 continues to apply to the Income-tax Act even after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more for that year: 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 such notice 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, as they stood immediately before the commencement of the Finance Act, 2021: Provided further that the provisions of this sub-section shall not apply in a case, where a notice under section 153A, or section 153C read with section 153A, is required to be issued in relation to a search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A, on or before the 31st day of March, 2021: Provided also that for the purposes of computing the period of limitation as per this section, the time or extended time allowed to the assessee, as per show-cause notice issued under clause (b) of section 148A or the period during which the proceeding under section 148A is stayed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This period is covered by the directions issued by this court in Union of India v. Ashish Agarwal [(2022) 444 ITR 1 (SC); (2023) 1 SCC 617.] and the provisions of the Income-tax Act read with Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. 95. The third proviso to section 149 reads thus: Provided also that for the purposes of computing the period of limitation as per this section, the time or extended time allowed to the assessee, as per show-cause notice issued under clause (b) of section 148A or the period during which the proceeding under section 148A is stayed by an order or injunction of any court, shall be excluded. 96. The third proviso excludes the following periods to calculate the period of limitation : (i) the time allowed to the assessee under section 148A (b); and (ii) the period during which the proceedings under section 148A are stayed by an order or injunction of any court . 97. A legal fiction is a supposition of law that a thing or event exists even though, in reality, it does not exist. ( Gajraj Singh v. State Transport Appellate Tribunal [(1997) 1 SCC 650.] The word deemed is used to treat a thing or event as something, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue to proceed further with the reassessment proceedings as per the substituted provisions of the Income-tax Act. Accordingly, all the reassessment notices issued under the old regime were deemed to always have been show-cause notices issued under section 148A (b) of the new regime. The fiction replaced section 148 notices with section 148A (b) notices with effect from the date when the notices under section 148 of the old regime were issued between April 1, 2021 and June 30, 2021, as the case may be. This ensured the continuance of the reassessment process initiated by the Revenue from April 1, 2021 to June 30, 2021 under the old regime. 100. Importantly, this court in Union of India v. Ashish Agarwal [(2022) 444 ITR 1 (SC); (2023) 1 SCC 617.] did not quash the reassessment notices issued under section 148 of the old regime. In Shree Chamundi Mopeds Ltd. v. Church of South India Trust Association [(1992) 75 Comp Cas 440 (SC); (1992) 3 SCC 1.], a three-judge Bench of this court explained the distinction between quashing an order and staying the operation of an order thus (page 448 of 75 Comp Cas): 10 . Quashing of an order results in the restoration of the position as it stood ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... des the time limit for completion of block assessments. Explanation 1 to the provision excludes period during which the assessment proceedings is stayed by an order or injunction of any court from the period of limitation. This court held that the exclusion of the period of limitation has to be computed rationally and practically in the following terms (page 9 of 384 ITR): As a general rule, therefore, when there is no stay of the assessment proceedings passed by the court, Explanation 1 to section 158BE of the Act may not be attracted. However, this general statement of legal principle has to be read subject to an exception in order to interpret it rationally and practically. In those cases where stay of some other nature is granted than the stay of the assessment proceedings but the effect of such stay is to prevent the Assessing Officer from effectively passing assessment order, even that kind of stay order may be treated as stay of the assessment proceedings because of the reason that such stay order becomes an obstacle for the Assessing Officer to pass an assessment order thereby preventing the Assessing Officer to proceed with the assessment proceedings and carry out appropri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er. Due to the legal fiction, the Assessing Officers were deemed to have been inhibited from acting in pursuance of the section 148A (b) notice till the relevant material was supplied to the assessees. Therefore, the show-cause notices were deemed to have been stayed until the Assessing Officers provided the relevant information or material to the assessees in terms of the direction issued in Union of India v. Ashish Agarwal[(2022) 444 ITR 1 (SC); (2023) 1 SCC 617.]. To summarize, the combined effect of the legal fiction and the directions issued by this court in Union of India v. Ashish Agarwal [(2022) 444 ITR 1 (SC); (2023) 1 SCC 617.] is that the show-cause notices that were deemed to have been issued during the period between April 1, 2021 and June 30, 2021 were stayed till the date of supply of the relevant information and material by the Assessing Officer to the assessee. After the supply of the relevant material and information to the assessee, time begins to run for the assessees to respond to the show-cause notices. 107. The third proviso to section 149 allows the exclusion of time allowed for the assessees to respond to the show-cause notice under section 149A(b) to compu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it. )] ) Therefore, the logical effect of the creation of the legal fiction by Union of India v. Ashish Agarwal [(2022) 444 ITR 1 (SC); (2023) 1 SCC 617.] is that the time surviving under the Income-tax Act read with Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 will be available to the Revenue to complete the remaining proceedings in furtherance of the deemed notices, including issuance of reassessment notices under section 148 of the new regime. The surviving or balance time limit can be calculated by computing the number of days between the date of issuance of the deemed notice and June 30, 2021. 109. If this court had not created the legal fiction and the original reassessment notices were validly issued according to the provisions of the new regime, the notices under section 148 of the new regime would have to be issued within the time limits extended by Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. As a corollary, the reassessment notices to be issued in pursuance of the deemed notices must also b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailable to the Assessing Officers to issue the reassessment notices under section 148 of the new regime. 112. Let us take the instance of a notice issued on May 1, 2021 under the old regime for a relevant assessment year. Because of the legal fiction, the deemed show-cause notices will also come into effect from May 1, 2021. After accounting for all the exclusions, the Assessing Officer will have sixty-one days (days between May 1, 2021 and June 30, 2021) to issue a notice under section 148 of the new regime. This time starts ticking for the Assessing Officer after receiving the response of the assessee. In this instance, if the assessee submits the response on June 18, 2022, the Assessing Officer will have sixty-one days from June 18, 2022 to issue a reassessment notice under section 148 of the new regime. Thus, in this illustration, the time limit for issuance of a notice under section 148 of the new regime will end on August 18, 2022. 113. In Union of India v. Ashish Agarwal [(2022) 444 ITR 1 (SC); (2023) 1 SCC 617.], this court allowed the assessees to avail of all the defences, including the defence of expiry of the time limit specified under section 149(1). In the instant app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to communicate the reasons for formation of opinion of income having allegedly escaped assessment to the assessee and providing him an opportunity to object to the commencement of a reassessment action on jurisdictional grounds. It was this procedural safeguard, as formulated in GKN Driveshafts, which finds resonance in clauses (b) and (d) of Section 148A of the Act. 22. Viewed in light of the above, and in our considered opinion the respondents had substantially complied with the principles underlying Section 148A (b) and (d) by providing an opportunity to the petitioner to question the assumption of jurisdiction under Section 148. We are thus of the firm opinion that, notwithstanding a formal communication having not been addressed to the petitioner of the 09 April 2021 notice being liable to be treated as one under Section 148A (b), the impugned notice and the consequential proceedings are not liable to be faulted on this score. 23. Of equal significance are the following observations rendered by the Supreme Court in Rajeev Bansal and when their Lordships dealt with the amended pecuniary limitations which came to be introduced in Section 149 by virtue of Finance Act, 2021. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment years only if the time limit survives according to section 149 (1) (b) of the old regime, that is, six years from the end of the relevant assessment year; and (iv) all notices issued invoking the time limit under section 149 (1) (b) of the old regime will have to be dropped if the income chargeable to tax which has escaped assessment is less than rupees fifty lakhs. 24. The Supreme Court thus essentially held that the pecuniary quantification of income which had allegedly escaped assessment and its revision from INR 1 lakh or more to INR 50 lakhs or more being beneficial to the assessee would additionally apply. It was perhaps in that light that Mr. Aggarwal had sought to urge that the reassessment action is additionally liable to be struck down on this ground. 25. It would be pertinent to recall that the reasons to believe which were provided to the writ petitioner had pegged the escaped assessment at INR 46,17,000/- and thus ex facie falling below the threshold prescribed by Section 149 (1) (b). The Supreme Court in Rajeev Bansal has categorically held that an action of reassessment commenced post 01 April 2021 would have to be compliant with the pecuniary threshold wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the challenge of the writ petitioner were to ultimately fail. We thus find ourselves unable to uphold the submissions of Mr. Panda based on Anindita Sengupta. 28. That only leaves us to deal with the last limb of the challenge which stood mounted by the petitioner and which was founded on the provisions comprised in Section 151 of the Act and the issue of approval by the competent authority. Undisputedly in the present case, the approval was granted by the Joint Commissioner of Income Tax, Range-52, Delhi. The issue which consequently arises is whether the Joint Commissioner could be considered to be the competent authority for the purposes of granting approval as contemplated under Section 151 of the Act. 29. We had in A bhinav Jindal HUF v. Commissioner of Income Tax and Ors CIT, (2024) 468 ITR 787 dealt with a similar issue and where the respondents had sought to contend that the provisions of TOLA would salvage approvals that may have been granted by Joint Commissioners and notwithstanding the hierarchical change which had come to be incorporated in Section 151 post Finance Act, 2021. Negating the argument of the Joint Commissioner being entitled to be viewed as the competent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding anything contained in the specified Act, initially up to March 31, 2021 and which date was extended subsequently to April 30, 2021 and lastly up to June 31, 2021. 36. Section 3 thus essentially extended the time period statutorily prescribed for initiation and compliance up to the dates notified by the Union Government from time to time. The extension of these timelines was intended to apply to all statutes which were included in the expression specified Act as defined in section 2(b) of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act. 37. The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act was thus concerned with overcoming the statutory closure and eclipse which would have otherwise descended upon the authority to act and take action under the specified statutes. It was essentially concerned with tiding over the insurmountable hurdles which arose due to the pandemic and the disruption that followed in its wake. The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, viewed in that light, was neither aimed at nor designed or intended to confer a new jurisdiction or authority upon an office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated with the aid of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act after the expiry of four years from the end of the relevant assessment year, the authority statutorily empowered to confer approval would be the Principal Chief Commissioner/Chief Commissioner/Principal Commissioner/Commissioner. It would only be in a case where the reassessment was proposed to be initiated before the expiry of four years from the end of the relevant assessment year that approval could have been accorded by the Joint Commissioner of Income-tax. Similar would be the position which would emerge if the actions were tested on the basis of the amended section 151 and which divides the power of sanction amongst two sets of authorities based on whether reassessment is commenced within three years or thereafter. 40. What we seek to emphasise is that the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act authorisation merely enables the competent authority to take action within the extended time period and irrespective of the closure which would have ordinarily come about by virtue of the provisions contained in the Act. It does not alter or amend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to be introduced by TOLA. We deem it apposite to extract the following passages from Rajeev Bansal: - 73. Section 151 imposes a check upon the power of the Revenue to reopen assessments. The provision imposes a responsibility on the Revenue to ensure that it obtains the sanction of the specified authority before issuing a notice under section 148. The purpose behind this procedural check is to save the assessees from harassment resulting from the mechanical reopening of assessments. ( Sri Krishna Pvt. Ltd v. ITO [(1996) 221 ITR 538 (SC); (1996) 9 SCC 534.]) A table representing the prescription under the old and new regime is set out below: Regime Time limits Specified authority Section 151 (2) of the old regime Before expiry of four years from the end of the relevant assessment year Joint Commissioner Section 151 (1) of the old regime After expiry of four years from the end of the relevant assessment year Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner Section 151 (i) of the new regime Three years or less than three years from the end of the relevant assessment year Principal Commissioner or Principal Director or Commissioner or Direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assume jurisdiction under section 148 to issue a reassessment notice. Section 151 of the new regime does not prescribe a time limit within which a specified authority has to grant sanction. Rather, it links up the time limits with the jurisdiction of the authority to grant sanction. Section 151 (ii) of the new regime prescribes a higher level of authority if more than three years have elapsed from the end of the relevant assessment year. Thus, non-compliance by the Assessing Officer with the strict time limits prescribed under section 151 affects their jurisdiction to issue a notice under section 148. 77. Parliament enacted Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 to ensure that the interests of the Revenue are not defeated because the Assessing Officer could not comply with the preconditions due to the difficulties that arose during the covid-19 pandemic. Section 3(1) of the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 relaxes the time limit for compliance with actions that fall for completion from March 20, 2020 to March 31, 2021. The Taxation and other Laws (Relaxation and Amendment of Certain Provi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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