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TMI Blog2025 (2) TMI 242X X X X Extracts X X X X X X X X Extracts X X X X ..... .(C) 3408/2023, W.P.(C) 3470/2023, W.P.(C) 3513/2023, W.P.(C) 3533/2023, W.P.(C) 3572/2023, W.P.(C) 3573/2023, W.P.(C) 3618/2023, W.P.(C) 3668/2023, W.P.(C) 3672/2023 & CM APPL. 10804/2024 (Interim Stay), W.P.(C) 3728/2023, W.P.(C) 3733/2023, W.P.(C) 3875/2023, W.P.(C) 3878/2023, W.P.(C) 3895/2023 & CM APPL. 5818/2025 (365 Days Delay in C.A.), W.P.(C) 3940/2023, W.P.(C) 3945/2023, W.P.(C) 4027/2023, W.P.(C) 4038/2023, W.P.(C) 4150/2023, W.P.(C) 4257/2023, W.P.(C) 4258/2023, W.P.(C) 4326/2023, W.P.(C) 4375/2023, W.P.(C) 4376/2023, W.P.(C) 4378/2023, W.P.(C) 4405/2023, W.P.(C) 4423/2023, W.P.(C) 4574/2023, W.P.(C) 4584/2023, W.P.(C) 4658/2023 & CM APPL. 39117/2023 (Direction), W.P.(C) 4659/2023 & CM APPL. 17933/2023 (Stay), W.P.(C) 6426/2023, W.P.(C) 7997/2023 & CM APPL. 30759/2023 (Interim Stay), W.P.(C) 4684/2023, W.P.(C) 4786/2023, W.P.(C) 4880/2023, W.P.(C) 4899/2023, W.P.(C) 4915/2023, W.P.(C) 4941/2023, W.P.(C) 5123/2023, W.P.(C) 5186/2023, W.P.(C) 5187/2023, W.P.(C) 5210/2023, W.P.(C) 5219/2023, W.P.(C) 5237/2023, W.P.(C) 5238/2023, W.P.(C) 5239/2023, W.P.(C) 5251/2023, W.P.(C) 5265/2023, W.P.(C) 5272/2023, W.P.(C) 5298/2023, W.P.(C) 5311/2023, W.P.(C) 5343/2023, W.P.(C) 5369/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3, W.P.(C) 6752/2023, W.P.(C) 6753/2023, W.P.(C) 6754/2023, W.P.(C) 6758/2023, W.P.(C) 6762/2023, W.P.(C) 6766/2023, W.P.(C) 6767/2023, W.P.(C) 6770/2023, W.P.(C) 6771/2023 & CM APPL. 26462/2023 (Interim Relief), W.P.(C) 6781/2023, W.P.(C) 6792/2023, W.P.(C) 6795/2023, W.P.(C) 6801/2023, W.P.(C) 6807/2023, W.P.(C) 6849/2023, W.P.(C) 6885/2023 & CM APPL. 26862/2023 (Interim Relief), W.P.(C) 6945/2023, W.P.(C) 6959/2023, W.P.(C) 6971/2023, W.P.(C) 6973/2023, W.P.(C) 6975/2023, W.P.(C) 6994/2023, W.P.(C) 7011/2023, W.P.(C) 7030/2023, W.P.(C) 7051/2023, W.P.(C) 7060/2023, W.P.(C) 7061/2023, W.P.(C) 7073/2023, W.P.(C) 7076/2023, W.P.(C) 7078/2023, W.P.(C) 7161/2023, W.P.(C) 7161/2023, W.P.(C) 7164/2023, W.P.(C) 7166/2023, W.P.(C) 7172/2023, W.P.(C) 7258/2023, W.P.(C) 7263/2023, W.P.(C) 7264/2023, W.P.(C) 7273/2023, W.P.(C) 7296/2023, W.P.(C) 7329/2023, W.P.(C) 7381/2023, W.P.(C) 7383/2023, W.P.(C) 7388/2023, W.P.(C) 7519/2023, W.P.(C) 7579/2023, W.P.(C) 7601/2023, CM APPL. 54593/2024 (239 Days Delay in C.A.) & CM APPL. 54641/2024 (360 days Delay in C.A.), W.P.(C) 7834/2023 & CM APPL. 30207/2023 (Stay), W.P.(C) 8564/2023, W.P.(C) 8894/2023 & CM APPL. 33618/2023 (Stay), W.P.(C) 8465/2024 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a, Ramayana Ispat Pvt Ltd., One Point Realty Private Limited, Udgam Education Institute Pvt. Ltd., Mr. Arvind Kumar, Adv., Mr. Arjun Kakkar & Mr. A. Sharma, Advs., Abhinav Goel., Public Clothing Pvt. Ltd., Sadhna Rani, Atul Kumar Saxena, Ravi Dhingra (HUF), Brij Bhushan Gupta, Pavel Garg Sons HUF, B.C. Enterprises, Sunil Kumar, GSM Auto Spares Private Limited, Saurav Bansal, Vijay Garg, Agsons Agencies India Private Limited, Ritika Garg, Meena Chawla, Mahesh Kumar Mani, Himank Garg, Asha Garg, Aruna Aneja, Madhur Kabra, Bharat Bhushan HUF, Raj Polybags Private Limited, Aditya Loomba, SE Finvest Private Limited, Jindal Financial And Investments Services, Mukesh Gupta, Naresh Kumar HUF, Ajay And Sons HUF, Sunayana Malhotra, Artistic Finance Pvt. Ltd., Pret Study By Janak Fashions Pvt. Ltd., Ram Kali, Rajesh Loomba, Harish Kumar Aneja HUF, Visual Technologies India Pvt Ltd., Nouvelle Securities Pvt Ltd., Pranay Aneja, Anupama Haribansh Choudhary, B.L. Health And Safety Pvt Ltd., Yogen Khosla, Mohan Singh Chauhan, Vipin Kumar Jain, Babita Jain, Kaushal Kumar HUF, Sunny Aggarwal, Bhanu Dogra, Welcome Shoes Pvt. Ltd., Triple Ess Infrastructure Private Limited, M/s. Goldstar Footwears Pvt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent, Ward No. 30(5), Delhi, National Faceless Assessment Centre, Delhi, ITO Ward 43(6) Delhi & Anr. ACIT, Cir 25(1), Delhi & Anr., Central Board Of Direct Tax & Ors., The Income Tax Department, Assessment Unit, National Faceless Assessment Centre New Delhi And Anr., For the Petitioner Through: Mr. Kunal Tandon, Sr. Adv. with Mr. Saurabh D. Karan Singh, Ms. Kanika Jain, Mr. Akash Kumar, Ms. Natasha & Mr. Sanjay Shisodia, Advs., Mr. Piyush Kaushik & Mr. Tanveer Zaki, Advs., Ms. Priyanka Goel, Adv., Mr. Naresh Jain, Mr. Ankit Daga, Ms. Arti Agarwal, Ms. Rosy Banerjee, Mr. Alok Kumar & Mr. Rishabh Jain, Advs. Dr. Aseem Chawla, Sr. Adv./ Amicus Curiae with Ms. Pratishtha & Ms. Poshali, Advs. Mr. Salil Kapoor, Mr. Sumit Lalchandani, Ms. Ananya Kapoor, Mr. Tarun Chanana, Mr. Sanat Kapoor, Mr. Shivam Yadav & Mr. Utkarsa Kr. Gupta, Mr. Kamal Sawhney, Mr. Nikhil Agarwal and Mr. Nishank Vashistha, Advs., Mr. Vipul Agrawal, SSC with Mr. Gaoraang Ranjan, Adv., Mr. Anand Shankar, Mr. Amit Kumar & Mr. Debashish Mukherjee, Advs., Mr. Paritosh Jain, Mr. Divyansh Jain & Mr. Vidhan Jain, Advs., Mr. Nagesh Kumar Behl and Mr. Mayank Pachauri, Advs., Mr. Ruchesh Sinha and Ms. Monalisa, Advs., Mr. Rano ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... makshraj Singh & Mr. Himanshu Gaur, Advs., Mr. Gaurav Gupta, SSC with Mr. Shivendra Singh, Mr. Yojit Prattek, JSCs & Ms. Prakriti Rastogi, Adv., Mr. Sunil Agarwal, SSC with Mr. Shivansh B. Pandya, Mr. Viplav Acharya, Ms. Priya Sarkar, JSCs & Mr. Utkarsh Tiwari, Adv., Mr. Indruj Singh Rai, SSC with Mr. Sanjeev Menon, JSCs, Mr. Anmol Jagga & Mr. Gaurav Kumar, Advs., Mr. T.P. Singh, Sr. Govt. Counsel for R-2, Ms. Bakshi Vinita, SPC for R-6, Mr. Hemant Kumar Yadav, SPC for R-2., Mr. Shlok Chandra, SSC with Ms. Naincy Jain & Ms. Madhavi Shukla, JSCs., Ms. Richa Dhawan & Ms. Harshita Maheshwari, Advs., Mr. Kamal Kant Jha, SPC,GOI with Mr. Avinash Singh, Mr. Vinish Phoghat, CGSPC., Ms. Anju Bhushan Gupta, SPC with Mr. Aditya Goel & Mr. Sanyam Gupta, Advs., Mr. Balendu Shekhar, CGSC with Mr. Rajkumar Maurya and Mr. Krishna Chaitanya, Advs., Mr. Himanshu Pathak, SPC and Mr. Amit Singh, Adv., ORDER YASHWANT VARMA, J. 1. This batch of writ petitions had called in question the reassessment action initiated by the respondents for different Assessment Years [AYs]. Although learned counsels for respective sides had placed detailed charts on our record identifying the AYs to which each writ pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (P) Ltd. v. Income Tax Officer 2024 SCC OnLine Del 7508 and where we came to render the following conclusions: - "75. It is important, at the outset, to note that a reassessment need not and in all conceivable contingencies be triggered by a return that an assessee may choose to lodge electronically. Reassessment, as contemplated within the framework of the Act, is a complex process driven by multiple factors that extend far beyond the initial filing of a return. As is manifest from a reading of Explanations 1 and 2 of section 148, reassessment may be commenced on the basis of information that may otherwise come to be placed in the hands of the jurisdictional Assessing Officer. A reassessment may also be considered being initiated if an audit objection were to be flagged and placed for the consideration of the jurisdictional Assessing Officer. In terms of Explanation 2, and post section 153A/153C fading into the sunset, we could also conceive of material unearthed in the course of a search or material, books of account or documents requisitioned under section 132A as constituting the basis for initiation of reassessment. Explanation 2 also alludes to a survey that may be conducte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the provisions contained in sub-sections (7) and (8) of section 144B and which enable the Principal Chief Commissioner or the Principal Director General to relegate assessment back to the jurisdictional Assessing Officer. The randomised allocation of cases based on the adopted algorithm and the use of technological tools including artificial intelligence and machine learning would appear to be primarily aimed at subserving the primary objective of faceless assessment, namely, of reducing a direct interface, for reasons of probity and to obviate allegations of individual arbitrariness. However, it would be wholly incorrect to view the faceless assessment scheme as introduced by virtue of section 144B as being the solitary route which the Act contemplates being tread for the purposes of assessment and reassessment. 79. The core attributes of the faceless assessment system revolve around the principle of randomised allocation, where "random" in its literal sense means that case assignments are made without any predetermined or controlling factor. This principle is a deliberate feature of the faceless assessment framework, aimed at reducing direct human interaction. A facet histo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C) does not conflict with the powers held by the jurisdictional Assessing Officer. Rather, this setup must be viewed as complementary, reinforcing both accountability and adaptability within the assessment process. 83. In Sanjay Gandhi Memorial Trust v. CIT (Exemptions) [(2023) 455 ITR 164 (Delhi); (2023) 3 HCC (Del) 396.], the court directly addressed whether the jurisdictional Assessing Officer could exercise assessment authority alongside the faceless assessment system. The court concluded that, while the faceless system centralises case handling through the National Faceless Assessment Centre, this framework does not completely replace or nullify the jurisdictional Assessing Officer's role. The Central Board of Direct Taxes notifications further affirm this shared responsibility, specifying that the National Faceless Assessment Centre and the jurisdictional Assessing Officer hold concurrent jurisdiction, thereby allowing the faceless system to conduct assessments without stripping the jurisdictional Assessing Officer of its foundational authority. 84. In this way, the jurisdictional Assessing Officer's retention of original jurisdiction provides a critical balance, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directs that the Income-tax authorities of the National e-Assessment Centre (hereinafter referred to as "the NeAC") specified in column (2) of the Schedule below, having its headquarters at the place mentioned in column (3) of the said Schedule, shall exercise the powers and functions of Assessing Officer concurrently, to facilitate the conduct of faceless assessment proceedings...' (emphasis supplied). 49. It is clarified in the e-assessment and faceless assessment scheme that once a case is selected for scrutiny, for the limited purpose of passing assessment order for a particular assessment year, the case is assigned to National e-Assessment Centre and after assessment, the electronic records of the case are to be transferred back to the jurisdictional Assessing Officer. 50. Further, the e-Assessment Scheme, 2019 and Faceless Assessment Scheme issued vide two notifications each dated September 12, 2019 and August 13, 2020 under sections 143 (3A) and (3B) of the Act clearly stipulate that the provision of section 127 of the Act shall apply subject to exceptions, modifications and adaptations as stipulated therein. In other words, if the faceless assessment scheme has not m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of transfer upon Principal Chief Commissioner or Principal Director General of National e-Assessment Centre and not upon any other Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner." As is evident from the above, the court came to the firm conclusion that irrespective of the system of faceless assessment that had come to be introduced and adopted, it would be wholly incorrect to hold or construe the provisions of the Act as denuding the jurisdictional Assessing Officer of the authority to undertake an assessment or of the said authority being completely deprived of authority and jurisdiction. The judgment in Sanjay Gandhi Memorial Trust v. CIT (Exemptions) [(2023) 455 ITR 164 (Delhi); (2023) 3 HCC (Del) 396.] is thus a resounding answer to the challenge as raised by the writ petitioners. That decision reinforces our conclusion of the two permissible modes of assessment being complimentary and the Act envisaging a co-existence of the two modes. 86. This quite apart from we have discerned the various sources of information which the jurisdictional Assessing Officer stands independently en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amework. 89. Regard must also be had to the fact that an assessing unit of the National Faceless Assessment Centre derives no authority or jurisdiction till such time as a case is randomly allocated to it and which triggers the assessment process in accordance with the procedure prescribed by section 144B. The evaluation of data and information would indubitably precede the actual process of assessment. If the interpretation which is advocated by the writ petitioners were to be countenanced, the appraisal and analysis of information and data functions which the Act entrusts upon the jurisdictional Assessing Officer would be rendered wholly unworkable and clearly be contrary to the purpose and intent of the assessment power as constructed under the Act. 90. The notion of entirely ousting the jurisdictional Assessing Officer from the assessment process is both impractical and misaligned with the objectives of the faceless assessment system. The faceless framework was established to reduce direct human interaction in assessments thereby enhancing objectivity, transparency, and efficiency. However, eliminating the jurisdictional Assessing Officer's role altogether would not onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... They also do not appear to have had the advantage of a principled stand of the respondents having been placed on the record of those proceedings. 93. In Hexaware Technologies Ltd. v. Asst. CIT [(2024) 464 ITR 430 (Bom); 2024 SCC OnLine Bom 1249.], the Bombay High Court ultimately came to conclude that there could be no question of a concurrent jurisdiction of the jurisdictional Assessing Officer's and the Faceless Assessing Officer for issuance of notice under section 148. From a reading of the record, it is unclear whether the notifications conferring jurisdiction on authorities of the National Faceless Assessment Centre for the purposes of conducting faceless assessment was placed before the High Court. At least the decision makes no reference to the notification of August 13, 2020 which has been produced in these proceedings and which in clear and unambiguous terms declares that the officers empowered to conduct faceless assessment were being conferred concurrent powers and functions of the Assessing Officer. We, with respect, also find ourselves unable to concur with Hexaware Technologies Ltd. v. Asst. CIT [(2024) 464 ITR 430 (Bom); 2024 SCC OnLine Bom 1249.] bearing in m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... less assessment scheme enabling us to appreciate its intent and purpose in greater depth. Unlike prior cases where certain High Courts, including in Hexaware Technologies Ltd. v. Asst. CIT [(2024) 464 ITR 430 (Bom); 2024 SCC OnLine Bom 1249.], were not provided with the full spectrum of relevant notifications and contextual information, the extensive documentation in this matter has helped clarify ambiguities in both law and fact. This record has allowed for a deeper analysis, addressing key points left unexamined in previous judgments, and has illuminated the legislative and procedural intentions behind the faceless assessment scheme, particularly the concurrent jurisdiction between the jurisdictional Assessing Officer and Faceless Assessing Officer. 96. Although we had reserved judgment on this batch of writ petitions on October 4, 2024, we find that in a recent decision rendered by the Gujarat High Court on October 1, 2024, a view has been expressed which appears to be in tune with the conclusions which we have reached. We thus deem it apposite to refer to the decision of that High Court in Talati and Talati LLP v. Office of Assistant CIT [(2024) 469 ITR 643 (Guj); 2024 : GUJH ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he course of search and seizure under section 132. 25. From the language employed in Explanation 1 and Explanation 2 to section 148 of the Act, 1961, we reach at an opinion that the method of automated allocation, i.e., for random allocation of cases through algorithm, or by using suitable technological tools, including artificial intelligence and machine learning, in accordance with risk management strategy formulated by the Board, as referred to in Explanation 1 clause (i) to section 148 of the Act, for issuance of notice under section 148 in a faceless manner, as per the scheme framed vide the notification dated March 29, 2022 ((2022) 442 ITR (Stat) 198), cannot be applied to the case of search and seizure under section 132, where the jurisdictional Assessing Officer (JAO) is required to record his satisfaction on the basis of the material for affirmation of opinion in an honest and bona fide manner. 26. We find substance in the submission of the learned counsel for the Revenue that recording of satisfaction by the Assessing Officer on a perusal of the information received by him as a result of search and seizure operation under section 132 of the Income-tax Act, 1961, requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Legislature under section 151A, to impart greater efficiency, transparency and accountability by applying artificial intelligence, technological innovations, etc., but as of now, from a careful reading of the notification dated March 29, 2022 ((2022) 442 ITR (Stat) 198), along with the statutory provisions, we find that the aforesaid notification does not cover a case where notice under section 148 is issued by the jurisdictional Assessing Officer (JAO) based on the information received by him in the matter of search and seizure under section 132 of the Act, 1961, or requisitioned under section 132A." 99. Returning then to the Faceless Reassessment Scheme, 2022 itself, we find sufficient merit in the interpretation of its clauses as has been commended for our consideration by the respondents. Clause 3 of the said scheme provides that assessment, reassessment or recomputation under section 147 of the Act as well as issuance of notice under section 148 would be through automated allocation in accordance with the risk management strategy and in a faceless manner. The respondents rightly draw our attention to the usage of punctuation at various places in clause 3. A careful reading o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conducted in a faceless manner and in accordance with an allocation that the National Faceless Assessment Centre would make. This, in our considered opinion, would be the only legally sustainable construction liable to be accorded to the scheme. Our conclusion would thus strike a harmonious balance between the evaluation of information made available to an Assessing Officer, the preliminary consideration of information for the purposes of formation of opinion and its ultimate assessment in a faceless manner. 102. We are also, in this regard, guided by the principles of beneficial construction and thus avoiding an interpretation that would render portions of the Act or the Faceless Assessment Scheme superfluous or ineffective should be avoided. To assert that the jurisdictional Assessing Officer's powers become redundant under the faceless assessment framework would conflict with beneficial construction, as it would undermine provisions specifically established to support comprehensive data analysis and informed decision-making, such as the jurisdictional Assessing Officer's access to risk management strategy and Insight Portal information. 103. We are fully cognisant o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndments which were introduced in that provision by Finance Act, 2021. The Court in Abhinav Jindal had ultimately held as follows: - "30. Tested on the principles which were enunciated in Suman Jeet Agarwal v. ITO [(2022) 449 ITR 517 (Delhi); 2022 SCC OnLine Del 3141.], the petitioners would appear to be correct in their submission of the date liable to be ascribed to the impugned notices and those being viewed as having been issued and dispatched after April 1, 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 Joint Commissioner of Income-tax and which was an authority recognised under the unamended section 151. The answer to the argument based on the provisions of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act would also largely remain unimpacted by our finding on this score as would become evident from the discussion which ensues. xxxx xxxx xxxx 33. A plain reading of section 3 establishes that where the time limit for the completion or compliance of any action under a specified Act were to fall between Mar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act 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 the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come about by virtue of the provisions contained in the Act. It does not alter or amend the structure for approval and sanction which stands erected by virtue of section 151. The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act merely extended the period within which action could 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 assessment year. 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 Joint Commissioner of Income-tax would not be compliant with the scheme of section 151. We thus find ourselves unable to sustain the grant of approval by the Joint Commissioner of Income-tax. 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 the Taxation and Other Laws (Relaxation and Amendment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue to make the assessment/reassessment under Section 147 of the Act. This is of course subject to all conditions for such initiation being fully satisfied. 40. The remaining aspect to be examined is whether in cases where incriminating assets, documents or material are found during the search conducted under Section 132 of the Act or requisitioned under Section 132A of the Act, proceedings under Section 147 of the Act for reassessment can be initiated for assessment/reassessment of income notwithstanding that proceedings under Section 153C of the Act could have been initiated. The learned ITAT has held that the said recourse is not open and it is necessary for the AO to follow the procedure as stipulated under Section 153C of the Act. 41. As noted above, the jurisdiction of the AO to reassess the income under Section 153C of the Act is predicated on (a) the AO of the searched person being satisfied that the assets and material found during the search proceedings or requisitioned are incriminating insofar as the assessee (other than the searched person) is concerned; (b) recording its satisfaction to the aforesaid effect; (c) transmitting the same to the AO of the other p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment of the undisclosed income for the block period. Thus, there were two parallel assessments, one in respect of disclosed income and the other in respect of undisclosed income. The implementation of the said scheme, instead of simplifying the procedure in search cases, further complicated the same. One of the issues that became the focal point in several cases was whether income is required to be assessed as undisclosed income for the block period or whether it was to be considered as covered under the regular assessment. 48. Sections 153A and 153C of the Act were enacted to simplify that procedure. The principal object of such enactment was to simplify the assessment and to provide for a single assessment in respect of each assessment year in cases relating to search under Section 132 of the Act or requisition made under Section 132A of the Act. In Principal Commissioner of Income-tax, Central-3 v. Abhisar Buildwell (P) Ltd., the Supreme Court had taken a note of the legislative intent in replacing the scheme of assessment/reassessment in search cases in the following words: "30. That prior to insertion of Section 153-A in the statute, the relevant provision for block ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision following it will have its full operation or the provisions embraced in the non obstante clause will not be an impediment for the operation of the enactment or the provision in which the non obstante clause occurs. (see : Principles of Statutory Interpretation, 9th Edition by Justice G.P. Singh Chapter V, Synopsis IV at pages 318 and 319). 47. Normally the use of the phrase by the Legislature in a statutory provision like notwithstanding anything to the contrary contained in this Act is equivalent to saying that the Act shall be no impediment to the measure [See : Law Lexicon words "notwithstanding anything in this Act to the contrary"]. Use of such expression is another way of saying that the provision in which the non obstante clause occurs usually would prevail over the other provisions in the Act. Thus, the non obstante clauses are not always to be regarded as repealing clauses nor as clauses which expressly or completely supersede any other provision of the law, but merely as clauses which remove all obstructions which might arise out of the provisions of any other law in the way of the operation of the principle enacting provision to which the non obstante clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns 147 and 148 respectively of the Act. We are in agreement with the submission of Mr. Bhatt, the learned senior counsel appearing for the Revenue that the non obstante clause in section 153A should be understood as merely dispensing with the procedural aspect of section 147 of the Act." 50. The aforesaid decision was rendered in the contest of Section 153A of the Act. Although, the rationale as set out in the said decision resonate with us, we are unable to concur that issuance of notice under Section 153A of the Act is optional. Once a search has been conducted under Section 132 of the Act or assets, documents or other material is requisitioned under Section 132A of the Act, the AO is required to issue a notice under Section 153A of the Act. This is necessary because in terms of proviso to Section 153A of the Act, the pending proceedings for assessment or reassessment for any of the assessment years falling within the period of six assessment years prior to the date of initiation of the search under Section 132 of the Act or acquisition under Section 132A of the Act, would abate. The said assessments would necessarily be required to be completed under Section 153A of the Act. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of another person (searched person), assets, documents or books of account, which either belong to the assessee or contain information pertaining to the said assessee, are found. And, the same are handed over to the AO of the assessee; he would subject to satisfaction of the other jurisdictional conditions stipulated under Section 153C of the Act, having the jurisdiction to make a reassessment/assessment of the income of the assessee under Section 153C of the Act. However, the same does not mean that he is bound to exercise the said jurisdiction. In the event, the AO does not assume it's jurisdiction to proceed with making an assessment/reassessment under Section 153C of the Act, recourse to Section 147/148 is not ousted. The non obstante provision kicks-in only on the AO assuming the jurisdiction under Section 153C of the Act, that is, if the AO exercises its jurisdiction to initiate the machinery provisions of Section 153C of the Act to make an assessment/reassessment of the assessee's income for the stipulated period. The non obstante provisions do no come into play, if the AO does not take recourse to provision of Section 153C of the Act. 59. The non obstante clause a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... termination of income of the assessee. The AO is neither require to record reasons for his belief that the income of the assessee for the concerned assessment year has escaped assessment nor does he require to seek further approvals as required under Section 148 of the Act. However, he must be satisfied that the assets seized or requisitioned or the documents, books of account or other material transmitted by the AO of the searched person belongs to or contains information, which has a bearing on the determination of the income of the assessee. The reassessment must be predicated on material held to be incriminating and the income assessed/reassessed must be relatable to the material found as held by this Court in Commissioner of Income Tax v. Kabul Chawla and affirmed by the Supreme Court in Principal Commissioner of Income-tax, Central-3 v. Abhisar Buildwell (P) Ltd." 7. We had in the course of hearing of this batch also indicated to learned counsels for respective sides that we would desist from answering questions 'E' and 'F' since the other challenges which stand concluded by judgments rendered by the Court in T.K.S Builders, Abhinav Jindal and Naveen Kumar Gupta are more fun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 [TOLA] as well as the judgment of the Supreme Court in Rajeev Bansal and which had not only examined the impact of its decision in Union of India and Ors. v. Ashish Agarwal (2023) 1 SCC 617 as well as the fallout of the curative steps which the respondents had taken in compliance with the liberty that was granted in Ashish Agarwal so as to salvage various reassessment notices. 14. The Supreme Court in Rajeev Bansal has exhaustively examined the impact of its judgment in Ashish Agarwal viewed in the context of the Third Proviso to Section 149 (1) as well as the period liable to be excluded in light of Section 3 of TOLA. The Supreme Court has ultimately held that the period between 20 March 2020 to 30 June 2021 would clearly be entitled to be excluded for the purposes of answering the question of limitation for commencement of reassessment action. This it held in light of the statutory command of Section 3 (1) of TOLA. 15. In Rajeev Bansal, it was further declared that the period between the date of issuance of the impugned reassessment notices (if falling between 20 March 2020 to 30 June 2021) up to the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticking, the Assessing Officer was required to complete these procedures within the surviving time limit. The surviving time limit, as prescribed under the Income-tax Act read with Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, was available 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 wil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2021, the date of issuance of notice, and 04.05.2022, being the date of decision of the Supreme Court in Union of India & Ors. v. Ashish Agarwal is required to be excluded by virtue of the third proviso to Section 149 (1) of the Act. 67. Additionally, the period from the date of decision in Union of India & Ors. v. Ashish Agarwal till the date of providing material, as required to the accompanied with a notice under Section 148A (b) of the Act, is required to be excluded. Thus, the period between 04.05.2022 to 30.05.2022, the date on which the AO had issued the notice under Section 148A (b) of the Act in furtherance of his earlier notice dated 01.06.2021, is also required to be excluded by virtue of the third proviso to Section 149 (1) of the Act as held by the Supreme Court in Union of India & Ors. v. Rajeev Bansal. 68. In addition to the above, the time granted to the petitioner to respond to the notice dated 30.05.2022 - the period of two weeks -is also required to be excluded by virtue of the third proviso to Section 149 (1) of the Act. The petitioner had furnished its response to the notice under Section 148A (b) of the Act on 13.06.2022. Thus, the period of limitation be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uly 2022 being liable to be quashed and set aside. 24. A similar factual position emerges from the disclosures which appear in W.P.(C) 6849/2023 and where it was fairly conceded that the reassessment notice would be liable to be recognized as being within the period of limitation when tested on the broad principles identified above. This emerges from the following summary chart which was placed for our consideration by Ms. Jha, learned senior counsel who represented that writ petitioner:- S.No. SC Paras 1. Assessment Year 2014-15 2. Period of limitation u/s 149 [3 years or 6 years] 6 years 3. Original Period of limitation u/s 149 31.03.2021 4. Extended period of limitation as per IT Act read with TOLA 30.06.2021 Paras 65-69 5. Sanction to be obtained u/s 151 till 30.06.2021 [within 6 years] PCIT 6. Date of original notice u/s 148 - deemed SCN u/s 148A (b) 23.04.2021 7. Time surviving from date of issuance of deemed SCN till expiry of period as extended by TOLA [from 23.04.2021 till 30.06.2021] 68 days Paras 109-113 8. Period of deemed stay to be excluded as per 3rd proviso to section 149 [Date of Or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion shall thus render a finding on whether the impugned reassessment notices would survive or be liable to be recalled. It shall be open to the writ petitioners to assail any adverse orders that may come to be passed pursuant to the above in accordance with law. 30. In order to facilitate the aforesaid exercise, we accord liberty to the writ petitioners to file written submissions before their respective AOs within a period of three weeks from today and which shall be duly taken into consideration before passing orders in terms of our aforenoted directions. 31. Till such time as the respective AOs complete the aforesaid determination, the interim orders operating on the writ petitions shall continue. Any final orders of assessment if passed shall abide by the fresh decision which the AO would now frame in light of the directions contained in paras 27 to 29 above. 32. We further observe that many of the writ petitioners have raised various factual and additional contentions in support of the challenge to the reassessment action. However, we have heard respective sides solely in respect of the issues that we had flagged in our order of 05 August 2024. 33. Thus we reserve the righ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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