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TMI Blog2025 (2) TMI 865X X X X Extracts X X X X X X X X Extracts X X X X ..... er passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated 10.06.2024, which in turn arises from the order passed by the A.O under Sec. 147 r.w.s. 144B of the Income-tax Act, 1961 (in short 'the Act') dated 29.04.2023 for the assessment year 2014-15. The assessee firm has assailed the impugned order on the following grounds of appeal before us: "1. That on the facts and in law, the order passed u/s. 147 r.w.s. 144B dt. 29.04.2023 is bad in law and illegal, as such it is liable to be quashed. 1.1. That, notice u/s. 148 dt. 30/06/2021 is time barred. 1.2. That, notice u/s. 148 dt. 30/06/2021 was issued to the assessee on 16/07/2021 1.3. That, notice u/s. 148 dt. 30/06/2021 was not signed, neither manually not digitally. 1.4. That, notice u/s. 148 dt. 30/06/2021 has been issued on the basis of 'change of opinion' on the same material on which assessment u/s. 143(3) has been made. 2. That, without prejudice to above, Ld. CIT (A) ought to have restricted the addition to Rs. 4,33,810.00 only instead of Rs. 12,11,800.00, following the judgment of Jurisdictional Raipur Bench of ITAT in case of M/s. P.D. Rice Udyog [ITA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 131(1A) of the Act, dated 29.09.2014, had deposed before the ADIT (Inv.)-1, Raipur that his proprietorship concerns had no business activities and were only providing bogus bills to different parties (beneficiaries). Accordingly, the A.O based on the aforesaid information, held a conviction that the assessee firm had booked bogus purchases of Rs. 1,03,77,500/- for the subject year and, thus, issued notice u/s. 148 of the Act, dated 30.06.2021. 4. Subsequently, the A.O observed that the Hon'ble Supreme Court in the case of Union of India & Ors. Vs. Ashish Agrawal, Civil Appeal No. 3005/2022, dated 04.05.2022, had held that the notices issued under the old regime u/s. 148 of the Act i.e. between 01.04.2021 to 30.06.2021 were to be deemed to have been issued u/s. 148A of the Act and treated as "Show Cause Notices" (SCNs) as per Section 148A(b) of the Act. The A.O following the directions of the Hon'ble Apex Court in the case of Union of India & Ors. Vs. Ashish Agrawal (supra), issued a letter dated 25.05.2022 a/w. copy of the relevant material (through speed post/email), wherein the assessee firm was called upon to put forth an explanation that based on information which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... copies of invoices, PAN details, complete postal addresses, bank statements reflecting payments, etc. In compliance, the assessee failed to furnish complete details as were called for by the A.O. The A.O after deliberating on the information/evidence i.e. STR information in the case of M/s. Tirupati Trading Company (supra) and statement of Shri Narad Kumar Sahu (supra) that was recorded u/s. 131 of the Act, dated 29.09.2014, observed that the assessee firm had not made any genuine purchases but had only obtained accommodation purchase bills from the subject party. On a perusal of the purchase register filed by the assessee, the A.O observed that it had though disclosed to have made purchases from M/s. Tirupati Trading Company (supra) of Rs. 1,40,97,500/-, but as per the ledger account of M/s. Tirupati Trading Company (supra) in the books of account of the said concern, the total transactions were reflected at Rs. 1,51,47,500/-. The A.O observed that though a perusal of the records revealed that the assessee firm had made payment of the entire amount of purchase consideration of Rs. 1,51,47,500/- (supra) through banking channel on 31.03.2014, but its bank account wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble. 7.2. The appellant also claimed that notice issued u/s 148 of the IT Act dated 30.06.2021, was not singed. However, this Ground is also not admissible as the reassessment proceedings was initiated after the decision of Hon'ble Supreme Court in the case of Union of India Vs Ashish Aggarwal, by issuing a fresh notice u/s 148 of the IT Act dated 26.07.2022. Hence, this issue raised by the appellant without any specific Grounds of Appeal is also not admissible. 7.3 On merit the appellant claimed that, on bogus purchase entire expenditure cannot be disallowed and only Gross Profit has to be charged. In this connection, he has relied upon the decision of the Hon'ble High Court of Bombay in the case of Pr. CIT Vs. Mohammed Haji Adam & Co in ITA No. 1004 of 2016. Hon'ble ITAT decision in the case of M/s. P.D. Rice Udyog Vs. DCIT, Raipur, ITA No. 210/RPR/2018. I have gone through the decisions. The facts are similar to the decision of appellant's case. By respectfully following the decisions of Jurisdictional ITAT, it is fair to estimate the Gross Profit at the rate of 8% as the income escaped the assessment as against Rs. 1,51,47,500/- disallowed by the A.O in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preme Court in the backdrop of The Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance Act, 2020. 16. The Finance Act, 2021 had substituted the entire scheme of reassessment under Sections 147 to 151 of the Income Tax Act w.e.f 1st April 2021. Broadly speaking, the changes made available on the statute by the legislature in all its wisdom are, viz. (i) Section 148 now mandates the assessing officer to initiate proceedings only based on prior information and with the prior approval of the specified authority; (ii) Section 148A requires the A.O to provide an opportunity of being heard to the assessee before deciding to issue a reassessment notice u/s. 148 of the Act; (iii) Section 148A requires the A.O to, viz. (a) conduct any enquiry, if required, with the prior approval of the specified authority; (b) provide an opportunity of being heard to the assessee, with the prior approval of the specified authority; (c) consider the reply furnished by assessee, if any, in response to the show-cause notice; and (d) decide on the basis of material available on record including reply of the assessee, whether or not it is a fit case to issue a notice u/s. 148 of the Act by pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xation of the time limit for issuing reassessment notice u/s. 148 of the Act. 19. As the notifications dated March 31, 2021 and April 27, 2021 issued by the Central Government under Section 3(1) of TOLA, 2020 contained an explanation declaring that the provisions under the old regime shall apply to the reassessment proceedings initiated under them, therefore, the A.Os had accordingly issued reassessment notices between April 1, 2021 and June 30, 2021 by relying on the provisions under Section 148 of the old regime. These reassessment notices issued between April 1 2021 and June 30, 2021 under the old regime were challenged by the assessee's before various High Courts, which quashed the same for the reasons, viz. (i) Sections 147 to 151 stood substituted by the Finance Act, 2021 from April 1, 2021; (ii) that in the absence of any saving clause, the department could initiate reassessment proceedings after April 1, 2021 only in accordance with the provisions of the new regime since they were remedial, beneficial, and meant to protect the rights and interests of the assessees; and (iii) the Central Government could not exercise its delegated authority to re-activate the pre-existing l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subsequent extension of time vide various notifications, the Revenue issued the impugned notices under section 148 after the amendment was enforced w.e.f. 01.04.2021, under the unamended section 148. In our view the same ought not to have been issued under the unamended Act and ought to have been issued under the substituted provisions of sections 147 to 151 of the IT Act as per the Finance Act, 2021. There appears to be genuine non-- application of the amendments as the officers of the Revenue may have been under a bonafide belief that the amendments may not yet have been enforced. Therefore, we are of the opinion that some leeway must be shown in that regard which the High Courts could have done so. Therefore, instead of quashing and setting aside the reassessment notices issued under the unamended provision of IT Act, the High Courts ought to have passed an order construing the notices issued under unamended Act/unamended provision of the IT Act as those deemed to have been issued under section 148A of the IT Act as per the new provision section 148A and the Revenue ought to have been permitted to proceed further with the reassessment proceedings as per the substituted provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be show cause notices in terms of Section 148A(b) of the Act; (ii) the A.O shall within thirty days from the date of order of the Hon'ble Apex Court in the case of Union of India & Ors Vs. Ashish Agrawal (supra) i.e. 04.05.2022 provide to the assessee information/material that was relied upon by the department which suggested that his income chargeable to tax had escapement; (iii) that a period of two weeks shall thereafter be allowed to the assessee's to file reply in response to the notice issued u/s. 148A(b) of the Act; (iv) the A.O shall, thereafter, pass an order u/s. 148A(d) of the Act with the prior approval of the specified authority, within one month from the end of the month, in which, the assessee's reply is received by him; or where no such reply is furnished, within one month from the end of the month in which time or extended time allowed to furnish the aforesaid reply expires. 21. Thereafter, the Hon'ble Apex Court in the case of Union of India and Ors. Vs. Rajeev Bansal (2024) 469 ITR 46 (SC) had, inter alia, further clarified as under: (i) The A.O is required to obtain prior approval of the specified authority according to section 151 of the new regime b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or completion between 20 March 2020 and 31 March 2021; c. Section 3(1) of TOLA overrides Section 149 of the Income Tax Act only to the extent of relaxing the time limit for issuance of a reassessment notice under Section 148; d. TOLA will extend the time limit for the grant of sanction by the authority specified under Section 151. The test to determine whether TOLA will apply to Section 151 of the new regime is this: if the time limit of three years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under Section 151(i) has extended time till 30 June 2021 to grant approval; e. In the case of Section 151 of the old regime, the test is: if the time limit of four years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under Section 151(2) has extended time till 31 March 2021 to grant approval; f. The directions in Ashish Agarwal (supra) will extend to all the ninety thousand reassessment notices issued under the old regime during the period 1 April 2021 and 30 June 2021; g. The time during which the show cause notices were deemed to be stayed is from the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... June 30, 2021(date on which deemed notice u/s. 148A was issued) to June, 30, 2021 (extended time period as per TOLA, 2020)] to issue notice u/s. 148 of the Act under the new regime. The Ld. AR submitted that as per the "4th proviso" to Section 149 of the Act, where the balance/surviving period available with the A.O for passing an order under clause (d) of Section 148A of the Act was less than 7 days, then such remaining period shall be extended to seven days and the period limitation shall be deemed to be extended accordingly. Elaborating further on his contention, the Ld. AR submitted that the time started ticking for the A.O to issue notice u/s. 148 of the Act within the time period of 7 days from the lapse of period of two weeks (14 days) to respond to the SCN issued to the assessee firm u/s. 148A(b) of the Act, dated 25.05.2022, which, thus, lapsed on 16.06.2022. The Ld. AR submitted that as the A.O in the present case had issued notice u/s. 148 of the Act, dated 25.07.2022 i.e. much beyond the period of limitation which expires on 16.06.2022, therefore, the same was barred by limitation. 23. We have thoughtfully considered the contentions advanced by the Ld. 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