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TMI Blog2025 (3) TMI 454X X X X Extracts X X X X X X X X Extracts X X X X ..... evasion and entry of entire sale proceeds was taken while incurring expenses in nature of commission." "ii. Whether on the facts and circumstances of case and in law, the Hon'ble CIT(A) has erred in not appreciating the fact that the entire sale proceeds which was credited in the books of account, on account of transaction in scrip M/s. JRI Industries and Infrastructure Ltd was manipulated for tax evasion and said transaction itself was not genuine and hence entire proceeds were needed to be brought to tax u/s. 68 of the I.T. Act." iii. Whether on the facts and in the circumstances of the case and in law, the ld. CIT(S) has erred in treating the commission expenses as mere assumption ignoring the fact that the transactions in penny stock are shown to be very complex, as the meeting of minds of the "players" can never be established by direct evidence and therefore the surrounding circumstances were required to be taken note of in such transactions?" 3. While in its Cross Objection, the assessee has raised the following grounds: - "The assessee prefers a Cross objection appeal against an order dated 12/03/2024 passed by Ld. Commissioner of Income Tax (Appeal), National Fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the re-assessment order passed under section 147 r.w. section 144B of the Act is void ab initio. 7. The brief facts of the case pertaining to this issue as emanating from the record are: The assessee is an individual. For the year under consideration, the assessee filed her return of income on 31.08.2015, declaring a total income of Rs. 7,96,485/-. In the return of income, the assessee disclosed Long Term Capital Gains of Rs. 89,65,705/- earned on the sale of listed shares of M/s. JRI Industries and Infrastructure Ltd., and claimed the same as exempt under section 10(38) of the Act. On the basis of the information received from DDIT (Inv.), Unit-8(2), Mumbai that the assessee is a beneficiary of bogus capital gains from transaction in penny stocks, notice under section 148 of the Act was issued on 16.06.2021. 8. Subsequently, in view of the decision of the Hon'ble Supreme Court in Union of India vs. Ashish Agrawal, reported in [2022] 444 ITR 1 (SC), original notice issued under section 148 on 16.06.2021 was deemed to be issued under section 148A(b) of the Act. Vide show cause notice dated 30.05.2022, the information and material relied upon by the Revenue was provided to the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22 falls within the limitation period as extended by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 ("the TOLA"). Accordingly, the learned DR submitted that the limitation period for issuance of notice under section 148 of the Act shall be governed by the provisions of the Act, as amended by Finance Act, 2021, read with the TOLA, in the light of the decisions of the Hon'ble Supreme Court in Ashish Agarwal (supra) and Rajeev Bansal (supra). 12. We have considered the submissions of both sides and perused the material as well as written submissions and rebuttal thereto as are available on record. We, at the outset, find that similar issue pertaining to the challenge against notices issued under section 148 of the Act for the assessment year 2015-16 on the basis that same are beyond the limitation period prescribed under section 149 of the Act has been decided in favour of the taxpayers after noting the submission of the Revenue before the Hon'ble Supreme Court in Rajeev Bansal (supra), wherein it was conceded by the Revenue that for the assessment year 2015-16, all notices issued on or after 1st April, 2021 will have to be dropped as they will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .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 20152016, 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." 4. In view of the aforesaid, the impugned order dated 19.07.2022 issued under Section 148(A)(d) of the Income Tax Act,1961 (hereafter the Act) as well as the notice dated 19.07.2022 issued under Section 148 of the Act in respect of AY 2015-16 are liable to be set aside. It is so directed." 13. We further find that similar findings were rendered by the Hon'ble Delhi High Court in IBIBO Group Pvt. Ltd. vs. ACIT, in W.P.(C) No.17639 of 2022, vide order dated 13.12.2024. During the hearing, the learned AR placed on record the copy of the following decisions of the Co-ordinate Bench of the Tribunal, wherein on similar lines re-assessment notices issued under section 148 of the Act for the assessment year 2015-16 were quashed: - * ACIT vs. Mani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the plea of the Revenue that the notice dated 29.07.2022 issued under section 148 is not barred by limitation period provided under the amended provisions of section 149 of the Act. 16. Before proceeding further, it is relevant to note that the provisions of section 149 of the Act, as amended by the Finance Act, 2021, which provides the time limit for issuance of notice under section 148 of the Act, and the same reads as follows: - "Time limit for notice. 149. (1) No notice under section 148 shall be issued for the relevant assessment year - (a) if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b); (b) if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y time for assessment year beginning on or before 1st 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 section 149(1)(b), as it stood immediately before the commencement of the Finance Act, 2021. Section 149 of the Act, prior to its amendment by the Finance Act, 2021, reads as follows: - "Time limit for notice. 149. (1) No notice under section 148 shall be issued for the relevant assessment year, - (a) if four years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b) or clause (c); (b) if four years, but not more than six years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to one lakh rupees or more for that year; (c) if four years, but not more than sixteen years, have elapsed from the end of the relevant assessment year unless the income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment. Explanation.- In determining income chargeable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inue to apply to the Act after 1st April, 2021 if any action or proceeding specified under the substituted provisions of the Act falls for completion between 20.03.2020 and 31.03.2021. Therefore, applying the aforesaid ratio of the Hon'ble Supreme Court to the facts of the present case, we are of the considered view that as the period of 4 years from the end of the relevant assessment year expires on 30.04.2020, which fell within the period from 20.03.2020 to 31.03.2021, therefore, the notice issued on 16.06.2021, which was deemed to be noticed under section 148A(b) of the Act, is covered under the extended time limit till 30.06.2021 provided under the TOLA. 19. The learned DR further submitted that the date of issuance of deemed show cause notice (old notice) till the date of filing of response by the assessee shall be extended under third proviso to section 149 of the Act. In this regard, the learned DR placed reliance upon paragraphs 106 and 107 of the decision of the Hon'ble Supreme Court in Rajeev Bansal (supra). The relevant portion of the submissions of the learned DR are reproduced as follows for ready reference: - "Exclusion of Time for Compliance with Section 148A Le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause notice was stayed till the supply of relevant information or material by the AO and further period of two weeks allowed to the assessee to respond to the show cause notice should be excluded. We find that while examining the validity of notices issued from 01.04.2021 to 30.06.2021 under the old regime, the Hon'ble Supreme Court in Rajeev Bansal (supra), analysing the interplay of Ashish Agarwal (supra) with the TOLA, in paragraph 108 of its judgment observed as follows: - "108. The Income Tax Act read with TOLA extended the time limit for issuing reassessment notices under Section 148, which fell for completion from 20 March 2020 to 31 March 2021, till 30 June 2021. All the reassessment notices under challenge in the present appeals were issued from 1 April 2021 to 30 June 2021 under the old regime. Ashish Agarwal (supra) deemed these reassessment notices under the old regime as show cause notices under the new regime with effect from the date of issuance of the reassessment notices. The effect of creating the legal fiction is that this Court has to imagine as real all the consequences and incidents that will inevitably flow from the fiction. 163 Therefore, the logical effec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice u/s. 148A(b) 30/05/2022 c) Reply of the assessee 10/06/2022 d) Order passed u/s. 148A(d) 29/07/2022 e) Notice u/s. 148 29/07/2022 23. Therefore, computing the surviving/balance time limit, as per the decision of the Hon'ble Supreme Court in Rajeev Bansal (supra), we find that the Revenue had only 15 days (i.e., between 16.06.2021 to 30.06.2021) to issue notice under section 148 of the Act of the new regime in the present case, i.e. till 25.06.2022, after receipt of the response from the assessee to the show cause notice under section 148A(b) of the Act on 10.06.2022. However, undisputedly, in the present case, the notice under section 148 of the Act was issued on 29.07.2022, i.e., 34 days after the surviving/balance time period as per the directions of the Hon'ble Supreme Court in Rajeev Bansal (supra). Therefore, having considered the provisions of the Act, pre as well as post the amendment by the Finance Act, 2021, and the TOLA, in the light of the decision of the Hon'ble Supreme Court in Ashish Agarwal (supra) and Rajeev Bansal (supra), we are of the considered view that the notice under section 148 of the Act in the present case was issued beyond the time ..... X X X X Extracts X X X X X X X X Extracts X X X X
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