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TMI Blog2025 (3) TMI 995X X X X Extracts X X X X X X X X Extracts X X X X ..... ver, in cases where income that escaped assessment amounts to ₹50 lakhs or more, assessments can be reopened within ten years. The new regime prohibits reopening of assessments that were time-barred under the old regime. In this case the notice u/s 148 of the Act was earlier issued on 09.04.2021 which was treated as show cause notice u/s 148A(b) of the Act but the order u/s 148A(d) of the Act has been passed on 30.06.2022 and as per the old provisions of reassessment, the notice u/s 148 of the Act after complying with the procedural requirement as per the amended provisions ought to have been issued by 31.03.2022 after excluding the period granted to file the reply in response to the notice u/s 148A(b) of the Act. Since the limitation for issue of notice u/s 148 of the Act expired on 31.03.2022 under the old regime and for AY 2015-16 of the assessment order the notice u/s 148 has been issued on 30.06.2022, the benefit of TOLA for extending the limitation for issue of notice u/s 148 of the Act will not be available to the Revenue. Thus notice issued u/s 148 of the Act on 30.06.2022 is barred by limitation and the assessment order is hereby quashed and appeal of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case was not stated to be covered by explanation 1 to section 148. 8. For that the Ld. CIT (A) erred in confirming the order of the AO when the order passed u/s 148A(d) was bad in law since the reply and issues raised by the assessee in response to notice u/s 148A(b) were not disposed off in accordance with law. 9. For that the Ld. CIT (A) erred in confirming the order of the AO when the reopening is otherwise bad in law since the approval obtained from specified authorities was not in accordance with law and the copy of the approval was never sent to the assessee in spite of repeated requests. 10. For that the Ld. CIT (A) erred in confirming the order of the AO when the reassessment is bad in law since no statutory notice was issued when the assessee duly complied with the notice u/s 148 by filing a letter dated 04.07.2022 that the original return filed by the company on 21.09.2015 be treated as return u/s 148 which was sufficient compliance under the law. 11. For that the Ld. CIT (A) erred in confirming the order of the AO when in disallowing derivative loss of Rs. 4, 30, 56, 175/- alleging the same to be bogus when the issue was duly examined in the original assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 56, 175/- i.e. Rs. 8, 61, 123/- was added on account of payment of commission to the stock broking firms which was incurred out of undisclosed sources and the income was accordingly assessed at Rs. 16, 96, 11, 420/-. Aggrieved with the assessment order the assessee filed an appeal before the Ld. CIT(A) who has discussed the facts of the case, the non-compliance before the Ld. AO, the legal issues raised by the assessee and as no compliance was made to the notices issued for hearing before him, the appeal was decided on merits considering the grounds of appeal and statement of facts filed by the assessee and hence, dismissed. Aggrieved with the order of the Ld. CIT(A) the assessee has filed the appeal before this Tribunal. 4. Rival contentions were heard and the submissions made have been examined. At the outset, the Ld. AR contended that the reopening of assessment for AY 2015-16 was barred on account of decision of the Hon'ble Supreme Court in the case of Union of India vs. Rajeev Bansal [2024] 167 taxmann.com 70 (SC)/[2024] 301 Taxman 238 (SC)/[2024] 469 ITR 46 (SC)[03-10-2024]. 5. We have heard the rival contentions and also gone through the facts and circumstances of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the order of the Apex Court was delivered after the decision by CIT(A). However it has been held by Hon'ble Bombay High Court in the case of Kansai Nerolac Paints reported in 364 ITR 632 that legal issue if raised before ITAT for the first time has to be decided by the ITAT and cannot be remanded to the lower authorities. Ground No. 2 is not pressed. In ground No. 3 & 5, it is submitted that the original assessment was completed u/s 143(3) wherein all facts were fully disclosed. There was nothing in the reasons recorded prior to issue of initial notice u/s 148 that there was failure on the part of the assessee to disclose truly and fully all material facts necessary for reassessment. Hence since the original notice itself was bad in law, it could not be treated as a valid notice as per Hon'ble Apex Court decision in the case of Ashish Agarwal. Hence the entire reassessment is liable to be quashed. In Ground No. 4, it is submitted that that Ld. CIT (A) erred in confirming the order of the AO when the notice u/s 148A(b) issued was barred by limitation since the materials were forwarded after the deadline fixed by the Hon'ble Apex Court and further complete materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time limit for completion of actions falling for completion between 20 March 2020 and 31 March 2021. 69. For instance, Section 149(1)(a) of the new regime specified the time limit of three years from the end of the relevant assessment year for reopening of the assessment. For assessment year 2017-2018, the three year period expired on 31 March 2021. The expiry of time fell within the time period contemplated by Section 3 of TOLA read with its notifications. Resultantly, the Revenue had time until 30 June 2021 to issue a reassessment notice for assessment year 2017-2018 under section 149(1)(a). This harmonious reading gives effect to the legislative intention of both the Income-tax Act and TOLA. Moreover, Sections 147 to 151 are machinery provisions. Therefore, they must be given an interpretation that is consistent with the object and purpose of the Income-tax Act. . . 74. The above table indicates that the specified authority is directly co-related to the time when the notice is issued. This plays out as follows under the old regime: (i) If income escaping assessment was less than Rupees one lakh: (a) a reassessment notice could be issued under section 148 within four y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue a notice under section 148. 77. Parliament enacted TOLA to ensure that the interests of the Revenue are not defeated because the assessing officer could not comply with the pre conditions due to the difficulties that arose during the COVID-19 pandemic. Section 3(1) of TOLA relaxes the time limit for compliance with actions that fall for completion from 20 March 2020 to 31 March 2021. TOLA will accordingly 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 an extended time till 30 June 2021 to grant approval. 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 time till 31 March 2021 to grant approval. The time limit for Section 151 of the old regime expires on 31 March 2021 because the new regime comes into e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o "pass orders in terms of Section 148-A(d) in respect of each of the assesses concerned." Further, it directed the assessing officers to issue a notice under Section 148 of the new regime "after following the procedure as required under section 148-A." Although this Court waived off the requirement of obtaining prior approval under section 148A(a) and Section 148A(b), it did not waive the requirement for Section 148A(d) and Section 148. Therefore, the assessing officer was required to obtain prior approval of the specified authority according to Section 151 of the new regime before passing an order under section 148A(d) or issuing a notice under section 148. These notices ought to have been issued following the time limits specified under section 151 of the new regime read with TOLA, where applicable. F. Section 148 notices issued in June-September 2022 i. Scope of Article 142 113. In Ashish Agarwal (supra), this Court allowed the assesses to avail all the defences, including the defence of expiry of the time limit specified under section 149(1). In the instant appeals, the reassessment notices pertain to the assessment years 2013-2014, 2014-2015, 2015-2016, 2016-2017, and 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levant information and material by the assessing officers to the assesses in terms of the directions issued by this Court in Ashish Agarwal (supra), and the period of two weeks allowed to the assesses to respond to the show cause notices; and h. The assessing officers were required to issue the reassessment notice under section 148 of the new regime within the time limit surviving under the Income-tax Act read with TOLA. All notices issued beyond the surviving period are time barred and liable to be set aside;" 7. Admittedly the notice u/s 148 of the Act was issued on 30.06.2022 i.e. beyond the TOLA period and as per the decision of the Hon'ble Supreme Court such a notice under the old regime could have been issued only up to 31.03.2022 and the benefit of extension of due date as per TOLA would be applicable only to the notices issued between 01.04.2021 to 30.06.2021 if the limitation for issuing such notices was expiring between 20 March 2020 and 31 March 2021 The limitation for A.Y. 2015-16 was expiring on 31.03.2022, i.e. beyond the period of 20.03.2020 to 31.03.2022, therefore, the benefit of TOLA would not be applicable. Further, in view of the first proviso to section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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