2023 (3) TMI 1550 - HC - Income Tax

Reopening of assessment u/s 147 as barred by limitation - notices having been issued after passage of six years from the end of the relevant assessment year - Period of limitation to issue notice issued u/s 148A(b) - Time limit for notice - scope of new regime as per section 148A - prescribed permissible timeline of six years - HELD THAT - As in agreement with the decision in Keenara Industries Pvt. Ltd. 2023 (3) TMI 104 - GUJARAT HIGH COURT of this Court as well with Allahabad High Court decision in Rajeev Bansal 2023 (2) TMI 1081 - ALLAHABAD HIGH COURT The point is no more res integra that all original notices under section 148 of the Act referable to the old regime and issued between 01.04.2021 to 30.06.2021 would stand beyond the prescribed permissible timeline of six years from the end of Assessment Year 2013-14 and Assessment Year 2014-15. Therefore all such notices when they would relate to Assessment Year 2013-14 or Assessment Year 2014-15 would be time barred as per the provisions of the Act as applicable in the old regime prior to 01.04.2021. Furthermore these notices cannot be issued as per the amended provision of the Act. Revenue was entirely at his receiving end unable to dispute the position of law holding the field as above. All the impugned notices in the respective petitions under section 148 of the Act relatable to Assessment year 2013-14 or the assessment year 2014-15 as the case may be are beyond the permissible time limit therefore liable to be treated illegal and without jurisdiction. Since the petitions deserve to be allowed on the aforesaid crisp legal ground alone learned advocates for the parties submitted to agree that facts and other legal issues may not be gone into by the Court. Accordingly they are neither delineated nor are gone into in respect of the above petitions.

Issues Involved:

1. Legality of notices issued under Section 148 of the Income Tax Act, 1961 for reopening assessments for the years 2013-14 and 2014-15.
2. Application of limitation periods under the old and new regimes of the Income Tax Act.
3. Impact of the Supreme Court's decision in Ashish Agarwal on the issuance of notices.
4. Validity of extensions granted under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020.

Detailed Analysis:

1. Legality of Notices Issued Under Section 148:

The petitioners challenged the notices issued under Section 148 of the Income Tax Act, 1961, which sought to reopen assessments for the years 2013-14 and 2014-15. The core argument was that these notices were issued beyond the permissible time limit, making them illegal and without jurisdiction. The court noted that the notices were treated as show-cause notices under Section 148A(b) following the Supreme Court's decision in Ashish Agarwal. However, the court emphasized that these notices were issued after the statutory period of six years from the end of the relevant assessment year, rendering them time-barred under the old regime.

2. Application of Limitation Periods:

Under the old regime, as per Section 149 of the Act, a notice under Section 148 could be issued within four to six years from the end of the relevant assessment year if the income that escaped assessment was likely to exceed one lakh rupees. The Finance Act, 2021, introduced a new regime effective from 01.04.2021, which reduced the time limit to three years, extendable to ten years if the escaped income exceeded fifty lakh rupees. However, the court clarified that the new provisions could not revive notices that had become time-barred under the old regime. Therefore, the notices issued for the assessment years 2013-14 and 2014-15 were beyond the six-year limit and thus invalid.

3. Impact of Supreme Court's Decision in Ashish Agarwal:

The Supreme Court in Ashish Agarwal held that notices issued between 01.04.2021 and 30.06.2021 under the old regime should be treated as issued under Section 148A of the new regime. However, the court maintained that all defenses available under Section 149 and other legal rights remained intact. Consequently, the limitation defenses under the old regime continued to apply, meaning that notices time-barred before the new regime could not be revived or validated by the Supreme Court's directions.

4. Validity of Extensions Granted Under the Taxation and Other Laws Act, 2020:

The court examined the extensions granted under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, due to the COVID-19 pandemic. These extensions were intended to prolong the time limits for issuing reassessment notices. However, the court concluded that these extensions could not override the principal legislation, which was the Finance Act, 2021. The court held that the secondary legislation could not extend the time limits for issuing notices that were already time-barred under the old regime.

Conclusion:

The court set aside the notices and orders issued under Sections 148 and 148A(d) for the assessment years 2013-14 and 2014-15, declaring them illegal and without jurisdiction due to being time-barred. The petitions were allowed on this legal ground, and all other factual and legal issues were kept open for future consideration. The decision reaffirmed the principle that time-barred notices under the old regime could not be revived under the new regime, despite legislative changes or extensions granted during the pandemic.

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