TMI Blog2023 (2) TMI 961X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 148 in the present case was issued on 27.03.2015; therefore, as per the facts of the present case also when the amendment extending limitation for issuing notice under Section 148 of the Act was brought on the Statute, the limitation for issuing notice in the present case already stood expired. Therefore, the proposition laid down by the Hon ble Delhi High Court in the case of Braham Dutta [ 2018 (12) TMI 832 - DELHI HIGH COURT ] that in such cases the retrospectivity of the amended provision would not apply to empower the Assessing Officer to extend limitation, which limitation already stood exhausted in his hands, would apply. Decided against revenue. - ITA No. 130/Rjt/2020 - - - Dated:- 22-2-2023 - Mrs. Annapurna Gupta, Accountant Member And Shri Siddhartha Nautiyal, Judicial Member For the Assessee : Shri D.M. Rindani, AR For the Revenue : Shri Shramdeep Sinha, CIT-DR ORDER PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER: This appeal is preferred by the Revenue against the order of the learned Commissioner of Income-tax (Appeals)-13, Ahmedabad (hereinafter referred to as CIT(A) ) dated 22.01.2020 passed u/s 250(6) of the Income-tax Act, 1961, (herei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee, the assets found to be located outside India were bank accounts i.e. undisclosed foreign accounts in various foreign banks. This limitation of 16 years was brought on the Statute by Finance Act, 2012 with effect from 01.07.2012; prior to that the maximum limit prescribed for reopening the case under Section 149 of the Act was 6 years upto to the relevant assessment year. It was brought to the notice of the learned CIT(A), that in the case of father and grandfather of the assessee, identical reassessment resorted to was held to be invalid finding the notice to be issued beyond the limit prescribed as per Section 149 of the Act, noting that the extended period of limitation of 16 years would not apply in the present case. The reasoning being that when the extended limit of 16 years was brought on the Statute by the Finance Act, 2012 with effect from 01.07.2012, the original limitation for reopening the case of the assessee i.e. upto 6 years already stood expired and, therefore, this extended limitation could not be applied retrospectively in cases where the original limitation already stood expired. The learned CIT(A) noted that, while holding so in the case of fathe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed by the revenue are directed against the combined order of learned CIT(A) dated 13-01- 2020. 39. At the outset the learned consul submitted that the issue common to all the appeal are covered in favour of the assessee by the decision of ITAT Rajkot in assessee's case dated 25-02-2019 in the case of Shri Ravichandra V. Mehta for A.Y. 1996-97 and assessment year 1997- 1998 (in ITA No. 409/ RJT 201,450/ RJT/ 2017, 410/ RJT/ 2017 and 451 RJT/ 2017 and also the subsequent order of ITAT Rajkot dated 25th June, 2019 in the case of the assessee. 40. On the other hand, learned departmental representative is fair enough to not controvert this undisputed fact that impugned issues in the appeal are covered by the decision of ITAT as referred in the decision of learned CIT appeal 41. With the assistance of learned representatives who have gone through the decision of learned CIT(A). The learned CIT(A) has held that issues under section 148 in respect all the above-mentioned years a being beyond the limitation prescribed under the pre-amended section 149 of the Act are bad in law and hence consequential assessment framed pursuant to such invalid notices are also required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d non- application of mind as to the well-established principles of law and that the additional grounds and the additional evidences have to be admitted for fairness and justice in view of the related decisions of the Hon'ble Courts in favour of tax payers. 5.3 In relation to the legality of the notice(s) u/s.148 it has been contented by the appellant that the above referred additional ground is purely legal in nature and therefore, requires admission and adjudication. It is case of the appellant that a search was conducted in his case on 20.3.2012, that Notice u/s 148 was issued for the captioned years on 27.02.2015 and that the same has been issued in view of Section 149(1)(c) of the Income Tax Act which was inserted by the Finance Act, 2012 with effect from 1.7.2012. As per provision of Section 149 as prevalent before the insertion of sub clause (c) to Sub section (1) of Section 149, it was provided that no Notice u/s 148 shall be issued for the relevant assessment year if not more than 4 or 6 years on the case may be, have elapsed from the end of the relevant Assessment Year. Therefore, prior to insertion of sub clause (c) to Section 149(1), the limitation period for i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.5 In addition to above the appellant has enclosed and brought to attention the judgement of ITAT Rajkot Dated 25-02-2019 in the case of Shri Ravichandra V Mehta for AY 1996-97 and AY 1997-98 ( in ITA No.(s) 409/RJT/2017, 450/RJT/2017, 410/RJT/2017 and 451/RJT/2017) and also the subsequent order of ITAT Rajkot dated 25-06-2019 in the case of the assessee, Shri Balkrishna R Mehta himself for AY 1996- 97 and AY 1997-98 ( in ITA No.(s) 407/RJT/2017, and 408/RJT/2017) were the order dated 25-02-2019 in the case of Shri Ravichandra V Mehta has been followed. 5.6 In the case of Shri Ravichandra V Mehta the additional ground of the appellant was that notice u/s. 148, pursuant to which impound assessment order is framed is barred by limitation u/s. 149 of the act and therefore assessment framed pursuant to such a valid notice is void ab initio. The ground of the Revenue was that the Ld. CIT(A) has erred in law and/or on facts virtually setting aside the order of AO passed u/s. 143 rws 147 of the Act dated 27-02-2015, whereas no such power rests with him under the Act and the additional ground was that the Ld. C1T(A) had erred in holding that as per the provision section 5 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Hon'ble ITAT Rajkot as the notices u/s. 148 were issued for these years on 27.02.2015 on the strength of the amended provisions w.e.f. 01.07.2012 whereas as per the pre-amended provision those notices-could not have been issued after 31.03.2005 for AY 1998-99, 31.03.2006 for AY 1999-2000, 31.03.2007 for AY 2000-01, 31.03.2008 for AY 2001- 02, 31.03.2009 for AY 2002-03, 3103.2010 for AY 2003-04 and 31.03.2011 for AY 2004-05.Following there from the assessment orders u/s. 143(3) rws 147 made on 31.03.2015 for AY 1998-99 to AY 2004-05 on the strength of the notices u/s. 148 dated 27.02.2015 for respective AYs, under consideration in the present appeals, are required to be quashed as notices u/s. 148 issued on 27.02.2015 for those years are void ab initio. Under the circumstances the submissions made on the merits of additions in the impugned assessment orders and the additional evidences related to funds are not required to be adjudicated upon. 6. The appeals for AY 1998-99 to AY 2004-05 are allowed. 43. The relevant part of the decision of ITAT Rajkot vide ITA Nos. 409, 410, 450 451/ RJT/ 2017 for A.Ys. 1996 -1997 and 1997- 1998 dated 25th February, 2019 is re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the decision of this Court in S.S. Gadgil vs. Lal Co. (1964) 53 ITR 231 (SC). In that case, a notice was issued against the assessee as an agent of a non-resident on 27th March, 1957, and that notice related to the asst. yr. 1954-55. Under cl. (iii) of the proviso to s. 34(1), as it stood prior to its amendment by the Finance Act, 1956, a notice of assessment or reassessment could not be issued against a person deemed to be an agent of a non-resident after the expiry of one year from the end of the year of assessment.The right to commence a proceeding for assessment against the assessee as agent of a non-resident for the asst. yr. 1954-55, therefore, ended on 31st March, 1956, under the new Act before its amendment in 1956. This provision was, however, amended by the Finance Act, 1956, and under the amended provision the period of limitation was extended to two years from the end of the assessment year. The amendment was made on 8th Sept., 1958, but was given effect to from 1st April, 1956. Since the time within which notice could be issued against a person deemed to be an agent of a non-resident was extended to two years from the end of the assessment year, it was contended o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le of this decision applies in the present case and it must be held that, on a proper construction of s. 297(2)(d)(ii) of the new Act, the ITO cannot issue a notice under s. 148 in order to reopen the assessment of an assessee in a case where the right to reopen the assessment was barred under the old Act at the date when the new Act came into force. It follows, therefore, that the notice dt. 13th Nov., 1963, and 9th Jan., 1964, issued by the ITO, Ahmedabad, were illegal and ultra vires and were rightly quashed by the Gujarat High Court by the grant of a writ. For the reasons expressed, we hold that the judgment of the High Court of Gujarat dt. 14/15th Dec., 1964, is correct and this appeal must be dismissed with costs. 7. In view of the above decision, since the assessment could not have been reopened for Assessment Years 1996-97 to 2005-06, which has become barred by limitation on 31st March 2012, the Amending Act being Finance Act, 2012 inserting sub clause (c) Section 149 (1) w.e.f. 01-07-2012 cannot give a fresh lease of life for reopening the same which has already become barred by limitation on 31.12.2012. In view of the above, the Notice issued u/s.148 being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that has been raised on behalf of the learned counsels appearing for the parties is whether the provisions of sub-section (1) of section 150 as amended can be availed for reopening assessments, which have attained finality and could not be reopened due to bar of limitation, that was attracted at the relevant time to the proposed reassessment proceedings under the provisions of section 149. 11. The submission made on behalf of the appellant is that neither the provisions of sub-section (1) nor sub-section (2) can be read as giving more than intended operation to the said provision. The provisions, it is argued, do not permit the authorities to reopen assessments, which have become final and reassessment of which had become barred by time before 1.4.1989 when section 150(1) was amended Reliance is placed on the decision in S.S. Gadgil v. Lal Co. [1964] 53 ITR 231. 12. The learned counsel appearing on behalf of the department has made an effort to persuade this Court to accept his construction of the provisions of section 150(1)and (2). It is argued that it is for the specific purpose of assessing income, which might accrue on the basis of any decision of any Court in any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apply to assessments which have attained finality due to bar of limitation applicable at the relevant time. 6. The High Court rejected the above contention of the assessee on the ground that on the amendment introduced with effect from 1.4.1989 in sub-section (1), which enables reopening of assessment based on any Order of 'Court in any proceedings in any law', there is no corresponding amendment made in sub- section (2) of Section 150 to bar reassessment based on Order of Court passed in any proceedings in any law in cases where prescribed period of litigation for reassessment had already expired. 17. We do not find the above reasoning of the High Court is sound. The plain language of sub-section(2)of Section150 clearly restricts application of sub- section (1) to enable the Authority to reopen assessments which have not already become final on the expiry of prescribed period of limitation under Section 149. As is sought to be done by the High Court, sub-section (2) of Section 150 cannot be held applicable only to reassessments based on Orders 'in proceedings under the Act' and not to Orders of Court 'in proceedings under any other law'. Such an i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1922, as it then stood, a notice of assessment or reassessment could not be issued against a person deemed to be an agent of a non-resident under Section 43, after the expiry of one year from the end of the year of assessment. The Section was amended by Section 18 of the Finance Act, 1956, extending this period of limitation to two years from the end of the assessment year. The amended was given retrospective effect from April 1, 1956. On March 12, 1957, the Income Tax Officer issued a notice calling upon the assessee to show cause why, in respect of the assessment year 1954-55, the assessee should not be treated as an agent under Section 43 in respect of certain non-residents. The case of the assessee, inter alia, was that the proposed action was barred by limitation as right to commence proceedings of assessment against the assessee as an agent of non-resident for the assessment year 1954-55 ended on 31.3.1956, under the Act before it was amended in 1956. This Court in the case of S.S. Gadgil (supra) accepted the contention of the assessee and held as under: . The legislature has given to section 18 of the Finance Act, 1956, only a limited retrospective operation, i.e., up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecting the petitioner's objection that It is also found that the assessee was a non-resident as contended by him, in the AY 1998-99. In the circumstances, there can be no question about the applicability of the then existing provision- Section 149 (b), which stated that the normal time limit for reopening assessment was 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. 16. It has been said that the government in all its actions is bound by rules fixed and announced beforehand--rules which make it possible to foresee with fair certainty how the authority will use its coercive powers in given circumstances, and to plan one's affairs on the basis of this knowledge (Ref. FA Hayek, Road to Serfdom , 1944). In this case, the interpretation proposed by the revenue has the potential of arming its authorities to re-open settled matters, in respect of issues where the citizen could genuinely be sanguine and had no obligation of the kind which the Revenue seeks to impose by the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t cannot be avoided without doing violence to the language of the enactment. If the enactment is expressed in language which is fairly capable of either interpretation, it ought to be construed as prospective only. In Commissioner of Income Tax v Scindia Steam Navigation Co. Ltd AIR 1961 SC 1633, it was held that as the liability to pay tax is computed according to the law in force at the beginning of the assessment year, i.e., the first day of April, any change in law upsetting the position and imposing tax liability after that date, even if made during the currency of the assessment year, unless specifically made retrospective, does not apply to the assessment for that year. These principles were reiterated in Commissioner of Income Tax v Vatika Township (P) Ltd [2014] 49 taxmann.com 249/227 Taxman 121/367 ITR 466(SC). 19. In view of the above discussion, it is held that the petition has to succeed; the impugned reassessment notice and all consequent proceedings are hereby quashed and set aside. The writ petition is allowed; however without order on costs. 10. Thus, in all above cases Courts have held that when the time limit for issuing notice u/s.148 has expire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee. At this juncture, learned Counsel for the assessee pointed out that in the case of the assessee the addition had been made only on protective basis. He pointed out that on account of the admitted undisclosed foreign bank accounts held by the family of the assessee including his father and grandfather, the Assessing Officer had taxed interest earned thereon and substantive addition had been made in the hands of the father of the assessee since documents revealing communication with the concerned bank accounts were noted to be relating to his father. The protective addition of the interest, however, was made in the hands of the assessee in the absence of any clear cut information as to whom the interest actually pertained to. The learned Counsel for the assessee stated that since the assessment order passed in the case of the father of the assessee, where the substantive addition had been made, no longer survived, though having been set aside on a legal ground ,clearly the substantive addition did not survive. He contended, therefore, that there was no case at all for validating the protective addition made in the hands of the assessee. 8. We have heard the rival contentions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreed to pay tax on the same. However during the assessment proceedings for AY 2005-06 to AY 2012-13 u/s. 153A, no clear details were furnished. However a chart of working of interest income was submitted as per which interest came to Rs.22,57,875/- as under: SN Name of the bank and account No. Amount in INR 1 ABN AMRO 208695A Rs. 2,34,260/- 2 ABN AMRO (USD) 208154 Rs. 20,23,615/- Total Rs. 22,57,875/- 4.3 Accordingly the assessee was show caused as to why an addition of Rs.22,57,875/- should not be made to his total income. However, no response was received from the assessee. From various documents seized from assessee Group's premises, A-601, Kailash Tower, Ghatkopar (East), Mumbai various correspondences of the foreign banks addressed to Shri Ravichandra Mehta were found and scanned images of two such documents are at pages 7, 8 and10 of the assessment order. The issues are dealt at para 4 to 4.6 on pages 5 to11 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITAT in the case of the assessee s father and grandfather for AYs 1996-97 and 1997-98 wherein following the decision of the Hon ble Delhi High Court in the case of Braham Dutt (supra) and the decision of Hon ble Apex Court in the case of K. M. Sharma (supra), the ITAT had held so in the said two cases. The relevant findings of the learned CIT(A) at paragraph Nos. 6 to 6.9 of is as under:- 6.1 From the perusal of impugned assessment order, it is seen that the residential status of the appellant is Resident. Accordingly as per the provisions of section 5(1) of the Act, the appellant is liable for tax in India on his global income which includes income which has accrued / arisen outside India. It follows that there is presumption in favour of Revenue that all the receipts of the assessee are income liable to be taxed in India unless it is proved otherwise by the assessee which is his primary onus, and the onus cannot be held to have shifted to the Income Tax Authority to prove that such income / funds were taxable in India. 6.2 It is also seen that as per the passport No. 9619172 issued on 17.08.2006 by the Regional Passport Office, Mumbai, the Date of Birth of Shri Vicky Me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2011,that though sub-clause (c) to Section 149 (1) provides that Notice u/s 148 can be issued if not more than 16 years have elapsed from the end of the relevant Assessment Year (where the income in relation to any asset located outside India chargeable to tax has escaped assessment) said sub clause (c) ofSection 149 (1) cannot help to extend the time limit which has already expired before the insertion of sub clause (c) to Section 149 (1J which is inserted with effect from 01.07.2012 only. Thus the time limit for the captioned year had already expired on 31.03.2011 which cannot be further extended in view of the amendment as carried out with effect from 01.07.2012. For the purpose reliance has been placed on the decision of Hon'ble Gujarat High Court in the case of Induprasad Bhatt Vs. J.P. Jani (ITO) (58 ITR 559) which was confirmed by the Supreme Court in J.P. Jani v/s Induprasad Devshankar Bhatt (72 ITR 595). The Hon'ble High Court of Gujarat held that on proper construction of section 297 (2) (d) (ii) of the Act the ITO cannot issue notice u/s. 148 to reopen the assessment of an assessee in the case were the right to reopen the assessment was barred under the old (pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng or rising outside India to such assesses from ambit of taxation. In the judgment dated 25.02.2019 in the case of Shri Ravichandra V Mehta, the Hon ble ITAT has relied upon the decision of Hon ble Delhi high Court in the case of Braham Dutt v/s ACIT 100 taxmann.com 324, the decision of Hon ble Supreme Court in the case of SS Gadgil v/s Lal Co. 53 ITR 231, and in the matter of K M Sharma v/s ITO 254 ITR 772 where in it has been held that when the time limit for issuing notice u/s. 148 has expired before any amendment in law from a prospective date will not revive. The decision of the Hon ble ITAT in the case of Shri Ravichandra V Mehta is as under 10. Thus, in all above cases Courts have held that when the time limit for issuing notice u/s. 148 has expired before any amendment in law from a prospective date will not revive. The time limit for those years for which limitation has already expired on the date of amendment. There was no challenge to vires of the amendment but still the Courts had held the u/s. 148 is beyond limitation period, In the present case in our hand, prior to amendment in section 149 and the time limit for issued of notice under section 148 for Ay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly. 11. Before us, the learned Counsel for the assessee has pointed out that in the case of the father and grandfather of the assessee, even for the impugned year i.e. AY 2004-05, the notice issued under Section 148 in the said case was held to be beyond the prescribed limitation by the ITAT in its order dated 27.12.2021 passed in ITA Nos.122 to 129/Rjt/2020 ITA Nos. 112 to 119/Rjt/2020. 12. Since the learned DR has been unable to distinguish either on facts or on law the case before us, we see no reason to interfere in the order of the learned CIT(A) holding the notice in the present case also to be issued beyond the prescribed limitation. In the impugned assessment year pertaining to AY 2004- 05, the limitation prescribed under the unamended Section 149 of the Act expired on 31.03.2011. The amended provision under sub-clause (c) to Section 149(1) of the Act extending the limitation to 16 years was brought on the Statute on the 1st of July, 2012 by the Finance Act, 2012 and the notice under Section 148 in the present case was issued on 27.03.2015; therefore, as per the facts of the present case also when the amendment extending limitation for issuing notice under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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