TMI Blog2023 (11) TMI 763X X X X Extracts X X X X X X X X Extracts X X X X ..... the amended 1961 Act [as obtaining with the enactment of FA 2021], falls foul of the limitation prescribed in Clause (a) of Sub-Section (1) of Section 149? HELD THAT:- As per directions contained in Ashish Agarwal s case [ 2022 (5) TMI 240 - SUPREME COURT] notices issued on or before 31.03.2021 will be governed by the old regime, while those issued on or after 01.04.2021 must be aligned with the new regime. Accordingly, all those notices issued between 01.04.2021 and 30.06.2021 stood converted to notices issued under Section 148A(b) of the new regime and were, thus, subject to the amended Section 149 of the 1961 Act Court noted (which was a matter of fact) that the power of reassessment which existed before 31.03.2021 continued to exist till 30.06.2021, with alteration in procedure brought about upon the enactment and enforcement of FA 2021. This is abundantly clear if one were to read the paragraphs following paragraph 99, i.e., paragraphs 100 to 105 of the judgment. The Court, in no uncertain terms, declared explanation A(a)(ii)/A(b) of Notifications dated 31.03.2021 and 27.04.2021 as being ultra vires the parent statute, i.e., TOLA. The said explanations sought to i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars and only in respect of serious tax evasion cases , that too, where evidence of concealment of income of Rs. 50 lakhs or more in a given period was found, the period for reopening the assessment was extended to ten (10) years. In order to ensure that utmost care was taken before invoking the extended period of limitation, the proposal was that approval should be obtained from the Principal Chief Commissioner of Income Tax, at the highest hierarchical level of the department. Likewise, the Memorandum emphasized that the new regime was forged with the hope that it would result in less litigation and would provide ease of doing business to tax payers, as there was a reduction in the time limit by which notice for assessment, reassessment and re-computation could be issued. Thus, as per the Memorandum, in normal cases , no notice was intended to be issued if three (03) years had elapsed from the end of the relevant AY. Notice, beyond the prescribed three (03) years from the end of the relevant AY, could be issued only in a few specific cases; one such example which is given in the Bill is where the AO was in possession of evidence that escaped income amounted to Rs. 50 lakhs or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 63/2023, W.P.(C) 5972/2023 CM APPL. 23464/2023, W.P.(C) 6281/2023 CM APPL. 24645/2023, W.P.(C) 6661/2023 CM APPL. 26089/2023, W.P.(C) 7180/2023 CM APPL. 27963/2023, Ganesh Dass Khanna, Pytex Impex Private Limited, M.R. Auxiliary Services Private Limited, Archna Gakhar, Amit Jain, Sunil Nosaria, Rita Somani, Samta Educational Minority Trust, Kartik Infratown Private Limited, Anita Kathuria, Jhawar Lal Jain, Geeken Seating Collection Private Limited, Shirish Jain, South East Up Power Transmission Company Limited, Orris Infrastructure (P) Ltd, Gurcharan Kaur, Apollo International Ltd, Mahesh Mittar Jain, Trishla Jain, Suntouch Infrasolutions Private Limited, Rajender Prasad Shukla, Hema, Manoj Kumar, Rama Jain (Through Legal Heir Sh. Mahesh Mittar Jain), Dashmesh Fin Invest Company Private Limited., Tarvinder Singh Juneja, Chandra Bhushan Ray, Dr. Vinod Kumar Upadhyaya, Hardeep Singh, Arvinder Kaur, Bhole Nath Foods Limited, Parnika Rathi, Pushpa Rathi, Dr. Bharat Aggarwal, Tanveen Kaur Juneja, Anish Singla Huf, Shalini Gupta, Blb Limited, Victoria Foods Private Limited, Chitranjan Shah, Devendra Kumar Saini, Yogesh Rustogi, Satpaul Goel, Vmvs Textiles Private Limited, Harje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and W.P.(C) 2213/2023, Mr Puneet Rai, Sr Standing Counsel, Mr Ashvini Kumar and Ms Madhavi Shukla, Jr. Standing Counsels in W.P.(C) 13903/2022, 15316/2022, ; Mr Gaurav Gupta, Sr. Standing Counsel with Mr Shivenda Singh an Mr Puneett Singhal, Jr. Standing Counsel in W.P.(C) 13003/2022, W.P.(C) 3395/2023 and W.P.(C) 3799/2023; Mr Puneet Rai,Sr,. Standing Counsel, Mr Ashvini Kumar, Jr. Standing Counsel, Ms Madhavi Shukla, Jr. Standing Counsel in W.P.(C) 2357/2023, W.P.(C) 3391/2023, W.P.(C) 5772/2023, W.P.(C) 5972/2023; Mr Manoj Kumar Tyagi, Adv in W.P.(C) 1910/2023; Mr Abhishek Maratha, Sr. Standing Counsel, with Mr Akshat Singh, Jr. Standing Counsel in W.P.(C) 12281/2022, W.P.(C) 12532/2022, W.P.(C) 13397/2022, W.P.(C) 13464/2022, W.P.(C) 13580/2022, W.P.(C) 13725/2022, W.P.(C) 13744/2022, W.P.(C) 13843/2022, W.P.(C) 17579/2022, W.P.(C) 1885/2023, W.P.(C) 1886/2023, W.P.(C) 1910/2023, W.P.(C) 4130/2023 W.P.(C) 4878/2023 Mr Aseem Chawla, Sr. Standing Counsel with Ms Pratishtha Chaudhary and Mr Aditya Gupta in W.P.(C) 13389/2022, W.P.(C) 17065/2022, W.P.(C) 17391/2022, W.P.(C) 17438/2022, W.P.(C) 17488/2022, W.P.(C) 237/2023, W.P.(C) 1623/2023, W.P.(C) 1724/2023, W.P.(C) 1749/2023, W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dication is: what was the period of limitation available to the respondents [hereafter referred to as revenue ] for issuance of notice under Section 148 of the Act? 3. Although the plain language of provisions of Section 149(1)(a) and (b) of the Act provide for limitation for notices to be issued under Section 148 qua the relevant AY, and hence, if applied, would, according to assessees, result in they being declared inefficacious-the revenue contends to the contrary. As per the revenue, the notices are within limitation based on a conjoint reading of the provisions mentioned above with the judgment rendered by the Supreme Court dated 04.05.2022 in Union of India and Ors. vs. Ashish Agarwal (2023) 1 SCC 617, Instruction No. 01 of 2022 dated 11.05.2022 issued by the Central Board of Direct Taxes [hereafter referred to as CBDT ] in exercise of powers under Section 119 of the Act and the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 [hereafter referred to as TOLA ]. 3.1. At this juncture, it is relevant to note that TOLA was preceded by an Ordinance issued under Article 123 of the Constitution titled Taxation and Other Laws (Relaxation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2020, two (02) other notifications were issued under the 2020 Ordinance, which were dated 29.06.2020 and 29.07.2020. 5.7. The first one was Notification No. 39 of 2020, dated 29.06.2020, whereby an error which had crept in the Notification dated 24.06.2020 was corrected. The second Notification, i.e., Notification No. 56 of 2020 dated 29.07.2020, was issued to amend the first proviso appended to Clause (i), sub-clause (a) and for insertion of a fresh proviso immediately after the second proviso incorporated in the Notification dated 24.06.2020. 6. Continuing with the narrative, the enactment of TOLA, which received the assent of the President of India on 29.09.2020, did not alter the end date for completion of proceedings and/or compliances, the due dates/time limit/limitation for which fell between 20.03.2020 and 31.12.2020. In other words, under TOLA, 31.03.2021 remained the end date for proceedings and compliances referred to in Section 3(1) of the said Act, which, as noticed hereafter, was extended via Notifications. 7. The enactment of Finance Act 2021 [hereafter referred to as FA 2021 ], which received the assent of the President of India on 28.03.2021 and came int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 31.03.2021] and Part A(b) [Notification dated 27.04.2021]. These explanations were identical. They, inter alia, provided that the provisions of Sections 148, 149 and 151 of the 1961 Act, as obtaining on 31.03.2021, would apply. In other words, these Notifications sought to bypass the substituted provisions contained in Sections 148, 149 and 151, which were incorporated in the 1961 Act pursuant to FA 2021. 11. Pivoted on the Notifications dated 31.03.2021 and 27.04.2021, the revenue issued notices under the unamended Section 148 of the 1961 Act to the assessees for AYs 2003-04 to 2017-18. 12. This led to challenges being laid via writ actions preferred in several High Courts of the country, including in this Court, wherein a bunch of cases were filed, the lead matter being W.P.(C) No. 6176/2021, titled Mon Mohan Kohli vs ACIT Anr. (2021) SCC OnLine Del 5250. 13. The writ petitioners (in those cases) assailed notices issued between 01.04.2021 and 30.06.2021 on two broad grounds. First, with the coming into force of FA 2021, the old regime could not have been taken recourse to by the revenue. Second, the notices were barred by limitation, as prescribed under the ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... say this objection preferred by the assessees was rejected by the AOs while passing the orders under Section 148A(d) of the 1961 Act. Resultantly, consequential notices under Section 148 of the 1961 Act were issued to the assessees. It is this development which has brought the assesses to the Court by way of the above-captioned writ actions. 18. Before we proceed further, we may note that based on the agreement arrived at between the counsel representing both the assesses and revenue, we had indicated that we would allude to the dates and events concerning W.P.(C) 12281/2022, titled, M.R. Auxiliary Services Private Limited vs. ITO Anr. and W.P.(C) 15121/2022, titled South East UP Power Transmission Company Limited vs. Deputy Commissioner of Income Tax, Central Circle-19, Delhi Ors. steering clear of the prefatory facts which have already been referred to hereinabove, since the issue which has arisen for consideration is a pure question of law and the judgment rendered by us would operate in rem and cover all assessees. 18.1. We also note that apart from the challenge laid to the notice issued under Section 148 to the concerned assessees, in some writ actions, the cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t onwards. Thus, according to the AO, the time limit would have to be reckoned from when the original notice under Section 148 was issued, i.e., from 28.06.2021. The AO, thus, claimed if the time limit provided under Section 149(1)(a) of the 1961 Act, which is three (03) years, is applied from that date, the reassessment proceedings would sustain and, therefore, the pre-conditions provided in Clause (b) of Subsection (1) of Section 149 were not applicable. 19.6. Being dissatisfied with the conclusion reached by the AO, MRA lodged its writ action on 23.08.2022. The writ petition came up before the coordinate bench on 25.08.2022, when notice was issued to the revenue. While issuing notice, the coordinate bench directed that although the AO would have the liberty to pass the assessment order, the same would not be given effect to and would be subject to further orders of the court. W.P.(C) 15121/2022 [South East UP Power Transmission case] 20. On 17.10.2016, South East UP Power Transmission Company Limited [hereafter referred to as South East ] filed its ROI for AY 2016-17. Via the ROI, South East declared a loss amounting to Rs. 54,87,433/-. 20.1. South East s ROI wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the 1961 Act, whereby he held that income chargeable to tax amounting to Rs. 8,01,500/- had escaped assessment. As a result, the AO also issued a consequential notice dated 29.07.2022 under Section 148 of the 1961 Act. 21.2. We may note that South East also conveyed to the AO via communication dated 22.08.2022 that the aforementioned notice issued under Section 148 should be dropped, considering that NCLT had approved the resolution plan presented by RPV. The said objection was also disposed of by the revenue via an order dated 19.09.2022. 21.3. It is in this background that South East filed its writ action, i.e. W.P.(C) 15121/2022, on 27.10.2022. Via this writ petition, South East has assailed the following notices and order: (i) Notice dated 30.06.2021 which was treated as a notice used under Section 148A(b) of the 1961 Act. (ii) Order dated 28.07.2022 passed under Section 148A(d) of the 1961 Act. (iii) Consequential notice dated 29.07.2022 issued under Section 148 of the 1961 Act. 21.4. Besides this, a challenge was laid to the Instruction dated 11.05.2022. Submissions made by counsel: 22. Although to adjudicate the legal issue in the above-c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LA also does not support this theory. (b) Contrary to the revenue s submission, TOLA has created no such legal fiction which would allow the notices issued under Section 148, which were issued in and about May-June 2022, to be treated as having been issued on or before 31.03.2021, to calculate the period of limitation prescribed in Section 149(1)(a) of the 1961 Act. [ See Keenara Industries Pvt. Ltd. vs. ITO, Surat 2023 (3) TMI 104 (Gujarat High Court); Rajiv Bansal v. Union of India and Ors 2023 (2) TMI 1081 (Bombay High Court) and Mon Mohan Kohli (Delhi High Court) paras 86 to 89] (c) The Instruction dated 11.05.2022 issued by the CBDT, which states in paragraph 6.1 that the extended reassessment notices would travel back in time to their original date when such notices were issued, provides no clarity as to what that original date would be. (d) The fallacy in the revenue s stand is that while it wishes to travel back in time by applying the period of limitation available prior to FA 2021 coming into force, it simultaneously seeks to apply the amended provisions. Therefore, if the unamended provisions are applied, the end date for expiration of limitation for AY ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s stand is erroneous as it fails to consider that with the enactment of FA 2021, it not only repealed but also substituted the provisions of Section 147 to Section 151. Substitution involves a two-step procedure. In the first instance, the subject provision ceases to exist. The next step brings into existence a new provision. In that sense, the legislative tool of substitution is different from suppression or a mere repeal of the existing provision. [ PTC India Ltd. v Central Electricity Regulatory Commission (2010) 4 SCC 603; Government of India v Indian Tobacco Association (2005) 7 SCC 396; Zile Singh v State of Haryana, (2004) 8 SCC 1; Income Tax Officer v Vikram Sujitkumar Bhatia (2023) SCC OnLine SC 370]. (vi)(a) The relevant extract of the Finance Minister s speech and the Memorandum explaining the provisions of Finance Bill 2021 [hereafter referred to as the Memorandum ] shed light on the object of bringing about amendments to Sections 147 to 151. The amendments intended to reduce litigation and compliance burden, remove discretion, impart certainty, and promote ease of doing business. It is in this light that for cases where the escapement of income was below Rs. 50 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umed that the legislature was aware of the state of law, as it existed then, which included the provisions of Section 149, TOLA and the Notifications issued under TOLA. However, despite such a situation obtaining, no provision was made for the extension of time limits under the amended Section 149, as exemplified by Notifications dated 31.03.2021 and 27.04.2021. Upon the enactment of FA 2021, TOLA and the Notifications issued under it were impliedly effaced. The Notifications dated 31.03.2021 and 27.04.2021 do not prescribe any time limit; instead, they merely extend the end dates specified under the repealed provisions of Section 149. Pursuant to the substitution of the old provisions of Section 149 with the enactment of FA 2021, the said Notifications cannot survive. [ See Municipal Council Palai v. T. J. Joseph, 1963 SCC OnLine SC 55; Fibre Boards Pvt. Ltd. vs CIT, (2015) 376 ITR 596 (SC) and CIT v. Venkateswara Hatcheries (P.) Ltd, 237 ITR 174 (SC)] (xi) With the enactment of FA 2021, the erstwhile provisions of Section 149(1) were repealed and were substituted by a new provision. The immediate impact of the substitution was, while the limitation prescribed under Clause (a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nability of the directions contained in the aforementioned judgment passed by the Supreme Court. In other words, only the Supreme Court would be competent to clarify, if necessary, the decision rendered under Article 142 of the Constitution. (iii) De hors the aforesaid contention, it is submitted that a perusal of the judgment rendered in Ashish Agrawal s case would show that it approved, among others, the judgment of the coordinate bench in Mon Mohan Kohli s case and while doing so recognized the fact that if corrective measures are not taken, it would result in the failure of reassessment proceedings qua cases in which notices under Section 148 were issued between 01.04.2021 and 30.06.2024. Against this backdrop, the Supreme Court directed that the notices issued under Section 148 should be treated as those issued under Section 148A(b) of the amended 1961 Act. (iv) Under the amended 1961 Act, the time limit for AY 2016-17 as per Section 149(1)(a) would come to an end on 31.03.2020. The limitation for notices issued between 01.04.2021 to 30.06.2021 stood extended till 30.06.2021, and the said notices were to be treated as notices issued under Section 148(A)(b) of the amended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22 is intra vires the provisions of the 1961 Act and Section 3(1) of TOLA, read with the directions contained in the Ashish Agrawal s case. (viii) Both under the unamended 1961 Act and amended 1961 Act, the issue concerning limitation is inextricably intertwined with two aspects: (a) First, the rank of the authority granting approval/sanction for triggering reassessment proceedings. (b) Second, the quantum of income which has escaped assessment. (ix) The issue concerning limitation is covered in favour of revenue by the decision of the coordinate bench rendered in Touchstone. It must be borne in mind that the 2020 Ordinance morphed into TOLA on 29.09.2020, and the Notification issued under TOLA extended the limitation. For issuance of notice under Section 148, the farthest time limit was extended to 30.06.2021. Therefore, notices issued before the said date are within the time limit prescribed under Section 149(1)(a) of the Act. (x) The constructive res judicata doctrine applies to Income Tax proceedings for the same AY. In other words, if multiple issues arise in assessment proceedings concerning a particular AY, the assessee must raise all such issues in the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ension of limitation granted by the revenue in the exercise of powers under Section 3(1) of TOLA and the correct application of Section 149(1)(a) of the amended 1961 Act. Analysis and Reasons: 25. Having heard the learned counsels for the assessees and the revenue, as was pointed out right at the outset, the only issue which arises for our consideration (and that too concerning AY 2016-17 and 2017-18) is whether the impugned order passed under Section 148A(d) and the consequent notice issued under Section 148 of the amended 1961 Act [as obtaining with the enactment of FA 2021], falls foul of the limitation prescribed in Clause (a) of Sub-Section (1) of Section 149? 26. Section 149(1) of the amended 1961 Act mandates that no notice under Section 148 would be issued for the relevant AY if three (03) years have elapsed from the end of the said AY. The AO can take recourse to the extended limitation period if the conditions precedent prescribed in Clause (b) of Sub-Section (1) of Section 149 are fulfilled. In other words, in a case where three (03) years from the end of the relevant AY have elapsed, the AO can issue a notice under Section 148 provided the conditions prescr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions, which involved passing of orders under Section 148A(d) and issuance of notices under Section 148 taken between 01.04.2021 (when FA 2021 kicked in) and 30.06.2021 were valid in the eyes of the law, having regard to the following circumstances: (i) First, the observations made in the judgment of the Supreme Court in Ashish Agrawal s case. (ii) Second, the observations made in paragraphs 98 and 99 by the coordinate bench in Mon Mohan Kohli s case. (iii) Third, the extension of the time limit, as noticed hereinabove, granted via the subject Notifications by the Central Government in the exercise of powers under Section 3(1) of TOLA. (iv) Fourth, the third and fourth provisos appended to Section 149 of the 1961 Act, which provide for the exclusion of periods referred to therein, which, if excised, would bring the impugned notices and orders within the limitation prescribed under Section 149(1)(a) of the amended 1961 Act. (v) Fifth, the issue raised before the Court is no longer res integra, given the judgments rendered by the coordinate bench in Touchstone and Salil Gulati. 32. Therefore, to deal with each of the submissions made on behalf of the reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture and substituted with a specific aim and object to protect the rights and interest of the assessee as well as and the same being in public interest, the respective High Courts have rightly held that the benefit of new provisions shall be made available even in respect of the proceedings relating to past assessment years, provided Section 148 notice has been issued on or after 1-4-2021. We are in complete agreement with the view taken by the various High Courts in holding so. 23. However, at the same time, the judgments of the several High Courts would result in no reassessment proceedings at all, even if the same are permissible under the Finance Act, 2021 and as per substituted Sections 147 to 151 of the IT Act. The Revenue cannot be made remediless and the object and purpose of reassessment proceedings cannot be frustrated. It is true that due to a bona fide mistake and in view of subsequent extension of time vide various notifications, the Revenue issued the impugned notices under Section 148 after the amendment was enforced w.e.f. 1-4-2021, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in law shall continue to be available. 29. The present order shall be applicable PAN INDIA and all judgments and orders passed by the different High Courts on the issue and under which similar notices which were issued after 1-42021 issued under Section 148 of the Act are set aside and shall be governed by the present order and shall stand modified to the aforesaid extent. The present order is passed in [the]exercise of powers under Article 142 of the Constitution of India so as to avoid any further appeals by the Revenue on the very issue by challenging similar judgments and orders, with a view not to burden this Court with approximately 9000 appeals. We also observe that the present order shall also govern the pending writ petitions, pending before various the High Courts in which similar notices under Section 148 of the Act issued after 1-4-2021 are under challenge. 30. The impugned common judgments and orders [ Ashok Kumar Agarwal v. Union of India, 2021 SCC OnLine All 799 ] passed by the High Court of Allahabad and the similar judgments and orders passed by various High Courts, more particularly, the respective judgments and orders passed by the various High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion are no different. 41. However, having regard to the fact that the revenue has laid store by the judgment rendered by the coordinate bench of this Court in Mon Mohan Kohli s case, the opening part of the said judgment reveals the question of law that came up for consideration before the said bench is extracted below: whether the Government/Executive can make or change law of the land by way of Explanations to Notifications without specific Authority from the Legislature to do so and whether the Government/Executive can impede the implementation of law made by the Legislature 42. In this context, the coordinate bench also noted the relief sought in the writ actions, which it was called upon to adjudicate. (i) A direction to quash reassessment notices issued after 31.03.2021 under Section 148 of the 1961 Act. (ii) Declare explanations A(a)(ii)/A(b) contained in the Notifications dated 31.03.2021 and 27.04.2021 issued under Section 3(1) of TOLA ultra vires the provisions of TOLA, to the extent that the said explanations extended the applicability of the provisions of Section 148, 149 and 151 [as the case may be], as obtaining on 31.03.2021 [i.e., before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amended 1961 Act continued to operate despite attempts to the contrary made by the introduction of the aforementioned explanations in Notifications dated 31.03.2021 and 27.04.2021. This is evident upon perusal of the following observations made by the coordinate bench in Mon Mohan Kohli s case: 100. This Court is of the opinion that Section 3(1) of [the] Relaxation Act empowers the Government/Executive to extend only the time limits and it does not delegate the power to legislate on provisions to be followed for initiation of reassessment proceedings. In fact, the Relaxation Act does not give power to [the] Government to extend the erstwhile Sections 147 to 151 beyond 31st March, 2021 and/or defer the operation of substituted provisions enacted by the Finance Act, 2021. Consequently, the impugned Explanations in the Notifications dated 31st March, 2021 and 27th April, 2021 are not conditional legislation and are beyond the power delegated to the Government as well as ultra vires the parent statute i.e. the Relaxation Act. Accordingly, this Court is respectfully not in agreement with the view of the Chhattisgarh High Court in Palak Khatuja (supra), but with the views of the Al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court in Ashish Agarwal which stated, in no uncertain terms, that defence under Section 149 would be available to the assessees. Thus, this submission advanced by the revenue cannot be accepted. 45. This brings us to the submission advanced on behalf of the revenue that the issue raised before us is no longer res integra. In this context, as noticed above, the revenue has relied upon judgments rendered by the coordinate bench in Touchstone and Salil Gulati. 46. A close appraisal of the facts obtaining in the Touchstone case would show that the writ petitioner in that case had laid a challenge to a notice issued under Section 148 vis- -vis AY 2013-14, and the escaped income exceeded Rs. 50 lakhs. In paragraph 16 of the judgment, the court noted this aspect of the matter and, thereafter, applied the provisions of Clause (b) of Sub-Section (1) of Section 149 of the amended 1961 Act. 47. Likewise, a perusal of the judgment rendered by the coordinate bench in Salil Gulati s case would show that it concerned AY 2013-14, and the escaped income in this case was also more than Rs. 50 lakhs. [See paragraph 9 of the said judgment]. In the said case, the court was not called u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suit a litigant should be able to demonstrate that the opposing party was bound to raise the issue to defend its position. (ii)(b) This is evident from the language of Explanation IV to Section 11 of the CPC from which this principle has been borrowed, where 0the expression used is might and ought and not might or ought . [ See Alka Gupta v Narender Kumar Gupta (2010) 10 SCC 141; Shiv Chander More v. Lt. Governor, (2014) 11 SCC 744; Ferro Alloys Corpn. Ltd. and Anr. v. Union of India and Ors. 1999 4 SCC 149; Shuja-ud-Din v. Siraj Din, AIR 1941 Lah 139]. (ii)(c). More importantly, in these cases, the interpretation of Section 149(1)(a) was not an issue therefore the principle of constructive res judicata, in our opinion, is not applicable. (ii)(d) Furthermore, if the judgements rendered in Touchstone and Salil Gulati are read in the manner in which the revenue is seeking to profess, they would run counter to the ratio of the judgement of the Supreme Court in the Ashish Agrawal case. 49. The arguments advanced on behalf of the revenue that since time limits have been extended by the Central Government by virtue of the Notifications issued under Section 3(1) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act was issued, which was treated, as per the judgment in Ashish Agrawal s case, as notice under 148A(b). Concededly, these notices were issued between 01.04.2021 and 30.06.2021, by which time the limitation under Section 149(1)(a) of the Act had already expired. 50.5. The fourth proviso, in our opinion, can have no impact on the outcome of the cases at hand, as it provides for a situation where, after the exclusion of the timeframe referred to in the third proviso, the time available to the AO for passing an order under Section 148A(d) of the Act is less than seven (7) days. The said proviso states that in such a situation, the remaining timeframe shall stand extended to seven (7) days, and consequently, the limitation under Sub-Section (1) of Section 149 shall also stand extended. 51. This brings us to the tenability of the travel back in time theory encapsulated in paragraphs 6.1 and 6.2(ii) of the Instruction dated 11.05.2022. For convenience, the relevant part of the instruction is set forth hereafter: 6.0 Operation of the new section 149 of the Act to identify cases where fresh notice under section 148 of the Act can be issued: 6.1 With respect of [to] opera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty under section 151 of the new law in this case shall be the authority prescribed under clause (ii) of that section. (ii) AY 16-17, AY 17-18: Fresh notice under section 148 can be issued in these cases, with the approval of the specified authority, under clause (a) of sub-section (1) of new section 149 of the Act, since they are within the period of three years from the end of the relevant assessment year. Specified authority under section 151 of the new law in this case shall be the authority prescribed under clause (i) of that section [Emphasis is ours] 52. A careful perusal of the judgment of the Supreme Court rendered in Ashish Agrawal s case and the provisions of TOLA would show that neither the said judgment nor TOLA allowed for any such modality to be taken recourse to by the revenue, i.e., that extended reassessment notice would travel back in time to their original date when such notices were to be issued and thereupon the provisions of amended Section 149 would apply. 52.1. Apart from anything else, the aforesaid provisions contained in the Instruction dated 11.05.2022 are beyond the powers conferred on the CBDT under Section 119 of the 1961 Act. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment year, he may assess or reassess or recompute the total income for such year under section 147 of the Act by issuing a notice under section 148 of the Act. However, such reopening is subject to the time limits prescribed in section 149 of the Act. xxx xxx xxx The Bill proposes a completely new procedure of [for] assessment of such cases. It is expected that the new system would result in less litigation and would provide ease of doing business to taxpayers as there is a reduction in [the] time limit by which a notice for assessment or reassessment or recomputation can be issued. The salient features of [the] new procedure are as under:- xxx xxx xxx (iii) Section 147 proposes to allow the Assessing Officer to assess or reassess or re-compute any income escaping assessment for any assessment year (called relevant assessment year). xxx xxx xxx (vii) New Section 148A of the Act proposes that before issuance of notice the Assessing Officer shall conduct enquiries, if required, and provide an opportunity of being heard to the assessee. After considering his reply, the Assessing Office shall decide, by passing an order, whether it is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available to the Assessing Officer for passing order, about fitness of a case for issue of 148 notice, is less than seven days, the remaining time shall be extended to seven days . [Emphasis is ours] 53.1. As would be evident from the extracts set forth above, both from the Finance Minister s speech and the Memorandum, the time limit for reopening under the new regime was reduced from six (06) years to three (03) years and only in respect of serious tax evasion cases , that too, where evidence of concealment of income of Rs. 50 lakhs or more in a given period was found, the period for reopening the assessment was extended to ten (10) years. In order to ensure that utmost care was taken before invoking the extended period of limitation, the proposal was that approval should be obtained from the Principal Chief Commissioner of Income Tax, at the highest hierarchical level of the department. Likewise, the Memorandum emphasized that the new regime was forged with the hope that it would result in less litigation and would provide ease of doing business to tax payers, as there was a reduction in the time limit by which notice for assessment, reassessment and re-computation could ..... X X X X Extracts X X X X X X X X Extracts X X X X
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