TMI Blog2024 (1) TMI 803X X X X Extracts X X X X X X X X Extracts X X X X ..... o Section 149(1) of the Act. The first proviso to Section 149(1) stipulates that no notice under Section 148 can be issued at any time in a case for any assessment year, if a notice under Section 148 could not have been issued at that time on account of being beyond the time limit specified under the unamended Section 149(1)(b), i.e., as it stood prior to the Finance Act, 2021. Applicability of Section 149 to be seen qua the notice under Section 148 and not with respect to the notice issued under Section 148A(b) or the order passed under Section 148A(d) of the Act. In the present case, as for AY 2013-14, the 6 years period expired on 31st March 2021, extended under Section 3(1) of TOLA. Therefore, the impugned notice dated 28th July 2022, which is under challenge in the petition, is barred by limitation. Reassessment notices issued for AY 2013-14 are patently barred by limitation as the six years limitation period under the Act (as extended by Section 3 of TOLA) expired by 31st March 2021. However, even on the Revenue s demurrer and assuming that such reopening notices could travel back in time and that the provisions of TOLA protected such reopening notices (we do not agree), even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice dated 28th July 2022 issued under Section 148 of the Income Tax Act, 1961 (the Act) seeking to reopen petitioner s assessment for AY 2013-14, (ii) the order dated 27th July 2022 passed under Section 148A(d) of the Act, and (iii) Central Board of Direct Taxes (CBDT) Instruction No. 1 of 2022 dated 11th May 2022. According to petitioner, the said reopening notice, the order dated 27th July 2022 and the said Instruction are illegal, without jurisdiction, arbitrary, in violation of principles of natural justice, ultra vires the provisions of the Act and hence deserve to be set aside. 2. Petitioner is a Public Sector Undertaking operating under the control of Ministry of Finance, Government of India, viz., respondent no. 3. Petitioner is engaged in the business of General Insurance in India and outside India. It is also a 'Public Finance Institution' under Section 4A of the erstwhile Companies Act, 1956. For AY 2013-14, petitioner filed on 28th November 2013 its original return of income under Section 139(1) of the Act declaring total income of Rs.NIL. On 9th June 2014, petitioner filed revised return of income for the said assessment year, declaring a total loss of Rs. 94, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owing the statutory procedure stipulated under Sections 148, 148A, 149 and 151 of the Act, issued the notice dated 29th June 2021 under Section 148 of the Act, seeking to reopen petitioner's assessment for AY 2013-14. This notice has been issued after a period of three years from the end of the relevant assessment year, i.e., AY 2013-14. In the said notice, respondent No. 1 alleged that there were reasons to believe that income for the said year had escaped assessment and proposed to reassess the income of petitioner. According to petitioner s respondent No. 1 had sought to reopen the assessment of petitioner by following the unamended provisions of Sections 147 and 148 of the Act that existed prior to 1st April 2021. By a communication dated 26th July 2021, petitioner filed its objections to the reopening notice dated 29th June 2021. Petitioner also requested for a copy of the reasons recorded with necessary documents/evidence. Respondent No. 1 did not respond and in view thereof, petitioner filed a Writ Petition in this Court being Writ Petition No. 3119 of 2021 on the ground that reopening notice dated 29th June 2021 issued by respondent No. 1 was illegal and without jurisdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been issued under section 148 of the unamended Act from 1-4- 2021 till date, including those which have been quashed by the High Courts. Even otherwise as observed hereinabove holding any enquiry with the prior approval of specified authority is not mandatory but it is for the concerned Assessing Officers to hold any enquiry, if required; (iii) The assessing officers shall thereafter pass orders in terms of section 148A(d) in respect of each of the concerned assessees; Thereafter after following the procedure as required under section 148A may issue notice under section 148 (as substituted); (iv) All defences which may be available to the assesses including those available under section 149 of the IT Act and all rights and contentions which may be available to the concerned assessees and Revenue under the Finance Act, 2021 and in law shall continue to be available. The Apex Court held that the modifications/substitution would apply to all judgments and orders passed by different High Courts where similar notices issued after 1st April 2021 under Section 148 of the Act are set aside. 8. Subsequently, respondent no. 3, through CBDT, on 11th May 2022 issued Instruction No. 1 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is recorded reasons dated 29th June 2021. In response to these letters dated 14th and 16th June 2022 petitioner, vide its letter dated 30th June 2022, raised its objections against the proposed reopening of AY 2013-14 where, inter alia, petitioner furnished detailed submissions as regard to the transaction with Renuka Mata Co-op. Society and the alleged tax evasion by claiming tax exemption as to why the reopening proceedings in respect of both the issues was incorrect and that no income had escaped assessment as contemplated under Section 147 of the Act. These objections were disposed by respondent No. 1 by order dated 27th July 2022 passed under Section 148A(d) of the Act. Respondent No. 1 accepted petitioner s explanation with regard to Renuka Mata Co-op. Society and the issue of tax evasion due to tax exemption alleged and has dropped the proceedings/proposed not to issue any reopening notice under Section 148 of the Act in that regard. 12. In so far as purported recorded reasoned dated 8th February 2021, that were communicated to petitioner for the first time on 14th June 2022, respondent No. 1 held that petitioner had not raised any objections and hence he would presume that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al (Supra) is challenged on the ground of being barred by limitation. 16. Mr. Pardiwalla submitted as under : (a) The Apex Court to strike a balance between the rights of both parties permitted the Revenue to re-initiate the reassessment proceedings by following the new procedure for reassessment. At the same time also specifically granted liberty to the assessees to raise all defences available to them including the defence under Section 149 of the Act; (b) It is now a settled position in law that the validity of a notice issued under Section 148 of the Act must be judged on the basis of the law existing on the date on which such notice is issued. This principle has been confirmed by this Court in Siemens Financial Services Private Limited V/s. Deputy Commissioner of Income Tax Ors. (2023) 457 ITR 647 (BOM) and in Tata Communications (Supra), where at paragraph 34 the Court has held that it is well settled that the validity of a notice issued under section 148 of the Act must be judged on the basis of the law existing on the date on which such notice is issued. Even the Revenue accepts this well settled position. Further, the provisions of sections 147 to 151 are procedural laws a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd held that the notice issued under Section 148 of the Act for the AY 2014-15 in the month of July 2022 was barred. This was also endorsed by the Rajasthan High Court in Sudesh Taneja V/s. Income Tax Officer, Ward 1(3), Jaipur (2022) 442 ITR 289, and by this Court in Tata Communications (Supra). In Ashish Agarwal (Supra), the Apex Court categorically affirmed the view taken by various High Courts including the Rajasthan High Court and in Tata Communications (Supra) by this Court; (g) Taxation and other laws (Relaxation and Amendment of certain provisions) Act, 2020 (TOLA) has no application in the present case which pertains to AY 2013-14. (h) The Apex Court in Ashish Agarwal (Supra) while enabling the Revenue to restart the reassessment proceedings held that the old Section 148 notices were to be treated as show cause notices in terms of Section 148A(b) and not notice under Section 148 of the Act and, therefore, the mandatory procedure stipulated in Section 148A was to be followed. Thereafter, the Assessing Officers were authorised to issue the notice under the amended Section 148 of the Act; (i) The first proviso to Section 149(1) of the Act puts a fetter on issuing of a notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation. This so even where the actual date is beyond the date of limitation so prescribed if no days are excluded from the limitation period; (b) Section 3 of TOLA merely provides exclusion of Covid period while computing the 4 years or the 6 years, as the case may be, under Section 149 of the Act. Hence, after excluding the Covid period, if the notice under Section 148 of the Act is within 6 years, it has to be deemed as within limitation period of 6 years. The relaxation has to be deemed to be an integral part of Section 149 in so far as days are excluded under Section 149 of the Act for computing 4 years and 6 years; (c) After exclusion of the Covid period, the notice under Section 148 of the Act for AY 2013-14 will be deemed as within limitation of 6 years. The expression in the TOLA Act and Notification issued thereunder that the end date to which the time limit for the completion of such action shall stand extended refers to the extension so arrived at after excluding the number of days/Covid period. The Notification No. 20 of 2021 dated 31st March 2021 seeks to extend the limitation which expires on 31st March 2021 under the Act. Petitioner s argument that Notification No. 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as totally blind to the facts of the lead case Ashish Agrawal (Supra) which pertain to AY 2013-14. It is preposterous to say that Apex Court order in Ashish Agrawal (Supra) does not assist Ashish Agrawal (Supra) as an assessee. The meaning of the Apex Court order in Ashish Agrawal (Supra) has to be found in respect of its observation : (i) strike a balance between the rights of the Revenue as well as the respective assessees as because of a bona fide belief of the officers of the Revenue in issuing approximately 90000 such notices ; and, (ii) Appeals are ALLOWED IN PART [Emphasis by upper case in Original]. (g) The true meaning of Apex Court order in Ashish Agrawal (Supra) passed in exercise of power under Article 142 of the Constitution are as under : (i) The Notices u/s 148 irrespective of the Assessment Year, of the unamended Act issued during 01-04-2021 to 30-06-2021 are to be treated as Show-Cause Notice under the amended Income-tax Act 1961 without being hit by limitation, if issued on or before 30-06-2021. (ii) There is no necessity to issue fresh notice u/s 148A of the Act in lieu of / in substitution of old notice u/s 148 issued during 01-04-2021 to 30- 06-2021 even where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdiwalla submitted as under : (a) The issue of limitation raised under the Limitation Act, 1963 would not apply to the provisions of the Income Tax Act and in particular to the case at hand in view of the specific period provided under the TOLA. Further this defence has not been raised either in the order passed under Section 148A(d) of the Act nor in the affidavit in reply; (b) Exclusion of Covid period while computing the 4 years or the 6 years, as the case may be, is in effect, nothing but the theory of travel back in time which has been rejected by this Court in Tata Communications (Supra). So also in Siemens Financials (Supra). In Ganesh Dass Khanna (Supra) the Delhi High Court has declared paragraph 6.1 of the Instructions as bad in law; (c) As regards the Notification No. 20 of 2021 dated 31st March 2021, which extends the limitation expiring on 31st March 2021 to 30th April 2021, the Notification itself says where the time limit specified in or prescribed or notified under the Income Tax Act falls for completion on 31st March 2021 . Since the limitation under the erstwhile Section 149 of the Act for reopening the assessment for the AY 2013-14 expired on 31st March 2020, Not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs (P.) Ltd. V/s. Income Tax Officer (2022) 142 taxmann.com 336 (Delhi) relied upon by Mr. Sharma can be distinguished in as much as in that case, without going into other details, petitioner accepted that the notice issued on 29th June 2021 under Section 148 of the Act was within limitation. In the case at hand it is petitioner s case that any notice issued after 31st March 2021 for AY 2013-14 was barred by limitation. As regards Salil Gulati V/s. Assistant Commissioner of Income Tax (2023) 150 taxmann.com 50(SC) it only followed Touchstone Holdings (Supra). FINDINGS : 19. Section 148 of the Act reads as under : 148. Issue of notice where income has escaped assessment. Before making the assessment, reassessment or recomputation under section 147, and subject to the provisions of section 148A, the Assessing Officer shall serve on the assessee a notice, along with a copy of the order passed, if required, under clause (d) of section 148A, requiring him to furnish within such period, as may be specified in such notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer shall be deemed to have information which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the three assessment years immediately preceeding the assessment year relevant to the previous year in which the search is initiated or books of account, other documents or any assets are requisitioned or survey is conducted in the case of the assessee or money, bullion, jewellery or other valuable article or thing or books of account or documents are seized or requisitioned in case of any other person. Explanation 3. For the purposes of this section, specified authority means the specified authority referred to in section 151. Section 148A of the Act reads as under : 148A. Conducting inquiry, providing opportunity before issue of notice under section 148. The Assessing Officer shall, before issuing any notice under section 148, (a) conduct any enquiry, if required, with the prior approval of specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment; (b) provide an opportunity of being heard to the assessee, with the prior approval of specified authority, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 an 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 on or before 1st day of April, 2021, if such notice could not have been issued at that time on account of being beyond the time specified under the provisions of clause (b) of sub-section (1) of this section, as they stood immediately before the commencement of the Finance Act, 2021: Provided further that the provisions of this sub-section shall not apply in a case, where a notice under section 153A, or section 153C read with section 153A, is required to be issued in relation to a search initia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y with the amended provision of the law. Therefore, any notice issued after 1st April, 2021 must comply with the amended provisions of the Act which was amended with effect from 1st April, 2021. This contention has also been considered and upheld by the Delhi High Court and the Allahabad High Court. 35. We have to also note the well settled proposition that when the Act specifies that something is to be done in a particular manner, then, that thing must be done in that specified manner alone, and any other method/(s) of performance cannot be upheld. Hence, notices issued under Section 148 of the Act after 1st April, 2021 must comply with the amended provisions of law and cannot be sustained on the basis of the erstwhile provision. 21. The Apex Court in Ashish Agarwal (Supra) did not disturb the findings of this Court in Tata Communications (Supra). The Apex Court only modified the orders passed by the respective High Courts to the effect that the notices issued under Section 148 of the Act, which were subject matter of writ petitions before various High Courts, shall be deemed to have been issued under Section 148A(b) of the Act and the Assessing Officer was directed to provide wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ash (Supra) held By this writ petition, petitioner has challenged the impugned order under Section 148 A(d) of the Income Tax Act, 1961 dated 29th July, 2022, relating to the assessment year 2014-2015 on the ground that the same being without jurisdiction and being barred by limitation since the initiation of re-opening of the assessment has been made admittedly after six years from the end of the expiry of the period of relevant assessment year. Mr. Roychowdhury, learned Counsel appearing for the respondent is not in a position to contradict the aforesaid factual and legal position. Accordingly, this writ petition being WPO No. 2450 of 2022 is disposed of by quashing the aforesaid impugned order dated 29th July, 2022. Prior thereto, the Rajasthan High Court in Sudesh Taneja (Supra), which was followed by this Court in Tata Communications (Supra), in paragraph 37 held as under : 37. In this context we have perused the provisions of reassessment contained in the Finance Act, 2021. We have noticed earlier the major departure that the new scheme of reassessment has made under these provisions. The time limits for issuing notice for reassessment have been changed. The concept of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o notice under Section 148 would be issued for the past assessment years by resorting to the larger period of limitation prescribed in newly substituted clause (b) of Section 149(1). This would indicate that the notice that would be issued after 01.04.2021 would be in terms of the substituted Section 149(1) but without breaching the upper time limit provided in the original Section 149(1) which stood substituted. This aspect has also been highlighted in the memorandum explaining the proposed provisions in the Finance Bill. If according to the revenue for past period provisions of section 149 before amendment were applicable, this first proviso to section 149(1) was wholly unnecessary. Looked from both angles, namely, no indication of surviving the past provisions after the substitution and in fact an active indication to the contrary, inescapable conclusion that we must arrive at is that for any action of issuance of notice under Section 148 after 01.04.2021 the newly introduced provisions under the Finance Act, 2021 would apply. Mere extension of time limits for issuing notice under section 148 would not change this position that obtains in law. Under no circumstances the extended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specified Act; or (b) filing of any appeal, reply or application or furnishing of any report, document, return or statement or such other record, by whatever name called, under the provisions of the specified Act; or (c) in case where the specified Act is the Income-tax Act, 1961,- (i) making of investment, deposit, payment, acquisition, purchase, construction or such other action, by whatever name called, for the purposes of claiming any deduction, exemption or allowance under the provisions contained in - (I) sections 54 to 54GB, or under any provisions of Chapter VI-A under the heading B.-Deductions in respect of certain payments thereof; or (II) such other provisions of that Act, subject to fulfillment of such conditions, as the Central Government may, by notification, specify; or (ii) beginning of manufacture or production of articles or things or providing any services referred to in section 10AA of that Act, in a case where the letter of approval, required to be issued in accordance with the provisions of the Special Economic Zones Act, 2005, has been issued on or before the 31st day of March, 2020, and where completion or compliance of such action has not been made within s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Finance Act, 2021, shall apply. (b) the compliance of any action referred to in clause (b) of sub- section (1) of section 3 of the said Act relates to intimation of Aadhaar number to the prescribed authority under sub-section (2) of section 139AA of the Income-tax Act, the time-limit for compliance of such action shall stand extended to the 30th day of June, 2021. xxxxxxxxxxxxxxxxxxx This Notification, therefore, says that where the specified Act is the Income Tax Act, 1961 and the completion of any action referred to in clause (a) of sub-section (1) of Section 3 of TOLA relates to issuance of notice under Section 148 as per time limit specified in Section 149 and 31st day of March 2021 is the end date of the period during which the time limit, specified in, or prescribed or notified under the Income Tax Act falls for the completion of such action, then, 30th day of April 2021 shall be the extended end date for the completion of such action. Therefore, this would apply only for AY 2014-15 because it says completion of any action when it relates to issuance of notice under Section 148 as per time limit specified in Section 149 is 31st March 2021 it shall be extended to 30th April 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the said Act that, - (A) where the specified Act is the Income-tax Act, 1961 (43 of 1961) (hereinafter referred to as the Income-tax Act) and, - (a) the completion of any action, referred to in clause (a) of sub-section (1) of section 3 of the said Act, relates to passing of any order for assessment or reassessment under the Income-tax Act, and the time limit for completion of such action under section 153 or section 153B thereof, expires on the 30th day of April, 2021 due to its extension by the said notifications, such time limit shall further stand extended to the 30th day of June, 2021; (b) the completion of any action, referred to in clause (a) of sub-section (1) of section 3 of the said Act, relates to passing of an order under sub-section (13) of section 144C of the Income- tax Act or issuance of notice under section 148 as per time-limit specified in section 149 or sanction under section 151 of the Income-tax Act, and the time limit for completion of such action expires on the 30th day of April, 2021 due to its extension by the said notifications, such time limit shall further stand extended to the 30th day of June, 2021. Explanation . For the removal of doubts, it is her ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der as section 151 has been amended by Finance Act, 2021 and the provisions of the amended section would have to be complied with by the Assessing Officer, w.e.f., 1st April 2021. Hence, the Assessing Officer cannot seek to take the shelter of TOLA as a subordinate legislation cannot override any statute enacted by the Parliament. Further, the notification extending the dates from 31st March 2021 till 30th June 2021 cannot apply once the Finance Act, 2021 is in existence. The sanction of the specified authority has to be obtained in accordance with the law existing when the sanction is obtained and, therefore, the sanction is required to be obtained by applying the amended section 151(ii) of the Act and since the sanction has been obtained in terms of section 151(i) of the Act, the impugned order and impugned notice are bad in law and should be quashed and set aside. 30. The Allahabad High Court in Ashok Kumar Agarwal V/s. Union of India (2021) 131 taxmann.com 22 (Allahabad) held that TOLA is an enactment to extend timelines only. Consequently, all references to issuance of notice contained in TOLA from 1st April 2021 must be read as reference to the substituted provisions only. Pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue. The Delhi High Court has considered and rejected the contention of the Revenue that the notice issued after 1st April 2021 relates back to an earlier period. 38. The Delhi High Court has considered and rejected this argument of the Revenue that Relaxation Act creates a legal fiction such that the notices issued under Section 148 of the Act are deemed to be issued on 31st March, 2021. The so-called legal fiction is directly contrary to the Revenue's own Circular No. 549 of 1989, which is binding on them as well as the well settled principle that the validity of a notice is to be judged on the basis of the law that prevails at the time of its issue. (emphasis supplied) Both these judgments, i.e., Tata Communications (Supra) and Mon Mohan Kohli (Supra), have been affirmed in Ashish Agarwal (Supra). 32 Further, in Siemens Financial (Supra), this Court has held that the Instruction is erroneous in this regard, i.e., travel back to the original date. Paragraphs 28 to 31 of the said judgment read as under : 28. The interpretation placed by the CBDT in paragraph 6.1 of Instruction No. 1/2022 dated 11th May 2022 cannot be countenanced as it is not open to them to clarify that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and rejected the contention of the Revenue that the notice issued after 1st April 2021 relates back to an earlier period. The Delhi High Court had considered and rejected the argument of the Revenue that TOLA creates a legal fiction such that the notices issued under Section 148 of the Act are deemed to be issued on 31st March, 2021. TOLA only granted power to the Central Government to notify the period during which actions are required to be taken that can fall within the ambit of TOLA, and the power to extend the time limit within which those actions are to be taken. There was no amendment to the provisions of Sections 147 to 151 of the Act. The court also observed that amendments to the substantive provisions of the Act were envisaged under Section 3 of TOLA, which was only a relaxation provision dealing with time limits under various enactments. The Assessing Officer could have assumed jurisdiction while issuing the impugned notices only after complying with the amended Section 147 which has not been done. In Tata Communications (Supra), this court also held that TOLA was not applicable for A.Y.-2015-2016 or any subsequent years. Hence question of applicability of notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but such Acts must be performed in accordance with the provisions of the specified Acts. Therefore, if there is an amendment in the specified Act, the amended provision of the specified Act would apply to such actions of the Revenue. The Delhi High Court has considered and rejected the contention of the Revenue that the notice issued after 1st April 2021 relates back to an earlier period. 38. The Delhi High Court has considered and rejected this argument of the Revenue that Relaxation Act creates a legal fiction such that the notices issued under Section 148 of the Act are deemed to be issued on 31st March, 2021. The so-called legal fiction is directly contrary to the Revenue s own Circular No. 549 of 1989, which is binding on them as well as the well settled principle that the validity of a notice is to be judged on the basis of the law that prevails at the time of its issue. 39. Even though Relaxation Act was in existence when the Finance Act, 2021 was passed, the parliament has specifically made the amended provisions of Sections 147 to 151 of the Act as being applicable with effect from 1st April, 2021. Therefore, the intention of the legislature is clear that substituted prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt is to be applied from 1st April, 2021. Further, when there is no ambiguity on the applicability of the provision, there is no question of resorting to purpose test. 43. As regards liberty granted by the Allahabad High Court, certainly, if the law permits issuance of notices under Section 148 of the Act (as amended), afresh, then no liberty is required to be granted by the Court, and it would be within the Assessing Officer s powers to initiate proceedings as per the amended law. The Madras High Court has considered this very plea and granted liberty to initiate reassessment proceedings in accordance with the provisions of the amended Act, if limitation for it survives . 44. As submitted by Mr. Mistri, with whom we agree, Chapter II of Relaxation Act provide for Relaxation of Certain Provisions of Specified Act and Section 3 forms part of this Chapter. Further Chapter III provides for amendment to Income Tax Act, 1961 and various Sections of the Act have been amended in Chapter III. From this the following propositions emerge : (a) Wherever the Parliament thought fit, the Parliament has itself amended the provision of the Income Tax Act, 1961 and not left it for the CBDT to make ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officers to issue notices under Section 148 of the Act after 1st April, 2021 in terms of the erstwhile provisions of Sections 147 to section 151, even though the said provisions were repealed with effect from 1st April, 2021 by the Finance Act, 2021. It is, however, pertinent to note that Section 3 of Relaxation Act falls in Chapter II of the said Act, which is titled Relaxation of Certain Provisions of Specified Act . In contradistinction, Section 4 of Relaxation Act which does amend several provisions of the Act falls in Chapter III, which is titled Amendments to the Income Tax Act, 1961 . It will be apposite to notice that the amendments provided for in Section 4 were made by the Legislature itself in terms of the said Section and no such power to amend the Act was delegated to the Central Government. Therefore, we would agree with Mr. Pardiwalla that it is only Section 4 of Relaxation Act which amended the Act and no such amendments to the substantive provisions of the Act were envisaged under Section 3 of Relaxation Act, which was only a relaxation provision dealing with time limits under various enactments. 48. Mr. Pardiwalla submitted that even assuming for a moment that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onwards was not expiring within the period for which Section 3(1) of Relaxation Act was applicable and, hence, Relaxation Act could never apply for these assessment years. As a consequence, there can be no question of extending the period of limitation for such assessment years. These findings of the Bombay High Court have not been disturbed by the Apex Court in Ashish Agarwal (Supra). The Apex Court only modified the orders passed by the respective High Courts to the effect that the notices issued under Section 148 of the Act which were subject matter of writ petitions before various High Courts shall be deemed to have been issued under Section 148A(b) of the Act and the Assessing Officer was directed to provide within 30 days to the respective assessee the information and material relied upon by the Revenue so that the assessee could reply to the show cause notices within two weeks thereafter. The Apex Court held that the Assessing Officer shall thereafter pass orders in terms of Section 148A(d) in respect of each of the concerned assessees. Thereafter, after following the procedure as required under Section 148A may issue notice under Section 148 (as substituted). The Apex Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tend 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 Allahabad High Court and Rajasthan High Court in Ashok Kumar Agarwal (supra) and Bpip Infra Private Limited (supra) respectively. 101. The submission of the Revenue that Section 6 of the General Clauses Act saves notices issued under Section 148 post 31st March, 2021 is untenable in law, as in the present case, the repeal is followed by a fresh legislation on the same subject and the new Act manifests an intention to destroy the old procedure. Consequently, if the Legislature has permitted reassessment to be made in a particular manner, it can only be in this manner, or not at all. 102. The argument of the respondents that the subs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... OLA, cannot be construed as one which could extend the period of limitation provided under Section 149(1)(a) of the 1961 Act. As per the ratio enunciated in Ashish Agrawal s case, Section 149(1)(a) would apply to AY 2016-17 and AY 2017-18. xxxxxxxxxxxxxxxxx 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] operation of new section 149 of the Act, the following may be seen : Hon'ble Supreme Court has held that the new law shall operate and all the defences available to assessees under section 149 of the new law and whatever rights are available to the Assessing Officer under the new law shall continue to be available. Sub-section (1) of new section 149 of the Act as amended by the Finance Act, 2021 (before its amendment by the Finance Act, 2022) reads as under :- 149. (1) No notice under section 148 shall be issued for the relevant assessment year,- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upreme 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. xxxxxxxxxxxxxxxxx 55. Furthermore, the reference made in paragraphs 6.1 and 6.2(ii) of the Instruction dated 11.05.2022, to the extent it propounds the travel back in time theory, is declared bad in law. (emphasis supplied) Paragraphs 6 and 8 of Group M Media India P. Ltd. (Supra) read as under : 6. Mr. Easwar, learned Senior Counsel appearing for the petitioner points out that Instruction No. 1 of 2015 dated 13 th January, 2015 issued by the CBDT has been quashed by the Hon'ble Delhi High Court in Tata Teleservices Ltd. (supra). Therefore, the Assessing Officer cannot now place reliance upon it to disregard the statutory duty cast upon him in terms of Section 143(1) and 143(1D) of the Act. Further attention was drawn to the decisions of this Court in Commissioner of Income Tax Vs. Smt. Godavari devi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n view of the decision of this Court in Godavaridevi Saraf (supra), the officers implementing the Act are bound by the decision of the Delhi High Court and Instruction No. 1 of 2015 dated 13th January, 2015 has ceased to exist. Therefore, no reference to the above Instruction can be made by the Assessing Officer while disposing of the petitioner's application in processing its return under Section 143(1) of the Act and consequent refund, if any, under Section 143(1D) of the Act. Needless to state that the Assessing Officer would independently apply his mind and take a decision in terms of Section 143 (1D) of the Act whether or not to grant a refund in the facts and circumstances of the petitioner's case for A.Y. 2015-16. (emphasis supplied) 34. It will be also useful to note that even in Hindustan Aeronautics Ltd. (Supra) the Apex Court has held that circulars/instructions are only binding on the Revenue and not on the assessees and certainly not on the Hon'ble Courts. 35. The Revenue s contention that the reopening notice was to relate back to an earlier date is entirely flawed and unacceptable. Thus, the reassessment notices issued for AY 2013-14 are patently barred b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether that proviso could be applied without reference to any period of limitation. It is a well-settled principle that no action can be commenced has expired. It is unnecessary to cite authorities in support of this position. Does the fact that the second proviso says that there is no period of limitation make a difference? xxxxxxxxxx. xxxxxxxxxx In J.P. Jani, Income-tax Officer v. Induprasad Devshanker Bhatt (1969) 72 I.T.R. 595; (1969) 1 S.C.R. 714 (S.C.) this court held that the Income-tax Officer cannot issue a notice under section 148 of the Income Tax Act, 1961, in order to reopen the assessment of an assessee in a case where the right ti reopen the assessment was barred under the 1922 Act at the date when the new Act camne into force. It was held that section 297(2)(d)(ii) of the 1961 Act was applicable only to this cases where the right of the Income-tax Officer to reopen an assessment was not barred under the repealed Act. This decision is broadly in line with the opinion of Das and Kapur JJ. in Prashar s case (1963) 49 I.T.R. (S.C.) 1; (1964) 1 S.C.R. 29 (S.C.) xxxxxxxxxx. For AY 2013-14, the time limit to issue a notice under Section 148 of the Act had already expired ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erstwhile Section 149) for reopening the assessment for the AY 2013-14 expired on 31st March 2020. Hence, Notification No. 20 of 2021 did not apply to the facts of the present case. Notification No. 38 of 2021 dated 27th April 2021 categorically uses the expression the time limit for completion of such action expires on the 30th day of April 2021 due to its extension by the said notifications, such time limit shall further stand extended to the 30th day of June 2021. Hence, it is incorrect to say that 31st March 2021 under the Act would mean under the Act, plus, extension by TOLA; (d) The submission that the Hon ble Supreme Court, while deciding Ashish Agarwal (Supra), was conscious of the limitation of 6 years expiring on 31st March 2021 under the pre-amendment provisions in respect of AY 2013-14 if the Covid period was not excluded, despite which the Apex Court has stated that all notices issued should be read to be issued under Section 148A to prevent the Revenue getting remediless, is unacceptable. This argument clearly fails to appreciate that the effect of Revenue s contention is that despite the substantive defence available to the assessee in Section 149 of the amended Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come Tax Officer (1977) 106 ITR 1 (SC) , which reads as under : It has been said that the taxes are the price that we pay for civilization. If so, it is essential that those who are entrusted with the task of calculating and realising that price should familiarise themselves with the relevant provisions and become well-versed with the law on the subject. Any remissness on their part can only be at the cost of the national exchequer and must necessarily result in loss of revenue. At the same time, we have to bear in mind that the policy of law is that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi- judicial controversies as it must in other spheres of human activity . (e) The contentions that (i) the true meaning of Apex Court order in Ashish Agrawal (Supra) is that the notices issued under Section 148, irrespective of the Assessment Year of the unamended Act, between 1st April 2021 to 30th June 2021 are to be treated as show cause notices without being hit by limitation, if issued on or before 30th March 2021 and (ii) the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that for AY 2013-14 the time limit would have expired even under TOLA on 31st March 2021; (h) As regards Salil Gulati (Supra), the Delhi High Court, to reach its conclusion, has merely relied upon its earlier decision in Touchstone Holdings (Supra). It will be relevant to note that following Salil Gulati (Supra), a similar view was taken by the Delhi High Court in Yogita Mohan V/s. Income Tax Officer WP(C) No. 15676 of 2022 dated 15.11.2022. Against the judgment, in an SLP preferred by the assessee, the Apex Court has issued notice vide its order dated 20th February 2023. It should also be noted that the Hon ble Gujarat High Court in Keenara Industries (P.) Ltd. V/s. Income Tax Officer (2023) 453 ITR 51 and the Allahabad High Court in Rajeev Bansal V/s. Union of India (2023) 453 ITR 153 have taken a view that notices issued for AY 2013-14 were barred by limitation in view of the amended Section 149 of the Act. Subsequently, the Apex Court, in SLPs preferred by the Revenue, has issued notice and stayed both the orders/judgments; (i) We are unable to comprehend the contention raised that if the notice dated 30th May 2022 under Section 148A(b) of the Act is valid in terms of Apex Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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