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TMI Blog2024 (9) TMI 1282X X X X Extracts X X X X X X X X Extracts X X X X ..... dita & Ms. Nancy Jain, Advs. JUDGMENT YASHWANT VARMA, J. 1. This batch of writ petitions assails the validity of the reassessment action initiated by the respondents under Section 148 of the Income Tax Act, 1961 [Act] and pertaining to Assessment Year [AY] 2015- 16. The solitary ground on which those reassessments were assailed before us was a violation of the provisions contained in Section 151 of the Act. 2. It is the case of the writ petitioners that the sanction for initiation of reassessment action rests on an approval granted by the Joint Commissioner of Income Tax [JCIT] as opposed to the Principal Chief Commissioner /Chief Commissioner/ Principal Commissioner/ Commissioner as mandated by Section 151 (1) of the Act. It is contended that since all the impugned Section 148 notices have come to be issued after the expiry of a period of four years from the concerned AY, they were liable to be mandatorily approved by the Principal Chief Commissioner or the other authorities specified in sub-section (1) of Section 151. 3. According to the writ petitioners, the impugned notices would not sustain even if they were tested on the basis of Section 151 as it came to exist on the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided an extended lifeline for the issuance of notices, the grant of sanction and other statutory compliances contemplated under the Act. It is thus submitted that since the impugned notices, by virtue of TOLA, came to be validly issued after the expiry of four years, the sanction was liable to be obtained in accordance with sub-section (2) of Section 151 and consequently, the approval accorded by the JCIT would be compliant with the statutory scheme of that provision. 6. It is pertinent to note that Section 151, pre-Finance Act 2021, categorized the approval liable to be accorded based upon the period within which a reassessment action was proposed to be initiated when computed from the end of the relevant AY. While sub-section (1) catered to situations where a notice for reassessment was sought to be issued after the expiry of four years from the end of the relevant AY and thus required that action be preceded by approval being obtained from the Principal Chief Commissioner and the other authorities specified therein, sub-section (2) constituted the residuary clause and pertained to cases falling within its ambit where approval was to be obtained from the JCIT. 7. Section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to define the 'specified authority' for sanction for issuance of notice to be the Additional Commissioner/ Additional Director/ Joint Commissioner/ Joint Director. However, in the present batch of writ petitions, we are concerned with the provisions of Section 151 as it stood immediately before and after the promulgation of Finance Act 2021. 9. For the purposes of brevity, we deem it apposite to notice the following salient facts as they obtain in W.P.(C) 2698/2022. For AY 2015-16, the petitioner is stated to have furnished a Return of Income on 30 October 2015. The aforesaid Return is stated to have been duly acknowledged in terms contemplated under Section 143 (1) of the Act. Thereafter, a notice under Section 148 dated 31 March 2021 is stated to have been issued to the writ petitioner. The notice, it is pertinent to note, appears to have been digitally signed on 01 April 2021, and, as per the writ petitioner, served via email on 22 April 2021. Responding to the aforesaid Section 148 notice, a revised Return is stated to have been filed by the writ petitioner on 13 July 2021. 10. The petitioner is stated to have taken an objection asserting that the notice would be invalid bei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pproval of the JCIT Range-52, Delhi. Similar is the position that emerges from a perusal of the Section 148 notices which are impugned in the connected writ petitions with the solitary distinction being of the JCITs' being authorities conferred with jurisdiction over different ranges. 15. Leading arguments on behalf of the writ petitioners, Mr. Kapil Goel learned counsel submitted that the challenge as raised by the writ petitioners is liable to succeed bearing in mind the consistent position with respect to Section 151 which has been taken by the Bombay, Madras and Orissa High Courts and all of which have taken the view that the provisions of TOLA cannot be construed as having amended the procedure for approval as contemplated under Section 151 of the Act. 16. Mr. Goel further submitted that this aspect had also fallen for consideration before our High Court in Twylight Infrastructure (P.) Ltd. vs. Commissioner of Income Tax 2024 SCC OnLine Del 330 and where too this issue came to be answered in favour of the assessees as under:- "4.1. In defence of the writ petitions, the Revenue, inter alia, has relied upon the Taxation and Other Laws (Relaxation and Amendment of Certain Pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that a challenge on identical lines was addressed before the Bombay High Court in J M Financial and Investments Consultancy Services Private Limited vs. ACIT, Circle 3(2)(1) & Ors Writ Petition No. 1050 of 2022 dated 04 April 2022. While dealing with these aspects the Bombay High Court had in J M Financial held as follows:- "5. Respondents have relied upon a letter dated 18th March 2021 issued by one Income Tax Officer, who has given an opinion to the Additional Commissioner of Income Tax that in view of the Taxation and other Laws (Relaxation of Certain Provisions) Act, 2020 (Relaxation Act), limitation, inter alia, under provisions of Section 151 (1) and Section 151 (2), which were originally expiring on 31st March 2020 stand extended to 31st March 2021. According to the Income Tax Officer, in view of the above, Assessment Year 2015-2016 which falls under the category within four years as on 31st March 2020, the statutory approval for issuance of notice under Section 148 of the Act for the Assessment Year 2015-2016 may be given by the Range Head as per the said provisions. Mr. Sharma clarifies that the Income Tax Officer is only conveying the view of the Principal Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms of section 151 (ii) and not section 151 (i) of the Act and the Principal Commissioner of Income-tax-8 cannot be the specified authority as per section 151 of the Act. Further, even in the affidavit-in-reply, the Department has accepted that the approval obtained is of the "Principal Commissioner of Income-tax-8" and, hence, such an approval would be bad in law. 25. The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, enacted on September 29, 2020 and came into force on March 31, 2020 ([2020] 428 ITR (St.) 29). It, inter alia, provided for a relaxation of certain provisions of the Income-tax Act, 1961. Where any time limit for completion or compliance of an action such as completion of any proceedings or passing of any order or issuance of any notice fell between the period March 20, 2020 to December 31, 2020, the time limit for completion of such action stood extended to March 31, 2021. Thus, the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act only seeks to extend the period of limitation and does not affect the scope of section 151. 26. The Assessing Officer cannot rely on the provisions of the Taxation and Other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 extended the time limits under specified enactments, including the Income-tax Act. As per clause (a)(ii) of sub-section (1) of section 3 thereof, time limits for grant of sanction or approval were also extended. Since the petitioner does not challenge the sanction with respect to the time limit, clause (a) of sub-section (1) of section 3 is immaterial. Indeed, the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, which extends the time limits for completion of specified tasks up to March 31, 2021, itself becomes irrelevant because of the nature of the challenge in these writ petitions. 15. In Siemens Financial Services [Siemens Financial Services Pvt. Ltd. v. Dy. CIT, (2023) 457 ITR 647 (Bom); 2023 SCC OnLine Bom 2822; (2023) 154 taxmann.com 159 (Bom).] , the Division Bench of the Bombay High Court concluded, in substantially similar facts and circumstances, that the amended section 151 and not the preamended section 151 would apply. For reasons set out above, I concur with the conclusion in Siemens Financial Services [Siemens Financial Services Pvt. Ltd. v. Dy. CIT, (2023 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued to deal with the situation arising from the amendment to the Income-tax Act by the Finance Act, 2021 with effect from April 1, 2021 whereas in these cases the notices were issued prior to April 1, 2021. 5. This court had an occasion in similar circumstances to quash an identical notice under section 148 of the Income-tax Act by its order dated November 20, 2019 in Writ Petition (C) No. 7618 of 2009 and which order stood confirmed by this court by the dismissal of the Department's review petition, i. e., RVWPET No. 188 of 2020 by the order dated December 3, 2021 which reads as under : "1. Although the point made by the Revenue in this review petition is that this court in its order dated November 20, 2019 erred in drawing a distinction between an Additional Commissioner and Commissioner in terms of their authority, the point involved was that for the purpose of section 151 (1) of the Income-tax Act, 1961 since the reopening of the assessment was beyond four years, it had to have the prior approval of the Commissioner of Income-tax, and there was no such approval in the present case. 2. Consequently, no ground is made out for reviewing the order dated November 20, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the plain language of the amended section 151 of the Act. Section 151, when read alongside the first proviso to section 148, brings the aspect of inextricable linkage to the fore. 12.1. Clauses (i) and (ii) of section 151 of the amended Act (which has been extracted hereinabove) clearly specify the authority whose approval can trigger the reassessment proceedings. Thus, if three (3) years or less have elapsed from the end of the relevant assessment year, the specified authority who would grant approval for initiation of reassessment proceedings will be the Principal Commissioner or Principal Director or Commissioner or Director. However, if more than three (3) years from the end of the relevant assessment year have elapsed, the specified authority for according approval for the reassessment shall be the Principal Chief Commissioner or Principal Director General or, where there is no Principal Chief Commissioner or Principal Director General, Chief Commissioner or Director General. 12.2. That the approval is mandatory is plainly evident on perusal of the first proviso appended to section 148 of the Act. The said proviso, at the risk of repetition, reads as follows: "Provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oners that the notices were digitally signed on or after 01 April 2021 and dispatched thereafter. They would thus contend that it was the amended regime of reassessment that would be applicable. 25. In the counter affidavit which has been filed in the lead writ petition, we find that the respondents have in paragraphs 6 to 9 taken the following stand:- "6. It is respectfully submitted that the technical team of ITBA portal were asked certain queries to clarify the issues regarding issuance of impugned notice dated 31.03.2021. The technical team of ITBA clarified the followings- i. The document with DIN No. ITBA/AST/S/148/2020-21/1032104440(1) was generated at 7:41 pm on 31.03.2021. ii. The last transaction time of AO Ward 54(1) on 31.03.2021 was 08:56 pm. iii. Document with DIN No. ITBA/AST/S/148/2020-21/1032104440(1) was signed by user on 01.04.2021 at 01:12:18 pm, mail was bounced but document read by e-filing on 02.04.2021 at 10:02 pm. Copy of notice under Section 148 of the Act dated 31.03.2021 alongwith the email containing reply from ITBA technical team is annexed herewith as Annexure-R1 (Colly.). 7. There is no dispute that the DIN of the impugned notice was gener ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eproduced hereinunder : "1. Category A : is in respect of writ petitions where notice is dated March 31, 2021 or before but digitally signed on or after April 1, 2021, however sent and received on or after April 1, 2021. 2. Category B : is in respect of writ petitions where notice is dated March 31, 2021 or before, digitally not signed, however sent and received on or after April 1, 2021. 3. Category C : is in respect of writ petitions where notice is dated March 31, 2021 or before, digitally signed on or before March 31, 2021, however sent and received on or after April 1, 2021. 4. Category D : is in respect of writ petitions where notice is dated March 31, 2021 or before, digitally signed on or before March 31, 2021, no service either by e-mail or by post or any other mode and assessee came to know later on through Portal or receipt of subsequent notice under section 142(1). 5. Category E : is in respect of writ petitions where notice is dated March 31, 2021 or before, manually signed, no service by e-mail but despatched through speed post on or after April 1, 2021. . ." 28. The Court then proceeded to explain the legal principles which would govern as under:- "25.10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uance of the e-mail attaching the notice. The High Court held the said date of triggering of e-mail to be the date of issue of section 148 notice for the purpose of section 149 of the Act of 1961. 25.12. The review of the aforesaid judgments of the Supreme Court and the several High Courts shows that all courts have consistently held that the expression "issue" in its common parlance and its legal interpretation means that the issuer of the notice must after drawing up the notice and signing the notice, make an overt act to ensure due despatch of the notice to the addressee. It is only upon due despatch, that the notice can be said to have been "issued". 25.13. Further, a perusal of the compliance affidavit reveals that while the function of generation of notice on Income Tax Business Application portal and digital signing of the notice is executed by the jurisdictional Assessing Officer, the function of drafting of the e-mail to which the notice is attached and triggering the e-mail to the assessee is performed by the Income Tax Business Application e-mail software system. Thus, mere generation of notice on the Income Tax Business Application screen cannot in fact or in law co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant extract of the aforesaid decision is reproduced herein under (page 295 of 352 ITR) : "The second grievance of the assessee is with regard to the uncommunicated intimations under section 143 (1) which remained on paper/file or the computer of the Assessing Officer. This is serious challenge and a matter of grave concern. The law requires intimation under section 143 (1) should be communicated to the assessee, if there is an adjustment made in the return resulting either in demand or reduction in refund. The uncommunicated orders/intimations cannot be enforced and are not valid... But when there is failure to despatch or send communication/intimation to the assessee consequences must follow. Such intimation/order prior to March 31, 2010, will be treated as non est or invalid for want of communication/service within a reasonable time. This exercise, it is desirable should be undertaken expeditiously by the Assessing Officers. The Central Board of Direct Taxes will issue instructions to the Assessing Officers. . ." (emphasis supplied) 25.16. The Department sought to contend that the Madras High Court in Malavika Enterprises (supra) has struck a discordant chord with the judgmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is a relevant date for determining if it was passed within limitation. As is evident, the expression used in section 35E(3) of the Act of 1944, is "no order shall be made" which is distinct from the expression used in section 149 of the Act of 1961 which reads as "no notice under section 148 shall be issued". The two statutory provisions are materially different and the ratio of the said judgment can have no bearing in interpreting section 149 of the Act of 1961." 29. It proceeded to record its conclusions in the following terms:- "31. For the reasons and principles that we have laid down, we dispose of these writ petitions with the following directions : 31.1. Category "A" : The notices falling under category "A", which were digitally signed on or after April 1, 2021, are held to bear the date on which the said notices were digitally signed and not March 31, 2021. The said petitions are disposed of with the direction that the said notices are to be considered as show-cause notices under section 148A (b) of the Act as per the directions of the apex court in the Ashish Agarwal, (supra) judgment. 31.2. Category "B" : The notices falling under category "B" which were sent th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atch recorded is on or after April 1, 2021, the notices are to be construed as show-cause notices under section 148A (b) as per the directions of the apex court in the Ashish Agarwal (supra) judgment. 31.6. Notices sent to unrelated e-mail addresses : The petitions challenging notices which were sent to unrelated e-mail addresses are disposed of with the direction the jurisdictional Assessing Officers to verify the date on which the notice was first viewed by the assessee on the e-filing portal and consider the same as the date of issuance. If such date of issuance is determined to be on or after April 1, 2021, the notices will be construed as issued under section 148A (b) of the Act of 1961 as per judgment in Ashish Agarwal (supra). 31.7. We may note that in the writ petitions, the petitioners have raised additional defenses to challenge the impugned notices. Such additional defenses have not been considered by this court and the petitioners shall be at liberty to raise all such additional defenses as available in law. 31.8. We are conscious that the time granted by the Supreme Court in Ashish Agarwal to the Department has since expired on June 3, 2022 however, the proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 assessees including those available under section 149 of the Income-tax Act and all rights and contentions which may be available to the concerned assessees and the Revenue under the Finance Act, 2021 and in law shall continue to be available."" 30. Tested on the principles which were enunciated in Suman Jeet Agarwal, the petitioners would appear to be correct in their submission of the date liable to be ascribed to the impugned notices and those being viewed as having been issued and dispatched after 01 April 2021. However, and in our considered opinion, the same would be of little relevance or significance when one bears in mind the indubitable fact that all the notices were approved by the JCIT and which was an authority recognised under the unamended Section 151. The answer to the argument based ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial Economic Zones Act, 2005 (28 of 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 such time, then, the time-limit for completion or compliance of such action shall, notwithstanding anything contained in the specified Act, stand extended to the 31st day of March, 2021, or such other date after the 31st day of March, 2021, as the Central Government may, by notification, specify in this behalf: Provided that the Central Government may specify different dates for completion or compliance of different actions: Provided further that such action shall not include payment of any amount as is referred to in sub-section (2): Provided also that where the specified Act is the Income-tax Act, 1961 (43 of 1961) and the compliance relates to- (i) furnishing of return under section 139 thereof, for the assessment year commencing on the- (a) 1st day of April, 2019, the provision of this sub-section shall have the effect as if for the figures, letters and words "31st day of March, 2021", the figures, letters and words "30th day of September, 2020" had been substituted; (b) 1st day of April, 2020 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m (I) of sub-clause (i) of clause (c), the provision of this sub-section shall have the effect as if- (a) for the figures, letters and words "31st day of December, 2020", the figures, letters and words "30th day of July, 2020" had been substituted for the time-limit for the completion or compliance; and (b) for the figures, letters and words "31st day of March, 2021", the figures, letters and words "31st day of July, 2020" had been substituted for making such completion or compliance; (vii) furnishing of report of audit under any provision thereof for the assessment year commencing on the 1st day of April, 2020, the provision of this sub-section shall have the effect as if for the figures, letters and words "31st day of March, 2021", the figures, letters and words "31st day of October, 2020" had been substituted: Provided also that the extension of the date as referred to in sub-clause (b) of clause (i) of the third proviso shall not apply to Explanation 1 to section 234A of the Income-tax Act, 1961 (43 of 1961) in cases where the amount of tax on the total income as reduced by the amount as specified in clauses (i) to (vi) of sub-section (1) of the said section exceeds one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecified by the Union Government by way of a notification. Undisputedly, the date of 31 March 2021 came to be extended thereafter up to 30 April 2021 and lastly up to 30 June 2021. 34. Concededly, Finance Act 2021 was enacted thereafter and came into effect from 01 April 2021. It is admitted by the respondents that the terminal point for initiation of reassessment for AY 2015-16 in ordinary circumstances would have been 31 March 2020 and that date clearly fell within the period spoken of in Section 3 of TOLA. The period for issuance of notice for AY 2015-16, thus and principally speaking, stood extended up to 30 June 2021. 35. However, the key to answering the argument which was canvassed on behalf of the respondents is contained in Section 3 itself and which purported to extend the period for completion of proceedings, passing of an order, issuance of a notice, intimation, notification, sanction or approval. The provision extended the time limit for such action, notwithstanding anything contained in the specified Act, initially up to 31 March 2021 and which date was extended subsequently to 30 April 2021 and lastly up to 31 June 2021. 36. Section 3 thus essentially extended the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corporated adequate measures to deal with such a contingency and in unambiguous terms identified the authority which was to be moved for the purposes of sanction and approval. Section 151 distributed the powers of approval amongst a set of specified authorities based upon the lapse of time between the end of the relevant AY and the date when reassessment was proposed. Thus even if the reassessment was proposed to be initiated with the aid of TOLA after the expiry of four years from the end of the relevant AY, the authority statutorily empowered to confer approval would be the Principal Chief Commissioner/Chief Commissioner/Principal Commissioner/Commissioner. It would only be in a case where the reassessment was proposed to be initiated before the expiry of four years from the end of the relevant AY that approval could have been accorded by the JCIT. Similar would be the position which would emerge if the actions were tested on the basis of the amended Section 151 and which divides the power of sanction amongst two sets of authorities based on whether reassessment is commenced within three years or thereafter. 40. What we seek to emphasise is that the TOLA authorisation merely ena ..... X X X X Extracts X X X X X X X X Extracts X X X X
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