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TMI Blog2025 (4) TMI 1027X X X X Extracts X X X X X X X X Extracts X X X X ..... of mind in mechanical manner; order u/s 148A(d) dt. 30-6- 22 & notice u/s 148 dt. 2-7-22 is invalid; in absence of a valid approval u/s 151 for A Y 16-17, assessment made u/s147 rws.144 rws. 144B would be invalid and is liable to be quashed." 2. "On the facts and circumstances of the case and in law, order u/s148A(d) dt.30- 6-22 & notice issued u/s148 dt.2-7-22 by ACIT, Cir-1(1) is invalid as it is by ACIT, Cir-1(1), Raipur (i.e., 'Jurisdictional AO'), while it ought to have been made by 'faceless AO' after CBDT Notification No.18 dt.29-3-22, it is in violation of CBDT Notification dt.29-3-22 would be invalid; thus, assessment made u/s147 rws.144 rws.144B dt.24-3-23 by 'faceless AO' would be invalid and is liable to be quashed." 3. "On the facts and circumstances of the case and in law, Id CIT(A) has erred in sustaining addition of Rs.1,22,40,000 on the count of unexplained income made u/s 69A; it is unjustified and is liable to be deleted." 4. "The appellant craves leave, to add, urge, alter, modify or withdraw any grounds before or at the time of hearing." 3. At the outset, it is noticed that the assessee being barred by limitation on account of del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22,40,000/- as unexplained income of the appellant u/s. 69A of the Act and Rs. 3,64,334/- being net profit as per audit report as the appellant had not filed ITR. Order u/s. 147 r.w.s 144 dated 24.03.2023 was passed accordingly. Aggrieved appellant filed this appeal. 10. Aggrieved with the aforesaid addition u/s 69A by the Ld. AO, assessee preferred an appeal before the Ld. CIT(A), but with no success. Therefore, the assessee had preferred the present appeal, which is under consideration before us. 11. At the outset, Ld. AR on behalf of the assessee, referring to ground no. 1 of the present appeal have assailed the assessment, challenging the validity of approval granted by the competent / sanctioning authority u/s 151 of the Act. It was the submission that in absence of valid approval u/s 151 which is without application of mind and in mechanical manner by the PCIT-1, Raipur, who is not the specified authority to grant approval u/s 151 of the present case, the order u/s 148A(d) and notice u/s 148 issued, become invalid on account of approval by a non-specified authority, having no jurisdiction to grant the approval as prescribed under the law. To substantiate this fact, Ld. AR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 148, which fell for completion from 20 March 2020 to 31 March 2021, till 30 June 2021. All the reassessment notices under challenge in the present appeals were issued from J April 2021 to 30 June 2021 under the old regime. Ashish Agarwal (supra) deemed these reassessment notices under the old regime as show cause notices under the new regime with effect from the date of issuance of the reassessment notices. The effect of creating the legal fiction is that this Court has to imagine as real all the consequences and incidents that will inevitably flow from the fiction. East End Dwellings Co. Ltd. v. Finsbury' Borough Council [1952] AC 109. [Lord Asquith, in his concurring opinion, observed: "If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it."] Therefore, the logical effect of the creation of the legal fiction by Ashish Agarwal (supra) is that the time surviving under the Income-tax Act read with TOLA will be available to the Revenue to compl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reply of the assessee; and (iii) issue a notice under section 148 if it was a fit case for reassessment. Once the clock started ticking, the assessing officer was required to complete these procedures within the surviving time limit. The surviving time limit, as prescribed under the Income-tax Act read with TOLA, was available to the assessing officers to issue the reassessment notices under section 148 of the new regime. 112. Let us take the instance of a notice issued on I May 2021 under the old regime for a relevant assessment year. Because of the legal fiction, the deemed show cause notices will also come into effect from 1 May 2021. After accounting for all the exclusions, the assessing officer will have sixty-one days [days between I May 2021 and 30 June 2021] to issue a notice under section 148 of the new regime. This time starts ticking for the assessing officer after receiving the response of the assessee. In this instance, if the assessee submits the response on 18 June 2022, the assessing officer will have sixty-one days from 18 June 2022 to issue a reassessment notice under section 148 of the new regime. Thus, in this illustration, the time limit for issuance of a n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt approval; f) The directions in Ashish Agarwal (supra) will extend to all the ninety thousand reassessment notices issued under the old regime during the period I April 2021 and 30 June 2021; g) The time during which the show cause notices were deemed to be stayed is from the date of issuance of the deemed notice between 1 April 2021 and 30 June 2021 till the supply of relevant information and material by the assessing officers to the assesses in terms of the directions issued by this Court in Ashish Agarwal (supra), and the period of two weeks allowed to the assesses to respond to the show cause notices; and h) The assessing officers were required to issue the reassessment notice under section 148 of the new regime within the time limit surviving under the Income-tax Act read with 'TOLA. All notices issued beyond the surviving period are time barred and liable to be set aside; 14. Based on aforesaid submission, Ld. AR submitted that since the order u/s 148A(d) along with notice u/s 148 was issued to the assessee dated 02.07.2022 i.e., after 3 years from the last date of assessment year 2016-17 i.e., 31.03.2017. In such case, an approval u/s 151(ii) granted by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f section 151(ii) of the Act i.e. the approval should have been obtained from the Principal Chief Commissioner whereas the approval has been obtained from Pr.CIT as stated in the notice under section 148 itself. Therefore we see merit in the contention of the assessee that the notice under section 148 for AY 2016-17 isissued without obtaining the prior approval from the appropriate authority. Accordingly, we hold that the notice under section 148 is invalid and the consequent assessment under section 147 is liable to be quashed. (ii) Manoj Rajput vs DCIT-1(1) in ITA No. 360/RPR/2023, vide order dated 22.10.2024. 15. We, thus, in terms of our aforesaid observation concur with the Ld. AR that in the present case before us for A.Y.2017-18, wherein notice u/s.148 of the Act was issued on 30.06.2022, i.e. beyond a period of three years from the end of the assessment year, the A.O. was statutorily obligated to have obtained the approval from either of the authorities specified u/s. 151(ii) of the extant law, viz. Principal Chief Commissioner or Principal Director General or where there is no Principal Chief Commissioner or Principal Director General, Chief Commissioner or Director G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess than three years have elapsed from the end of the relevant assessment year, as would fall under the provisions of clause (i) of Section 151 of the Act. As in the present case the assessment year in question is 20 16-17 and the impugned notice itself has been issued on 30 July. 2022, it is issued after a period more than 3 years having elapsed from the end of the said assessment year. hence, clause (ii) of Section 151 of the Act was applicable, which required the sanction to be issued by either Principal Chief Commissioner or Principal Director General or where there is no Principal Chief Commissioner or Principal Director General. Chief Commissioner or Director General for issuance of notice under Section 148 of the Act. 10. As rightly pointed out at the bar, such issue fell for consideration of the Division Bench of this Court in Siemens Financial Services Pvt. Ltd. (supra), wherein the Division Bench considered the provisions of Section 151 of the Act read with the provisions of Section 148A(b), the latter provision clearly providing that prior to issuance of any notice under Section 148 of the Act, the assessing officer shall provide an opportunity of being heard to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itions as ordained by clause (d) of Section 148A is that an order under such provision can be passed by the Assessing officer only with the approval of "Specified Authority". Thus, necessarily when clause (d) of Section 148A provides for prior approval specified authority, it relates to the provisions of Section 151 of the Act providing for 'Specified authority for the purposes of Section 148 and Section 148A of the Act'. In the present case, Section 151 as amended by the Finance Act, 2021 and Section 148A as also introduced by Finance Act, 2021 have become applicable, as although the assessment year in question is 2016-17 in respect of which the assessrnent is sought to be reopened by issuance of notice under section 148, which is dated 30 July, 2022. Such amended provision would squarely become applicable the date of notice under section 148 itself being 30 July, 2022. 9. The record clearly indicates that the sanction in the present case was issued by the Principal Commissioner which can only be in respect of cases if three years or less than three years have elapsecl from the end of the relevant assessment year, as would fill] under the provisions of clause (i) of Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h in paragraph 27 of the said decision. 12. In the present ease, it is not in dispute that an appropriate sanction of the specified authority as per the provisions of Section 151(ii) of the Act was not obtained and {Or such reason, certainly, as held by this Court in Siemens Financial Services Pvt. Ltd. (supra), the impugned notices would be rendered bad and illegal. The petition accordingly needs to succeed on such ground of the Court requiring to delve on such issues of challenge as raised by the petitioner as also prior procedure adopted in that regard. 16. Based on aforesaid submissions, it was the prayer by Ld. AR that the sanction by the specified authority u/s 151(ii) was not in accordance with law, therefore, order u/s 148A(d) and the notice u/s 148 issued beyond 3 years from the end of the relevant AY, are invalid for the want of approval from the specified authority. It was, therefore, the prayer that the reopening assessment order passed u/s 147 on the basis of order u/s 148A(d) and notice u/s 148 dated 30.06.2021 is invalid, bad in law and cannot sustained in the eyes of law, therefore, the same is liable to be quashed. 17. In response, on the aforesaid issue, Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 are governed by the substituted sections 147 to 151 of the Income Tax Act, 1961, as amended by the Finance Act, 2021. Consequently, the High Courts set aside all the reassessment notices issued under section 148 of the Income Tax Act, 1961. Aggrieved by the same, the Revenue appealed before the Hon'ble Supreme Court. iii. The Hon'ble Supreme Court on 4th May 2022 passed its judgment in the case of UOI & Others Vs. Ashish Agrawal [Civil Appeal No.3005/2022]. The gist of above judgment is given as under- (a) The object and Purpose of reassessment proceedings cannot be frustrated. The Revenue proceeded with the pre-amended provisions under a genuine and bonafide mistake and therefore some leeway must be shown in this regard which could have been done by the High Courts itself. (b) All the impugned notices issued u/s 148 on or after 01st April 2021 as per the old provisions of section 148 shall be deemed to have been issued under section 148A of the Income-tax Act, 1961 as substituted by the Finance Act, 2021 and also shall be treated as show cause notices in pursuance of section 148A(b). Hence, the requirement of conducting the inquiry with prior approval under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ACIT, Cir-1(1), Raipur (i.c., 'Jurisdictional AO'), while it ought to have been made by 'faceless AO' after CBDT Notification No.18 dt.29-3-22; it is in violation of CHDT Notification dt.29-3-22 would be invalid; thus, assessment made u/s147 rws.144 rws.144B dt.24-3-23 by 'faceless AO' would be invalid and is liable to be quashed." Clarification :- The assessee has misinterpreted the CBDT Notification dated 29.03.2022 (Copy enclosed). The para 3 of the said notification is produced hereunder :- 3. Scope of the Scheme. . . For the purpose of this Scheme, -- (a) assessment, reassessment or recomputation under section 147 of the Act. (b) issuance of notice under section 148 of the Act. shall be through automated allocation, in accordance with risk management strategy formulated by the Board as referred to in section 148 of the Act for issuance of notice, and in a faceless manner, to the extent provided in section 144B of the Act with reference to making assessment or reassessment of total income or loss of assessee. As per the said notification, issuance of notice u/s 148 of the Act shall be through automated allocation, in accordance with risk ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der to decide this appeal in a timely manner a number of notices/ communications through ITBA portal were sent to the appellant, viz. Communications dated 28/03/2024, 30/5/2024, 7/6/2024 and 19/06/2024. However, there evidently has been no response from the appellant till date. There is no gain saying that once the appeal is filed by the appellant, it is obligatory on its part to purposefully and co-operatively pursue the same in a worthwhile manner, which the appellant has evidently failed to do. It clearly appears that the appellant's compliance or rather lack of it, the appellant has not even bothered to pursue this appeal in any productive manner. Hence, in view of the aforesaid total non-compliance/non prosecution of the instant appeal on the part of the appellant, the instant appeal is adjudicated and disposed off, as under, ex-parte, primarily on the basis documentation available on record. 5.3 Firstly, it is stated at the outset, that in the situation as obtained in the instant case, as evidently seen from the above, this appeal is liable to be dismissed in terms of the ratio of the judgments of the Hon'ble Apex Court and the various High Courts including the Hon& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indings of fact and decisions thereof, more particularly in the absence of any meaningful and worthwhile submissions/documentations even during the instant appellate proceedings in this case to counter effectively the position adopted by the AO on the concemed issues and reduced in wnting in the assessment order. 5.6 In this case, it was seen that the appellant had shown fictitious purchases of Rs. 4,43,05,807/- from two companies during the F.Y. 2012-13. It was reported by Inv. Wing that the companies were not doing any business activities and these concems were only used for providing bogus bills to different parties (beneficiaries) and the appellant was one of the beneficiary. The case was reopened us. 148 of the Act. Further, as the appellant did not respond to the notices issued, the A.O treated the purchases as bogus and made the addition on the count of unexplained expenditure u/s. 69C of the Act. Order u/s. 147 r.w.s 144 r.w.s. 144B of the act was passed accordingly. 5.7 It is pertinent to note that even during the instant appellate proceedings, the appellant had chosen to remain silent and failed to substantiate or cooperate by filing the details called for, which show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apsed on 31.03.2020. Accordingly, as per provisions of section 151(ii) the sanctioning authority under the new regime are Principal Chief Commissioner or Principal Director General or Where there is no Principal Chief Commissioner or Principal Director General, Chief Commissioner or Director General, whereas in present case, the approval was granted by Ld. PCIT-1, Raipur, vide his approval letter F.No. Pr. CIT- 1/RPR/Tech/2022-23 dated 28.06.2022. The aforesaid facts are on records and are not disputed by the revenue. Since, the issue of sanctioning authority is no more res integra, as has been specifically deliberated upon and guided by the Hon'ble Apex Court in the case of Rajeev Bansal (supra), analyzing the order of Hon'ble Apex Court in the case of Ashish Agrawal (supra), wherein it is categorically held that, as per the provisions of new regime the sanctioning authority shall be decided as prescribed amended section 151(new regime). In the present case because the reopening has been initiated after 3 years therefore, clause(ii) of section 151 shall apply. We, thus, find substance in the contention of the Ld. AR that the approval granted u/s 151(ii) (new regime) was no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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