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TMI Blog2024 (10) TMI 1652X X X X Extracts X X X X X X X X Extracts X X X X ..... on of Rs. 53,59,000/- made by A.O without appreciating that the reassessment proceedings and the reassessment order passed by A.O is illegal ab initio void inasmuch as no notice u/s. 143(2) was issued by AO. The assessment order is liable to be quashed. 3. Ld. CIT (A) erred in dismissing the appeal without appreciating that the initiation of reassessment is illegal and invalid inasmuch as approval granted u/s. 151 is not in accordance with provisions of law. Consequently reassessment proceedings and the reassessment order is illegal and liable to be quashed. 4. Without prejudice to above grounds, the Ld. CIT (A) erred in dismissing the appeal without providing due and proper opportunity of hearing. 5. The appellant reserves the right to amend, modify or add any of the ground/s of appeal." 2. Succinctly stated, the A.O based on credible information that though there were credit entries of Rs. 66.10 lacs in the bank account of the assessee but he had not filed his return of income for the year under consideration, i.e. A.Y. 2017-18, initiated proceedings u/s. 147 of the Act. Notice u/s. 148 of the Act, dated 26.04.2023 was issued to the assessee. 3. The assessee, af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sputable conclusion that the assessee has got nothing more to say in this regard. I have gone through the record before me and based on the record I have decided to adjudicate the issue on the merits of the case. In the instant case the AO has rightly assessed an income of Rs. 66,10,000/- under the head "unexplained investment u/s 69 r.w.s 115BBE of the Income Tax Act, 1961" amounting to Rs. 53,59,000/-. Since the appellant failed to substantiate appellant's claim and addition made by the Assessing Officer of Rs. 53,59,000/-is hereby confirmed. 6. Ground Nos Ito 2 of the appeal are dismissed. 7. Ground No. 3 is general in nature. 8. In the result, the appeal is dismissed." 5. The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us. 6. We have heard the Ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements/CBDT instruction that have been pressed into service by the Ld. AR to drive home his contentions. 7. Shri R.B Doshi, Ld. Authorized Representative (for short 'AR') for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quired to be obtained from the authorities therein specified, viz. Principal Chief Commissioner or Principal Director General or where there is no Principal Chief Commissioner or Principal Director General, Chief Commissioner or Director General. The Ld. AR submitted that as the A.O. in the present case had obtained the approval from the Pr. Commissioner of Income Tax, i.e. an authority who was not vested with any jurisdiction as per the mandate of Section 151 of the Act, therefore, the assessment so framed by him was liable to be struck down for want of valid assumption of jurisdiction. 10. Apropos the validity of the jurisdiction that was assumed by the A.O. for framing of the impugned assessment vide his order u/s. 147 r.w.s. 144 r.w.s. 144B of the Act, dated 11.05.2023 de hors a notice u/s 143(2) issued by the A.O., the Ld. AR submitted that though the assessee had complied to notice u/s. 148 of the Act, dated 30.06.2022 and filed his return of income on 26.04.2023, Page 1 of APB., but the A.O. without issuing notice u/s. 143(2) of the Act, had thereafter proceeded with and framed the impugned assessment. The Ld. AR submitted that as the failure on the part of the A.O to issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, irrespective of the fact that the provisions of section 148A have not been complied with.". Issue of notice where income has escaped assessment 148. 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 assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139: Provided that no notice under this section shall be issued unless there is information with the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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." Conducting inquiry, providing opportunity before issue of notice under section 148-"148A. 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, by serving upon him a notice to show cause within such time, as may be specified in the notice, being not less than seven days and but not exceeding thirty days from the date on which such notice is issued, or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice under section 148 should not be issued on the basis of information which suggests that income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rgeable to tax, represented in the form of 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 limit specified under the provisions of clause (b) of subsection (1) of this section, as they stood immediately before the commencement of the Finance Act, 2021: Provided further that the provisions of this subsection 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 initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A, on or before the 31st day of March, 2021: Provided also that for the purposes of computing the period of limitation as per this section, the time or extended time allowed to the assessee, as per show cause notice issued under clause (b) of section 148A or the period during which the proceeding under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reliable material /information in possession of the assessing officer leading to formation of belief that income has escaped assessment, (3) no enquiry being conducted by the assessing officer prior to the issuance of notice; and reopening is based on change of opinion of the assessing officer and (4) lastly the mandatory procedure laid down by this Court in the case of GKN Driveshafts (India) Ltd. Vs. Income Tax Officer and Ors.; (2003) 1 SCC 72, has not been followed. 6.1 Further pre Finance Act, 2021, the reopening was permissible for a maximum period up to six years and in some cases beyond even six years leading to uncertainty for a considerable time. Therefore, Parliament thought it fit to amend the Income Tax Act to simplify the tax administration, ease compliances and reduce litigation. Therefore, with a view to achieve the said object, by the Finance Act, 2021, sections 147 to 149 and section 151 have been substituted. 6.2 Under the substituted provisions of the IT Act vide Finance Act, 2021, no notice under section 148 of the IT Act can be issued without following the procedure prescribed under section 148A of the IT Act. Along with the notice under section 148 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision governing the time limit for issuance of notice under section 148 of the IT Act. The substituted section 149 of the IT Act has reduced the permissible time limit for issuance of such a notice to three years and only in exceptional cases ten years. It also provides further additional safeguards which were absent under the earlier regime pre Finance Act, 2021. 7. Thus, the new provisions substituted by the Finance Act, 2021 being remedial and benevolent in nature 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 1st April, 2021. We are in complete agreement with the view taken by the various High Courts in holding so. 8. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 148A(a) be dispensed with as a onetime measure vis-à-vis those notices which have been issued under Section 148 of the unamended Act from 01.04.2021 till date, including those which have been quashed by the High Courts; (iii) The assessing officers shall thereafter pass an order in terms of section 148A(d) after following the due procedure as required under section 148A(b) in respect of each of the concerned assessees; (iv) All the defences which may be available to the assessee under section 149 and/or which may be available under the Finance Act, 2021 and in law and whatever rights are available to the Assessing Officer under the Finance Act, 2021 are kept open and/or shall continue to be available and; (v) The present order shall substitute/modify respective judgments and orders passed by the respective High Courts quashing the similar notices issued under unamended section 148 of the IT Act irrespective of whether they have been assailed before this Court or not. 9. There is a broad consensus on the aforesaid aspects amongst the learned ASG appearing on behalf of the Revenue and the learned Senior Advocates/learned counsel appearing on behalf of the respective ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 11. The present order shall be applicable PAN INDIA and all judgments and orders passed by different High Courts on the issue and under which similar notices which were issued after 01.04.2021 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 exercise of powers under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the information and material relied upon for issuance of extended reassessment notices. ● The assessee has two weeks to reply as to why a notice under section 148 of the Act should not be issued, on the basis of information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year. The time period of two weeks shall be counted from the date of last communication of information and material by the Assessing Officer to the assessee. ● In view of the observation of Hon'ble Supreme Court that all the defences of the new law are available to the assessee, if assessee makes a request by making an application that more time be given to him to file reply to the show cause notice, then such a request shall be considered by the Assessing Officer on merit and time may be extended by the Assessing Officer as provided in clause (b) of new section 148A of the Act. ● After receiving the reply, the Assessing Officer shall decide on the basis of material available on record including reply of the assessee, whether or not it is a fit case to. issue a notice under section 148 of the Act. The Assessing Officer is requir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pal Director General or where there is no Principal Chief Commissioner or Principal Director General, Chief Commissioner or Director General. However, as the A.O. had obtained the approval from the Pr. Commissioner of Income Tax, i.e. an authority who was not vested with any jurisdiction as per the mandate of Section 151 of the Act (as made available on the statute w.e.f 01.04.2021), therefore, the assessment so framed by him u/s. 147 r.w.s. 144 r.w.s. 144B of the Act, dated 11.05.2023 being devoid and bereft of valid assumption of jurisdiction is liable to be quashed. Accordingly, we quash the assessment framed by the A.O u/s. 147 r.w.s. 144 r.w.s. 144B of the Act, dated 11.05.2023 in terms of our aforesaid observations. 16. As we have quashed the assessment framed by the A.O u/s. 147 r.w.s. 144 r.w.s. 144B of the Act, dated 11.05.2023 for want of valid assumption of jurisdiction for issuing notice u/s. 148 of the Act, therefore, we refrain from adverting to and dealing with the other contention based on which validity of the assessment order has been challenged before us which, thus, is left open. 17. In the result, the appeal of the assessee is allowed in terms of our aforesai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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