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TMI Blog2025 (5) TMI 449X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Supreme Court in Union of India & Ors. v. Ashish Aggarwal 2022 SCC OnLine SC 543. 2. The petitioner also impugns the said notice as well as an order dated 02.12.2022 passed under Section 148A (d) of the Act, which was issued pursuant to the aforementioned notice dated 24.05.2021. PREFATORY FACTS 3. The petitioner filed its return of income for AY 2013-14 on 29.11.2013, declaring a loss of Rs. 6,41,68,53,076/-. The petitioner's return of income was selected for scrutiny and the Assessing Officer [AO] issued a notice under Section 143 (2) of the Act. The AO also issued further notices during the course of the assessment proceedings, which were duly responded to by the petitioner. 4. The assessment proceedings culminated in an assessment order dated 21.03.2016 passed under Section 143 (3) of the Act. 5. Thereafter, on 03.02.2017, the AO issued a notice under Section 154 read with Section 155 of the Act, inter alia, stating that there was a mistake apparent from the record, which was proposed to be rectified, and the petitioner was afforded an opportunity to be heard in that regard. According to the AO, an amount of Rs. 6,29,00,000/-, which was debited from the profit and l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the unamended provisions relating to the re-assessment of income that had escaped assessment. 10. The Revenue appealed the decisions rendered by various High Courts to the Supreme Court of India. In Union of India & Ors. v. Ashish Aggarwal 2022 SCC OnLine SC 543 - which was one of such appeals arising from the decision of the Allahabad High Court - the Supreme Court delivered its decision on 04.05.2022, whereby it concurred with the view that the amended provisions which came into force after 31.03.2021 would be applicable to notices issued thereafter. However, the Supreme Court also issued certain directions in exercise of its powers under Article 142 of the Constitution of India. The Court directed that all notices that were issued under Section 148 of the Act after 01.04.2021 till the date of the said decision (04.05.2022), including those that had been set aside by the High Courts, would be construed as show cause notices under Section 148A (b) of the Act. The Assessing Officers were directed to provide the information and material relied upon by the Revenue for issuance of such notices, to the respective assessees within a period of thirty days from the date of the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... initiated. 12. The petitioner responded to the said notice by filing a reply on 13.06.2022, inter alia, contending that initiation of the said proceedings was barred by limitation by virtue of the first proviso to Section 149 (1) (b) of the Act. The petitioner, thereafter, filed a further response on merits on 30.06.2022. 13. The AO disregarded the objections raised by the petitioner and on 25.07.2022 passed an order under Section 148A (d) of the Act, holding that it was a fit case for issuance of notice under Section 148 of the Act. The said order was communicated to the petitioner along with the notice dated 25.07.2022 issued under Section 148 of the Act. 14. Aggrieved by the aforesaid order and notice dated 25.07.2022, the petitioner challenged the same by filing a writ petition [being W.P.(C) 13581/2022], inter alia, on the ground that the said order was passed without considering the petitioner's responses, which were furnished on 13.06.2022 and 30.06.2022. 15. The said writ petition was allowed by an order dated 10.10.2022. This Court set aside both the order and notice dated 25.07.2022, and directed the AO to pass a fresh order within a period of eight weeks from date. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tially amended with the substitution/amendment of provisions under Sections 147-151 of the Act by virtue of the Finance Act, 2021. 21. Section 149 (1) of the Act as in force at the material time is out below: "Time limit for notice. 149. (1) No notice under 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 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 sub-section (1) of this section, as they stood imm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 years. Even this reopening can be done only after the approval of the Principal Chief Commissioner, the highest level of the Income Tax Department." 24. It is apparent from the above that the rationale for substituting Section 149 (1) of the Act was to reduce the time period for reopening assessments from six years to three years, except in cases of serious tax evasion where there is evidence of concealment of income of Rs. 50 lakh or more. In such cases, it was proposed that the time limit for reopening the assessments would extend to ten years after approval of the PCCIT. 25. Thus, the first and foremost question to be addressed is whether the conditions as specified under Section 149 (1) (b) of the Act are satisfied. As is apparent from the plain language of the said clause that, essentially, three conditions are required to be satisfied. First, that the Assessing Officer has in his possession books of account or other documents or evidence, which reveal that the income chargeable to tax has escaped assessment. Second, that the said evidence is to the effect that the income chargeable to tax that has escaped assessment is represented in the form of an asset. And third, that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , thus, apparent that any expenditure incurred for the salaries and wages, irrespective of the years in which the same is incurred, would not be represented by any asset. Since the conditions as specified under Section 149 (1) (b) of the Act are not satisfied, no notice under Section 148 of the Act could be issued after expiry of three years from the end of AY 2013-14, that is, after 31.03.2017. 30. In view of the above, it is not necessary to address the question whether reopening of assessment for AY 2013-14 is barred under the proviso to Section 149 (1) of the Act. However, we consider it apposite to address the said question as well. 31. In cases where a notice under Section 148 of the Act can be issued under Section 149 (1) (a) and (b) for any assessment year, beginning on or before 1st day of April, 2021, it would also be necessary to examine whether such a notice could be issued at 'that time'. The First Proviso to Section 149 (1) of the Act expressly provides that no notice under Section 148 of the Act shall be issued in case of the relevant assessment year beginning on or before 1st day of April, 2021, if such a notice could not be issued at that time on account of being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year): Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year: *** *** ***" 36. As is clear from the plain language of the First Proviso to Section 147 of the Act as applicable at the material time that in cases where an assessment has been made ..... X X X X Extracts X X X X X X X X Extracts X X X X
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