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Income Tax Appellate Tribunal, DEHRADUN BENCH, DEHRADUN
Before: Sh. Amit ShuklaDr. B. R. R. Kumar
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeals have been filed by the Assessee against the orders of ld. CIT(A)-IV, Kanpur dated 17.02.2017. As all the appeals deal with identical issue, we proceeded to decide the appeals by a consolidated order for convenience and to avoid repetition of facts.
Briefly stated facts of the case are that the assessee is an individual, derives income from other sources. For all the years under consideration, proceedings u/s 147 of the Income-tax
ITA Nos. 1798 to 1804/Del/2017 2 Raju Verma Act, 1961 were commenced by way of issue of notice u/s 148 of the Act on 12.06.2014. In the reasons recorded for reopening of the assessment, the Assessing Officer recorded that assessee was holding bank account in foreign bank i.e. HSBC Geneva and the said account was not disclosed to the Income-tax Department. The detailed reasons recorded by the Assessing Officer have been reproduced by the Assessing Officer in assessment orders dated 30.01.2015.
The amount involved in the various assessment years is as under: Assessment year Amount 1999-2000 Rs.33,053 2000-2001 Rs.44,625 2001-2002 Rs.24,220 2002-2003 Rs.17,455 2003-2004 Rs.24,331 2004-2005 Rs.71,216 2005-2006 Rs.35,214
The notice u/s 148 of the Act has been issued on 12.6.2014. The issue to be adjudicated is identified as to “whether invoking the provisions of Section 194C for the years in consideration was legally tenable or not as the provision was inserted by the Finance Act, 2012 w.e.f. 01.07.2012 and thus whether it can be treated to have retrospective effect or not?”
The ld. Counsel in support of his contention relied on the decision of the Hon’ble High Court of Delhi in the case of Brahma Datt Vs ACIT reported in 100 taxmann.com 324.
On the other hand, the ld. DR relied on the order of the ld. CIT(A). The ld. DR also relied on the decision of the Hon’ble Supreme Court in the case of Raymond Woollen Mills Ltd. Vs.
ITA Nos. 1798 to 1804/Del/2017 3 Raju Verma ITO reported in 236 ITR 34 (SC) and the decision of Hon’ble High Court of Delhi in the case of Sonia Gandhi Vs. ACIT, Circle- 52(1), reported in (2018) 97 taxmann.com 150. On the issue of decision of the Hon’ble Delhi High Court in the case of Brahm Datt (supra), the ld. Counsel submitted that in the said case the account was not held in the personal capacity and it was held as settler of the trust and facts of present case being different, ratio of the said judgment cannot be applied over the facts of the instant case.
It is also a fact on record that in assessment year 2012- 13, the assessee declared outstanding balance in the HSBC, Geneva account which includes principal amount and interest component accumulated till date excluding the withdrawal made from time to time. This account was initially opened in “the British Bank of Middle East”, Geneva in financial year 1996-97 and funds were deposited in that. The British Bank of Middle East was later on merged with HSBC bank, Geneva in financial year 1998. The issue is involved from the side of revenue was taxation of the notional interest and the expenses debited which were in the nature of general maintenance fee and charges levied by the bank as mentioned in the above table.
We find that the Hon’ble Delhi High Court in the case of Brahm Datt (supra), notice u/s 148 of the Act was issued for assessment year 1998-99 invoking limitation of 16 years provided in section 149(c) of the Act for holding bank account in HSBC, Geneva. In the said decision, the Hon’ble Delhi High Court has relied on the decision of the Hon’ble Supreme Court in the case of K.M. Sharma vs. ITO 254 ITR 772(SC), wherein
ITA Nos. 1798 to 1804/Del/2017 4 Raju Verma the Hon’ble Supreme Court has held that law of limitation was intended to give certainty and finality to legal proceedings and therefore, proceedings which had attained finality under the existing law due to bar of limitation, could not be held to be open for revival unless the amended provision is clearly given retrospective operation so as to allow upsetting proceedings, which has already been completed and attained finality. The Co- ordinate Bench of ITAT in ITA Nos. 1796 & 1797/Del/2017 vide order dated 09.04.2019 in Assessee’s own case, relying on the judgment of the Hon’ble Jurisdiction High Court in the case of Brahma Datt Vs. ACIT (supra) held that the notice cannot be issued by invoking the provisions that have come into force w.e.f. 01.07.2012.
The Hon’ble Delhi High Court in the case of Brahma Datt Vs. ACIT (supra) quashed the reassessment observing as under:
“14. The ratio of K.M Sharma and S.S. Gadgil, in the opinion of this court covers the facts of this case. Reassessment for 1998-99 could not be reopened beyond 31.03.2005 in terms of provisions of Section 149 of the Act as applicable at the relevant time. The petitioner’s return for assessment year 1998-99 became barred by limitation on 31.03.2005. The question of revival of the period of limitation for reopening assessment for AY 1998-99 by taking recourse to the subsequent amendment made in Section 149 of the Act in the year 2012, i.e., more than 8 years after expiration of limitation on 31.03.2005, has been dealt with by the Supreme Court in K.M. Sharma (supra).
ITA Nos. 1798 to 1804/Del/2017 5 Raju Verma
The AO has conceded in the order rejecting the petitioner’s objection that "It is also found that the assessee was a non-resident as contended by him, in the AY 1998-99." In the circumstances, there can be no question about the applicability of the then existing provision- Section 149 (b), which stated that the normal time limit for reopening assessment was four years, "but not more than six years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to one lakh rupees or more for that year."
It has been said that "the government in all its actions is bound by rules fixed and announced beforehand--rules which make it possible to foresee with fair certainty how the authority will use its coercive powers in given circumstances, and to plan one's affairs on the basis of this knowledge" (Ref. FA Hayek, "Road to Serfdom", 1944). In this case, the interpretation proposed by the revenue has the potential of arming its authorities to re-open settled matters, in respect of issues where the citizen could genuinely be sanguine and had no obligation of the kind which the Revenue seeks to impose by the present amendment. All the more significant, is the fact that absent a clear indication, every statute is presumed to be prospective. The revenue had sought to contend that the amendment (to Section 149) is merely procedural and no one has a
ITA Nos. 1798 to 1804/Del/2017 6 Raju Verma vested right to procedure; and that procedural amendments can be given effect any time, even in ongoing proceedings.
This court is of the opinion that there is no merit in the revenue’s contention. In Sri Prithvi Cotton Mills Vs Broach Borough Municipality, AIR 1970 SC 192, examined the validity of the retrospective amendment of a statute in light of Article 19(1)(g) of the Constitution of India, i.e. a fundamental right to practice any profession, or to carry on any occupation, trade or business. The court said:
"In testing whether a retrospective imposition of a tax operates so harshly as to violate fundamental rights under article 19(1)(g), the factors considered relevant include the context in which retroactivity was contemplated such as whether the law is one of validation of taxing statute struck-down by courts for certain defects; the period of such retroactivity, and the decree and extent of any unforeseen or unforeseeable financial burden imposed for the past period etc."
In Govinddas v Income Tax Officer AIR 1977 SC 552 the Supreme Court held that Section 171 (6) of the Income Tax Act was prospective and inapplicable for any assessment year prior to 1st April, 1962, the date on which the Act came into force and observed that:
ITA Nos. 1798 to 1804/Del/2017 7 Raju Verma "11. Now it is a well settled rule of interpretation hallowed by time and sanctified by judicial decisions that, unless the terms of a statute expressly so provide or necessarily require it, retrospective operation should not be given to a statute so as to take away or impair an existing right or create a new obligation or impose a new liability otherwise than as regards matters of procedure. The general rule as stated by Halsbury in Vol. 36 of the Laws of England (3rd Edn.) and reiterated in several decisions of this Court as well as English courts is that all statutes other than those which are merely declaratory or which relate only to matters of procedure or of evidence are prima facie prospectively and retrospective operation should not be given to a statute so as to affect, alter or destroy an existing right or create a new liability or obligation unless that effect cannot be avoided without doing violence to the language of the enactment. If the enactment is expressed in language which is fairly capable of either interpretation, it ought to be construed as prospective only."
In Commissioner of Income Tax v Scindia Steam Navigation Co. Ltd AIR 1961 SC 1633, it was held that as the liability to pay tax is computed according to the law in force at the beginning of the assessment year, i.e., the first day of April, any change in law upsetting the position and imposing tax liability after that date, even if made during the currency of the assessment year, unless
ITA Nos. 1798 to 1804/Del/2017 8 Raju Verma specifically made retrospective, does not apply to the assessment for that year. These principles were reiterated in Commissioner of Income Tax v Vatika Township (P) Ltd [2014] 367 ITR 466.
In view of the above discussion, it is held that the petition has to succeed; the impugned reassessment notice and all consequent proceedings are hereby quashed and set aside. The writ petition is allowed; however without order on costs.”
In view of the facts of the instant case being identical to facts in the case of Brahma Datt (supra), respectfully following the decision of the Hon’ble Delhi High Court, the notice issued under section 148 of the Act is held to be barred by limitation and the reassessment proceeding are accordingly quashed.
Since, we have already quashed the reassessment proceeding on the ground of the limitation of notice u/s 148 of the Act, we hold that the merits of the case are not required to be dealt upon.
In the result, all the appeals of the Assessee are allowed Order Pronounced in the Open Court on 06/10/2021.
Sd/- Sd/- (Amit Shukla) (Dr. B. R. R. Kumar) Judicial Member Accountant Member Dated: 06/10/2021 *Subodh* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals)