VIMLADEVI SHYAMSUNDER KHETAN,MUMBAI vs. ITO 23(3)(6), MUMBAI

The Ld. Counsel for the assessee, at the outset, submitted that the notice issued u/s 148 of the Act dated 29.06.2021 is barred by limitation by virtue of the decision of the Hon’ble Supreme Court in the case of Union of India & Ors. vs. Rajeev Bansal, (2024) 469 ITR 46 (SC). Referring to page 21 of the paper book, the Ld. Counsel submitted that the Assessing Officer issued notice u/s 148 of the Act on 29.06.2021 under the old regime and order u/s 148A(d) on 27.07.2022 and notice u/s 148 on 29.07.2022 following the procedure laid down by Hon’ble Supreme Court. The Ld. Counsel for the assessee submitted that since the final notice was issued on 29.07.2022 for the assessment year 2015-16 the same is barred by limitation specified under the provisions of section 149 of the Act as applicable to the relevant year.

The Ld. Counsel for the assessee further submitted that the said notice was issued after the statutory cut-off date of 31.03.2022 prescribed under the erstwhile regime, and there exists no provision, including the Taxation and Other Laws (Relaxation and Amendment) Act, 2020 (TOLA). The Ld. Counsel for the assessee placing reliance on the decision of the Hon’ble Supreme Court in the case of Union of India & Ors. vs. Rajeev Bansal (supra) submitted that as a matter of fact the Revenue conceded that for the assessment year 2015-16, a notice issued or after 01.04.2021 will have to be dropped as they will not fall for completion during the period prescribed under TOLA.

Heard rival contentions, perused the orders of the authorities below. The assessment year involved in this case is assessment year 2015-16 and, admittedly, the notice u/s 148 of the Act was issued on 29.06.2021 and an order passed u/s 148(d) on 27.07.2022 with final notice u/s 148 on 29.07.2022.

The Hon’ble Supreme Court in the case of Union of India & Ors. vs. Rajeev Bansal (supra), held that the Revenue conceded that for the assessment year 2015-16, all notices issued on or after 01.04.2021 will have to be dropped as they will not fall for completion in the period prescribed under TOLA. This concession was specifically recorded by the Hon’ble Supreme Court in paragraph 19 of the judgment as under: “19. Mr. N Venkataraman, learned Additional Solicitor General of India, made the following submissions on behalf of the Revenue: a. Parliament enacted TOLA as a free-standing legislation to provide relief and relaxation to both the assesses and the Revenue during the time of COVID- 19. TOLA seeks to relax actions and proceedings that could not be completed or complied with within the original time limits specified under the Income-tax Act; 3 b. Section 149 of the new regime provides three crucial benefits to the assesses: (i) the four-year time limit for all situations has been reduced to three years; (ii) the first proviso to Section 149 ensures that re-assessment for previous assessment years cannot be undertaken beyond six years; and (iii) the monetary threshold of Rupees fifty lakhs will apply to the re assessment for previous assessment years; c. The relaxations provided under section 3(1) of TOLA apply "notwithstanding anything contained in the specified Act." Section 3(1), therefore, overrides the time limits for issuing a notice under section 148 read with Section 149 of the Income-tax Act; d. TOLA does not extend the life of the old regime. It merely provides a relaxation for the completion or compliance of actions following the procedure laid down under the new regime; e. The Finance Act 2021 substituted the old regime for re-assessment with a new regime. The first proviso to Section 149 does not expressly bar the application of TOLA. Section 3 of TOLA applies to the entire Income-tax Act, including Sections 149 and 151 of the new regime. Once the first proviso to Section 149(1)(b) is read with TOLA, then all the notices issued between 1 April 2021 and 30 June 2021 pertaining to assessment years 2013-2014, 2014-2015, 2015-2016, 2016-2017, and 2017-2018 will be within the period of limitation as explained in the tabulation below:

Therefore, by virtue of this concession, the notice issued on or after 31.03.2022 is barred by limitation. Admittedly, in the case of the assessee, the final notice was issued after 31.03.2022 and, therefore, such notice is barred by limitation and consequently the assessment framed pursuant to such notice is bad in law. Ground No. 1 raised by the assessee in the grounds of appeal is allowed.

As we have decided and held that the reassessment is bad in law, by allowing Ground No. 1, Grounds Nos. 2 and 3 need not be adjudicated.

In the result, the appeal of the assessee is partly allowed.