DOSCH PHARMACEUTICALS PVT LTD vs. THE INCOME TAX OFFICER WARD- 1 (3) 1

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WP/3979/2024HC Bombay01 July 2024Author: HON'BLE SHRI JUSTICE G. S. KULKARNI, HON'BLE SHRI JUSTICE SOMASEKHAR SUNDARESAN11 pages
AI SummaryAllowed

What did the High Court hold?

The High Court held that the notice dated July 29, 2022, issued under Section 148 of the Income Tax Act, 1961, for AY 2015-16, was indeed barred by limitation. The Court referred to the first proviso to Section 149 of the Act, which states that no notice under Section 148 shall be issued if it could not have been issued under the pre-amended provisions due to being beyond the time limit. For AY 2015-16, the six-year period expired on March 31, 2022, making the notice issued on July 29, 2022, beyond the prescribed time limit. Furthermore, the Court found the notice to be invalid and bad in law because it was issued by the Jurisdictional Assessing Officer (JAO). Citing Section 151A of the Act and the CBDT Scheme framed thereunder, the Court held that notices under Section 148 must be issued in a faceless manner by the Facilitation Assessing Officer (FAO), not the JAO. The revenue's counsel could not dispute this contention. Consequently, the writ petition was allowed, and the impugned notice was quashed and set aside.

What were the facts?

The petitioner, M/s. Dosch Pharmaceutical Pvt. Ltd., filed a writ petition challenging an order dated July 29, 2022, passed by the Assessing Officer under Section 148A(d) of the Income Tax Act, 1961, and subsequent notices issued under Section 148 of the Act for Assessment Year 2015-16. The petitioner, a domestic company, had its scrutiny assessment completed under Section 143(3) on December 22, 2017. Subsequently, a notice under Section 148 was issued on June 30, 2021, followed by proceedings under Section 148A(b) initiated on May 20, 2022. The petitioner filed objections on June 1, 2022, which were rejected by the impugned order dated July 29, 2022, leading to the issuance of a fresh notice under Section 148 on July 29, 2022.

What were the issues?

1. Whether the notice dated July 29, 2022, issued under Section 148 of the Income Tax Act, 1961, for AY 2015-16 is barred by limitation as per the first proviso to Section 149(1) of the Act? - Assessee's contention: The notice was issued after the expiry of the limitation period, which ended on March 31, 2022, citing the Division Bench decision in Hexaware Technologies Limited. - Revenue's contention: Not recorded in the judgment. 2. Whether the impugned notice dated July 29, 2022, is invalid and bad in law as it was issued by the Jurisdictional Assessing Officer (JAO) and not in accordance with Section 151A of the Act? - Assessee's contention: The notice was issued by the JAO, whereas Section 151A, read with the CBDT Scheme, mandates that such notices should be issued by the Facilitation Assessing Officer (FAO) in a faceless manner. - Revenue's contention: Not recorded in the judgment, but the court notes the revenue's counsel was not in a position to dispute the contention.

Which sections of the Income-tax Act were involved?

Section 148,Section 148A(d),Section 143(3),Section 94(7),Section 149(1),Section 151A,Section 147,Section 144B(1),Section 144B(7),Section 144B(8)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
5-WPL-5607-2023-F.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION (L.) NO. 5607 OF 2023 M/s. Dosch Pharmaceutical Pvt. Ltd., 15-C, Laxmi Industrial Estate, New Link Road, Andheri West, Mumbai – 400053. PAN : AAACD2320F …Petitioner Versus 1. Income tax Officer, Ward-1(3)(1) 2. Pr. Chief Commissioner of Income tax, Mumbai 3. Assistant Commissioner of Income tax, Mumbai 4. Principal Commissioner of Income tax, Mumbai 5. Union of India, through the Secretary, Department of Revenue, Ministry of Finance, North Block, New Delhi-110 001. …Respondents Mr. Jose Pulikkoden a/w. Steve Pulikkoden and Rakshitha Poojary, Advocates for Petitioner. Mr. Suresh Kumar, Advocate for Respondents. CORAM : G.S. KULKARNI & SOMASEKHAR SUNDARESAN, JJ. DATE : July 01, 2024 Page 1 of 11 July 01, 2024 Shraddha Talekar, PS SHRADDHA KAMLESH TALEKAR Digitally signed by SHRADDHA KAMLESH TALEKAR Date: 2024.07.29 20:14:26 +0530 CNR No : HCBM020056082023 Uploaded on - 29/07/2024 Downloaded on - 31/10/2026 00:37:07 2024:BHC-OS:11162-DB 5-WPL-5607-2023-F.doc

Oral Judgment : (Per, G.S. Kulkarni, J.)

1.

Rule. Rule made returnable forthwith. Respondents waive service. By consent of the parties, heard finally.

2.

In this petition filed under Article 226 of the Constitution of India, the Petitioner has prayed for reliefs which inter alia revolve around the order dated 29 July, 2022 passed by the Assessing Officer under Section 148A(d) of the Income Tax Act, 1961 (“the Act”). According to the Learned Counsel for the Petitioner, prayer clause (a) would be the main prayer, which would require consideration. For convenience, prayer clause (a) seeking substantive relief is extracted below : (a) That this Hon’ble Court may be pleased to issue an appropriate writ or any other directions thereof, under writ or any other directions thereof, under Article 226 of the Constitution of India against Respondents, to quash and set aside : i) The approval u/s 151 of the IT Act, 1961 granted by the Respondent No.4 (EXHIBIT- ‘C’). ii) Respondent No. 3’s Notice dated 30.06.2021 u/s 148 of the IT Act, 1961, for A.Y. 2025-16 (EXHIBIT- ‘B’). iii) Respondent No.1’s Order dated 29.07.2021 of the IT Act, 1961 passed u/s 148A(d) of the IT Act, 1961, for AY 2015-16 (EXHIBIT- ‘G’). Downloaded on - 31/10/2026 00:37:07

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iv) Notice dated 29.07.2022 issued by the Respondent No. 1 u/s. 148 of the IT Act, 1961 for A.Y. 2015-16 (EXHIBIT- ‘H’).

3.

The Petitioner claims to be a domestic company inter alia engaged in the business of trading and export in pharmaceutical products, namely hard gelatin capsules and printed foils. The Assessment Year in question is 2015-16. The Petitioner filed its return of income for the said assessment year on 20 October, 2015 declaring an income of Rs.3,95,99,830/-. Subsequently, the case was selected for scrutiny by issuance of notice under Section 143(2) of the Act. The Petitioner having submitted all details of the accounts and after carrying out necessary verifications, scrutiny assessment was completed under Section 143(3) by the Deputy Commissioner of Income Tax by enhancing the disallowance under section 94(7) of the Act to Rs.10,23,76,932/- as against Rs.9,72,64,267/- in the Assessment Order dated 22nd December, 2017. 4. On such backdrop, on 30 June, 2021, the Petitioner was issued a notice under Section 148 of the Act, applying the pre-amended provisions. Admittedly, with effect from 1 April, 2021, the amended provisions, introduced by the Finance Act, 2021, had become applicable. Downloaded on - 31/10/2026 00:37:07

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5.

On 20 May, 2022, proceedings under Section 148A(b) of the Act came to be initiated against the Petitioner, thereby supplying grounds on which the assessment was proposed to be reopened. On 1 June, 2022, the Petitioner’s reply objecting to the assessment proceedings came to be filed, responding to the notice dated 20 May, 2022. On such objections, the impugned order came to be passed on 29 July, 2022, rejecting the Petitioner’s submissions and thereby issuing the impugned notice under Section 148 of the Act, dated 29 July, 2022. 6. The primary contention as urged on behalf of the Petitioner in answering the impugned notice under Section 148 of the Act is to the effect that the notice is barred by limitation as provided under Section 149(1) of the Act, read with the first proviso thereunder. It is submitted that admittedly, in the present case, the notice was issued on 20 May, 2022, which is after the prescribed period of limitation, which had expired on 31 March, 2022. It is submitted that such issue had fallen for consideration before a Division Bench of this Court in Hexaware Technologies Limited Vs. Assistant Commissioner of Income Tax & 4 Ors. 1, wherein the Court was considering the legality of the notice under 1 (2024) 464 ITR 430 Downloaded on - 31/10/2026 00:37:07

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Section 148 issued on 27 August, 2022, on the ground of the same being barred by limitation as per the first proviso of section 149 of the Act; and on the second issue whether such notice would be invalid and bad in law as the same was issued by the Jurisdictional Assessing Officer and in accordance with Section 151A of the Act. The said decision of the Division Bench is placed for our consideration. Learned Counsel for the Petitioner has drawn our attention to the questions of law which had fallen for consideration of the Court and relevant to the facts of the present case are Question Nos.2 and 4, which read thus : 2 Whether the notice dated 27th August, 2022 issued under Section 148 of the Act is barred by limitation as per the first proviso to Section 149 of the Act? 4 Whether the impugned notice dated 27th August 2022 is invalid and bad in law being issued by the JAO as the same was not in accordance with Section 151A of the Act?

7.

The Division Bench, in the context of issue of limitation and considering the effect of the provisions of Section 149, more particularly the first proviso, held that for the Assessment Year 2015-2016, 6th year expired on 31 March, 2022, and the notice under Section 148 of the Act being issued on 27 August, 2022, was clearly beyond the period of limitation prescribed in Section 149 read with the first proviso. It was Downloaded on - 31/10/2026 00:37:07

5-WPL-5607-2023-F.doc required to be noted, which are extracted below : 24 …..The first proviso to Section 149 of the Act provides that no notice under Section 148 shall be issued at any point of time in a case for a relevant assessment year beginning on or before the 1 st day of April 2021, if a notice under Section 148 could not have been issued at that time on account of being beyond the time limit specified under the provision of clause (b) of sub-section (1) of this Section, as it stood immediately before the commencement of the Finance Act, 2021. The term ‘at that time’ in the first proviso refers to the date on which notice under Section 148 is to be issued by the Assessing Officer. The term ‘at that time’ has to refer to the term ‘at any time’ used earlier in the said proviso. The reference to ‘at any time’ is to the date of the notice to be issued by the Assessing Officer and, therefore, the term ‘at that time’ would also refer to the said date. On the said date, if a notice could not have been issued under the erstwhile provision of Section 149(1)(b) of the Act, for any assessment year beginning on or before the 1st day of April 2021, the notice cannot be issued even under the new provisions. 25 Section 149(1)(b) of the erstwhile provisions provided a time limit of six years from the end of the relevant assessment year for issuing notice under Section 148 of the Act. For the relevant assessment year, being Assessment Year 2015-2016, 6th year expired on 31st March 2022. The notice under Section 148 of the Act, in the present case, is issued on 27th August 2022, i.e., clearly beyond the period of limitation prescribed in Section 149 read with the first proviso to the said section. This is squarely covered by paragraphs 36 and 37 of New India Assurance (Supra) which has been reproduced above in paragraph 23. 2 (2024) 158 taxmann.com 367 (Bombay) Downloaded on - 31/10/2026 00:37:07

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26 The purpose of the first proviso to Section 149 of the Act is consistent with the stated object of the government to make prospective amendments in the Act. Accordingly, the proviso provides that up to Assessment Year 2021-2022 (period before the amendment), the period of limitation as prescribed in the erstwhile provisions of Section 149(1)(b) of the Act would be applicable and only from Assessment Year 2022-2023, the period of ten years as provided in Section 149(1)(b) of the Act, would be applicable. The submission of the Revenue to interpret the first proviso to Section 149 of the Act to be applicable only for Assessment Years 2013- 2014 and 2014-2015, i.e., for assessment years where the period of limitation had already expired on 1st April 2021 is not sustainable. The interpretation canvassed by the Revenue is clearly contrary to the plain language of the proviso. When the language in the statute is clear, it has to be so interpreted and there is no scope for interpreting the provision on any other basis. The taxing statue should be strictly construed. [Godrej & Boyce Manufacturing Company Ltd. vs. DCIT]

8.

Mr. Suresh Kumar, Learned Counsel for the Revenue would not dispute the position that as in the present case the impugned notice under Section 148 of the Act was issued on 29 July, 2022, the issue would stand squarely covered by the decision of this Court in Hexaware Technologies Limited (Supra) and the impugned notice accordingly would be required to be held as barred by limitation, applying the provisions of Section 149 read with the first proviso.

9.

Learned Counsel for the Petitioner has also drawn our attention Downloaded on - 31/10/2026 00:37:07

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to the impugned notice dated 29 July, 2022 to contend that the same has been issued by the Jurisdictional Assessing Officer (“JAO”), namely Income Tax Officer 1(3)(1), Mumbai, which according to him, also would not be in consonance with the provisions of Section 151A, by which the Income Tax Act has introduced the regime of faceless assessment. On such issue, Learned Counsel for the Petitioner has drawn our attention to the question of law No.4 which was dealt with by the Court in Hexaware Technologies Limited (Supra), which we have noted hereinabove.

10.

In answering such question, the Division Bench held that there is no question of any concurrent jurisdiction to be exercised by the JAO and the Faceless Assessing Officer (“FAO”) for issuance of notice under Section 148 of the Act or even for passing an assessment or reassessment order. It was observed that when the specific jurisdiction has been assigned to the FAO in the Scheme dated 29 March, 2022 notified in pursuance of the said provision, in such event, it excludes the jurisdiction of the JAO. It was held that as Section 151A of the Act itself contemplates formulation of the Scheme for both assessment, reassessment or recomputation under Section 147, as well as for issuance of notice under Downloaded on - 31/10/2026 00:37:07

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Section 148 of the Act, and that the Scheme framed by the CBDT covered both such aspects of the provisions of Section 151A of the Act. It was observed that the Scheme as framed was clearly applicable for issuance of notice under Section 148 of the Act and accordingly, only the FAO can issue the notice under Section 148 of the Act and not the JAO. The relevant observations of the Court in this regard are extracted hereunder : 36……. Section 151A of the Act itself contemplates formulation of Scheme for both assessment, reassessment or recomputation under Section 147 as well as for issuance of notice under Section 148 of the Act. Therefore, the Scheme framed by the CBDT, which covers both the aforesaid aspect of the provisions of Section 151A of the Act cannot be said to be applicable only for one aspect, i.e., proceedings post the issue of notice under Section 148 of the Act being assessment, reassessment or recomputation under Section 147 of the Act and inapplicable to the issuance of notice under Section 148 of the Act. The Scheme is clearly applicable for issuance of notice under Section 148 of the Act and accordingly, it is only the FAO which can issue the notice under Section 148 of the Act and not the JAO. The argument advanced by respondent would render clause 3(b) of the Scheme otiose and to be ignored or contravened, as according to respondent, even though the Scheme specifically provides for issuance of notice under Section 148 of the Act in a faceless manner, no notice is required to be issued under Section 148 of the Act in a faceless manner. In such a situation, not only clause 3(b) but also the first two lines below clause 3(b) would be otiose, as it deals with the aspect of issuance of notice under Section 148 of the Act. Respondents, being an authority subordinate to the CBDT, cannot argue that the Scheme framed by the CBDT, and which has been laid before both House of Parliament is partly otiose and inapplicable. The argument advanced by respondent expressly makes clause 3(b) otiose and impliedly makes the whole Scheme otiose. If clause 3(b) of the Scheme is not applicable, then only clause 3(a) of the Scheme Downloaded on - 31/10/2026 00:37:07

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remains. What is covered in clause 3(a) of the Scheme is already provided in Section 144B(1) of the Act, which Section provides for faceless assessment, and covers assessment, reassessment or recomputation under Section 147 of the Act. Therefore, if Revenue’s arguments are to be accepted, there is no purpose of framing a Scheme only for clause 3(a) which is in any event already covered under faceless assessment regime in Section 144B of the Act. The argument of respondent, therefore, renders the whole Scheme redundant. An argument which renders the whole Scheme otiose cannot be accepted as correct interpretation of the Scheme. The phrase “to the extent provided in Section 144B of the Act” in the Scheme is with reference to only making assessment or reassessment or total income or loss of assessee. Therefore, for the purposes of making assessment or reassessment, the provisions of Section 144B of the Act would be applicable as no such manner for reassessment is separately provided in the Scheme. For issuing notice, the term “to the extent provided in Section 144B of the Act” is not relevant. The Scheme provides that the notice under Section 148 of the Act, shall be issued through automated allocation, in accordance with risk management strategy formulated by the Board as referred to in Section 148 of the Act and in a faceless manner. Therefore, “to the extent provided in Section 144B of the Act” does not go with issuance of notice and is applicable only with reference to assessment or reassessment. The phrase “to the extent provided in Section 144B of the Act” would mean that the restriction provided in Section 144B of the Act, such as keeping the International Tax Jurisdiction or Central Circle Jurisdiction out of the ambit of Section 144B of the Act would also apply under the Scheme. Further the exceptions provided in sub-section (7) and (8) of Section 144B of the Act would also be applicable to the Scheme.

11.

In our opinion, there is merit in the contention as raised on behalf of the Petitioner that for the aforesaid reasons, as well, the impugned notice would also be hit by the provisions of Section 151A of Downloaded on - 31/10/2026 00:37:07

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the Act insofar as the issuance of notice is by the JAO who has acted without jurisdiction.

12.

Mr. Suresh Kumar, Learned Counsel for the Respondents- Revenue would not be in a position to dispute such contention as advanced by the Petitioner, considering the nature of the notice issued and the same having been issued by the JAO.

13.

In view of the above discussion, the Writ Petition deserves to succeed and is accordingly allowed in terms of prayer clause (a) : (a) The impugned notice dated 29 July, 2022 issued under Section 148 of the Act is quashed and set aside as being barred by limitation and also being contrary to the provisions of Section 151A of the Act.

14.

Rule is made absolute in the aforesaid terms. No costs. [ SOMASEKHAR SUNDARESAN, J.] [G.S. KULKARNI, J.] Downloaded on - 31/10/2026 00:37:07 Powered by TCPDF (www.tcpdf.org)

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