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Facts
The assessee filed an appeal against the reassessment order, which was passed beyond the limitation period. The Revenue's appeal was filed with a delay, which was condoned. The core issue revolves around the timeline for completing the reassessment proceedings.
Held
The Tribunal held that the reassessment order was passed beyond the period of limitation prescribed under Section 153 of the Income Tax Act. Consequently, the order was set aside as bad in law. Other grounds were rendered academic.
Key Issues
Whether the reassessment order passed by the Assessing Officer was within the limitation period prescribed under the Income Tax Act, 1961, considering various exclusions and provisos.
Sections Cited
143(3), 147, 148, 69C, 153, 142(2A), 132, 132A, 92CA, 250, 254, 260, 262, 263, 264, 153A, 153B, 158BE, 153A, 158BA, 245C, 245D, 245Q, 245R, 144BA, 10, 12AB
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Income Tax Appellate Tribunal, MUMBAI BENCH “G”, MUMBAI
Before: JUSTICE (RETD.) SHRI C.V. BHADANG & SHRI VIKRAM SINGH YADAV
O R D E R PER VIKRAM SINGH YADAV, A.M :
These are cross-appeals filed by the assessee and the Revenue against the order(s) of the Learned Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre (NFAC), Delhi [„Ld.CIT(A)‟], dated 25-08-2023, pertaining to Assessment Year (AY) 2012-13. the assessee has taken the following grounds of appeal:
“1. (a) The Ld. CIT(A) erred in not appreciating that the reassessment order passed u/s. 143(3) r.w.s. 147 of the Act is invalid, bad-in-law and against the principles of natural justice. (b) The Ld.CIT(A) grossly erred in confirming the validity of the reassessment order by referring to the proviso to Explanation (2) of section 153 of the Act even though the same is passed beyond the limitation period prescribed in the provisions of the Act without any application of his mind and not even calling for any necessary clarification either from the assessee or from the Id. Assessing Officer at all. (c) The Ld.CIT(A) erred in facts and law in not appreciating that the reassessment order also suffers from infirmity in as much as the issue of addition made in the reassessment order is already examined in the original assessment order and thereby, now amounts to change of opinion. (d) The Ld. CIT(A) also erred in law in not appreciating that the approval granted by the superior authority is mechanical and without application of mind rendering the reopening invalid. 2. (a) The ld.CIT(A) erred in facts and law in confirming addition u/s. 69C of the Act of alleged bogus purchases upto an amount of Rs. 1,08,22,67,425/- being 25% of Rs. 432,90,69,703/-, on his own surmises and conjectures, without considering the overall facts and circumstances and evidences on record. (b) The ld.CIT(A) failed to appreciate that the Id. A.O. failed to provide any adverse material/statements relied upon against the assessee and grossly erred in facts and law in not providing any opportunity of cross examination of the relevant parties.
Without prejudice to ground nos. 1 and 2 above, the ld. CIT(A) erred in facts and law in not appreciating that the real income on the alleged purchases could not have been more than 0.10% of commission income in terms of overall allegations considering the facts and circumstances of the case.”
the Revenue has taken the following grounds of appeal: “(i) On the facts and circumstances of the case and in law, whether the Ld. CIT(A) has erred in restricting the addition u/s 69C of the Act for unexplained expenditure on account of bogus purchase transactions to 25% of Rs.432,90,69,703/- instead of upholding the AO's order disallowing the entire purchase amount without considering the position of law established by the Hon'ble Apex Court in the case of N. K. Proteins Ltd that 100% disallowances on bogus purchases is attracted. (ii) Whether the Ld. CIT(A)'s decision is justified to estimate the disallowance of bogus purchases @ 25% especially when the facts, observation and conclusion of special audit conclusively prove that this purchase is just an accommodation entry and no movement of goods in the said transaction happened? (iii) Whether on the facts and circumstances of the case, Ld. CIT(A) erred in restricting the addition to 25% of bogus purchase amount when the AO disallowed entire 100% of bogus purchase u/s 69C of the Act, as by doing so the provisions of Section 69C, which is an enabling provision, would become redundant and the very purpose and spirit of introduction of section 69C of the Act would be defeated? (iv) Whether on the facts and circumstances of the case, the Ld. CIT (A) erred in holding at Para 6.24 of its order that if the entire purchases are disallowed, then the corresponding sales also need to be ignored, and also erred in not appreciating the decision of the Hon'ble Bombay High Court in the case of PCIT - 25 vs M/s Shree Ganesh Developers ITXA 719 of 2018 wherein it is held that it is nobody's case that the respondent-assessee has made sales out of books by purchasing the goods out of books. (V) On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating the fact that while deciding on a similar issue, the Hon'ble Bombay High Court has held in the case of PCIT 25 vs M/s Shree Ganesh Developers ITXA 719 of 2018 that if the approach of the appellate authorities of estimating the profit on bogus purchases is to be accepted, then, in effect, the consequence would be that even if assessee has failed to prove its claim of deduction or purchases, still by estimating profit, impliedly deduction of purchases, is given. It was further held by the Hon'ble Court that this would amount to endorsing outright conduct of illegality contrary to the express provisions of Section 69C of the Act. (vi) Whether in the light of the facts of the case, the Ld. CIT (A) has erred in not appreciating the fact that the Hon'ble Bombay High Court in the case of PCIT-5, Mumbai vs Kanak Impex (India) Limited ITXA 791 of 2021 has held that when the assessee had discharged its onus to establish the genuineness of purchase transactions, the AO was justified in adding the entire purchase amount and the Appellate Authorities were not justified in estimating the profit rate and thereby impliedly granting deduction of such unexplained expenditure which is contrary to the express provision of Section 69C of the Act. (vii) Whether in the light of the facts of the case, the Ld. CIT (A) has erred in not appreciating the fact that the Hon'ble Bombay High Court in the case of PCIT-12, Mumbai vs Drisha Impex (India) Limited ITXA 1240 of 2018 has held that with regard to bogus purchases the Hon'ble Tribunal had erred in restricting the disallowance to a certain percentage of the total bogus purchase amount and in not upholding the addition of 100% of bogus purchase amount? viii) Whether in the light of the facts of the case, the Ld. CIT (A) has erred in not appreciating the fact that the Hon'ble Delhi High Court in the case of La Medica and the Hon'ble Allahabad High Court in the case of Kaveri Rice
Mills have confirmed the addition of all bogus purchase amounts on identical facts and circumstances?”
4. At the outset, it is noted that there is a delay in filing the Revenue‟s appeal as pointed out by the Registry. In this regard, the Revenue authorities have filed an application seeking condonation of delay. It has been submitted that due to procedural complexities related to jurisdiction over the case, the appeal couldn‟t be filed in time and there was no deliberate and intentional cause for the delay in filing of appeal and reliance has been placed on various authorities rendered by the Hon‟ble Supreme Court wherein it has been laid down that substantial justice must prevail over procedural delays and the latter should not obstruct the dispensation of justice. The Ld.AR didn‟t raise any specific objection during the course of hearing. After hearing both the parties and perusing the facts placed on record, we find that there was reasonable cause for the delay in filing the present appeal and hence, the delay is hereby condoned and appeal so filed by the Revenue is admitted for adjudication.
Briefly the facts of the case are that the assessee has originally filed his return of income on 28-09-2012, declaring total income of Rs. 5,12,500/-. The assessment proceedings were completed u/s. 143(3) of the Income Tax Act, 1961 („the Act‟) vide order dt.27-02-2015, determining the assessed income at Rs. 3,71,97,722/-. The assessee carried the matter in appeal before the Ld.CIT(A), who vide order dt. 22- 11-2017, deleted the addition and in absence of any further appeal by the Revenue, the said assessment proceedings have since attained finality.
The case of the assessee was thereafter reopened basis information received from Director General of Income Tax (Inv.), that assessee has taken bogus purchase bills to reduce and suppress the profits and reasons were recorded wherein the AO has held that he has reason to believe that income chargeable to tax has escaped assessment by reason of failure on the part of the assessee to disclose fully and truly all the material facts necessary for his assessment in terms of provisions of section 147 and notice u/s. 148 of the Act, was issued 28- 03-2019, after taking approval from the PCIT-28, Mumbai. In response, the assessee filed a letter dt. 01-10-2019, objecting to the reopening and requested for copy of reasons. The objections so taken were disposed off by the AO vide letter dt. 01-11-2019. Thereafter, notice and show cause were issued to the assessee a show-cause as to why the case should not be referred for special audit in terms of provisions of section 142(2A) of the Act. Thereafter, the matter was referred to special audit u/s. 142(2A) of the Act and the Special auditor so appointed gave its report. Thereafter, taking into consideration the audit report furnished by the special auditor, notices were again issued to the assessee and after taking into consideration the submissions filed by the assessee but not finding the same acceptable, the AO held that the assessee has failed to prove the genuineness of the purchase transaction of Rs. 250,34,42,660/- made from M/s. LohaIspaat Ltd., and expenditure on account of bogus purchases amounting to Rs. 250,34,42,660/-was treated as un-explained expenditure u/s. 69C of the Act. Further, another addition of Rs. 182,56,27,043/- towards bogus purchases from three other parties, namely, Greenfield Overseas, Arihant International and Marque Global was brought to tax as unexplained expenditure u/s 69C of the Act and assessed income was determined at Rs. 4,32,95,82,203/- and assessment order u/s. 143(3) r.w.s. 147 of the Act was passed vide order dt. 23-06-2022.
The assessee carried the matter in appeal before the Ld. CIT(A) on various legal as well as on merits of the case. The Ld.CIT(A) allowed partial relief to the assessee, holding that the addition should be restricted @25% of the purchases and addition to the extent of Rs. 1,08,22,67,425/- was sustained and the remaining addition was deleted. Against the said order, both the parties are in appeal before us.
Since in assessee‟s appeal, he has taken certain legal grounds challenging the jurisdiction of the AO, it was decided to take up these grounds first with the consent of both the parties.
During the course of the hearing, the Ld.AR submitted that in Ground No. 1, the assessee has challenged the assessment order so passed by the AO u/s. 143(3) r.w.s. 147 of the Act for the reason that the same has been passed beyond the limitation period. In this regard, our reference was drawn to the sequence of events as per following table:
It was also submitted by the ld AR that the assessment order was passed on 23-06-2022. However, the same was supposed to be passed before 15-03-2022, after taking into consideration the time allowed for special audit u/s. 142(2A) of the Act as well as the writ petition filed by the assessee before the Hon‟ble Bombay High Court. It was submitted that even after applying the first proviso to explanation 1 of section 153 of the Act, wherein additional 60 days are provided to complete the assessment order, the assessment order so passed by the AO, continues to be time barred in terms of section 153 of the Act. It was further submitted that on the earlier occasion when the matter had come up for hearing, the Bench has directed the Revenue to call for the factual report from the AO. It was submitted that the said report has since been submitted by the AO and a copy thereof has already been placed on record by the ld DR and even on perusal of the said report dt. 05-07-2024, it can be noted that the relevant dates which have been mentioned in the aforesaid table have not been disputed by the AO. It was submitted that the only reason why the AO has stated that the order has been passed within the limitation period is by referring to the provisions of Taxation and other laws [Relaxation and amendment to certain provisions) Act, 2020 and notification issued from time to time. It was submitted that the provisions of TOLA are not at all applicable in the instant case and our reference was drawn to the notification No. S.O.1703 (E) [No. 38/2021/F.No. 370142/35/2020- TPL] dated 27-04-2021 wherein the time limit has been extended only upto 30th day of June, 2021 and in the instant case, order has been passed on 23-06-2022. It was accordingly submitted that the order so passed by the AO is clearly beyond the limitation period and, therefore, on this account, the same should be set aside as barred by limitation.
Per contra, the Ld.CIT-DR was heard, who has taken us through the factual report so submitted by the AO dt. 05-07-2024 and relied upon the same. We deem it appropriate to reproduce the same in verbatim as under:
At the outset, the aforementioned sequence of events itself states that the assessment order has been passed well within the time period prescribed under the I.T. Act, 1961. 4.1 Moreover, it is again submitted that in this case, Notice u/s. 148 of the Act dated 28.03.2019 was issued through ITBA system and the same was digitally signed and dispatched through postal authorities before 31.03.2019. In this regard, it has been found that the assessee has claimed that the said notice u/s. 148 of the Act was received to him by hand in July, 2019. 4.2 Furthermore, it is pertinent to mention that the case was referred to special audit under section 142(2A) of the I.T. Act, 1961 on 30.12.2019 and the requisite audit report was received in this case on 05.03.2021. Thus, considering the date of receiving of special audit report i.e. 05.03.2021 (uploaded in ITBA on 12.03.2021), date of service of notice u/s, 148 of the Act and applying the provisions of Taxation and Other Laws (Relaxation & Amendment of Certain Provisions) Act, 2020 (TOLA) and subsequent Gazette Notifications issued in this regard from time to time, the extension of time limit for completion of assessment was available in this case upto 30.09.2021 [Notification No. 10/2021/F.No.370142/35/2020-TPL Annexure - 25). In the meanwhile, against the assessment proceedings the assessee preferred Writ Petition on 01.04.2021 before the Hon'ble Bombay High Court. Therefore, the further assessment proceedings were kept in abeyance till the final order of the Hon'ble High Court i.e. on 14.01.2022. Thus, the limitation period for passing of assessment order was extended as per the law i.e. the time period available on account of stay on completion of assessment i.e. from 01.04.2021 to 30.09.2021. Thus, the order u/s. 143(3) r.w.s. 147 was passed on 23.06.2022 after receiving of order of the Hon'ble High Court on 14.01.2022 well within the limitation period.”
We have heard the rival contentions and purused the material available on record. In this case, the reassessment proceedings were completed u/s 147 r/w 143(3) of the Act vide order dated 23-06-2022. The statue provides for time limit for completion of such reassessment proceedings and such an order passed by the Assessing officer has to necessarily comply with the time limits so specified.
The relevant provisions dealing with time limit for completion of assessment and reassessment proceedings are contained in Section 153 of the Act and the same read as under:
“153. (1) No order of assessment shall be made under section 143 or section 144 at any time after the expiry of twenty-one months from the end of the assessment year in which the income was first assessable: Provided that in respect of an order of assessment relating to the assessment year commencing on the 1st day of April, 2018, the provisions of this sub-section shall have effect, as if for the words "twenty-one months", the words "eighteen months" had been substituted: Provided further that in respect of an order of assessment relating to the assessment year commencing on— (i) the 1st day of April, 2019, the provisions of this sub-section shall have effect, as if for the words "twenty-one months", the words "twelve months" had been substituted; (ii) the 1st day of April, 2020, the provisions of this sub-section shall have effect, as if for the words "twenty-one months", the words "eighteen months" had been substituted: Provided also that in respect of an order of assessment relating to the assessment year commencing on 6[***] the 1st day of April, 2021, the provisions of this sub-section shall have effect, as if for the words "twenty-one months", the words "nine months" had been substituted: 7[Provided also that in respect of an order of assessment relating to the assessment year commencing on or after the 1st day of April, 2022, the provisions of this sub- section shall have effect, as if for the words "twenty-one months", the words "twelve months" had been substituted.]
(1A) Notwithstanding anything contained in sub-section (1), where a return under sub- section (8A) of section 139 is furnished, an order of assessment under section 143 or section 144 may be made at any time before the expiry of 8[twelve] months from the end of the financial year in which such return was furnished. 9[(1B) Notwithstanding anything in sub-section (1), where a return is furnished in consequence of an order under clause (b) of sub-section (2) of section 119, an order of assessment under section 143 or section 144 may be made at any time before the expiry of twelve months from the end of the financial year in which such return was furnished.] (2) No order of assessment, reassessment or recomputation shall be made under section 147 after the expiry of nine months from the end of the financial year in which the notice under section 148 was served: Provided that where the notice under section 148 is served on or after the 1st day of April, 2019, the provisions of this sub-section shall have effect, as if for the words "nine months", the words "twelve months" had been substituted. (3) Notwithstanding anything contained in sub-sections (1) 10[, (1A)] and (2), an order of fresh assessment or fresh order under section 92CA, as the case may be, in pursuance of an order under 11[section 250 or] section 254 or section 263 or section 264, setting aside or cancelling an assessment, or an order under section 92CA, as the case may be, may be made at any time before the expiry of nine months from the end of the financial year in which the order under 11[section 250 or] section 254 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner or, as the case may be, the order under section 263 or section 264 is passed by the 12[Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be] : Provided that where the order under 11[section 250 or] section 254 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner or, as the case may be, the order under section 263 or section 264 is passed by the 12[Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be,] on or after the 1st day of April, 2019, the provisions of this sub-section shall have effect, as if for the words "nine months", the words "twelve months" had been substituted. 13[(3A) Notwithstanding anything contained in sub-sections (1), (1A), (2) and (3), where an assessment or reassessment is pending on the date of initiation of search under section 132 or making of requisition under section 132A, the period available for completion of assessment or reassessment, as the case may be, under the said sub- sections shall,— in a case where such search is initiated under section 132 or such requisition (a) is made under section 132A; (b) in the case of an assessee, to whom any money, bullion, jewellery or other valuable article or thing seized or requisitioned belongs to;
(c) in the case of an assessee, to whom any books of account or documents seized or requisitioned pertains or pertain to, or any information contained therein, relates to, be extended by twelve months.] (4) Notwithstanding anything contained in 14[sub-sections (1), (1A), (2), (3) and (3A)], where a reference under sub-section (1) of section 92CA is made during the course of the proceeding for the assessment or reassessment, the period available for completion of assessment or reassessment, as the case may be, under the said 15[sub- sections (1), (1A), (2), (3) and (3A)], shall be extended by twelve months. (5) Where effect to an order under section 250 or section 254 or section 260 or section 262 or section 263 or section 264 is to be given by the Assessing Officer or the Transfer Pricing Officer, as the case may be, wholly or partly, otherwise than by making a fresh assessment or reassessment or fresh order under section 92CA, as the case may be, such effect shall be given within a period of three months from the end of the month in which order under section 250 or section 254 or section 260 or section 262 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be, the order under section 263 or section 264 is passed by the 15[Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be] : Provided that where it is not possible for the Assessing Officer or the Transfer Pricing Officer, as the case may be, to give effect to such order within the aforesaid period, for reasons beyond his control, the Principal Commissioner or Commissioner on receipt of such request in writing from the Assessing Officer or the Transfer Pricing Officer, as the case may be, if satisfied, may allow an additional period of six months to give effect to the order: Provided further that where an order under section 250 or section 254 or section 260 or section 262 or section 263 or section 264 requires verification of any issue by way of submission of any document by the assessee or any other person or where an opportunity of being heard is to be provided to the assessee, the order giving effect to the said order under section 250 or section 254 or section 260 or section 262 or section 263 or section 264 shall be made within the time specified in sub- section (3). (5A) Where the Transfer Pricing Officer gives effect to an order or direction under section 263 by an order under section 92CA and forwards such order to the Assessing Officer, the Assessing Officer shall proceed to modify the order of assessment or reassessment or recomputation, in conformity with such order of the Transfer Pricing Officer, within two months from the end of the month in which such order of the Transfer Pricing Officer is received by him. (6) Nothing contained in sub-sections (1) 16[, (1A)] and (2) shall apply to the following classes of assessments, reassessments and recomputation which may, subject to the provisions of sub-sections (3), (5) and (5A), be completed— where the assessment, reassessment or recomputation is made on the assessee (i) or any person in consequence of or to give effect to any finding or direction contained in an order under section 250, section 254, section 260, section 262, section 263, or section 264 or in an order of any court in a proceeding otherwise than by way of appeal or reference under this Act, on or before the expiry of twelve months from the end of the month in which such order is received or passed by the 17[Principal Chief Commissioner or Chief Commissioner or] Principal Commissioner or Commissioner, as the case may be; or (ii) where, in the case of a firm, an assessment is made on a partner of the firm in consequence of an assessment made on the firm under section 147, on or before the expiry of twelve months from the end of the month in which the assessment order in the case of the firm is passed. (7) Where effect to any order, finding or direction referred to in sub-section (5) or sub- section (6) is to be given by the Assessing Officer, within the time specified in the said sub-sections, and such order has been received or passed, as the case may be, by the income-tax authority specified therein before the 1st day of June, 2016, the Assessing Officer shall give effect to such order, finding or direction, or assess, reassess or recompute the income of the assessee, on or before the 31st day of March, 2017. (8) Notwithstanding anything contained in the foregoing provisions of this section, sub-section (2) of section 153A or sub-section (1) of section 153B 18[or section 158BE], the order of assessment or reassessment, relating to any assessment year, which stands revived under sub-section (2) of section 153A 18[or sub-section (5) of section 158BA], shall be made within a period of one year from the end of the month of such revival or within the period specified in this section or sub-section (1) of section 153B 18[or section 158BE], whichever is later. (9) The provisions of this section as they stood immediately before the commencement of the Finance Act, 2016, shall apply to and in relation to any order of assessment, reassessment or recomputation made before the 1st day of June, 2016: Provided that where a notice under sub-section (1) of section 142 or sub-section (2) of section 143 or section 148 has been issued prior to the 1st day of June, 2016 and the assessment or reassessment has not been completed by such date due to exclusion of time referred to in Explanation 1, such assessment or reassessment shall be completed in accordance with the provisions of this section as it stood immediately before its substitution by the Finance Act, 2016 (28 of 2016). Explanation 1.—For the purposes of this section, in computing the period of limitation— the time taken in reopening the whole or any part of the proceeding or in (i) giving an opportunity to the assessee to be re-heard under the proviso to section 129; or [(ii) the period commencing on the date on which stay on the assessment proceeding was granted by an order or injunction of any court and ending on the date on which certified copy of the order vacating the stay was received by the jurisdictional Principal Commissioner or Commissioner; or]
(iii) the period commencing from the date on which the Assessing Officer intimates the Central Government or the prescribed authority, the contravention of the provisions of clause (21) or clause (22B) or clause (23A) or clause (23B), under clause (i) of the first proviso to sub-section (3) of section 143 and ending with the date on which the copy of the order withdrawing the approval or rescinding the notification, as the case may be, under those clauses is received by the Assessing Officer; or (iv) the period commencing from the date on which the Assessing Officer directs the assessee to get his accounts audited [or inventory valued] under sub- section (2A) of section 142 and— (a) ending with the last date on which the assessee is required to furnish a report of such audit [or inventory valuation] under that sub-section; or (b) where such direction is challenged before a court, ending with the date on which the order setting aside such direction is received by the Principal Commissioner or Commissioner; or (v) the period commencing from the date on which the Assessing Officer makes a reference to the Valuation Officer under sub-section (1) of section 142A and ending with the date on which the report of the Valuation Officer is received by the Assessing Officer; or (vi) the period (not exceeding sixty days) commencing from the date on which the Assessing Officer received the declaration under sub-section (1) of section 158A and ending with the date on which the order under sub-section (3) of that section is made by him; or (vii) in a case where an application made before the Income-tax Settlement Commission is rejected by it or is not allowed to be proceeded with by it, the period commencing from the date on which an application is made before the Settlement Commission under section 245C and ending with the date on which the order under sub-section (1) of section 245D is received by the Principal Commissioner or Commissioner under sub-section (2) of that section; or (viii) the period commencing from the date on which an application is made before the Authority for Advance Rulings or before the Board for Advance Rulings under sub-section (1) of section 245Q and ending with the date on which the order rejecting the application is received by the Principal Commissioner or Commissioner under sub-section (3) of section 245R; or (ix) the period commencing from the date on which an application is made before the Authority for Advance Rulings or before the Board for Advance Rulings under sub-section (1) of section 245Q and ending with the date on which the advance ruling pronounced by it is received by the Principal Commissioner or Commissioner under sub-section (7) of section 245R; or (x) the period commencing from the date on which a reference or first of the references for exchange of information is made by an authority competent under an agreement referred to in section 90 or section 90A and ending with the date on which the information requested is last received by the Principal Commissioner or Commissioner or a period of one year, whichever is less; or (xi) the period commencing from the date on which a reference for declaration of an arrangement to be an impermissible avoidance arrangement is received by the Principal Commissioner or Commissioner under sub-section (1) of section 144BA and ending on the date on which a direction under sub- section (3) or sub-section (6) or an order under sub-section (5) of the said section is received by the Assessing Officer; or (xii) the period (not exceeding one hundred and eighty days) commencing from the date on which a search is initiated under section 132 or a requisition is made under section 132A and ending on the date on which the books of account or other documents, or any money, bullion, jewellery or other valuable article or thing seized under section 132 or requisitioned under section 132A, as the case may be, are handed over to the Assessing Officer having jurisdiction over the assessee,—
(a) in whose case such search is initiated under section 132 or such requisition is made under section 132A; or (b) to whom any money, bullion, jewellery or other valuable article or thing seized or requisitioned belongs to; or (c) to whom any books of account or documents seized or requisitioned pertains or pertain to, or any information contained therein, relates to; or (xiii) the period commencing from the date on which the Assessing Officer makes a reference to the Principal Commissioner or Commissioner under the second proviso to sub-section (3) of section 143 and ending with the date on which the copy of the order under clause (ii) or clause (iii) of the fifteenth proviso to clause (23C) of section 10 or clause (ii) or clause (iii) of sub-section (4) of section 12AB, as the case may be, is received by the Assessing Officer, shall be excluded: Provided that where immediately after the exclusion of the aforesaid period, the period of limitation referred to in sub-sections (1), 21[(1A),] (2), (3) and sub-section (8) available to the Assessing Officer for making an order of assessment, reassessment or recomputation, as the case may be, is less than sixty days, such remaining period shall be extended to sixty days and the aforesaid period of limitation shall be deemed to be extended accordingly:
Provided further that where the period available to the Transfer Pricing Officer is extended to sixty days in accordance with the proviso to sub-section (3A) of section 92CA and the period of limitation available to the Assessing Officer for making an order of assessment, reassessment or recomputation, as the case may be, is less than sixty days, such remaining period shall be extended to sixty days and the aforesaid period of limitation shall be deemed to be extended accordingly: Provided also that where a proceeding before the Settlement Commission abates under section 245HA, the period of limitation available under this section to the Assessing Officer for making an order of assessment, reassessment or recomputation, as the case may be, shall, after the exclusion of the period under sub-section (4) of section 245HA, be not less than one year; and where such period of limitation is less than one year, it shall be deemed to have been extended to one year; and for the purposes of determining the period of limitation under sections 149, 154, 155 and 158BE and for the purposes of payment of interest under section 244A, this proviso shall also apply accordingly: Provided also that where the assessee exercises the option to withdraw the application under sub-section (1) of section 245M, the period of limitation available under this section to the Assessing Officer for making an order of assessment, reassessment or recomputation, as the case may be, shall, after the exclusion of the period under sub- section (5) of the said section, be not less than one year; and where such period of limitation is less than one year, it shall be deemed to have been extended to one year: Provided also that for the purposes of determining the period of limitation under sections 149, 154 and 155, and for the purposes of payment of interest under section 244A, the provisions of the fourth proviso shall apply accordingly: [Provided also that where after exclusion of the period referred to in clause (xii) the period of limitation for making an order of assessment, reassessment or recomputation, as the case may be, ends before the end of the month, such period shall be extended to the end of such month.] Explanation 2.—For the purposes of this section, where, by an order referred to in clause (i) of sub-section (6),— (a) any income is excluded from the total income of the assessee for an assessment year, then, an assessment of such income for another assessment year shall, for the purposes of section 150 and this section, be deemed to be one made in consequence of or to give effect to any finding or direction contained in the said order; or (b) any income is excluded from the total income of one person and held to be the income of another person, then, an assessment of such income on such other person shall, for the purposes of section 150 and this section, be deemed to be one made in consequence of or to give effect to any finding or direction contained in the said order, if such other person was given an opportunity of being heard before the said order was passed.]
As evident from the reading of the aforesaid provisions, sub-section (2) to section 153 of the Act provides that no order of re-assessment shall be made u/s. 147, after expiry of nine months from the end of the financial year in which notice u/s. 148 was served. In the instant case, though the assessee in one of his grounds of appeal has challenged the service of the notice so issued by the AO, however, for the purposes of present discussion as so submitted by the ld AR, we take the date of issuance of notice as 28-03-2019, which has been claimed to be served on the assessee on 31-03-2019 as the starting point for working out the limitation. Further, we refer to explanation-1 to section 153, which provides for exclusion of certain period for the purposes of working out the period of limitation. As per clause (ii) to explanation-1, it has been provided that the period during which the assessment proceedings is stayed by an order or injunction of any court has to be excluded. In the instant case, the assessee has moved a writ petition before the Hon‟ble Bombay High Court by way of W.P. No. 9165 of 2021 against reopening of the assessment on 1st of April, 2021, thereafter, the assessee on 9th April, 2021 furnished before the AO an order of the Hon‟ble Bombay High Court stating that the Bombay High Court had stayed the assessment proceedings and thereafter, by order dt. 14-01-2022, the Hon‟ble Bombay High Court disposed-off the Writ Petition as withdrawn and necessary directions were issued to the AO to provide the requisite information to the assessee which were provided by the AO vide letter dt. 02-02-2022. These are also admitted facts as mentioned at para Nos. 19 to 23, at Pg.Nos. 18 and 19 of the assessment order. So, the period during which the assessment proceedings were stayed and subsequently vacated by virtue of withdrawal of writ petition being allowed by the Hon‟ble Bombay High Court has to be excluded. The assessee in his aforesaid working has excluded the period starting from the date on which the interim stay order was granted by the Hon‟ble Bombay High Court and date of disposal of the Writ Petition and has worked out 268 days which needs to be excluded as per the said clause- (ii) of explanation-1 to section 153 of the Act. Further, in terms of clause (iv) to explanation-1, the period starting from the date on which the AO directs the assessee to get his accounts audited u/s. 142(2A) of the Act and ending with the last date on which the assessee is required to furnish the report of audit has to be excluded. In this case also, the AO has directed the assessee to get his accounts audited u/s. 142(2A) of the Act and the assessee has worked out 432 days which are required to be excluded starting from the date of approval for special audit dt. 30-12-2019 and the date of furnishing of the special audit report i.e., 05-03-2021. Further, in terms of the proviso to section 153 which provides that where immediately after exclusion of the aforesaid period, the period of limitation available to the AO for making the re- assessment proceedings is less than 60 days such remaining period shall be extended to 60 days and the aforesaid period of limitation shall be deemed to be extended accordingly and following the same, the limitation for passing the impugned order u/s. 147 r.w.s. 143(3) of the Act expires on 15-03-2022, whereas the re-assessment order was actually passed on 23-06-2022.
15. The AO in his factual report has not disputed any of the aforesaid dates in terms of the period to be excluded on account of the fact that the Hon‟ble Bombay High Court has stayed the re-assessment proceedings as well as the period to be excluded on account of direction to the assessee to get his accounts audited u/s. 142(2A) of the Act. At the same time, the AO has referred to the provisions of TOLA and has stated that applying the provisions of TOLA, there was extension of time limit for completion of re-assessment proceedings upto 30-09-2021. The AO has referred to notification No. 10/2021, dt. 27-02-2021 wherein the time limit for completion of re-assessment proceedings u/s. 153 of the Act were extended upto 30-09-2021. We find that the said period so extended pursuant to the TOLA Act falls within the period during which the proceedings were stayed by the Hon‟ble Bombay High Court and which has already been excluded by the assessee, wherein it has worked out 268 days by virtue of which the period of limitation get further extended. We, therefore, find that even if the provision of TOLA are taken into consideration that does not support the case of the Revenue in terms of seeking further extension of time for completion of re-assessment proceedings beyond 15-03-2022.
16. In the light of aforesaid discussion, we are of the considered view that the order so passed by the AO u/s. 147 r.w.s. 143(3) of the Act dated 23-06-2022 is barred by limitation and, therefore, cannot be sustained in the eyes of law and the same is accordingly set aside. In the result, the ground so taken by the assessee so far as it relates to challenging the order of the AO as passed beyond the period of limitation is hereby allowed.
In the result, where we have set-aside the reassessment order as barred by limitation, other grounds of appeal
s so raised by the assessee as well as grounds of appeal so taken by the Revenue have become academic in nature and dismissed as infructuous.