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Facts
The assessee filed appeals against assessment orders passed under section 147/144B for Assessment Years 2013-14 to 2017-18. The primary issue was the validity of notices issued under section 148 and the subsequent reassessment orders.
Held
The Tribunal held that the notices issued under section 148 for AYs 2013-14 and 2014-15 were barred by the limitation period under section 149 of the Act and were therefore void ab initio. Similarly, for AYs 2016-17 and 2017-18, the notices were invalid due to non-compliance with the prior approval requirements under section 151(ii) of the Act. For AY 2015-16, the Revenue conceded that notices issued after April 1, 2021, should be dropped.
Key Issues
Whether the notices issued under Section 148 and subsequent reassessment orders are valid, considering the time limitation prescribed under Section 149 and prior approval requirements under Section 151, in light of the Finance Act, 2021, and Supreme Court decisions like Ashish Agarwal and Rajeev Bansal.
Sections Cited
147, 144B, 148, 148A, 149, 151, 163
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Before: SHRI SANDEEP GOSAIN & SHRI PRABHASH SHANKAR
per the decision of the Hon'ble Supreme Court in Rajeev Bansal (supra), we find that the Revenue had only 2 days (i.e., between 28/06/2021 to 30/06/2021) to issue notice under section 148 of the Act of the new regime in the present casein this case. No response was received from the assessee.Time limit to issue notice u/s 148 as per section 149 as amended by Finance Act 2021 and as per Rajeev Bansal case would be 21/06/2022, i.e, 7 days from 14-06-2022.However, in both the years under consideration, the notices under section 6123, 6124, 6125, 6126/Mum/2024 A.Y. 2013-14, 2014-15,2015-16, 2016-17, 2017-18 Lalit Surajprakash Garg 148 of the Act were issued on 27.07.2022, much after the surviving time period as per the decision of the Hon'ble Supreme Court in Rajeev Bansal (supra).Thus,we find that even if the benefit of the fourth proviso to section 149 of the Act is granted to the Revenue, since the remaining period in the present case, after the exclusion of time period as provided in the third proviso to section 149 is less than 7 days, even then the notice dated 27.07.2022 under section 148 of the Act was issued much beyond the 7 days extension provided in the fourth proviso to section 149 of the Act.
Therefore, having considered the provisions of the Act, before as well as after the amendment by the Finance Act, 2021, and the TOLA, in the light of the decision of the Hon'ble Supreme Court in Ashish Agarwal (supra) and Rajeev Bansal (supra), we are of the considered view that the notices issued under section 148 of the Act on 27.07.2022 for both AYs 2013-14 and 2014-15 are barred by limitation period specified under section 149 of the Act.
1. Accordingly, notice issued under section 148 of the Act on 27.07.2022 are void ab initio and bad in law. Therefore, the same are quashed. Consequently, the re-assessment proceedings and assessment orders passed under section 147 r.w. section 144B of the Act are also quashed.
P a g e | 13 , 6123, 6124, 6125, 6126/Mum/2024 A.Y. 2013-14, 2014-15,2015-16, 2016-17, 2017-18 Lalit Surajprakash Garg
8.1 In view of the above decision quashing the assessment orders, thus allowing the additional grounds of appeal, other grounds raised by the assessee in the appeal are academic only, and therefore, are left open.
In the result,ITA 6122/MUM/2024 (A.Y. 2013-14) & ITA 6123/Mum/2024 (A.Y. 2014-15) are allowed.
ITA 6124/Mum/2024 (A.Y. 2015-16)
Additional Grounds:
On the facts and circumstances of the case and in law, the notice issued u/s 148 of the I. T. Act, 1961 by the Ld. A.O. is an invalid notice and the reassessment order passed thereafter is grossly incorrect, invalid and bad- in-law.
On the facts and circumstances of the case and in law, the Ld. A.O. has erred by issuing the notice u/s 148 of the I.T. Act, 1961 on 26/07/2022 for AY 2015- 16 since the same is barred by limitation. In this regard, the assessee relies on the judicial decision of Hon'ble Supreme Court in case of Union of India vs. Rajeev Bansal [2024] 167 taxmann.com 70 (SC), wherein it is mentioned at para 19(f) that, “The Revenue /concedes that for the assessment year 2015-16, all notices issued on or after 1 April 2021 will have to be dropped as they will not fall for completion during the period prescribed under TOLA.”
Since the grounds go into the roots of the entire proceedings in the relevant assessment years, they are being adjudicated together in the paras to follow.In the above assessment year,reassessment notice u/s 148 of the Act had been issued on 26.07.2022 6123, 6124, 6125, 6126/Mum/2024 A.Y. 2013-14, 2014-15,2015-16, 2016-17, 2017-18 Lalit Surajprakash Garg which is matter of record and there is no dispute on it. In this regard, the ld.AR has claimed that in view of the departmental stand taken by the ld.Counsel of the Revenue before the hon’ble Supreme Court in the Rajeev Bansal case,the proceeding are liable to be invalid. The ld.DR has not controverted his contentions in any manner. It may be stated here that in the case of Union of India and Others v. Rajeev Bansal(supra), the hon’ble Supreme Court considered the manner of applicability of the provisions of Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 [TOLA]. During the said proceedings, it was conceded on behalf of the Revenue that TOLA was not applicable for reopening the assessments for AY 2015-16. The said concession was recorded in paragraph 19(f) of the said decision.
Paragraphs 19 (e) and 19(f) are relevant and are set out below: -
"(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 the 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 the 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:……………… (f) The Revenue concedes that for the assessment year 2015-2016, all notices issued on or after 1 April 2021 will have to be dropped as they will not fall for completion during the period prescribed under the TOLA."
6123, 6124, 6125, 6126/Mum/2024 A.Y. 2013-14, 2014-15,2015-16, 2016-17, 2017-18 Lalit Surajprakash Garg
Therefore, having considered the above facts and the decision relied upon by the ld.AR, we are of the considered view that the notice issued under section 148 of the Act on 26.07.2022 for AY 2015-16 is barred by limitation period specified under section 149 of the Act. Accordingly, notice is void ab initio and bad in law. Therefore, the same is quashed. Consequently, the re- assessment proceeding and assessment order passed under section 147 r.w. section 144B of the Act are also quashed.
In view of the above decision quashing the assessment orders, thus allowing the additional grounds of appeal, other grounds raised by the assessee in the appeal are academic only, and therefore, are left open.
In the result, assessee’s appeal in ITA 6124/MUM/2024 (A.Y. 2015-16) is allowed.
ITA 6125/Mum/2024 (A.Y. 2016-17) and ITA 6126/Mum/2024 (A.Y. 2017-18)
Additional Grounds: 1. On the facts and circumstances of the case and in law, the notice issued u/s 148 of the I.T. Act. 1961 by the Ld. A.O. is an invalid noticeand the reassessment order passed thereafter is grossly incorrect, invalid and bad- in-law.
2. On the facts and circumstances of the case and in law, the Ld. A.O. has erred by taking approval u/s 151(i) of the I. T. Act. 1961 from Pr. CIT. Central - 3, 6123, 6124, 6125, 6126/Mum/2024 A.Y. 2013-14, 2014-15,2015-16, 2016-17, 2017-18 Lalit Surajprakash Garg
as against the requirement of approval to be taken u/s 151(ii) of the 1. T. Act, 1961 from Pr. CCIT. Hence, the notice issued u/s 148 is an invalid notice.
In the additional grounds no.1 and 2 above in both the above appeals, the assessee has contested the validity of the notice u/s 148 of the Act and the consequent reassessment order claiming that the orders have been passed without obtaining approval of appropriate authorities. Since the grounds are identical and go into the roots of the entire proceedings in both the assessment years i.e. 2016-17 and 2017- 18,they are being adjudicated together in the paras to follow.
Before us, during hearing of the appeal, the ld.Authorised Representative in support of the legal grounds has taken us through all the relevant facts of the case relating to action u/s 148 of the Act, present position of the law in this regard and also the legal implications arising on account of the recent decisions of Hon’ble Supreme Court relating to the instant issue.It is contented that order 148A(d) was passed with the approval of Pr.CIT-Centra-3,Mumbai.The notice u/s. 148 of the Act was also issued with the prior approval of the Pr. Commissioner of Income- tax,Central-3, Mumbai.The case of the appellant is covered by section 151(ii) of the Act which provides that where the notices for reassessment are issued beyond the period of three years from the end of the assessment year, the appropriate authority for the purpose of section 6123, 6124, 6125, 6126/Mum/2024 A.Y. 2013-14, 2014-15,2015-16, 2016-17, 2017-18 Lalit Surajprakash Garg 148 and section 148A of the Act is the Principle Chief Commissioner or Principle Director General or Chief Commissioner or Director General.
As against this specific requirement of section 151(ii), it is clear that u/s 148A(d) as well as for the notice u/s. 148 the Assessing Officer had obtained prior approval from Pr. Commissioner of Income-tax,Central- 3, Mumbai. As such, the approval obtained by the AO is not in accordance with the provisions of section 151(ii).Therefore, the reassessment is liable to be quashed.Reliance is placed on the decision in the case of Union of India v. Rajeev Bansal (2024) 469 ITR 46 (SC).Attention is drawn to paragraph 81 of the hon’ble Supreme Court judgment where it held as under:
“Although this court waived off the requirement of obtaining prior approval u/s. 148A(a) and 148A(b), it did not waive the requirement for section 148A(d) and section 148. Therefore, the assessing officer was required to obtain prior approval of the specified authority according to Section 151 of the new regime before passing an order under section 148A(d) or issuing a notice under section 148...”
In the course of hearing before us, the ld.DR relied on the orders of authorities below.In respect of legal contentions made by the ld.AR,he did not controvert the facts on record relating to the reassessment proceedings including order u/s 148A(d)as well.
We have carefully considered the facts of the case and find that on legality of the notice u/s 148 vis-a-vis sanctioning authority, the case of the 6123, 6124, 6125, 6126/Mum/2024 A.Y. 2013-14, 2014-15,2015-16, 2016-17, 2017-18 Lalit Surajprakash Garg assessee is squarely covered by the above mentioned decision of hon’ble Apex Court(supra) which has been elaborately considered by the coordinate Bench in the case of Assistant Commissioner Of Income Tax vs Munish Financial, Mumbai dated 02.12.2024 in on identical facts of the case,quashed the reassessment order.
19.1 The instant case in AY 2016-17 was taken up for reassessment by the notice dated 28.06.2021.Relevant assessment year in the case is 2016-17. The reassessment was initiated after a period of three years from the end of the assessment year.The order u/s. 148A(d) of the Act was passed by the AO on 27.07.2022.Fresh notice u/s. 148 of the Act was issued by the Assessing Officer on 27.07.2022. It is evident that while passing the order u/s 148A(d), the AO had obtained the prior approval of the Pr.
Commissioner of Income-tax,Central-3, Mumbai. This fact is mentioned at paras 3.3 and 3.5 of the order. Further, the notice u/s 148 of the Act was also issued with the prior approval of the Pr. Commissioner of Income- tax,Central-3, Mumbai, a fact on record uncontroverted by the ld.DR.
19.2 Likewise AY 2017-18 was taken up for reassessment by the notice dated 28.06.2021. Relevant assessment year in the case is 2017-18.
The reassessment was initiated after period of three years from the end of 6123, 6124, 6125, 6126/Mum/2024 A.Y. 2013-14, 2014-15,2015-16, 2016-17, 2017-18 Lalit Surajprakash Garg the assessment year. The order u/s. 148A(d) of the Act was passed by the AO on 27.07.2022.Fresh notice u/s. 148 of the Act was issued by the on 27.07.2022. It is evident that while passing the order u/s 148A(d), the AO had obtained the prior approval of the Pr. Commissioner of Income- tax,Central-3, Mumbai. This fact is mentioned at paras 3.3 and 3.5 of the order. Further, the notice u/s 148 of the Act was also issued with the prior approval of the Pr. Commissioner of Income-tax,Central-3, Mumbai,a fact on record uncontroverted by the ld.DR.
19.3. Grant of sanction by the appropriate authority is a precondition for the AO to assume jurisdiction under Section 148 to issue a reassessment notice. Section 151 (ii) of the new regime prescribes a higher level of authority if more than three years have elapsed from the end of the relevant assessment year. We find merits in the contention of the ld.AR that case of the appellant is covered by section 151(ii) of the Act which provides that where the notices for reassessment are issued beyond the period of three years from the end of the assessment year, the appropriate authority for the purpose of section 148 and section 148A of the Act is the Principle Chief Commissioner or Principle Director General or Chief Commissioner or Director General.As against this specific requirement of section 151(ii), it is clear from the order u/s. 148A(d) and the notice u/s. 148 that obtained prior approval from Pr. Commissioner of Income- 6123, 6124, 6125, 6126/Mum/2024 A.Y. 2013-14, 2014-15,2015-16, 2016-17, 2017-18 Lalit Surajprakash Garg tax,Central-3, Mumbai. As such, the approval obtained by him is not in accordance with the provisions of section 151(ii).Accordingly, we hold that the notices under section 148 for both the AY s 2016-17 and 2017-18 are invalid and the consequent reassessment orders under section 147 are hereby quashed.
Since we have already quashed the order under section 147 based on the above proposition itself, other grounds relating to merits of the case have become academic and therefore, do not warrant any adjudication.
In the result, the appeals in ITA 6125/Mum/2024 (A.Y.
2016-17) and ITA 6126/Mum/2024 (A.Y. 2017-18) are allowed.
In the result, all the above captioned appeals of the assessee for AYs 2013-14,2014-15,2015-16,2016-17 and 2017-18 are allowed.
Order pronounced in the open court on 15/04/2025.