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Facts
The assessee appealed against the reopening of assessment for AY 2016-17 and subsequent additions, arguing that the approval for reopening under Section 147 was improperly granted under old provisions, contrary to Supreme Court rulings in Ashish Agarwal and Rajeev Bansal cases. The assessee also disputed additions for interest difference, disallowance of NCD issue expenses, and levy of interest/penalty.
Held
The tribunal, following the Hon'ble Supreme Court's decision in Rajeev Bansal, found that the approval for reopening was invalid. Consequently, it set aside the impugned notice for reopening the assessment and quashed the resultant assessment order.
Key Issues
Whether the reopening of assessment under Section 147 was valid, particularly regarding the correct procedure for obtaining approval for reassessment notices in light of Supreme Court judgments on TOLA and the new reassessment regime.
Sections Cited
147, 144B, 37(1), 35D(2), 234C, 271(1)(c), 148, 148A(b), 149, 151
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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY, HON’BLE & SHRI NARENDRA KUMAR BILLAIYA, HON’BLE
O R D E R
PER NARENDRA KUMAR BILLAIYA, AM:
This appeal by the assessee is preferred against the order dated 10/01/2025 by NFAC, Delhi, [hereinafter ‘the ld. CIT(A)’] pertaining to AY 2016-17.
Grievance of the assessee reads as under:- “The ground or grounds of appeal are without prejudice to one another. 1.a) On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in confirming the action taken by the AO in re-opening the assessment u/s.147 of the Income Tax Act, 1961 though the prescribed conditions therein are not satisfied. b) The Id. CIT(A) failed to appreciate that initiation of re-opening of assessment proceedings and completion of the re-assessment u/s.147 r.w.s. 144B by the AO is without jurisdiction and bad in law.
2.a) On the facts and in the circumstances of the case and in law, the Id CIT(A) erred in confirming the addition of 7 1,54,421/- made by the AO to the income of the Appellant on account of difference in interest as per books of account vis-à-vis reflected in Form No. 26AS. b) The Id. CIT(A) failed to appreciate that the Appellant has reconcilled the difference between interest as per Form No. 26AS and Profit & loss account. c) In reaching to the conclusion and confirming such addition the ld. CIT(A) omitted to consider relevant factors, considerations, principles and evidences while he was overwhelmed, influenced and prejudiced by irrelevant considerations and factors. 3.a) On the facts and in the circumstances of the case and in law, the Id. CIT(A) erred in confirming the addition of 7 86,54,794/ - made by the AO to the income of the Appellant by way of disallowing Redeemable Non-convertible Debentures issue expenses treating the same as capital expenditure. b) The Id. CIT(A) failed to appreciate that these expenses are in the nature of revenue expenditure and as such allowable as deduction u/s.37(1). c) In reaching to the conclusion and confirming such addition the Id. CIT(A) omitted to consider relevant factors, considerations, principles and evidences while he was overwhelmed, influenced and prejudiced by irrelevant considerations and factors. d) Alternatively, if the Redeemable Non-convertible Debentures issue expenses are not to be allowed as revenue expenditure than the deduction u/s.35D(2) may be allowed. 4) The Id. CIT(A) erred in dismissing the Ground No.5 and 6 raised by the Appellant disputing the levy of interest u/s.234C and initiation of penalty proceedings u/s.271(1)(c) respectively without passing any speaking order. The Appellant denies its liability for such interest and penalty. The Appellant craves leave to add, alter, amend or delete any or all of the above grounds of appeal
.”
3. The assessee has challenged the reopening of the assessment u/s 147 of the Act by not following the prescribed conditions mentioned in the relevant provisions of the Act.
4. It has been strongly argued that the approval has been granted by the Authority in the old provisions of the Act relating to the approval and notice u/s 148 of the Act following the decision in the case of Union of India vs. Ashish Agarwal reported in 444 ITR 1 (SC) whereas, the notice u/s 148A(b) of the Act should have been approved as per the decision of the Hon’ble Supreme Court in the case of Union of India vs. Rajeev Bansal [2024] 469 ITR 46 (SC).
5. We have carefully perused the order of the authorities below. In light of the objections raised by the assessee, we find force in the contention of the ld. Counsel for the assessee. The Hon’ble Supreme Court in the case of Rajeev Bansal (supra) has concluded as under:-
After 1-4-2021, the Income-tax Act has to be read along with the substituted “(a) provisions; (b) TOLA will continue to apply to the Income-tax Act after 1-4-2021 if any action or proceeding specified under the substituted provisions of the Income-tax Act falls for completion between 20-3-2020 and 31-3-2021; (c) Section 3(1) of TOLA overrides section 149 only to the extent of relaxing the time- limit for issuance of a reassessment notice under section 148; (d) TOLA will extend the time-limit for the grant of sanction by the authority specified under section 151. The test to determine whether TOLA will apply to section 151 of the new regime is this: if the time-limit of three years from the end of an assessment year falls between 20-3-2020 and 31-3-2021, then the specified authority under section 151(i) has extended time till 30-6-2021 to grant approval; (e) In the case of section 151 of the old regime, the test is: if the time-limit of four years from the end of an assessment year falls between 20-3-2020 and 31-3-2021, then the specified authority under section 151(2) has extended time till 31-3-2021 to grant approval; (f) The directions in Ashish Agarwal (supra) will extend to all the ninety thousand reassessment notices issued under the old regime during the period 1-4-2021 and 30-6-2021; (g) The time during which the show cause notices were deemed to be stayed is from the date of issuance of the deemed notice between 1-4-2021 and 30-6-2021 till the supply of relevant information and material by the Assessing Officers to the assessees in terms of the directions issued by this Court in Ashish Agarwal (supra), and the period of two weeks allowed to the assessees to respond to the show cause notices; and (h) The Assessing Officers were required to issue the reassessment notice under section 148 of the new regime within the time-limit surviving under the Income- tax Act read with TOLA. All notices issued beyond the surviving period are time barred and liable to be set aside. [Para 114]”