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Facts
The assessee's appeal against a CIT(A) order for AY 2017-18 was filed with a delay of 168 days, which was subsequently condoned. The core issue concerned the validity of a reopening notice issued under Section 148A(b) of the Income Tax Act, which the assessee challenged on grounds of limitation and monetary threshold.
Held
The Tribunal held that the notice under Section 148A(b) and the subsequent notice under Section 148 were issued beyond the prescribed time limits as per the SOP. Additionally, the alleged escaped income of Rs. 14,89,425/- was below the Rs. 50 lakh threshold required for reassessment notices under the new regime. Consequently, the notice under Section 148 and the consequential assessment order were deemed unsustainable and bad in law.
Key Issues
The key legal issue was the validity of the reassessment notice issued under Section 148 of the Income Tax Act, considering adherence to the prescribed time limits under the SOP and the monetary threshold for escaped income under the new reassessment regime.
Sections Cited
147, 148, 148A, 148A(b), 148A(d), 143(2), 149(1)(a), 149(1)(b), 149(1)(h), 151
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Income Tax Appellate Tribunal, “SMC” BENCH KOLKATA
Before: SHRI GEORGE MATHAN
O R D E R This is an appeal filed by the assessee against the order of the ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi, dated 29.07.2024 for the Assessment Year 2017-2018.
Shri Soumitra Choudhury, ld.AR appeared on behalf of the assessee and Smt. Sima Das Biswas, ld. Sr.DR appeared on behalf of the revenue.
The appeal of the assessee is barred by 168 days. In this regard, the assessee has filed an application for condonation of delay stating therein sufficient reasons for delay, which are plausible and not found to be false. Ld. Sr.DR also did not raise any serious objection to condone the delay. Accordingly, delay of 168 days in filing the present appeal by the assessee is condoned and the appeal is admitted for hearing.
It was submitted by the ld. AR that this is a case of reopening and issuance of notice u/s.148 of the Act. It was the submission that the notice
It was the submission that the assessee has filed his reply on 08.06.2022, which is within 14 days provided under the SOP issued under Instruction No.01/2022, dated 11th May, 2022, and notice issued u/s.148A(b) of the Act. It was the submission that as per SOP, 30 days time was available from the date of reply. The assessee has been unable to produce the proof that the assessee has filed its reply on 08.06.2022. It was the submission that 30 days from the said date 08.06.2022, is 07.07.2022 and the notice u/s.148A(d) of the Act and the notice u/s.148 of the Act has been issued on 26.07.2022, which is beyond the period as mentioned in the SOP. Para 8.1 of the said SOP issued under the Instruction No.01/2022, dated 11th May, 2022 reads as follows :- 8.1 The procedure required to be followed by the Jurisdictional Assessing Officer/Assessing Officer, in compliance with the order of the Hon'ble Supreme Court, is as under: • The extended reassessment notices are deemed to be show cause notices under clause (b) of section 148A of the Act in accordance with the judgment of Hon'ble Supreme Court. Therefore, all requirement of new law prior to that show cause notice shall be deemed to have been complied with. • The Assessing Officer shall exclude cases as per clarification in paragraph 7.1 above. • Within 30 days i.e. by 2nd June 2022, the Assessing Officer shall provide to the assessees, in remaining cases, the information and material relied upon for issuance of extended reassessment notices. • The assessee has two weeks to reply as to why a notice under section 148 of the Act should not be issued, on the basis of information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year. • The time period of two weeks shall be counted from the date of last communication of information and material by the Assessing Officer to the assessee. • In view of the observation of Hon'ble Supreme Court that all the defences of the new law are available to the assessee, if assessee makes a request by making an application that more time be given to him to file reply to the show cause notice, then such a request shall be considered by the Assessing Officer on merit and time may be extended by the Assessing Officer as provided in clause (b) of new section 148A of the Act. • After receiving the reply, the Assessing Officer shall decide on the basis of material available on record including reply of the assessee, whether or not it is a fit case to issue a notice under section 148 of the Act. The Assessing Officer is required to pass an order under clause (d) of section 148A of the Act to that effect, with the prior approval of the specified authority of the new law. This order is required to be passed within one month from the end of the month in which the reply is received by him from the assessee. In case no such reply is furnished by the assessee, then the order is required to be passed within one month from the end of the month in which time or extended time allowed to furnish a reply expires. • If it is a fit case to issue a notice under section 148 of the Act, the Assessing Officer shall serve on the assessee a notice under section 148 after obtaining the approval of the specified authority under section 151 of the new law. The copy of the order passed under clause (d) of section 148A of the Act shall also be served with the notice u/s 148.
• If it is not a fit case to issue a notice under section 148 of the Act, the order passed under clause (d) of section 148A to that effect shall be served on the assessee. 6. It was the submission that the notice issued u/s.148 of the Act is liable to be quashed. 7. Ld. AR drew my attention to the notice issued u/s.148 of the Act at page 6 of the paper book which reads as under :-
8. Ld. AR also drew my attention to page 8 of the paper book, which is a downloaded copy from the portal, to submit that no reply nor any notice u/s.148A(d) of the Act is showing. The said downloaded copy reads as under :-
9. It was the submission that the issue is now squarely covered by the decision of the coordinate bench in the case of ETC Electric Pvt. Ltd., passed in dated 15.07.2025, wherein the coordinate bench of the Tribunal has held in paras 6 to 8 as follows :- 6. Upon hearing the submission of the counsel of the respective parties, we have perused the order as well as facts of the case, the following facts have been emerged are as under. 1) Original notice u/s 148 dated 29.06.2021 demands show cause notice as per Ashish Agrawal judgment. ii) The AO supplied material on 02.06.2022 u/s 147 (a)(b) as per direction of the Hon'ble Supreme Court alleging escaped income of Rs. 21,50,000/- iii) order passed by the AO u/s 148A on 27.07.2022 iv) 148 notice issued on 27.07.2022. v) Notice u/s 143(2) issued on 04.01.2023, 7. The submission of Ld. A.R is that as per section 149(1)(a) three years which was ended on 31.03.2022. In the present case, the notice issued u/s 148 i.e. on 27.07.2022. He placed reliance on the Hon'ble Supreme Court judgment on the Rajib Bansal case. The relevant portion of the order on this issue has been settled is thus: 48. Notices have to be judged according to the law existing on the date the notice is issued. Section 149 of the old regime primarily provided two time limits: (i) four years for all situations and (ii) beyond four years and within six years if the income chargeable to tax which escaped assessment amounted to Rupees one lakh or more. After 1 April 2021, the time limits prescribed under the new regime came into force. The ordinary time limit of four years was reduced to three years. Therefore, in all situations, reassessment notices could be issued under the new regime if not more than three years have elapsed from the end of the relevant assessment year. For example, for assessment year 2018- 2019, the four year period would have expired on 31 March 2023 under the old regime. However, if the notice is issued after 1 April 2021, the three year time limit prescribed under the new regime will be applicable. The three year time limit will expire on 31 March 2022.
The first proviso to Section 149(1)(b) requires the determination of whether the time limit prescribed under Section 149(1)(b) of the old regime continues to exist for the assessment year 2021-2022 and before. Resultantly, a notice under Section 148 of the new regime cannot be issued if the period of six years from the end of the relevant assessment year has expired at the time of issuance of the notice. This also ensures that the new time limit of ten years prescribed under Section 149(1)(h) of the new regime applies prospectively. For example, for the assessment year 2012-2013, the ten year period would have expired on 31 March 2023, while the six year period expired on 31 March 2019. Without the proviso to Section 149(1)(b) of the new regime, the Revenue could have had the power to reopen assessments for the year 2012-2013 if the escaped assessment amounted to Rupees fifty lakhs or more. The proviso limits the retrospective operation of Section 149(1)(b) to protect the interests of the assesses.
Another important change under Section 149(1)thi of the new regime is the increase in the monetary threshold from Rupees one lakh to Rupees fifty lakks. The old regime prescribed a time limit of six years from the end of the relevant assessment year if the income chargeable to tas which escaped assessment was more than Rupees one lakh. In comparison, the new regime increases the time limit to ten years if the escaped assessment amounts to more than Rupees fifty lakks. This change could be summarized thus: Regime Time limit Income chargeable to Tax which has escaped assessment Old regime Four years but not Rupees one lakh or More than six years more New regime Three years but not Rupees fifty lakhs or More than ten years more 51. Given Section 149(1)(b) of the new regime, reassessment notices could be issued after three years only if the income chargeable to tax which escaped assessment is more than Rupees fifty lakhs. The proviso to Section 149(1)(b) limits the retrospectivity of that provision with respect to the time limits specified under Section 149(1)(b) of the old regime."
It is pertinent to mention here that TOLA to extend up to June, 21 between 20th March, 2020 to 30th June, 2021 only if fell, for compliance. In the present case, the assessee replied on 03.06.2022. Income chargeable to tax is below Rs 50 lakhs. Going over the Hon'ble Supreme Court decision as discussed above and considering the facts of the case, we are inclined to hold that issuance of notice u/s 148 of the Act is barred by limitation. Accordingly, the assessment proceedings is void ab-initio. Since We have passed order on legal issue not on merit, hence there is no discussion in other grounds 10. It was the further submission that the issue in the appeal was below Rs.50 lakhs insofar as the reasons mentioned in the notice u/s.148A(b) of the Act clearly mentioned the alleged escapement of income to be Rs.14,89,425/-.
11. In reply, ld. Sr. DR vehemently supported the order of the ld.AO and ld.CIT(A). It was the submission that she would like to take the report from the Assessing Officer.
I have considered the rival submissions. As it is noticed that the notice u/s.148A(b) of the Act has been issued on 26.05.2022 wherein 14 days or two weeks time has been given to the assessee and the same expired on 07.06.2022. It must be mentioned here that the assessee has claimed to have been filed its reply on 08.06.2022. The same has not been placed before me. However, considering the SOP, it would have to be considered from the date of reply or the cut off date from the date provided u/s.148A(b) of the Act. This would be when taken at 07.06.2022 plus 30 days, the same would be 06.07.2022 but if the date on which the assessee has claimed to have filed reply, then it would be 07.07.2022. But the notice has been issued as per the assessment order u/s.148A(d) of the Act to be 26.07.2022, which admittedly is beyond the time prescribed. Also, a perusal of the notice issued u/s.148A(b) of the Act clearly shows that the alleged escapement of income is below Rs.50 lakhs. In these circumstances, respectfully following the decision of the coordinate bench of the Tribunal in the case of ETC Electric Pvt. Ltd., referred to supra, the notice issued u/s.148 of the Act is held to be unsustainable. Consequently, the consequential assessment order is also be held to be bad in law.