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Facts
The AO initiated reassessment for AY 2015-16 by issuing a notice under Section 148 of the old regime on 06.04.2021. Subsequently, proceedings were transitioned to the new regime, culminating in a Section 148 notice on 29.07.2022, which the assessee challenged as time-barred.
Held
The Tribunal found that the Section 148 notice issued on 29.07.2022 was beyond the prescribed time limit under the extant provisions, as the benefit of TOLA for extending limitation was not applicable. Relying on a coordinate bench's decision, the Tribunal held the assessment order unsustainable and allowed the appeal.
Key Issues
Whether the notice issued under Section 148 of the Income Tax Act on 29.07.2022 for AY 2015-16 was barred by limitation under the new reassessment regime, considering the transitional provisions and the application of TOLA.
Sections Cited
250, 148, 148A(b), 148A(d), 149, 153A, 153C
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Income Tax Appellate Tribunal, “B” BENCH”, KOLKATA
M/s Lovely International Pvt. Ltd., 24, Anuj Chambers, 3rd Floor, Room No. 3B, Park Street, Kolkata - 700016 [PAN: AAACL5322K] ……..…...…………….... Appellant vs. DCIT, Circle 7(1), Kolkata, Aayakar Bhavan, P-7, Chowringhee Square, Kolkata - 700069 ................................. Respondent Appearances by: Assessee represented by : S.M. Surana, Advocate Department represented by : Prakash Nath Barnwal, CIT-DR Date of concluding the hearing : 19.05.2025 Date of pronouncing the order : 19.05.2025 O R D E R PER BENCH 1. This appeal arises from the order u/s 250 of the Income Tax Act, 1961 (hereafter “the Act”), passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi vide order dated 11.12.2024.
1.1 In this case, there is certain chronology of events which is very important for deciding the issue at hand. We may briefly discuss the same as under:
(i) Notice u/s 148 of the Act issued on 06.04.2021 for AY 2015-16.
(ii) Thereafter, notice u/s 148A(b) of the Act was issued on 30.05.2022 which was titled “subsequent proceedings with reference to section 148A(b)
M/s Lovely International Pvt. Ltd. of the Act in consequence to Hon’ble Supreme Court order dated 04.05.2022 later.” [The Hon’ble Apex Court order mentioned here is the case of Ashish Agarwal reported in 444 ITR 1 (SC)].
(iii) A copy of the order u/s 148A(d) of the Act was issued on 28.07.2022.
(iv) A notice u/s 148 of the Act was issued dated 29.07.2022.
1.2 From the chronology of event, it is seen that initially, the Ld. AO had issued a notice under the old regime on 06.04.2021 and thereafter, had initiated proceedings under the new regime, which was effective from 01.04.2021. Ultimately, the notice u/s 148 of the Act was issued on 29.07.2022.
The primary challenge of the assessee has been that the notice u/s 148 of the Act was issued on 29.07.2022 was barred by limitation and hence the impugned proceedings deserve to be quashed. Since, this matter goes to the root of assuming jurisdiction, this issue would need to be elaborated further.
2.1 Before us, the Ld. AR pointed out the chronology of event through detailed submissions filed for the purpose of assisting the Bench. He reiterated the fact that ultimately the notice u/s 148 of the Act was issued beyond the time prescribed for issuing such notice.
2.2 The Ld. DR relied on the orders of authorities below.
We have carefully considered the facts of this case and heard both the Ld. AR/DR. It is seen that the notice u/s 148 of the Act could have been issued by 31.03.2022 in this case. Needless to say, the procedure brought on the statute w.e.f. 01.04.2021 had to be followed. The Ld. AO is seen to have done that but in doing so has issued the notice u/s 148 of the Act on 29.07.2022. Clearly, this is beyond the limit prescribed under the extant provision. In this regard, the coordinate Bench order in the case of “7. Admittedly the notice u/s 148 of the Act was issued on 30.06.2022 i.e. beyond the TOLA period and as per the decision of the Hon'ble Supreme Court such a notice under the old regime could have been issued only up to 31.03.2022 and the benefit of extension of due date as per TOLA would be applicable only to the notices issued between 01.04.2021 to 30.06.2021 if the limitation for issuing such notices was expiring between 20 March 2020 and 31 March 2021 The limitation for A.Y. 2015- 16 was expiring on 31.03.2022, i.e. beyond the period of 20.03.2020 to 31.03.2022, therefore, the benefit of TOLA would not be applicable. The time limit for reopening assessments has been reduced from four years to three years. However, in cases where income that escaped assessment amounts to ₹50 lakhs or more, assessments can be reopened within ten years. The new regime prohibits reopening of assessments that were time-barred under the old regime. The provisions of section 149 of the new regime are as under: 149. (1) No notice under section 148 shall be issued for the relevant assessment year,— (a) if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b); b) if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of— (i) an asset; (ii) expenditure in respect of a transaction or in relation to an event or occasion; or (iii) an entry or entries in the books of account, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more:] Provided that no notice under section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April, 2021, if a notice under section 148 or section 153A or section 153C could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause (b) of subsection (1) of this section or section 153A or section 153C, as the case may be, as they stood immediately before the commencement of the Finance Act, 2021: (emphasis supplied) 8. In this case the notice u/s 148 of the Act was earlier issued on 09.04.2021 which was treated as show cause notice u/s 148A(b) of the Act but the order u/s 148A(d) of the Act has been passed on 30.06.2022 and as per the old provisions of reassessment, the notice u/s 148 of the Act after complying with the procedural requirement as per the amended provisions ought to have been issued by 31.03.2022 after excluding the period granted to file the reply in response to the notice u/s 148A(b) of the Act. Since the limitation for issue of notice u/s 148 of the Act expired on 31.03.2022 under the old regime and for AY 2015- 16 as per page 2 of the assessment order the notice u/s 148 has been issued on 30.06.2022, the benefit of TOLA for extending the limitation for issue of notice u/s 148 of the Act will not be available to the Revenue. Hence, in view of the decisions relied upon by M/s Lovely International Pvt. Ltd. the Ld. AR (supra), the notice issued u/s 148 of the Act on 30.06.2022 is barred by limitation and the assessment order is hereby quashed and appeal of the assessee is allowed. Other issues are not adjudicated as the assessment order has been quashed.
In the result, the appeal filed by the assessee is allowed.” 3.1 Considering the position of law as applicable for the assessment year under consideration and the findings given in the case of Kothari Metals Ltd. (supra), it deserves to be held that the notice u/s 148 of the Act was issued beyond the time prescribed in the Act and hence the consequent assessment order is not sustainable in the eyes of law.
In the result, appeal filed by the assessee is allowed.
Order pronounced on 19.05.2025