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Facts
The assessee appealed against a reassessment initiated under Section 147, contending that the subsequent notices issued under Section 148 for AY 2015-16 were time-barred under the new provisions of the Income Tax Act, 1961. Further, a crucial notice was allegedly issued in the name of a different entity and manually created, leading to invalid initiation of proceedings.
Held
The Tribunal found that the notice dated 28.07.2022 was invalid as it was issued in the name of another assessee and not generated through the prescribed income tax portal. Additionally, applying the first proviso to Section 149(1)(b), the Tribunal ruled that the notice for AY 2015-16 was time-barred as the six-year limitation period had expired by 31.03.2022. Consequently, the assessment framed under Section 147 was quashed.
Key Issues
Whether the reassessment proceedings initiated by notices under Section 148 were valid, considering that a notice was issued to a wrong entity and the proceedings were time-barred under the amended provisions of the Income Tax Act.
Sections Cited
250, 147, 148, 148A(b), 148A(d), 149(1), 149(1)(b)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “C” BENCH KOLKATA
Date of concluding the hearing : 06.01.2025 Date of pronouncing the order : 31.01.2025 O R D E R
Per Sanjay Garg, Judicial Member:
The present appeal has been preferred by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals) [hereinafter referred to as “the Ld. CIT(A)] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) dated, 12.08.2024.
The Ld. Counsel for the assessee at the outset, has submitted that in this case, the notice issued u/s 148 of the Act, which is sine qua non for reopening of the assessment, has been issued beyond the period of limitation. He has further submitted that even the said notice u/s 148 of the Act was issued in the name of different assessee. The Ld. Counsel for the assessee has invited our attention to page no. 19 of paper book to M/s Coplama Products Pvt. Ltd. submit that the earlier notice u/s 148 of the Act was issued to the assessee on 21.04.2021 was under the old provisions of the Act. The provision of section 147/148 of the Act stood amended w.e.f. 01.04.2021 and therefore, the AO was required to issue notice u/s 148 of the Act under the new provisions. Accordingly, the said notice was treated by the AO as withdrawn and the fresh notice as per the new/amended provision was issued u/s 148A(d) of the Act dated 29.05.2022. The assessee filed reply to the said notice on 02.07.2022. Thereafter, the AO passed the order u/s 148A(b) of the Act on 28.07.2022 and on the same date he issued notices u/s 148 of the Act. The Ld. Counsel further brought our attention to the copy of the notice dated 28.07.2022 to show that the same has been issued in the name of another assessee namely Caramel Merchant Pvt. Ltd. Therefore, no valid notice u/s 148 of the Act been issued in the name of the assessee. Moreover, in the name of the said Caramel Merchants Pvt. Ltd. has been written by the AO by hand and no DIN No. etc. has been mentioned in the said notice. It seems that the said notice has not been generated as per the prescribed procedure on the income tax portal rather, the same has been created manually in violation of the provisions of the Income Tax Act and procedure prescribed thereto. Even the said notice is in the name of the same another assessee and not in the name of the assessee hence, the same can not be treated as valid notice. Even the said notice is time barred by limitation. The last date to issue the notice u/s 148 of the Act in this case was 31.03.2022, whereas, the notices u/s 148A(b) of the Act was issued on 29.05.2022 and notice u/s 148 of the Act was issued on 28.07.2022. As observed even the said notice dated 28.07.2022 has not been issued to the assessee but in the name of other person. Therefore, the reopening of the assessment is bad in law on both counts.
The issue is squarely covered by the decision of the co-ordinate Bench of the Tribunal in the case of ACIT-19(1), Mumbai Vs. Manish Financial, & 5055/Mum/2024 & others, order dated 02.12.2024, wherein, “6. We heard the parties and perused the material on record. In assessee's case, the AO issued the original notice under section 148 dated 29.06.2021 for AY 2015- 16 and consequent to the directions given by the Hon'ble Supreme Court in the case of Ashish Agrawal (supra), the said notice was deemed as notice issued under section 148A(b). The AO after passing the order under section 148A(d) issued the notice under section 148 dated 29.07.2022. The contention of the assessee is that the said notice is barred by limitation as per the first proviso to the un-amended provisions of section 149(1) as has been confirmed by the decision of the Hon'ble Supreme Court in the case of Rajeev Bansal (Supra). The relevant observations of the Hon'ble Supreme Court reads as under – 19. Mr N Venkataraman, learned Additional Solicitor General of India, made the following submissions on behalf of the Revenue: (a) to (e)**** (f). 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; ****** 46. The ingredients of the proviso could be broken down for analysis as follows: (i) no notice under section 148 of the new regime can be issued at any time for an assessment year beginning on or before 1 April 2021; (ii) if it is barred at the time when the notice is sought to be issued because of the "time limits specified under the provisions of" 149(1)(b) of the old regime. Thus, a notice could be issued under section 148 of the new regime for assessment year 2021-2022 and before only if the time limit for issuance of such notice continued to exist under section 149(1)(b) of the old regime 49. 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)(b) 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.
This issue of notice under section 148 issued for 2015-16 being time barred is considered by the coordinate bench in the case of Pushpak Realities Pvt. Ltd.(supra) and it is held that ****** For the A.Y.2015-16, the Revenue itself has contended before the Hon’ble Supreme Court as noted above, all the notices issued on or after 01/04/2021 will have to be dropped as they will not fall for completion during the period prescribed under TOLA. Here notice u/s. 148 for the A.Y. 2015-16 has been M/s Coplama Products Pvt. Ltd. issued on 28/07/2022 which is admittedly barred by limitation under the new provision of Section 149(1) and it is not covered under TOLA. Accordingly, all the notices are quashed being barred by limitation on the reasons given above and we are not going on the reasons given by the ld. CIT (A) for quashing the notice.”
A combined reading of the above observations of the Hon'ble Supreme Court and the findings of coordinate bench makes it clear that the test for checking the validity of notices issued under section 148 under new regime for AYs 2021-22 or prior years is whether the period of six years has expired at the time of issue of such notice and in that case the notice under section 148 becomes invalid. These observations also makes it clear that the time limit of ten years as per the amended provisions of section 149(1)(b) can be applied only prospectively. In assessee's case when we apply this test for AY 2015-16, the period of six years has expired on 31.03.2022 and therefore the notice dated 29.07.2022 under section 148 of the Act for AY 2015-16 is invalid since it is barred by limitation. Accordingly the assessment completed under section 147 of the Act is liable to be quashed.”
In view of the aforesaid position of law, the notice u/s 148 of the Act in this case is bad in law and therefore, the consequential assessment framed u/s 147 of the Act is bad in law and the same is hereby quashed the appeal of the assessee stands allowed.
In the result, appeal filed by the assessee is allowed.
Order pronounced in the court on 31.01.2025