INCOME TAX OFFICER WARD-3(3)(2), AHMEDABAD, AHMEDABAD vs. NISHAN GOVINDBHAI THAKKAR, AHMEDABAD
Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: DR. BRR KUMAR & SHRI SIDDHARTHA NAUTIYAL
PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER:
This appeal has been filed by the Revenue against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld.
CIT(A)”), National Faceless Appeal Centre (in short “NFAC”), Delhi vide order dated 18.07.2024 passed for A.Y. 2017-18. 2. The Revenue has taken the following grounds of appeal:-
“a)
The Ld. CIT(A) has erred in law and on facts in quashing the notice issued u/s.
148 even though the notice was issued as per Instruction No. 01/2022 of the CBDT,
New Delhi dated 11/05/2022 and considering that the date of limitation of issuing notice for A.Y. 2017-18 got extended by the Taxation and Other Laws (Relaxation and Amendments of Certain provisions) Act, 2020 and further notification issued on 31/03/2021 and 27/04/2021 vide Notification No. 20/2021 and 38/2021 respectively?
(b)
Whether the Ld. CIT(A) is legally correct in its judgment, which in effect nullifies the exercise done by the Hon'ble Supreme Court by invoking its powers under Article 142 of the Constitution in the case of Ashish Agarwal (supra)?
Asst.Year –2017-18
- 2–
(c)
The Ld. CIT(A) has erred in law and on fact in giving its finding against the.
Instructions enumerated in CBDT Instruction No. 1/2022 dated 11/05/2022 which is a set of Instruction issued wholly in pursuance of the Hon'ble Supreme Court order in the case of Ashish Agarwal (supra)?
(d)
The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.
16,82,439/- on account of Sale of Shares of Penny Scrip M/s. Shivansh Finserve Ltd treated as unexplained money u/s 69 of the IT Act?
(e)
The appellant craves leave to add, alter and /or to amend all or and the ground before the final hearing of the appeal.”
The brief facts of the case are that the case of the assessee was reopened under Section 148 of the Act by the Assessing Officer on the ground that assessee is one of the beneficiaries who has booked fictitious profit in equity trading in shares of M/s. Shivansh Finserv Ltd. and has incurred profit amounting to Rs. 16,82,439/- which is not genuine.
In appeal before Ld. CIT(A), the assessee challenged the reopening of assessment on the ground that the same is barred by limitation. Before Ld. CIT(A) the assessee submitted that reopening of assessment is allowed up to a period of three years from the end of the relevant assessment year. However, if the amount of escapement of income is Rs. 50 lakhs or more assessment can be reopened up to a period of 10 years from the end of the relevant assessment year. In this case, the assessment is reopened for A.Y. 2017-18 and three years from the end of the relevant assessment year would end on 31.03.2021. Further, the alleged income which has escaped assessment in the case of the assessee is Rs. 16,82,439/-, which is less than Rs. 50 lakhs and therefore, assessment for A.Y. 2017-18 cannot be reopened beyond a period of three years from the end of the relevant assessment year, which period was ending on 31.03.2021. However, the ITO vs. Nishan Govindbhai Thakkar Asst.Year –2017-18 - 3–
Ld. AO reopened the assessment by issue of notice under Section 148 of the Act on 31.07.2022, which was beyond the stipulated period of three years from the end of the relevant assessment year.
In light of the above submissions of the assessee, the Ld. CIT(A) allowed the appeal of the assessee and quashed the notice dated 31.07.2022 as being barred by limitation, with the following observations:
“6.3)
The time limitation for issuance of notice under section 148 of the Act is proposed to be provided in section 149 of the Act and is as below:
(1) No notice under section 148 shall be issued for the relevant assessment year-
(a) if there years have elapsed from the end of the relevant assessment year, unless the case fall sunder clause (b);
(b) if there 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 accounts or other documents or evidence which reveal that the income chargeable to tax, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more for that year:
Thus, it is clear from the above provisions, that the time limitation for issuance of notice u/s.148 of the Act is proposed to be provided in section 149 of the Act is three
(03) years and as per Clause (b) of Section 149(1), 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 accounts or other documents or evidence which reveal that the income chargeable to tax, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more for that, year. In the instant case, the escaped assessment amounts to be less than fifty lakh rupees. Further before invoking the extended period of limitation, the proposal was that approval should be obtained from the Principal Chief
Commissioner of Income Tax. In the present case, the approval was taken from the Principal Commissioner of Income Tax as submitted by the appellant.
4) Reliance is placed on the decision of Hon'ble High Court of Delhi in the case of Ganesh Dass Khanna Vs. Income Tax Officer [2023] 156 taxmann.com 417 (Delhi), wherein it was held as under:-
"53.1
As would be evident from the extracts set forth above, both from the Finance Minister's speech and the Memorandum, the time limit for reopening under the new regime was reduced from six (06) years to three (03) years and ITO vs. Nishan Govindbhai Thakkar
Asst.Year –2017-18
- 4–
only in respect of "serious tax evasion cases", that too, where evidence of concealment of income of Rs.50 lakhs or more in a given period was found, the period for reopening the assessment was extended to ten (10) years. In order to ensure that utmost care was taken before invoking the extended period of limitation, the proposal was that approval should be obtained from the Principal Chief Commissioner of Income Tax, at the highest hierarchical level of the department. Likewise, the Memorandum emphasized that the new regime was forged with the hope that it would result in less litigation and would provide ease of doing business to tax payers, as there was a reduction in the time limit by which notice for assessment, reassessment and re- computation could be issued.
2 Thus, as per the Memorandum, in "normal cases", no notice was intended to be issued if three (03) years had elapsed from the end of the relevant AY, Notice, beyond the prescribed three (03) years from the end of the relevant AY, could be issued only in a few specific cases; one such example which is given in the Bill is where the AO was in possession of evidence that escaped income amounted to Rs.50 lakhs or more.
3 In sum, the sense that one gets upon a holistic reading of the backdrop in which the new regime for reopening assessments was enacted is that where escapement of income was below Rs. 50 lakhs, the normal period of limitation, i.e., three (03) years was to apply. In comparison, the extended period of ten (10) years would apply in serious tax evasion cases where there was evidence of concealment of income of Rs. 50 lakhs or more in the given period.
4 The State, perhaps, did not deem it worthwhile to chase assessees beyond three (03) years, where the alleged escaped income was less than Rs,50 lakhs. These aspects concerning legislative policy come through if one were to read the relevant provisions of the statute referred to above in the background of the speech of the Finance Minister and the Memorandum.
Conclusion:
Therefore, having regard to the foregoing discussion, we are of the opinion that the impugned actions, which include orders passed under section 148A(d) and the consequent notices issued under section 148 of the amended 1961 Act, concerning AY 2016-17 and AY 2017-18 cannot be sustained. It is ordered accordingly.
Furthermore, the reference made in paragraphs 6.1 and 6.2(ii) of the Instruction dated 11-5-2022, to the extent it propounds the "travel back in time" theory, is declared bad in law.
The writ petitions are disposed of in the aforesaid terms." Asst.Year –2017-18 - 5–
5) Considering the facts of the case and following the decision of Hon'ble High Court of Delhi cited supra, the notice issued u/s.148 of the Act is barred by limitation and bad in law. Hence, Ground No.1 is allowed.
0) As I have held that the notice issued u/s 148 itself is bad in law, the other grounds have become redundant to adjudicate.”
The Department is in appeal before us against the aforesaid order passed by Ld. CIT(A), quashing the notice issued under Section 148 of the Act, as being time barred.
On going through the contents of the order passed by Ld. CIT(A), we observe that Ld. CIT(A) has correctly observed that the notice under Section 148 of the Act was issued by the Assessing Officer beyond the stipulated period as prescribed under Section 149(1)(a) of the Act. Accordingly, we find no infirmity in the order of Ld. CIT(A) so as to call for any interference.
In the result, the appeal of the Department is dismissed. This Order is pronounced in the Open Court on 15/01/2025 (DR. BRR KUMAR) JUDICIAL MEMBER Ahmedabad; Dated 15/01/2025
TANMAY, Sr. PSआदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to :
अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent. 3. संबंिधत आयकर आयुƅ / Concerned CIT 4. आयकर आयुƅ(अपील) / The CIT(A)- 5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाडŊ फाईल / Guard file.
आदेशानुसार/ BY ORDER,
उप/सहायक पंजीकार (Dy./Asstt.