ANIL KUMAR,UNA vs. INCOME TAX OFFICER, WARD, UNA, UNA

Having said so, one still has to examine whether this Writ Petition ought to be entertained and the matter be remanded back to the ITAT to hear the Rectification Application afresh. Having heard Mr. Pardiwalla, the learned senior counsel appearing on behalf of the Petitioner, as well as Mr. Gupta, learned advocate appearing on behalf of the Revenue, we are of the view that since the Petitioner has already filed Income Tax Appeal No. 753 of 2025 challenging the original order passed by the ITAT dated 10th December 2024, we need not send the aforesaid Rectification Application back to the ITAT. We find that the interest of the Petitioner would be adequately protected if he is permitted to canvass all the grounds raised in the present Petition pertaining to the merits of the matter in the appeal filed challenging the original order.

In view of the decision of the Bombay High Court, the Ld. AR has not opposed and submitted that let the Misc. Application be decided on merit

In view of the above, we are of the considered opinion that the present Misc. Applications which were filed within two months of receipt/dispatch of the order are maintainable and are not barred by limitation; and are thus maintainable in law.

On the merit, Ld. Sr. DR had submitted that the Tribunal had decided the issue and dismissed the appeal of the revenue by following the decision of the Hon'ble Supreme Court in PCIT Vs. AbhisarBuildwell Private Limited.

It was contended by the Ld. DR, having reference to the Misc. Application ,that the Hon'ble Supreme Court, in the case of AbhisarBuildwell Private Limited ,has given the liberty to the Assessing M/s OswalApparls Pvt. Ltd. Officer to initiate the proceedings under Section 147/148, and therefore, similar directions were required to be issued by the Tribunal and not by issuing the direction, an error has crept in the order and therefore, the order of the tribunal is required to be rectified/modified to conform with the judgment of the Hon’ble Supreme Court.

The Hon'ble Apex Court vide the above-mentioned judgement in the case of Pr.CIT (Central)-3 vs. AbhisarBuildwellPct Ltd. Civil Appeal No. 6580 of 2021 dated 24.04.2023, has held that i. that in Case of search under Section 132 or requisition under Section 132A, the AO assumes the jurisdiction for block assessment under Section 153A: ii. all pending assessments/reassessments shall stand abated: iii. in Case any incriminating material is found/unearthed, even, in Case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the ‘total income’ taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns: and iv. in Case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessment/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the A.O. in exercise of powers under Section 147/148 of the Act, 5 M/s OswalApparls Pvt. Ltd. subject to fulfilment of the conditions as envisaged/mentioned under Sections 147/148 of the Act and those powers are saved. 8.1 The Ld. DR submitted that the issue involved in the present case decided by the Hon'ble Bench vide Order dated 04.11.2024 (ITA No 425/Chd/2021) raised a similar problem as per the law declared by the Supreme Court in the above-mentioned judgment of the Hon'ble Apex Court. However, no similar directions were given by the Bench in the said order to Assessing Officer, reopen proceedings as per Section 147/148 of the IT Act

Per Contra, Ld. AR had submitted that the Assessing Officer had already passed the order giving effect on 18th November, 2024, and therefore, no fresh directions can be issued under Section 147/148 by the Tribunal.

Undisputedly, none of the clauses of Explanation 1 would be attracted in the facts and circumstances of the present batch. The statute incorporates no provisions in terms of which the period which may have been consumed while pursuing an assessment under Sections 153A or 153C is liable to be excluded if such an action were to be ultimately annulled. The fact that the statute seeks to create rigid time frames within which a reassessment action may be initiated stands fortified by the First Proviso appearing in Section 149, and which came to be introduced in the statute book by Finance Act 2021.

Section 149(1), along with its First and the Second Provisos, is accordingly reproduced hereinbelow:- “Time limit for notice. 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 M/s OswalApparls Pvt. Ltd. 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 153-A 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 sub-section (1) of this section or section 153A or section 153-C, as the case may be], as they stood immediately before the commencement of the Finance Act, 2021: Provided further that the provisions of this sub-section shall not apply in a case, where a notice under section 153A, or section 153C read with section 153A, is required to be issued in relation to a search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A, on or before the 31st day of March, 2021:”

It is pertinent to note that both Sections 153A and 153C saw significant amendments which came to be made by virtue of Finance Act, 2021. Both those provisions saw the introduction of a sunset clause and the statute mandating that the scheme of search assessment as introduced in the Act originally by way of Finance Act, 2003 would cease to apply to a search initiated on or after 01 April 2021.

Notwithstanding the curtains thus being wrung down on Sections 153A and 153C, the Proviso to Section 149(1) in unambiguous terms provides that in case reassessment is sought to be initiated for a relevant AY falling prior to 01 April 2021, such an action would have to be in conformity with the time limits specified in Sections 149 (1) (b), Sections 153A or 153C, whichever be applicable, and as those provisions stood immediately before the commencement of Finance Act, 2021. The Proviso is thus representative of a clear legislative policy of reassessments being required to be compliant with time frames which existed in the provisions aforenoted and as they stood before the commencement of Finance Act, 2021.

The challenge which stands mounted in these writ petitions was identically raised in Dinesh Jindal v. Assistant Commissioner of Income Tax and Others19. In Dinesh Jindal we had an occasion to examine the working of the First Proviso to Section 149(1). On a due consideration of the statutory scheme, we had observed as follows:- “10. Undisputedly, and if the validity of the reassessment were to be tested on the anvil of Section 153C, the petitioner would be entitled to succeed for the following reasons. It is an undisputed fact that the proceedings under Section 148 commenced on the basis of the impugned notice dated 30 March 2023. This date would be of seminal importance since the period of six AYs' or the “relevant assessment year” would have to be reckoned from the date when action was initiated to reopen the assessment pertaining to AY 2013-2014.

The computation of the six or the block of ten AYs' was explained by us in Ojjus Medicare Private Limited in the following terms: “D. The First Proviso to Section 153C introduces a legal fiction on the basis of which the commencement date for computation of the six year or the ten year block is deemed to be the date of receipt of books of accounts by the jurisdictional AO. The identification of the starting block for the purposes of computation of the six and the ten year period is governed by the First Proviso to Section 153C, which significantly shifts the reference point spoken of in Section 153A(1), while defining the point from which the period of the “relevant assessment year” is to be calculated, to the date of receipt of the books of accounts, documents or assets seized by the jurisdictional AO of the non-searched person. The shift of the relevant date in the case of a non- searched person being regulated by the First Proviso of Section 153C(1) is an issue which is no longer res integra and stands authoritatively settled by virtue of the decisions of this Court in SSP Aviation and RRJ Securities as well as the decision of the Supreme Court in Jasjit Singh. The aforesaid legal position also stood reiterated by the Supreme Court in Vikram Sujitkumar Bhatia. The submission of the 9 M/s OswalApparls Pvt. Ltd. respondents, therefore, that the block periods would have to be reckoned with reference to the date of search can neither be countenanced nor accepted. E. The reckoning of the six AYs‟ would require one to firstly identify the FY in which the search was undertaken and which would lead to the ascertainment of the ASSESSMENT YEAR relevant to the previous year of search. The block of six AYs‟ would consequently be those which immediately precede the AY relevant to the year of search. In the case of a search assessment undertaken in terms of Section 153C, the solitary distinction would be that the previous year of search would stand substituted by the date or the year in which the books of accounts or documents and assets seized are handed over to the jurisdictional AO as opposed to the year of search which constitutes the basis for an assessment under Section 153A. F. While the identification and computation of the six AYs‟ hinges upon the phrase “immediately preceding the assessment year relevant to the previous year” of search, the ten year period would have to be reckoned from the 31st day of March of the AY relevant to the year of search. This, since undisputedly, Explanation 1 of Section 153A requires us to reckon it “from the end of the assessment year”. This distinction would have to necessarily be acknowledged in light of the statute having consciously adopted the phraseology “immediately preceding” when it be in relation to the six year period and employing the expression “from the end of the assessment year” while speaking of the ten year block.”

The respondents, in any event, have not doubted the correctness of the terminal dates which would apply to the relevant AYs which form the subject matter of the present batch of writ petitions. The table, which had been extracted by us in the introductory parts of the present judgement, clearly establishes that all the notices under Section 148 impugned herein would fall beyond the date computed in terms of the First Proviso to Section 149(1).

The respondents despite the clear enunciation of the legal position with respect to search assessments in terms of our judgements in Kabul Chawla, RRJ Securities and a host of others that followed neither chose to initiate any remedial action nor did they adopt a course correction. Nothing fettered the right of the respondents to commence reassessment if they 12 M/s OswalApparls Pvt. Ltd. were of the opinion that, notwithstanding absence of incriminating material, escapement of income had occurred. It was open for the respondents to establish that an action for reassessment was warranted independently and irrespective of no adverse material having been found in the course of a search. We thus find ourselves unable to hold in their favour. Consequently, and for all the aforesaid reasons, we find ourselves unable to sustain the reassessment action.

We have heard the rival contention of parties and perused the materials available on record. The Hon'ble Supreme Court while deciding the decision in the case of AbhisarBuildwell in Paragraph 14 has held as under:

From the perusal of the judgment of the Hon'ble Supreme Court, it is clear that the Hon'ble Supreme Court has mentioned that the completed and unabated assessment can be reopened by the AO in exercise of power under Section 147/148 of the Act, subject to the fulfilment of the conditions as mentioned under Section 147/148 of the Act.

The appeals has been dismissed/ decided by the Bench, by relying upon the judgment of the Hon'ble Supreme Court in the case of AbhisarBuildwell however while dismissing the appeal of the Revenue the Tribunal inadvertently has not given the liberty, to reopen the assessment to the AO while exercising the power under Section 147/148 of the Act , therefore, in our view the Tribunal has committed an error by not giving the liberty as mentioned in paragraph 14 (IV) of AbhisarBuildwell (supra).

As the Tribunal has merely dismissed the appeal of the revenue without giving the opportunity to their therefore we are of the considered opinion that the decision of the Tribunal in ITA No.428/Chandi/2021, 14 M/s OswalApparls Pvt. Ltd. ITA No. 430/Chnadi/2021, ITA No. 431/Chandi/2021, ITA No. 25/Chandi/2022are required to be modified thereby adding paragraph 8A in the decision of the Tribunal which is to the following effect. 8A. Needless to say the completed/unabated assessments can be reopened by the AO in exercise of powers under Sections 147/148 of the Act, subject to the fulfilment of the conditions as envisaged/mentioned under Section 147/148 of the Act and period of limitation in terms of the decision of AbhisarBuildwell (supra).

In the light of the above modifications, the applications of the revenue are allowed.