Loading judgment…
Facts
The revenue filed an appeal against an order that quashed reassessment proceedings. The assessee, a company engaged in manufacturing packaging products, had filed its return declaring Nil income. The reassessment was initiated to disallow depreciation on goodwill due to impairment.
Held
The Tribunal held that the notice under Section 148 was issued by the Jurisdictional Assessing Officer instead of the Faceless Assessing Officer, violating the e-Assessment Scheme, 2022. Additionally, the reassessment proceedings were found to be barred by limitation.
Key Issues
Whether the reassessment proceedings were validly initiated, considering the jurisdiction for issuing notices and the limitation period for reassessment.
Sections Cited
Section 148, Section 143(3), Section 147, Section 148A, Section 151A, Section 149, Section 144B, Section 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘A‘ BENCH
आदेश / O R D E R PER AMIT SHUKLA (J.M):
The aforesaid appeal has been filed by the revenue (Ld. AO) against order dated 05.06.2024, passed by the Ld. Commissioner of Income-tax (Appeals) National Faceless Appeal Center (NFAC) under Section 250 of the Income-tax Act, 1961 quashing the reassessment proceedings on the ground of validity and jurisdiction. Ld. AO has raised various Amcor Flexibles India Pvt. Ltd. grounds in the appeal; however, all the grounds pertain to the validity of reassessment proceedings.
The facts in brief are that the assessee is a company incorporated under the Companies Act, 1956 and is engaged in the business of manufacturing of packaging products for pharmaceuticals, food and fast-moving consumer goods industry. The assessee filed return of income (‘ROI’) on 30.11.2013 declaring the total income at Rs. Nil after claiming earlier year’s losses to the extent of current year income. The return of the assessee was selected for scrutiny and an assessment order was passed under Section 143(3) r.w.s. 144C(3)(a) of the Income-tax Act,1961 (‘the Act’) dated 31.01.2017, assessing total income at Rs. Nil.
Ld. AO issued a notice on 20.04.2021under unamended Section 148 of the Act for reopening the assessment for the year under consideration. In response to the said notice, the assesseechallenged the reopening by filing its objections vide letter dated 09.06.2021 stating that mandatory procedure under the new Section 148A of the Income-tax Act was not followed and hence the Notice is bad in law.
Subsequently, the assessee was issued Notice under section 143(2) read with section 147 of the Act dated 11.12.2021 along with reasons for reopening. As per the reasons for reopening, the assessment was reopened to disallow the depreciation on goodwill amounting to Rs.2,37,83,195 on the ground that the amount pertaining to goodwill has been impaired in the books of account and therefore the depreciation cannot be allowed as the asset not Amcor Flexibles India Pvt. Ltd. in existence. The said reasons for reopening has been arrived on the basis of the disclosure made in the Financial Statement for year ending on 31 March 2013.Against the said Notice, the assessee submitted detailed objections vide its letter dated 13.01.2022.
It is to be noted that with respect to the notices issued by the Income Tax Department under the unamended Section 148 of the Act on or after 01 April 2021, the matter went to Hon’ble Supreme Court and the Hon’ble Supreme Court vide its order dated 04.05.2022 in the case of UOI vs. Ashish Agarwal [2022] 138 taxmann.com 64 (SC) held that the all the notices issued under the unamended section 148 of the Act on or after 01.04.2021 up to 30.06.2021 and which has been challenged before the High Court (whether disposed of or pending) shall be deemed to be show cause notices under new section 148A of the Act and directed that the Assessing Officers to provide the relevant information and material relied upon to reopen the assessment to the taxpayers within 30 days from the date of its order. In view of above Supreme Court decision, the CBDT issued Instructions No. 1/2022 dated 11.05.2022 laying down the uniform procedure to be followed by the tax officers in giving effect to the order of the Supreme Court.
Pursuant to the Supreme Court direction and CBDT instruction, a letter dated 19.05.2022 was issued by the Jurisdictional Assessing Officeralong with reasons for reopening. The assessee vide letter dated 03.06.2022 filed the Amcor Flexibles India Pvt. Ltd. objections against the said letter.However, the contentions of the assessee were rejected by the Jurisdictional Assessing Officer videorder dated 28.07.2022 passed under Section 148A(d) of the Income-tax Act, 1961 andthe Notice under Section 148 of the Act was also issued deeming it as a fit case for reassessment.
Subsequently, the Ld. AO from the National Faceless Assessment Centre issued a notice under section 142(1) of the Act dated 17 January 2023 seeking various detailsand also issued the notice under Section 143(2) dated 19 April 2023. Thereafter, the Ld. AO from National Faceless Assessment Centre issued a show-cause notice on 02.05.2023 and 10.05.2023 asking the assessee to show cause as to why the depreciation on goodwill of Rs. 2,37,83,195 should not be disallowed. In response to the same, the assessee filed its detailed submission vide letter dated 15 May 2023. However, the Ld. AO from National Faceless Assessment Centre passed a reassessment order under section 147 read with section 144B of the Act on 26.05.2023 disallowing depreciation on goodwill of Rs. 2,37,83,195/-.
The assessee being aggrieved by the abovementioned impugned reassessment order filed an appeal before the Commissioner of Income-tax (Appeals). Before the Ld. CIT (A), the assessee challenged the impugned reassessment order on the validity of reassessment proceedings as well as on the merits of disallowance of depreciation on goodwill. On validity of reassessment proceedings, it was submitted by the Amcor Flexibles India Pvt. Ltd. assessee before the Ld. CIT (A) that the notice under Section 148 should have been issued by the Faceless Assessing Officer and not by the Jurisdiction Assessing Officer. It was also contended that reassessment cannot be initiated on the basis of information of preceding year i.e., AY 2012-13 (FY 2011-12) and not relating to any information for relevant assessment year i.e., AY 2013-14 and hence the reassessment proceedings are clearly in violation of Explanation 1 to Section 148 of the Act.
The CIT(A) vide its Order dated 5 June 2024 quashed the reassessment proceedings by holding as under:
Against the abovementioned Order passed by the CIT(A), the revenue has filed the subject appeal raising various grounds to justify the validity of reassessment proceedings. During the course of hearing before us, the Ld. DR has relied upon the order passed under Section 148A and reassessment order passed under Section 143(3) r.w.s. 147 of the Income- tax Act.
During the course of hearing before us Shri Ajit Kumar Jain, Ld. AR supported the order passed by the Ld. CIT(A). It was submitted that notice under Section 148 was issued by the Jurisdictional Assessing Officer – Soumya Anand, ACIT, 14(1)(1), Mumbai on 28 July 2022. Section 151A of the Income Tax Act, 1961 permitted Central Government to make a scheme for the purposes of assessment, reassessment or re-computation under Section 147 or issuance of Notice under Section 148 or conducting of enquiries or issuance of show-cause notice or passing of order under section 148A or sanction for issue of such notice under Section 151, so as to impart greater efficiency, transparency and accountability. In terms of the said section, the Central Government issued a notification, being Notification No. 18/2022 dated 29th Amcor Flexibles India Pvt. Ltd. March 2022, wherein a scheme, called ‘e-Assessment of Income Escaping Assessment Scheme, 2022’ was brought into force with effect from 29 March 2022. As per the scheme the issuance of Notice under Section 148 of the Act and the completion of the assessment under section 147 is to be done in a faceless manner. Accordingly, it was only the Faceless Assessing Officer from NFAC that could have issued a Notice under section 148 after 29 March 2022. Therefore, the issuance of the Notice under Section 148 of the Act on 28 July 2022 is in violation of Section 151A of the Act read with ‘e-Assessment of Income Escaping Assessment Scheme, 2022’ and on this ground alone, the Notice is liable to be quashed.
In this regard, the Ld. AR placed reliance on the decision of Hon’ble Bombay High Court in the case of Hexaware Technologies Limited vs. ACIT [2024] 162 taxmann.com 225 (Bombay HC) wherein Hon’ble High court has quashed the Notice issued by Jurisdictional Assessing Officer instead of Faceless Assessing Officer.
It was further submitted by Ld. AR that recently, Hon’ble Bombay High court in the case of Kairos Properties Private Limited [2024] 165 taxmann.com 760 (Bombay) has held that even the initial procedure for reassessment under Section 148A of the Act shall also be done in faceless manner.
Ld. AR further placed reliance on the decision of Jurisdictional High Court in the case of New India Assurance Company Ltd vs. ACIT [2024] 158 taxmann.com 367 (Bombay) wherein it was held that where limitation under the Amcor Flexibles India Pvt. Ltd. Act (erstwhile section 149) for reopening of assessment for AY 2013-14 expired on 31-3-2020, notice issued in June 2021 in case of assessee was barred by limitation, hence, section 148 notice dated 28-7-2022 issued pursuant to Union of India v. Ashish Agarwal [2022] 138 taxmann.com 64/286 Taxman 183/444 ITR 1 (SC) was to be quashed and set aside and was invalid, without jurisdiction and barred by limitation.
It was thus submitted by the Ld. AR that the Notice issued under Section 148 of the Act is after the time limit prescribed under Section 149(1)(b) of the Act and hence it is time barred.
Ld. DR on the other hand relied on the order of AO and submitted that AO has correctly acquired jurisdiction in law and the requirement of law is that notice has to send in accordance and AO has to be pass the order.
We have heard both the sides and perused the material placed on record. It is an undisputed fact that in this case the notice issued under Section 148 dated 28 July 2022 has been issued by the Jurisdiction Assessing Officer and not by the Assessing Officer from NFAC. In view of Notification No. 18/2022 dated 29th March 2022 issued pursuant to power given under Section 151A, a scheme, called ‘e-Assessment of Income Escaping Assessment Scheme, 2022’ was brought into force with effect from 29 March 2022. As per the scheme the issuance of Notice under Section 148 of the Act and the completion of the assessment under section 147 has to be done in a faceless manner. Accordingly, it was only the Amcor Flexibles India Pvt. Ltd. Faceless Assessing Officer from NFAC that could have issued a notice under section 148 after 29 March 2022. The Jurisdictional Assessing Officer did not have jurisdiction to issue notice under Section 148 of the IT Act specifically on account of CBDT Notification No.18/2022 dated 29.03.2022. This view is upheld by Hon’ble Bombay High Court in its latest decision in the case of Hexaware Technologies Ltd vs. ACIT, Circle-15(1)(2), Mumbai [2024] in 162 taxmann.com 225. The relevant finding of the Hon’ble Court is reproduced hereunder: 1. “Further, in our view, there is no question of concurrent jurisdiction of the JAO and the FAO for issuance of notice under Section 148 of the Act or even for passing assessment or reassessment order. When specific jurisdiction has been assigned to either the JAO or the FAO in the Scheme dated 29th March, 2022, then it is to the exclusion of the other. To take any other view in the matter, would not only result in chaos but also render the whole faceless proceedings redundant. If the argument of Revenue is to be accepted, then even when notices are issued by the FAO, it would be open to an assessee to make submission before the JAO and vice versa, which is clearly not contemplated in the Act. Therefore, there is no question of concurrent jurisdiction of both FAO or the JAO with respect to the issuance of notice under Section 148 of the Act. The Scheme dated 29th March 2022 in paragraph 3 clearly provides that the issuance of notice “shall be through automated allocation” which means that the same is mandatory and is required to be followed by the Department and does not give any discretion to the Department to choose whether to follow it or not. That automated allocation is defined in paragraph 2(b) of the Scheme to mean an algorithm for randomized allocation of cases by using suitable technological tools including artificial intelligence and machine learning with a view to optimise the use of resources. Therefore, it means that the case can be allocated randomly to any officer who would Amcor Flexibles India Pvt. Ltd. then have jurisdiction to issue the notice under section 148 of the Act. It is not the case of respondent no. 1 that respondent no. 1 was the random officer who had been allocated jurisdiction 18. Since in this case the notice dated 28 July 2022 issued under Section 148 has been issued by the Jurisdictional Assessing Officer, therefore, we are in agreement with the Order passed by CIT(A) on this ground that this issue is squarely covered by the judgement of the Hon’ble Jurisdictional High Court and accordingly the reassessment proceedings is held to be without jurisdiction at the inception.
Further, the Hon’ble Bombay High court in the case of Kairos Properties Private Limited [2024] 165 taxmann.com 760 (Bombay) has even held that the initial procedure for reassessment under Section 148A of the Act shall also be done in faceless manner. The relevant observation and finding reads as under:- Para 13 “It is thus clear from the implications as brought about by the provisions of Section 151A that the notification dated 29th March, 2022 is issued in terms of what has been provided under Section 151A. It has been issued after the amendments were incorporated in sub-section (1) by Finance Act, 2021 with effect from 1 April, 2022. It would be thus difficult to accept a proposition when in paragraph 3(a) of the Scheme defining the scope of the Scheme when the words "assessment", "reassessment" or "re-computation" under Section 147 of the Act are explicitly provided, and further when clause (b) in paragraph 3 of the Scheme provides for issuance of notice under Section 148 of the Act, it would not take within its ambit the provisions of Section 148A which are the initial steps, which in a given case are required to be taken in issuance of notice under Section 148 of the Act.
Amcor Flexibles India Pvt. Ltd. Section 148A provides for "Conducting inquiry, providing opportunity before issue of notice under section 148". Thus, this provision postulates a procedure inextricably linked to Section 148 which would apply to all cases of reassessment with a proviso stipulating exceptions to the rule. In other words, Section 148A in its object, intent and purpose is inextricably connected with the assessment, re-assessment or recomputation, for which a notice under Section 148 may be issued. Any other view would mean that the requirement to adopt the faceless procedure under the Scheme is a mere ministerial requirement for issuance of the notice. Such a reading would not be in conformity with the objectives spelt out in clauses (a), (b) and (c) of Section 151A(1).”
Para 14 “Thus, to accept a contention that merely because the notification does not explicitly refer to the provisions of Section 148A, the scope of the Scheme as defined in paragraph 3 would exclude the applicability of Section 148A, would lead to an absolute absurdity, and more particularly, considering the express provisions of subsection (1) of Section 151A. Also it is not possible to accept reading of the provisions of Section 144B de-hors Section 151A(1). Sub- section (2) of Section 151A is specifically incorporated to empower the Central Government to exclude the applicability of any of the provisions of the Act and/or to make such provisions applicable with exceptions, modifications and adaptations. Nothing of this nature is found in the notification to infer any exclusion of Section 148A, and when it clearly concerns the entire assessment, reassessment or re-computation under Section 147 and issuance of notice in that regard under Section 148 of the Act.”
Para 15 “Thus, the Central Government has not applied the provisions of subsection (2) of Section 151A to specifically exclude the application of Section 148A from the scope of the Scheme in paragraph 3 of the notification dated 29th March, 2022, it would hence be not be possible to accept the
Since in instant case the order under Section 148A has been passed by the Jurisdictional Assessment Officer, therefore, following the aforesaid judgment we hold that the reassessment is without jurisdiction for this reason as well.
We have also gone through the judgement of Hon’ble Bombay High Court in the case of New India Assurance Company Ltd vs. ACIT [2024] 158 taxmann.com 367 (Bombay) and agree with the contention of the Ld. AR that in view of the judgement of Hon’ble Jurisdictional High Court, this reassessment proceedings is barred by limitation. Relevant findings from the judgement are reproduced hereunder: Para 35 “The Revenue's contention that the reopening notice was to relate back to an earlier date is entirely flawed and unacceptable. Thus, the reassessment notices issued for AY 2013-14 are patently barred by limitation as the six years limitation period under the Act (as extended by Section 3 of TOLA) expired by 31st March 2021. However, even on the Revenue's demurrer and assuming that such reopening notices could travel back in time and that the provisions of TOLA protected such reopening notices (we do not agree), even then, in so far as the notices issued for AY 2013-14 is concerned, would in any case be barred by limitation. As stated earlier, under the erstwhile Section 149, a notice under section 148 could have been issued within a period of six years from the end of the relevant assessment year. The Notifications issued under TOLA, viz., Notification No. 20/2021, which is relied upon by the Revenue, only cover Amcor Flexibles India Pvt. Ltd. those cases where 31st March, 2021 was the end date of the period during which the time limit, specified in, or prescribed or notified under the Income-tax Act falls for completion. The limitation under the Income-tax Act, 1961 (erstwhile Section 149) for reopening the assessment for the AY 2013-14 expired on 31st March 2020. Hence, Notification No. 20/2021 did not apply to the facts of the present case, viz., reopening notice for the AY 2013-14. Therefore, the Revenue could not issue any notice under section 148 beyond 31st March 2021 and hence, even the relate back theory of the Revenue could not safeguard the reassessment proceedings initiated after 1st April 2021 for AY 2013-14.” Para 36 “Therefore, in the present case, as the foundation of the entire reassessment proceeding, viz., the notice issued in June 2021 itself was barred by limitation in view of non- applicability of Notification No. 20/2021, the superstructure sitting thereon, viz., the reassessment proceedings initiated pursuant to judgment in Ashish Agarwal will also be regarded as beyond time limit. Therefore, on this ground as well, the impugned reopening notice dated 28th July 2022 issued for AY 2013-14 in petitioner's case is barred by limitation and deserves to be quashed and set aside. Alternatively, it is well settled that a notice under section 148 of the Act cannot be issued in order to reopen the assessment of an assessee in a case where the right to reopen the assessment was already barred under the pre- amended Act on the date when the new legislation came into force.” …..
Thus, respectfully following the judgement of Hon’ble High Court, we agree that the time limit for reopening of assessment for AY 2013-14 has expired on 31-3-2020 and hence even the Notice issued under unamended Section 148 in April 2021 is barred by limitation.
Amcor Flexibles India Pvt. Ltd. 23. In view of the above we find merits in the submission of the assessee and appeal filed by the revenue is dismissed for the reasons noted hereinabove.
In the result, appeal of the Revenue is dismissed.
Order pronounced on 6th September, 2024.