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Facts
The assessee's appeal challenges an assessment order passed under Section 147/144 of the Income Tax Act. The primary contention is that the notice initiating reassessment proceedings under Section 148 was issued beyond the prescribed time limit and was not properly served on the assessee.
Held
The Tribunal held that the notice under Section 148 of the Act, dated 12.04.2022, was issued beyond the limitation period as provided under Section 149(1)(b) of the Act. Consequently, the notice was deemed invalid and the subsequent assessment order was quashed.
Key Issues
Whether the notice under Section 148 of the Income Tax Act was issued within the limitation period prescribed by Section 149(1)(b) and properly served on the assessee.
Sections Cited
147, 144, 148, 148A, 149, 153(1), 142(1), 234A, 234B, 270A, 271F, 271(1)(b), 144C, 156, 133A, 151A
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Income Tax Appellate Tribunal, DELHI BENCH, D: NEW DELHI
Before: SHRI VIKAS AWASTHY & SHRI BRAJESH KUMAR SINGH
ITA No.-2025/Del/2025 CEB LLC (Earlier Known as CEB Inc. ) United States of America ORDER
PER BRAJESH KUMAR SINGH, AM,
This appeal by the assessee is directed against the order of the Assessing Officer dated 31.01.2025 passed u/s 147/144 of the Income Tax Act, 1961 (hereinafter ‘the Act’) arising out of the direction of Dispute Resolution Panel date of directions 10.12.2024 pertaining to Assessment Year 2018-19.
1.1. The grounds of appeal raised by the assessee reads as under:-
“1. That on the facts and circumstances of the case and in law, the Ld. AD has erred in assessing the total income of the Appellant for the subject assessment year at INR 47,82,983 2. That on the facts and circumstances of the case and in law, the final assessment order dated January 31, 2025 passed by the Ld. AO under section 147 read with section 144 of the Act, pursuant to the directions issued by the DRP, is without jurisdiction, bad in law and thus, liable to be quashed.
That on the facts and circumstances of the case and in law, the final assessment order passed by the Ld. AD is barred by limitation as it has been passed beyond the time frame prescribed under section 153(1) of the Act.
That on the facts and circumstances of the case and in law, the draft assessment order dated March 27, 2024 passed by the AO in the name of a non-existent entity and without mentioning any Permanent Account Number ("PAN") is Invalid and consequently, the DRP directions and final assessment order passed basis such an invalid draft assessment order are also invalid and thus, deserve to be quashed.
That on the facts and circumstances of the case and in law, the AD has erred in not serving notices under section 148A(b) 2 ITA No.-2025/Del/2025 CEB LLC (Earlier Known as CEB Inc. ) United States of America and 148 and order under section 148A(d) of the Act, which is sine qua non for initiation of assessment proceedings under section 147 r.w.s 148A of the Act.
That on the facts and in the circumstances of the case and in law, the notice dated April 12, 2022 issued under section 148 of the Act is time-barred and accordingly, the subject proceedings initiated basis such invalid notice deserves to be quashed 7. That on the facts and circumstances of the case and in law, the Ld. AQ has erred in Initiating the subject proceedings without bringing on record any information that suggests that income of the Appellant for the subject assessment year has escaped assessment.
That on the facts and circumstances of the case and in law, the Ld. AO has erred in initiating the assessment proceedings on an erroneous assumption that the Appellant has not filed its return of income for the year under consideration.
9. That on the facts and circumstances of the case and in low, the Lid. AD and DRP have erred in holding that the receipts of INR 47,82,983 from Genpact India Private Limited ("Genpact") are taxable as Fee for Technical Services es per section 9(1)(vi) of the Act read with Article 12 of the India- US Double Taxation Avoidance Agreement ("DTAA") 10. That on the facts and circumstances of the case and in law, Ld. AO and DRP have erred in holding that the subscription fee received by the Appellant from Genpact during the subject assessment year satisfy the 'make-available condition as per Article 12(4)(b) of the India-US DTAA 11. That on the facts and circumstances of the case and in law, the Ld. DRP has erred in holding the receipts of INR 47,82,983 as 'Fee for Technical Services without issuing a show cause notice to the Appellant in this regard.
That on the facts and circumstances of the case and in law, the Ld. AO and DRP have erred in not appreciating that the receipts amounting to INR 47,82,983 do not pertain to the Appellant in view of the Novation agreement dated 25 October 2016 executed between the Appellant, CEB Global Limited. UK and Genpact.
ITA No.-2025/Del/2025 CEB LLC (Earlier Known as CEB Inc. ) United States of America 13. That on the facts and circumstances of the case and in law, the Ld. AO has erred in Incorrectly computing the assessed income and consequently tax payable thereon for the subject assessment year. 14 That on the facts and circumstances of the case and in law, the Ld. has erred in levying interest under sections 234A and 2348 of the Act.
On the facts and circumstances of the case and in law, the Ld. AO has erred in initiating penalty proceedings under Section 270A of the Act 16. On the facts and circumstances of the case and in law, the Ld. AO has erred in initiating penalty proceedings under Section 271F of the Act 17. On the facts and circumstances of the case and in law, the Ld. AO has erred in initiating penalty proceedings under Section 271(1)(b) of the Act. The above grounds of appeal are all independent and without prejudice to each other. The Appellant craves leave to supplement, to cancel, to amend, to add and/or otherwise to alter/ modify any or all the ground(s) of appeal stated herein above on or before its hearing before your honor.”
2. In this case, the assessment was reopened u/s 148 of the Act, in view of the facts noted by the AO, that the assessee had not filed its return of income for A.Y. 2018-19 and during the course of survey u/s 133A(2A) of the Act, at the premises of M/s Genpact India Pvt. Ltd., it was found that the assessee had received a sum of Rs. 47,82,983 as foreign remittance from M/s Genpact India Pvt. Ltd. According to the AO, the notice u/s148 of the Act, was issued to the 4 ITA No.-2025/Del/2025 CEB LLC (Earlier Known as CEB Inc. ) United States of America assessee on 12.04.2022, which as later discussed in this order has been contested by the assessee, on the ground that the said notice dated 12.04.2022 was never served upon the assessee company and the said notice issued was beyond the limitation period in terms of section 149(1)(b) of the Act. 2.1 In this regard, the assessee submitted a list of dates alongwith the facts of the proceedings in this case, which is reproduced as below:
ITA No.-2025/Del/2025 CEB LLC (Earlier Known as CEB Inc. ) United States of America 3. On the basis of the aforesaid facts, the assessee raised various legal objections which was summarized by the assessee in its submission dated 06.02.2024 and reproduced on page 11 of the draft assessment order, which is reproduced as below: “In conclusion, the Assessee would like to further emphasize that the response to the notice issued is under protest as an act of compliance for the notice received and cooperation with the income tax department. In a nut shell, the Assessee objects the aforesaid proceedings and the notice on the following grounds:-
1. The correct name of entity and PAN details have not been provided as requested.
2. Notice under Section 148 of the Act has not been served
3. Proceeding under section 148A has not been carried out for the year under consideration
4. Notice under section 148 dated 12 April 2022 is time-barred as per provisions of section 149 of the Act
5. Without prejudice to above contentions, the software licence fees, communication charges, bandwidth charges, webhosting charges as stated in the notice cannot be construed as ‘Royalty’.
4. However, the AO did not accept the legal objections and passed a draft assessment order u/s 147/144 of the Act, on 27.03.2024 proposing an addition of Rs. 47,82,983/- on account of income accruing to the assessee from M/s Genpact India Ltd.
5. Aggrieved with the above proposed addition, the assessee filed its objections before the Ld. DRP. The Ld. DRP regarding the legal ITA No.-2025/Del/2025 CEB LLC (Earlier Known as CEB Inc. ) United States of America objections raised by the assessee made its observation regarding the issue of the impugned notice on a non-existent company and directed the AO to pass a speaking order regarding the said legal objection raised by the assessee. The said observations / directions of the DRP are as under: “(a) At the outset, the assessee has challenged the validity of the proceedings right from the non issuance of notice to the matter being time barred and that the notice was issued without PAN and most importantly the correct name of the assessee was not mentioned and that the AO disregarded even the Novation Agreement. The assessee has categorically stated that vide its submissions dated 21.12.2023, 19.01.2024, 06.02.2024 and 16.02.2024 informed the AO that the notices have been issued in the name of the non- existent entity and Dehors the multiple letters filed by the company intimating that there is no entity in the name of Corporate Executive Board (CEB), the AO continued to issue notices and even the order is in the name of non-existent entity. Although the Panel does not have the mandate of adjudicating upon the procedural/technical issue, the instant issue of issuance of notices and the DAO in the name of a non-existent entity is not merely a procedural issue and warrants intervention by the Panel at this juncture. There are a plethora of judgments including the judgment of Hon'ble Supreme Court in the case of PCIT New Delhi vs Maruti Suzuki India Ltd which states that the order issued in the name of a non-existent entity is bad in law and void ab initio. The Panel observed that there was not even an iota of discussion by the AO in the DAO regarding issuance of notice to a non-existent entity. The Panel accordingly directs the AO to make a note of the same and pass a speaking order in this regard after recording the facts to ensure that the stance of Revenue is not jeopardized.
6. However, the AO did not deal with the above legal objection and passed the final assessment order by taking note of the direction of ITA No.-2025/Del/2025 CEB LLC (Earlier Known as CEB Inc. ) United States of America the DRP in para no. 13 and 14 of its order which is reproduced as under: “13. The Hon'ble DRP disposed off the grounds raised by the assessee before the Hon'ble DRP. As per the directions of Hon'ble DRP the amount received by the assessee in lieu of providing subscription for sales leadership program to Genpact India were of the nature of FTS, contrary to Royalty as treated by the AO. In view of the above discussion and directions by Hon'ble DRP, its total income is computed as under:- Particulars Amount (Rs.) Income as per ITR NA Income accruing Rs. to the assesse 47,82,983/- from M/s Genpact India (P) Limited (FTS) Assessed income Rs. of the assessee 47,82,983/- for AY 2018-19
14. Assessment is accordingly made on total income of Rs. 47,82,983/- as above. Credit for prepaid taxes is allowed after verification Detailed computation of tax and interest chargeable under various provisions of the Act is made in ITNS-150 and enclosed with this assessment order. Demand notice u/s 156 is issued with the order. A copy of the directions u/s 144C(5) of the DRP dated 10.12.2024 is placed as annexure to this order and is to be read as a part of this final assessment order.”
During the appeal before us, the assessee reiterated its submissions made before the DRP and the legal submissions regarding the violation of provision of section 149 of the Act are reproduced as under; “Ground 3 ITA No.-2025/Del/2025 CEB LLC (Earlier Known as CEB Inc. ) United States of America That on the facts and in the circumstances of the case and in law, notice under section 143 of the Act issued on 12 April 2022 is time-barred and accordingly proceeding carried out under section 147 is void ab initio and against the principal of natural justice. At the outset, the Company has not received any notice under section 148 of the Act during the course of assessment proceeding. On perusal of the show cause notice dated 27 January 2024, the Company got to know that a notice under section 148 of the Act has been issued on 12 April 2022. Relevant extract of the show cause notice is as under: 1. Re-assessment proceeding in your case was initiated by issued of notice u/s 148 of the Income Tax Act on 12.04.2022, in response to which no compliance has been made Further, notice u/s 142(1) of the Act was issued on 26.10.2023 and 07.12.2023 but no compliance has been received in this office." The Company vide its submission filed on 27 January 2024, 06 February 2024, 13 February 2024, requested the Ld. AO to provide the copy of the notice under section 148 of the Act, however, it has not been served to the Company. Therefore, in absence of the service of notice under section 148 of the Act, draft assessment proceeding is void ab initio. Without prejudice the above grounds, even if is assumed that the notice under section tice of the Act has been issued on 12 Apr 2022, the Company challenges its validity on the grand that the same has been issued after the time limit prescribed under the Act. it is pertinent to reproduce herewith relevant text of provision of section 149 of the Act " 149. (1) No notice under section 140 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 ITA No.-2025/Del/2025 CEB LLC (Earlier Known as CEB Inc. ) United States of America 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, il a notice under section 148 or section 153A or section 153C could not have been issued at the 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 153C, 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” As per section 149(1)(a) of the Act, no notice under section 148 of the Act shall be issued after the expiry of three years from the end of the relevant assessment year. Further, section 149(1)(b) of that Act states that notice can be issued upto ten years 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 which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more. As per the draft assessment order, an amount of INR 47,82,983 has been alleged to be income chargeable to tax which has escaped assessment. Thus, the time limit for issue of the notice under section 148 of the Act would be covered by the provisions of section 149(1)(a) of the Act i.e. three years from the end of relevant assessment years. In the Para 6.2.2 of the draft assessment order, the Ld. AO mentioned that: 6.2.2 Based on the information available show cause notice u/s 148A(b) was issued asking the assessee to explain as why proceedings shouldn't be initiated for income escaping assessment. The notice was duly sent to the address of the assessee as available with the department based on the information available. The assessee furnished no response to the notice u/s 1484(b) within the stipulated time period and as a result order u/s 1484(d) was passed and notice us 148 was served by post on 27.03.2022 and 12.04.2022 respectively to the registered address available with the department as per information available.
ITA No.-2025/Del/2025 CEB LLC (Earlier Known as CEB Inc. ) United States of America Further, the Ld. AO mentioned in the show cause notice dated 27 January 2024 that a notice under section 148 of the Act was issued on 12 April 2022. Relevant extract of the same is as under: “Re-assessment proceeding in your case was initiated by Issued of notice also 148 of the Income Tax Act on 12.04.2022 response to which no compliance has seen Further notice u/s 142(1) of the Act was issued on dt. 26.10. 2023 and 07.17 2023 but no compliance has been received in this office" In view of the above extract, it can be stated that the if AO has passed an order under section 148A(d) of the Act on 27 March 2022 and issued notice uniter section 148 of the Act on 12 April 2022 As per section 149(1)(a) of the Act, no notice under section 148 of the Act shall be issued after the expiry of three years from the end of the relevant assessment year Accordingly, notice under section 148 of the Act must have been issued by 31 March 2022 It has been mentioned by Ld. AD in the show cause notice that a notice under section 148 was issued to the Assessee on 12 April 2022 Thus the notice under section 148 of the Act has been issued after the time limit prescribed under section 149(1)(a) of the Art, therefore, notice under section 148 of the Act is time-barred and void-ab-initio Consequently, the proceeding under consideration is also invalid and liable to be dropped. (emphasis supplied by us) 8. We have heard both the parties and considered the material available on record. In this case, the assessee has challenged the legality of the assessment order passed in this case on jurisdictional grounds. The assessee contested that no proceedings u/s 148 A(b) of the Act was initiated in its case and further the notice u/s 148 dated 12.02.2022 was never served upon the assessee. Further, the assessee also submitted that the impugned notice u/s 148 of the Act ITA No.-2025/Del/2025 CEB LLC (Earlier Known as CEB Inc. ) United States of America dated 12.04.2022 was served upon a non-existent company i.e. in name of ‘Corporate Executive Board’, which was non -existent on the date of the said impugned notice u/s 148 of the Act, dated 12.04.2022. The fact regarding service of the notice u/s 148 of the Act dated 12.04.2022 on a non-existent entity was also noted by the DRP and the DRP had directed the AO to pass a speaking order regarding the above legal objection raised by the assessee, which was not done by the AO while passing the final assessment order u/s 144C r.w.s. 144(13) of the Act, dated 31.01.2025. 8.1 Further, the contentions of the assessee that no proceedings u/s 148A(b) of the act was carried out in the case of the assessee and the impugned notice u/s 148 of the Act dated 12.04.2022 was not served upon it was not contested by the AO while passing the final assessment order and further, in absence of any contrary evidence brought on record before us by the CIT(DR), the above facts stated by the assessee are found to be acceptable. Therefore, the present assessment order has been passed in violation of the Hon’ble Supreme Court decision in the case of Ashish Agarwal [2022] 138 taxmann.com, which held that under the provision of section 147 to 149 of the Act as substituted by the Finance Act, 2021 and section 12 ITA No.-2025/Del/2025 CEB LLC (Earlier Known as CEB Inc. ) United States of America 151A no notice under Section 148 of the Act can be issued without following the procedure prescribed u/s 148A of the Act. 8.2 Further, the assessee has also contested that in this case, that even if the claim of the Department that notice u/s 148 of the Act issued on 12.04.2022 is correct, still the said impugned notice was beyond the limitation period as the notice was issued after the end of the three assessment years of the relevant assessment year, which was reopened vide the said notice dated 12.04.2022 and because the income escaping assessment was only Rs. 47,82,983/- which was less than Rs. 50 lakhs, and therefore, clearly the impugned notice u/s 148 of the Act, dated 12.04.2022 was beyond time as per the provisions of section 149(1)(b) of the Act. Therefore, even considering the fact that a notice u/s 148 dated 12.04.2022 was issued by the AO but still in view of the provision of section 149(1)(b) of the Act, the above notice is beyond time as it violates the provisions of section 149(1)(b) of the Act because as per the impugned proceedings under section 148 of the Act, the income escaping was Rs. 47,82,983/- which was less than Rs. 50 lakhs whereas the assessment beyond three years can be reopened under the newly amended provisions of section 148 r.w.s. 149(1)(b) of the 13 ITA No.-2025/Del/2025 CEB LLC (Earlier Known as CEB Inc. ) United States of America Act, only when the income chargeable to tax which has escaped assessment amounts to or is likely to amount to 50 lakhs or more. 8.3 In view of the above facts, we hold that the notice u/s 148 of the Act dated 12.04.2022 is issued beyond the limitation period as provided u/s 149(1)(b) of the Act, and therefore the said notice is invalid notice and the impugned final assessment order dated 31.01.2025 passed u/s 147/144 of the Act in this case in consequence of such invalid notice is illegal and cannot be sustained, and therefore, the same is quashed. Ground no. 2 of the appeal is allowed.
In view of the fact, since, we have quashed the impugned assessment proceedings in this case, no other grounds raised
by the assessee survive for adjudication.
10. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 26th November, 2025.