RITVIK SANDEEP KOLATKAR,PUNE vs. ITO, WARD 8(3), PUNE, PUNE
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Income Tax Appellate Tribunal, PUNE “SMC” BENCH : PUNE
Before: SHRI SATBEER SINGH GODARA
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE “SMC” BENCH : PUNE BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER I.T.A.No.610/PUN./2024 Assessment Year 2014-2015
Shri Ritvik Sandeep The Income Tax Officer, Kolatkar, Flat No.301, Ward – 8 (3), Shreyas Covert, Pratyakshakar Bhavan, Chaturshrungi, Pune City, vs. Dr. Ambedkar Marg, Model Colony S.O. Pune Nr. Akurdi Rly. Station, Maharashtra. Pune – 411 044. PIN – 411 016 Maharashtra. PAN BRCPK6181L (Appellant) (Respondent)
For Assessee : Shri Kishor B. Phadke For Revenue : Shri Kalpesh Kumar Rupavatiya
Date of Hearing : 09.05.2024 Date of Pronouncement : 28.05.2024 ORDER
This assessee’s appeal for assessment year 2014-15,
arises against the National Faceless Appeal Centre [in short
the “NFAC”] Delhi’s Din and Order No. ITBA/NFAC/S/250/
2023-24/1060161596(1), dated 27.01.2024, in proceedings
u/s.147 r.w.s.144 of the Income Tax Act, 1961 (in short “the
Act”).
Heard both the parties. Case file perused.
It emerges at the outset that the assessee canvasses
his sole substantive grievance challenging validity of the
impugned sec.148A/148/147 proceedings itself since initiated
in violation of sec.149(1)(b) of the Act.
2 ITA.No.610/PUN./2024
The few relevant facts may be noticed.
2.1. There is hardly any dispute between the parties that
the impugned assessment year herein is assessment year
2014-2015. Learned assessing authority initiated the
impugned sec.148(1)/148 proceedings against the assessee
vide it’s corresponding notice issued on 21.07.2022 so as to
make the addition of Rs.15,52,462/- u/sec.56(2)(vii)(b) of the
Act. This sum represents difference between the assessee’s
actual purchase price and stamp value of the corresponding
capital asset. Sec.149(1)(a), amended w.e.f. 01.04.2021 vide
Finance Act, 2021 admittedly prescribes limitation of three to
ten years under clause (b) thereof subject to a rider that the
“income which has escaped assessment amounts to or is likely
to amount to 50 lakhs rupees or more”. That being the case,
the learned DR could not rebut the foregoing clinching factual
position that the assessing authority herein had nowhere
recorded the corresponding satisfaction of assessee’s alleged
taxable income’s amount satisfied the said pecuniary limit. I
deem it appropriate to take note of the CBDT’s circular /
instruction no.1/2022 dated 11.05.202 making it clear in
paragraph-7.1 thereof that the above escaped amount’s indeed
forms a mandatory condition as well. Hon’ble jurisdictional
high court’s latest decision Hexaware Technologies Ltd. vs.
ACIT [2024] 162 taxmann.com 225 (Bombay); for succeeding
assessment year 2015-16; involving sec.148 notice dated
3 ITA.No.610/PUN./2024
08.04.2022; holds the same as time barred u/sec.149(1) of the
Act as follows :
“25. Section 149(1)(b) of the erstwhile provisions
provided a time limit of six years from the end of the
relevant assessment year for issuing notice under Section
148 of the Act. For the relevant assessment year, being
Assessment Year 2015-2016, 6th year expired on 31st
March 2022. The notice under Section 148 of the Act,
in the present case, is issued on 27th August 2022,
i.e., clearly beyond the period of limitation prescribed in
Section 149 read with the first proviso to the said section.
This is squarely covered by paragraphs 36 and 37 of
New India Assurance (Supra) which has been reproduced
above in paragraph 23.
The purpose of the first proviso to Section 149 of
the Act is consistent with the stated object of the
government to make prospective amendments in the Act.
Accordingly, the proviso provides that up to Assessment
Year 2021-2022 (period before the amendment), the period
of limitation as prescribed in the erstwhile provisions of
Section 149(1)(b) of the Act would be applicable and only
from Assessment Year 2022-2023, the period of ten years
as provided in Section 149(1)(b) of the Act, would be
applicable. The submission of the Revenue to interpret the
4 ITA.No.610/PUN./2024
first proviso to Section 149 of the Act to be applicable only
for Assessment Years 2013- 2014 and 2014-2015, i.e., for
assessment years where the period of limitation had
already expired on 1st April 2021 is not sustainable. The
interpretation canvassed by the Revenue is clearly
contrary to the plain language of the proviso. When the
language in the statute is clear, it has to be so interpreted
and there is no scope for interpreting the provision on any
other basis. The taxing statue should be strictly construed.
[Godrej & Boyce Manufacturing Company Ltd. vs. DCIT].
The interpretation as canvassed by the Revenue
would render the first proviso to Section 149 of the Act
redundant and otiose. The time limit to issue notice under
Section 148 of the Act had already expired on 1st April
2021 for Assessment Year 2013–2014 and 2014–2015,
when Section 149 of the Act was amended. Therefore,
reopening for Assessment Years 2013-2014 and 2014-
2015 had already been barred by limitation on 1st April
2021. Accordingly, the extended period of ten years as
provided in Section 149(1)(b) of the Act would not have
been applicable to Assessment Years 2013-2014 and 014-
2015, de hors the proviso. It is a settled principle of
law that when limitation has already expired, it cannot
be revived by way of a subsequent amendment and,
hence, for Assessment Years 2013-2014 and 2014-2015
5 ITA.No.610/PUN./2024
proviso to Section 149 of the Act was not required. Hence,
to give meaning to the proviso it has to be interpreted to be
applicable for Assessment Years upto 2021-2022. In
Commissioner of Income Tax vs. Onkarmal Meghraj (HUF),
the Hon'ble Apex Court was dealing with the question
whether a proviso could be applied without reference to
any period of limitation. It held that "it is a well-settled
principle that no action can be commenced where the
period within which it can be commenced has expired. It is
unnecessary to cite authorities in support of this position.
Does the fact that the second proviso says that there is no
period of limitation make a difference?"
The interpretation canvassed by the Revenue would
render the following parts of the proviso redundant -
(i) ‘at any time’ in the first line of the proviso.
(ii) ‘beginning on or before 1st day of April, 2021,’ in the
second line of the proviso.
(iii) ‘at that time’ in the fourth line of the proviso.
If we have to give effect to the interpretation suggested by
the Revenue, then the proviso would have read as under :
"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 153A or Section 153C
6 ITA.No.610/PUN./2024
could not have been issued at that time [on 1st day of
April, 2021] 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; OR
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 153A or Section 153C
could not have been issued at that time [on 1st day of
April, 2021] 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".
Section has to be interpreted so as to give
meaning to all the words/phrases used in the Section and
it should not be interpreted in such a way so as to render
any part or phrase in the Section otiose. As stated
aforesaid, if the interpretation canvassed by the Revenue
is to be accepted then, not only various parts of the Section
would be rendered otiose, one would have to also
substitute one phrase with another phrase in the said
Section, which is clearly not permissible in law. Reliance in
7 ITA.No.610/PUN./2024
this regard is placed on the decision of the Hon’ble Apex
Court in the case of Commissioner of Income Tax vs. Sham
L. Chellaram.
It was submitted on behalf of Revenue that the
period of limitation for the purposes of Section 149 of the
Act has to be seen with respect to the original notice under
Section 148 of the Act, which was issued to petitioner
on 8th April 2021 and as the said notice was issued
within the period of six years from the end of the relevant
assessment year, which was expiring on 31st March
2022, the reassessment proceedings are within the period
of limitation prescribed in Section 149 of the Act. It is not
acceptable.
Section 149 of the Act sets out, inter alia, the time
limit for issuing notice under Section 148 of the Act. Apart
from the period of limitation set out in the said Section, the
first proviso lays down a further restriction on the issue of
a notice under section 148 of the Act. The period of
limitation as well as the said further restriction is
framed/provided in respect of a notice under 148 of the
Act, and not for a notice under section 148A of the Act. The
notice dated 8th April 2021, which though originally
issued as a notice under section 148 of the Act, (under the
provisions of the Act prior to the amendments made by the
Finance Act, 2021), has now been treated as a notice
8 ITA.No.610/PUN./2024
issued under section 148A(b) of the Act in accordance with
the decision of the Hon'ble Apex Court in Ashish Agarwal
(Supra). Once the notice dated 8th April 2021 has been
treated as having been issued under Section 148A(b) of
the Act, the said notice is no longer relevant for the
purpose of determining the period of limitation prescribed
under Section 149 or the restriction as per the first
proviso below Section 149 of the Act. Therefore, for
considering the restriction on issue of a notice under
section 148 of the Act prescribed in the first proviso to
Section 149 of the Act, the fresh/presently impugned
notice dated 27th August 2022 issued under Section 148
of the Act is required to be considered. The said notice is
admittedly beyond the erstwhile period of limitation of six
years prescribed by the Act prior to its amendment by the
Finance Act, 2021. For the Assessment Year 2015-2016,
the erstwhile time limit of six years expired on 31st March
2022 and, the impugned notice under Section 148 of the
Act has been issued on 27th August 2022 and, therefore,
the impugned notice dated 27th August 2022 is barred by
the restriction of the first proviso to Section 149 of the Act.
With respect to applicability of the fifth proviso
and the sixth proviso to Section 149(1)(b) of the Act for
extension of limitation for issuing the notice under Section
148 of the Act, fifth and sixth provisos are only applicable
9 ITA.No.610/PUN./2024
with respect to the period of limitation prescribed in
Section 149(1) of the Act, i.e., three years or ten years, as
the case may be. Fifth proviso or sixth proviso extend
limitation for issuing notice under Section 149 of the Act,
however, the first proviso is an exception to the period of
limitation and provides for a restriction on the notices
under Section 148 being issued for Assessment Years upto
2021-22 beyond a certain date. Therefore, the way the
Section would operate, is first to decide whether a notice
issued under Section 148 of the Act is within the period
of limitation in terms of Section 149(1)(a) or (b) of the Act.
To decide whether the notice is within the period of
limitation under Section 149(1)(a) or (b) of the Act, the
extension of time as per the fifth and/or sixth proviso
would be considered. Once, the notice is otherwise within
the period of limitation, thereafter one has to see whether
the said time limit is within the restriction provided in
the first proviso or not. If the notice is beyond the
restriction period, the notice is invalid. The fifth and/or the
sixth proviso cannot apply at this stage to extend the
period of restriction as per the first proviso. Hence, if a
notice is not within the time prescribed under the first
proviso to Section 149(1) of the Act, then such period
cannot be extended by fifth proviso and sixth proviso. In
10 ITA.No.610/PUN./2024
Godrej Industries Ltd. (Supra) paragraph 15 reads as
under :
“15. Based on petitioner’s facts, the show cause
notice under Section 148A(b) of the Act was issued
on 24th May 2022 asking petitioner to furnish a
reply by 8th June 2022. Petitioner filed a detailed
reply in response to the show cause notice on 8th
June 2022 and, therefore, only the period from 24th
May 2022 to 8th June 2022 could be excluded by
virtue of the first limb of the fifth proviso to Section
149 of the Act. Subsequently, petitioner received
another letter dated 28th June 2022 which annexed
certain details and provided further time for making
detailed submissions upto 8th July 2022. Petitioner
replied to the letter and made detailed submissions
on 2nd July 2022. Therefore, even assuming this
period is to be excluded, the period which could be
excluded is only from 24th May 2022 to 8th June
2022. Even after considering the letter dated 28th
June 2022 and the reply dated 2nd July 2022, at the
highest a further period from 28th June 2022 to 8th
July 2022 could be excluded but the period of time
from 8th June 2022 to 28th June 2022 cannot be
excluded as per the fifth proviso. This is because
petitioner on 8th June 2022 did not request for any
11 ITA.No.610/PUN./2024
further time and furnished its response to the show
cause notice under Section 148A(b) of the Act. It is
the Assessing Officer who has suo moto issued
another letter on 28th June 2022 asking petitioner to
furnish further details by 8th July 2022. Therefore,
even assuming a period of 27 days (i.e., 16
days from 24th May to 8th June and 11 days from
28th June to 8th July) are excluded from the date of
the impugned notice under Section 148 of the Act
issued on 31st July 2022, the impugned notice would
yet be barred by limitation and could not have been
issued by virtue of the first proviso to Section 149 of
the Act.
Even if the fifth and sixth provisos are held to
be applicable, the impugned notice would still be beyond
the period of limitation. The fifth proviso extends
limitation with respect to the time or extended time
allowed to an assessee as per the show cause notice
issued under Section 148A(b) of the Act or the period,
during which the proceeding under Section 148A of the
Act are stayed by an order of injunction by any Court.
Hence, in the present case, in view of the fifth proviso, the
period to be excluded would be counted from 25th May
2022, i.e., the date on which the show cause notice was
issued under Section 148A(b) of the Act by respondent
12 ITA.No.610/PUN./2024
no.1 subsequent to the decision of the Hon’ble Apex Court
in the case of Ashish Agarwal (Supra) and upto 10th June
2022, which is a period of 16 days. Further, the time
period from 29th June 2022 upto 4th July 2022 cannot be
excluded as the same was not based on any extension
sought by petitioner, but at the behest of respondent no.1.
Even if the same was to be excluded, still it will mean
further exclusion of 5 days. Considering the said excluded
period as well, the impugned notice dated 27th August
2022 is still beyond limitation. The fact that the original
notice dated 8th April, 2021 issued under Section 148 of
the Act, was stayed by this Court on 3rd August 2021,
and its stay came to an end on 29th March 2022 on
account of the decision of this Court, will not be relevant
for providing extension as per the fifth proviso. The fifth
proviso provides for extension for the period during which
the proceeding under Section 148A of the Act is stayed.
The original stay granted by this Court was not with
respect to the proceeding under Section 148A of the Act,
but with respect to the proceeding initiated as per the
erstwhile provision of Section 148 of the Act and, hence,
such stay would not extend the period of limitation as per
the fifth proviso to Section 149 of the Act. The question of
applicability of the sixth proviso does not arise on the facts
13 ITA.No.610/PUN./2024
of the present case. We find support for this in Godrej
Industries Ltd. (Supra).
In view of the aforesaid, the impugned notice
dated 27th August 2022 is clearly barred by the law of
limitation.”
I adopt their lordships’ foregoing detailed reasoning
mutatis mutandis to quash the impugned reopening since the
escaped income does not satisfy the pecuniary jurisdiction
threshold limit(s) u/sec.149(1)(b) of the Act in very terms. The
assessee succeeds in his instant sole substantive grievance.
Ordered accordingly.
This assessee’s appeal is allowed in above terms.
Order pronounced in the open Court on 28.05.2024.
Sd/- [SATBEER SINGH GODARA] JUDICIAL MEMBER Pune, Dated 28th May, 2024
VBP/- Copy to 1. The appellant 2. The respondent 3. The Pr. CIT, Pune concerned 4. D.R. ITAT, “SMC” Bench, Pune. 5. Guard File.
//By Order//
//True Copy //
Sr. Private Secretary, ITAT, Pune Benches, Pune.
