Reassessment notice for AY 2013-14 cannot be issued after 31.03.2021 by taking relief of TOLA [Read order]
The judgement has been passed by Hon’ble Bombay High Court in the case of The New India Assurance Company Limited Vs. Assistant Commissioner of Income Tax Circle-3(2)(1), Mumbai WRIT PETITION NO. 1945 OF 2023 Dt. 15.01.2024.
In the above appeal assessee was issued notice without following the statutory procedure stipulated under Sections 148, 148A, 149 and 151 of the Act, the notice was issued on 29th June 2021 under Section 148 of the Act, seeking to reopen petitioner’s assessment for AY 2013-14.
This notice has been issued after a period of three years from the end of the relevant assessment year, i.e., AY 2013-14. Assessee filed a Writ petition for the same and The said writ petition came to be finally disposed by a common judgment dated 29th March 2022 passed by this Court in Tata Communications Transformation Services Ltd. V/s. Assistant Commissioner of Income Tax (2022) 443 ITR 49 (Bombay) wherein the reopening notice dated 29th June 2021 was also quashed and set aside.
Pursuant to the judgment of Hon’ble Supreme Court in case Ashish Agarwal respondent no.1, in petitioner’s case, re-initiated the assessment proceedings by issuing a notice on 30th May 2022.
Against the above reassessment, assessee filed an application before Hon’ble High Court wherein it held that the proceedings are beyond the time limit prescribed in Income tax act and the instructions of CBDT is beyond jurisdiction, illegal, contrary to directions of the Apex Court and ultra vires.
Counsel for assessee submitted that it is now a settled position in law that the validity of a notice issued under Section 148 of the Act must be judged on the basis of the law existing on the date on which such notice is issued. This principle has been confirmed by this Court in Siemens Financial Services Private Limited V/s. Deputy Commissioner of Income Tax & Ors (2023) 457 ITR 647 (BOM).
Exclusion of Covid period while computing the 4 years or the 6 years, as the case may be, is in effect, nothing but the theory of travel back in time which has been rejected by this Court in Tata Communications and in Siemens Financials.
The Apex Court in Ashish Agarwal (Supra) did not disturb the findings of this Court in Tata Communications. The Apex Court only modified the orders passed by the respective High Courts to the effect that the notices issued under Section 148 of the Act, which were subject matter of writ petitions before various High Courts, shall be deemed to have been issued under Section 148A(b) of the Act and the Assessing Officer was directed to provide within 30 days to the respective assessee the information and material relied upon by the Revenue so that the assessee could reply to the show cause notices within two weeks thereafter.
The Apex Court also kept open expressly all contentions which may be available to the assessee including those available under Section 149 of the Act and all rights and contentions, which may be available to the concerned assessee and Revenue under the Finance Act, 2021 and in law, shall be continued to be available. This was done by the Apex Court to strike a balance between the rights of both the parties. Therefore, the validity of the reopening notice to petitioner must be decided on the basis of law which exists at the time when such a notice was issued, i.e., 28th July 2022.
Assessee also contended that the time limit under Section 149 expired on 31st March 2021 only for AY 2014-15 (and not for AY 2013-14, which expired on 31st March 2020) and has got extended by virtue of clause (a) of sub-section (1) of Section 3 of TOLA. The Notification does not say “issuance of notice under Section 148 as per time limit specified in Section 149 as extended under sub-section (1) of Section 3 of TOLA”. Therefore, the provisions of TOLA cannot apply. Also the Notifications thereunder do not apply to the case at hand for AY 2013-14.
Hon’ble Court in it’s judgement stated as under:
We are unable to comprehend the contention raised that if the notice dated 30th May 2022 under Section 148A(b) of the Act is valid in terms of Apex Court order in Ashish Agrawal, then the notice under Section 148 of the Act cannot be issued on 31st March 2021 and respondent cannot be expected to do impossible. It has nowhere been urged by petitioner that assessing officer ought to complete the proceedings before the show cause notice under Section 148A(b) of the Act was issued. It is the case of petitioner that the reopening notice under Section 148 ought to have been issued within 6 years from the end of the AY 2013-14. This limitation period, as extended by TOLA, expired on 31st March 2021. However, in the present case, the reopening notice has been issued in July 2022 and, therefore, beyond the statutory time limit. In any case, as stated above, the Hon’ble Supreme Court, while invoking powers under Article 142, consciously and categorically granted liberty to assessees to raise all defences available to the assessee, including the defences under Section 149 of the Act. This specific and express directions cannot be set at naught. Accepting this contention of the Revenue would be a travesty of justice.
In the circumstances, in our view, the notice issued under Section 148 of the Act, impugned in this petition, for AY 2013-14 is issued beyond the period of limitation.
Having decided in favour of assessee/petitioner on this issue of limitation, we are not discussing the other grounds of challenge raised in the petition. Petitioner may raise all those contentions independently in any other proceeding.
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