Calcutta HC Stays Section 148 IT Notice Due to Limitation and Pending Appeal

SCI India Limited Vs ITO (Calcutta High Court)

Hon’ble Calcutta High Court stays Notice under Section 148 of Income Tax Act, 1961 on the grounds of limitation and as well on the ground that an order emanating from an earlier notice under section 148 is pending before the CIT (Appeals).

Issue: The petitioner challenged a notice dated April 26, 2023, issued under Section 148 of the Income Tax Act, 1961, for the assessment year 2016-17 based on two grounds: the notice was issued beyond the limitation period, and an order resulting from a previous notice under Section 148 for the same assessment year is still pending before an appellate authority, making it impermissible to have two parallel assessments for the same year.

Arguments Advanced by Petitioner

1. It was argued that notice dated 26.04.2023 issued under Section 148 is barred by limitation as per the first proviso to Section 149. It was submitted that for the assessment years up to 2021-2022 (i.e., the period before the amendment to Section 149 by the Finance Act, 2021), the limitation period of six years, as prescribed by the unamended Section 149, would apply. Only from the assessment year 2022-2023 onward does the ten-year limitation period specified in the amended Section 149 come into effect.

2. It was also argued that a second notice under section 148 cannot be issued when an order emanating from an earlier notice under section 148 is pending before the Commissioner Income Tax (Appeals). It was argued that an appeal is continuation of assessment proceedings and there cannot be two parallel assessments for the same assessment year.

Held in the Order:

The Hon’ble Calcutta High Court held that, given the fact that no second notice under Section 148 of the Income Tax Act could have been issued for the assessment year 2016-17, and considering the amended provisions of Section 149, including the jurisdictional issues involved, the petitioner has established a prima facie case. Consequently, all further proceedings related to the notice issued under Section 148 for the assessment year 2016-17, dated April 26, 2023, shall remain stayed.

Advocates appearing for the petitioner – Mr. Vinay Kumar Shraff and Mr. Dev Kumar Agarwal.

Advocates appearing for the respondent – Mr. Tilak Mitra

FULL TEXT OF THE JUDGMENT/ORDER OF CALCUTTA HIGH COURT

1. The present writ petition has been filed, inter alia, questioning the jurisdiction and/or authority of the jurisdictional officer to issue the notice dated 26^th April, 2023 under Section 148 of the Income Tax Act, 1961 as amended by Finance Act, 2021, (hereinafter referred to as the “said Act”).

2. Mr. Shraff, learned advocate representing the petitioner, by placing before this Court the first and the fifth proviso to Section 149 of the said Act, submits that no notice under Section 148 of the said Act can be issued in respect of the assessment year 2016-17, beginning on or before 1^st April, 2021 in terms of the amended provisions of Section 149 of the said Act. According to him since, the proceeding relates to the assessment year 2016­17, the issuance of notice under Section 148 of the said Act shall be in accordance with the un-amended provisions of Section 149 of the said Act, as it stood immediately before the commencement of the Finance Act, 2021.

3. Independent of the above, by placing before this Court the notice dated 29^th March, 2021, issued under Section 148 of the said Act, in respect of the assessment year 2016-17 it is submitted that since, reassessment proceeding had commenced pursuant to the aforesaid notice dated 29^th March, 2021 and the same having already been concluded by passing the assessment order dated 30^th March, 2022 read with Sections 144 and 147 of the said Act, no further notice under Section 148 of the said Act, in respect of the selfsame assessment year could have been issued on the petitioner. In support of his contention he has placed reliance on a judgment delivered by the Hon’ble High Court of Delhi at New Delhi in the case of Kamdhenu Enterprises Ltd. v. Income Tax Officer, reported in (2023) 146 com 417 (Delhi). Having regard to the aforesaid, it is submitted that the subsequent notice issued under Section 148 of the said Act dated 26^th April, 2023 for the assessment year 2016-17 is without jurisdiction, nonet and should be quashed.

4. Mitra, learned advocate enters appearance on behalf of the respondents and prays for leave to use affidavit-in-opposition to the present writ petition.

5. Having regard to the aforesaid, considering the fact that no second notice under Section 148 of the said Act in respect of the assessment year 2016-17 could have been issued and further taking note of the amended provisions of Section 149 of the said Act, including the jurisdictional issue involved, I am of the view that the writ petition should be heard. Further since, the petitioner has been able to make out a prima facie case, all further proceeding in connection with the notice issued under Section 148 of the said Act, for the assessment year 2016-17 dated 26^th April, 2023 shall remain stayed till the end of September, 2024 or until further orders, whichever is earlier.

6. Let affidavit-in-opposition to the present writ petition be filed within a period of three weeks after the summer vacation. Reply thereto, if any, be filed within two weeks thereafter.

7. List this matter in the Combined Monthly List of July, 2024.