CLE Private Limited Vs DCIT (ITAT Mumbai)
Income Tax Appellate Tribunal (ITAT) Mumbai addressed the issue of reassessment initiated against CLE Private Limited, focusing primarily on the validity of the reassessment notice issued under Section 148 of the Income Tax Act. The core contention was whether the notice was issued within the permissible time limit, considering the provisions of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA).
The original return of income was filed on September 30, 2015, and the scrutiny assessment was completed on December 29, 2017. Subsequently, a notice under Section 148 was issued on July 31, 2022, based on information received from the investigation wing regarding alleged accommodation entries. The ITAT examined the timeline and the applicability of TOLA, referencing key Supreme Court judgments, including “Union of India vs. Ashish Agarwal” and “Union of India vs. Rajeev Bansal.”
The ITAT highlighted that TOLA was enacted to provide relief during the COVID-19 pandemic, extending time limits for actions under the Income Tax Act. However, the Supreme Court’s decision in “Rajeev Bansal” clarified the applicability of TOLA, specifying that it extended time limits only for actions falling between March 20, 2020, and March 31, 2021, up to June 30, 2021. For the assessment year 2015-16, the original limitation period, even when extended by TOLA, had expired before the issuance of the notice. The tribunal emphasized that for assessment year 2015-16, the revenue conceded before the supreme court that notices issued after 01.04.2021 would have to be dropped.
The ITAT also addressed the issue of sanction under Section 151 of the Act, noting the differences in sanctioning authorities between the old and new regimes. It emphasized that post-April 1, 2021, prior approval must be obtained from the competent authorities specified under the new regime, and non-compliance with the prescribed time limits affects the jurisdiction to issue a notice under Section 148.
The tribunal concluded that the notice issued to CLE Private Limited on July 31, 2022, was time-barred. The original time limit for the assessment year 2015-16, even considering the TOLA extension, had expired. Therefore, the reassessment was deemed invalid, and the notice was quashed. Consequently, other grounds of appeal, including the addition under Section 68, were not adjudicated. The appeal was allowed based on the limitation issue.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
