Case Law Details
DCIT Vs Anand Pershad Jaiswal (ITAT Delhi)
Conclusion: Subsequent amendment to section 149, by Finance Act, 2012 which extended limitation for initiation of reassessment proceedings to sixteen years could not be resorted for reopening concluded proceedings and the notice issued under Section 149 was time barred and thus could not have been acted upon. Consequently, the impugned re-assessment order passed in consequence of the illegal notice under Section 148 was a nullity and bad in law.
Held: Assessee was an individual and holding the status of Non-Resident Indian for the previous year relevant to Assessment Year 2000-01. Assessee filed return of income declaring total income at Rs.2610/-. Thereafter, AO received an information from FT&TR under exchange of information wherein it was found that assessee held foreign bank accounts in the name of Shri Anand Pershad Jaiswal and his father with the total credit entries amount to Rs.57,35,41,059/- for the Assessment Year 2000-01. Consequent upon information, AO issued notice under Section 148 r.w. Section 147 and reopened the assessment. The re-assessment order was passed on the basis of fresh material obtained concerning Assessment Year 2000-01. The additions were made towards credit entries reflected in the foreign bank accounts in the absence of any explanation thereof. Revenue contented that in view of Explanation inserted to S. 149 the extended time limit provided by clause (c) inserted by Finance Act 2012 would be automatically applied where income in relation to assets located outside India had found to be escaped regardless of other imputations. It was held that subsequent amendment to section 149, by Finance Act, 2012 which extended limitation for initiation of reassessment proceedings to sixteen years could not be resorted for reopening concluded proceedings in respect of which limitation had already expired/ lapsed before the amendment became effective. It was thus held that impugned reassessment notice and all consequent proceedings were without authority of law and a nullity and hence liable to be quashed and set aside. Consequently, the impugned re-assessment order passed in consequence of the illegal notice under Section 148 was a nullity and bad in law.
FULL TEXT OF THE ORDER OF ITAT DELHI
The present appeals are filed by the Revenue against the orders passed by CIT(A) for various assessment years mentioned hereinabove.
2. The issue in all the appeals is common and heard together.
3. ITA No.4824/Del/2019 (Assessment Year 2000-01) (Anand Pershad Jaiswal) is taken up as a lead case wherein the Revenue has raised the following grounds:
“1. The Order of Ld. CIT (A) is not correct in law and facts.
2. Whether on facts and circumstances of the case and in the law the Ld. CIT(A) has erred in quashing the assessment order passed by A.O. u/s 147 r.w.s section 143(3) on the ground that the notice issued u/s. 148 on 29.03.17 was time barred by holding that, for the instant assessment year i.e. A.Y. 2000-01, the last date for issue of notice was 31.03.2007.
3. Whether on facts and circumstances of the case and in the law the Ld. CIT (A) has erred in quashing the assessment order passed by A.O. u/s. 147 r.w.s section 143(3) even when explanation to section 149 has clarified that provision of section 149(1) and (3) as amended by the Finance Act 2012 shall also be applicable for any assessment year beginning on or before the first day of April 2012.
4. Whether on facts and circumstances of the case and in the law the Ld. CIT (A) has erred in quashing the assessment order passed by A.O. u/s. 147 r.w.s section 143(3) by replying upon the ration of judgement in the case of Brahm Datt vs ACTT (2018) of the jurisdictional High Court even when the order of Hon’ble High Court has not been accepted by the revenue and filing of SLP against that has been recommended.
5. Whether on facts and circumstances of the case and in the law the Ld. CIT (A) has erred in deleting the addition of Rs. 32,65,56,486/- made to returned income by the A.O. on merit even when on being provided with opportunities to file evidences in support of credit entries in different bank accounts held by the assessee during the previous year, he failed to discharge his onus by submitting requisite evidences as regard to the source thereof and to substantiate his claim that the credit entries in the different bank accounts had no connection with India.
6. The appellate craves for leave to add, amend and/all the ground of appeal before or during the course of hearing of the appeal.”
4. Briefly stated, the assessee is an individual and holding the status of Non-Resident Indian for the previous year relevant to Assessment Year 2000-01. The assessee filed return of income declaring total income at Rs.2610/-. Thereafter, the Assessing Officer received an information from FT&TR under exchange of information wherein it was found that the assessee holds foreign bank accounts in the name of Shri Anand Pershad Jaiswal and his father, Shri Ladli Pershad Jaiswal with the total credit entries amount to Rs.57,35,41,059/- for the Assessment Year 2000-01. Consequent upon information, the Assessing Officer issued notice dated 29.03.2017 under Section 148 r.w. Section 147 of the Act and reopened the assessment. The re-assessment order was passed dated 29.12.2017 on the basis of fresh material obtained concerning Assessment Year 2000-01. The additions were made towards credit entries reflected in the foreign bank accounts in the absence of any explanation thereof.
5. Aggrieved, the assessee preferred appeal before the CIT(A).
6. The CIT(A) took note of the submissions made on behalf of the captioned assessees and passed a consolidated order dated 28.03.2019 for all the assessees named above. The respective reassessment orders were cancelled on the grounds of lack of jurisdiction to reassess the income by issuing time barred notice under S. 148 of the Act.
The relevant paragraphs of the order of the CIT(A) is reproduced hereunder:
7.2 Although, the appellant has raised as many as twenty-five grounds of appeal (twenty-three being original and two being additional). However, the legal ground as to whether the notice issued u/s 148 was time-barred, goes to the root of the matter as it would decide the legality of assumption of jurisdiction u/s 147/148. This ground is, therefore, decided, first.
7.3 Hon’ble Delhi High Court while delivering the judgment in case of Brahm Datt Vs. ACIT [2018] 100 taxmann.com 324 (Delhi) has laid down a ratio that amendment to section 149 by Finance Act, 2012, which extended limitation for reopening assessment to sixteen years, cannot be resorted to for reopening proceedings concluded before amendment became effective( on 01.07.2012). In that case, the first issue before Hon’ble High Court was, as to whether AY 9899 could not have been reopened beyond 31-3-2005 in terms of provisions of section 149 as applicable at relevant time. Hon’ble High Court answered in affirmative. The second issue before the Hon’ble HC was as to whether subsequent amendment to section 149, by Finance Act, 2012, which extended limitation for initiation of reassessment proceedings to sixteen years, could not be resorted to for reopening concluded proceedings in respect of which limitation had already expired/ lapsed before amendment became effective. Hon’ble High Court answered in affirmative. The relevant portion of the judgment is reproduced below:
“14 The ratio of KM Sharma and S.S. Gadgil, in the opinion of this court covers the facts of this case. Reassessment for 1998-99 could not be reopened beyond 31.03.2005 in terms of provisions of Section 149 of the Act as applicable at the relevant time. The petitioner’s return for assessment year 1998-99 became barred by limitation on 31.03.2005. The question of revival of the period of limitation for reopening assessment for AY 1998-99 by taking recourse to the subsequent amendment made in Section 149 of the Act in the year 2012, i.e., more than 8 years after expiration of limitation on 31.03.2005, has been dealt with by the Supreme Court in KM. Sharma (supra).
16. It has been said that “the government in all its actions is bound by rules fixed and announced beforehand—rules which make it possible to foresee with fair certainty how the authority will use its coercive powers in given circumstances and to plan one’s affairs on the basis of this knowledge” (Ref. FA Hayek, “Road to Serfdom”, 1944). In this case, the interpretation proposed by the revenue has the potential of arming its authorities to re-open settled matters, in respect of issues where the citizen could genuinely be sanguine and had no obligation of the kind which the Revenue seeks to impose by the present amendment. All the more significant, is the fact that absent a clear indication, every statute is presumed to be prospective. The revenue had sought to contend that the amendment (to Section 149) is merely procedural and no one has a vested right to procedure; and that procedural amendments can be given effect any time, even in ongoing proceedings.
17. This court is of the opinion that there is no merit in the revenue’s contention. In Prithvi Cotton Mills Ltd. v. Broach Borough Municipality [1971] 79 ITR 136 (SC), examined the validity of the retrospective amendment of a statute in light of Article 19(1)(g) of the Constitution of India, i.e. a fundamental right to practice any profession, or to carry on any occupation, trade or business. The court said:
“In testing whether a retrospective imposition of a tax operates so harshly as to violate fundamental rights under article 19(1)(g), the factors considered relevant include the context in which retroactivity was contemplated such as whether the law is one of validation of taxing statute struck-down by courts for certain defects; the period of such retroactivity, and the decree and extent of any unforeseen or unforeseeable financial burden imposed for the past period etc.”
18. In Govinddas v. ITO [1976] 103 ITR 123 the Supreme Court held that Section 171 (6) of the Income Tax Act was prospective and inapplicable for any assessment year prior to 1st April, 1962, the date on which the Act came into force and observed that: “11. Now it is a well settled rule of interpretation hallowed by time and sanctified by judicial decisions that, unless the terms of a statute expressly so provide or necessarily require it, retrospective operation should not be given to a statute so as to take away or impair an existing right or create a new obligation or impose a new liability otherwise than as regards matters of procedure. The general rule as stated by Halsbury in Vol. 36 of the Laws of England (3rd Edn.) and reiterated in several decisions of this Court as well as English courts is that all statutes other than those which are merely declaratory or which relate only to matters of procedure or of evidence are prima facie prospectively and retrospective operation should not be given to a statute so as to affect, alter or destroy an existing right or create a new liability or obligation unless that effect cannot be avoided without doing violence to the language of the enactment. If the enactment is expressed in language which is fairly capable of either interpretation, it ought to be construed as prospective only.”
In CIT v. Scindia Steam Navigation Co. Ltd [19611 42 ITR 589, it was held that as the liability to pay tax is computed according to the law in force at the beginning of the assessment year, i.e., the first day of April, any change in law upsetting the position and imposing tax liability after that date, even if made during the currency of the assessment year, unless specifically made retrospective, does not apply to the assessment for that year. These principles were reiterated in CIT v. Vatika Township (P.) Ltd [20141 49 taxmann.com 249/227 Taxman 121/367 ITR 466 (SC)”
7.4 In the present case, last date of issuing Notice u/s.148 (before 01.07.2012-the date of amendment in section 149) was 31.03.2007. Therefore, Assessment for AY 2000-01 had attained finality on 31.03.2007 and respectfully following the ratio of Hon’ble jurisdictional High Court, it is held that on 29.03.2017 (date of issuing notice u/s. 148), the AO had no power to assume jurisdiction u/s 147. As a consequence, impugned assessment order is quashed.”
8. The CIT(A) thus concluded that the assessment for Assessment Year 2000-01 in the case of Anand Pershad Jaiswal has attained finality on 31.03.2007 and thus could not have been reopened thereafter with reference to subsequent amendment in law brought out in Section 149 by Finance Act, 2012 applicable w.e.f. 01.07.2012 whereby the time limit for reopening the assessee was extended to 16 years. For doing so, the CIT(A) relied upon the judgment of Hon’ble High Court in the case of Brahm Datt vs. ACIT (2018) 100 com 324 (Del). The CIT(A) did not enter into the merits of the case having regard to the jurisdictional defect as noted above. The other captioned appeals were also adjudicated in favour of the Assessee for similar reasons.
9. Aggrieved by the relief granted by the CIT(A), the Revenue preferred captioned appeals before the Tribunal.
10. The Ld. Departmental Representative broadly supported the stance of the Assessing officer and contended that in view of Explanation inserted to S. 149 of the Act, the extended time limit provided by clause (c) inserted by Finance Act 2012 would automatically apply where income in relation to assets located outside India is found to be escaped regardless of other imputations. The DR thus contends that the Ld. CIT(A) has lost sight of Explanation inserted to S. 149 to meet such eventualities. It was thus submitted that the appellate order of the CIT(A) is proceeded on misconstruction of limitation period provided under S. 149 and hence requires to set aside and cancelled and the action of AO requires to be restored.
11. Before the Tribunal, the Ld. Counsel reiterated the oral and written submissions made before the CIT(A) and asserted that at the time of issue of notice under Section 148 upon the assessee, the time limit available to reopen the assessment was only 6 years( from the end of relevant assessment year AY 2000-01) under S. 149(1)(b) of the Act which stood expired as per the bar of limitation existing as per extant law of S. 149 of the Act. At the time of issuance, the notice under 148 dated 29/03/2017 for AY 2000-01 was thus clearly barred by limitation way beyond the limitation stipulated under Section 149 of the Act in terms of old provisions of law and consequently the subsequent insertion of clause (c) to S. 149(1) by Finance Act, 2012 w.e.f. 1-7-2012 seeking to extend time limit to 16 years to assess income in relation any assets located outside India would not apply in the instant case. It was submitted that the time limit extended by clause (c) to S. 149(1) would apply only to a situation where the limitation period was subsisting and had not expired at the time of amendment brought by Finance Act, 2012. In essence, The assessee contends that the amendments carried out to extend time limit to reopen the assessment would not apply to reinstate the jurisdiction where it already stood expired before amendment. To support such proposition, the Assessee relied upon the judgment rendered by the jurisdictional High Court in the case of Brahm Datt vs. ACIT (2018) 100 taxmann.com 324 (Delhi). It was thus contended that in the light of law interpreted by the Hon’ble Delhi High Court, the very foundation for framing the re-assessment by issuing belated notice under S. 148 is shaken to its root. The Ld. Counsel thus contends that as a sequel to nonest notice under S. 148, the reassessment order framed is without valid jurisdiction and thus a nullity in law. The Ld. Counsel thus submits that the action of the CIT(A) is in consonance with the view expressed by Hon’ble Delhi High Court and thus does not call for any interference.
12. We have heard the parties in length and perused the assessment order and the first appellate order.
13. It is the case of the Revenue that the Assessing Officer is entitled to assume jurisdiction under S. 147 r.w.s 148 in terms of notice under S. 148 dated 29/3/2017 in Anand Pershad Jaiswal [and similar notice issued in March 2017 in case of other assessee] in view of the amendment carried out in S. 149 by the Finance Act, 2012 w.e.f. 01.07.2012 which has the effect of bringing new limitation period of 16 years into force where the escapement of income relates to assets situated outside India. Hence, the notice issued dated 29.03.2017 and other notices issued about the same time in case of other assessees under Section 148 to reopen the assessment for Assessment Year 2000-01; 2002-03 etc. is within the limitation period qua 16 year limitation period and thus enforceable in law.
12. The assessee, on the other hand, submits that at the time of amendment to Section 149 seeking to increase limitation period from 6 years to 16 years, the limitation period for Assessment Year 2000-01 in question had already expired under erstwhile law [which provided for issue of notice under S. 148 for reassessment within 6 years from the end of relevant assessment year] and therefore the amendment carried out in Section 149 does not have the effect on the assessment which already stood concluded and already time barred at the time of extension of limitation coming into force
13. As stated on behalf of the Assessee, the limitation period for Assessment Years 2000-01, 2001-02 and 2002-03 expired on 31.03.2007, 31.03.2008 and 31.03.2009 respectively in terms of old provisions of S. 149 of the Act. Thus, as contended, at the time of amendment seeking to expand the time limit for reopening the assessment, the assessment for these years were already time barred and limitation in such eventualities could not be revived by the subsequent amendment. The consequent re-assessment orders on the basis of time barred notices under S. 148 are thus outside the sanction of law and a nullity at the threshold.
14. Contextually, in the similar factual matrix, the Hon’ble Delhi High Court in the case of Brahm Datt (supra) has an occasion to deal with the identical controversy. In that case, the Assessee, non resident, was found to have settled certain amount in a trust in foreign country relevant to AY 1998-99. The Hon’ble High Court endorsed the plea of the assessee that assessment for subject assessment year could not have been reopened beyond 31-03-2005 in terms of provisions of Section 149 as applicable at relevant time. It was held therein that subsequent amendment to section 149, by Finance Act, 2012 which extended limitation for initiation of reassessment proceedings to sixteen years could not be resorted for reopening concluded proceedings in respect of which limitation had already expired/ lapsed before the amendment became effective. It was thus held that impugned reassessment notice and all consequent proceedings were without authority of law and a nullity and hence liable to be quashed and set aside.
15. Similarly, the Hon’ble Delhi High Court in CIT vs. Pushpak Enterprises 254 ITR 193(Del.) (2002) has also echoed the same view earlier. It was held that the case cannot be reopened as per amended provision when it is otherwise time barred as per old provision prevailing for the relevant assessment year prior to amendment. In that case, it was observed that the provisions of S. 147 and S. 149 stood amended from 1-4-1989. Accordingly, the old provisions which were on the statute book prior to 1-4-1989 should be applicable to the case of the assessee involving assessment years 1981-1982 & 1982-83 and not the amended provisions.
16. Hon’ble Supreme Court in case of S.S. Gadgil vs. Lal & Co. (1964) 53 ITR 231(SC) held that amended provisions will not reinstate the jurisdiction to reassess the return which is otherwise time-barred as per existing provisions for the relevant assessment year.
17. On a conspectus of judicial pronouncements and on reading of statute, it thus transpires that amended law seeking to extend the time limit to cover the case for reopening, would not apply unless the time limit for reopening the assessment year survived and not ended at the time of amendment becoming operative.
18. In the light of the judicial view taken by the Hon’ble Delhi High Court, the action of the CIT(A) cannot be faulted. We thus concur with the view taken by the CIT(A) that the notice issued under Section 149 is time barred and thus could not have been acted upon. Consequently, the impugned re-assessment order passed in consequence of the illegal notice under Section 148 is a nullity and bad in law. We thus decline to interfere with the order of CIT(A)
19. In the result, the appeal of the Revenue is dismissed.
20. The facts and issue are common therefore, the ratio of the decision in the case of Anand Pershad Jaiswal in ITA No.4824/Mum/2019 shall apply mutatis mutandis in the other two captioned appeals.
21. In the result, the appeals of the Revenue in ITA No.4826/Del/2019 for Assessment Year 2000-01 and ITA 561/Del/2022 for Assessment Year 2002-03 are dismissed.
22. In the combined result, all the captioned appeals of the Revenue are dismissed.
Order was pronounced in the open Court on 27/12/2022.
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