Gujarat High Court ruling on Section 148A: Notices issued after 01.04.2021 are time-barred. Details of the Keenara Industries Pvt Ltd Vs ITO case provided.
A group of petitions filed writ before the Hon’ble Gujarat High Court challenging the notices issued u/s 148A and 148 of the Income Tax Act, 1961 pursuant to Supreme Court Judgement in case of UOI vs Ashish Aggarwal (2022) on the issue that notice issued on or after 01.04.2021, the period concerned is between 01.04.2021 to 30.06.2021 held that relaxation will not apply.
The Hon’ble Court held that law as per the Act has to be followed and that notices issued for AY 2013-14 and 2014-15 are barred by limitation. The argument by the Revenue that the judgement of Apex court would be applicable to cases, where such notice has been challenged before the different High Courts only, were not accepted.
A group of petitioner had challenged the validity of notices issued under section 148 read with Section 148A of the Act, for AY 2014-15 and 2015-16 were barred by limitation as in view of old regime of reopening, reopening notice u/s 148 of the Act could have been issued before the expiry of six years from the end of the assessment year i.e no notice could have been issued after expiry of the period of six years from the end of the assessment year and if the period of six years from the end of the relevant assessment year expired on or before 31.03.2021, then notice u/s 148 of the Act could not have been issued under the new regime for the said assessment years.
The Hon’ble while allowing the petition held that even though CBDT issued both the notifications of 31.03.2021 and 27.04.2021, they could have no power to extend the time period under the first proviso to section 149(1) of the Act. The Notifications which are the creation of the executives, issued under section 3 of the TOLA Act, 2020 cannot override the legislation. Therefore, the CBDT’s interpretation for issuance of directions to the Assessing Officers vide instruction dated March 31, 2021, by relying on the TOLA Act is contrary to the ratio of the Apex Court. The notice under section 148 of the Act can be issued on or after 01.04.2021 only if the limitation for issuing such notice under the old regime of reopening had not expired prior to Finance Act, 2021 coming into force, which means w.e.f. 01.04.2021. As per the old regime of reopening, the reopening notice under section 148 of the Act could have been issued before the expiry of six years from the end of the relevant assessment year. In other words, no notice could have been issued after the expiry of a period of six years from the end of the relevant assessment year. In other words, if the period of six years from the end of the relevant assessment year expired on 31.03.2021, then notice under section 148 of the Act could not have been issued under the new regime for the said assessment year. The notices under Section 148A (by deeming fiction) were issued, between the period 01.04.2021 to 30.06.2021 (i.e. after 31.03.2021), wherein six years had elapsed from the end of the relevant assessment year and therefore they are time-barred and the petitions of Batch I for A.Y. 2013-2014 and Batch-II for A.Y.2014-2015 deserves to be allowed.
It held that in view of the fact recorded by the Hon’ble Supreme Court that about 90,000 reassessment notices were issued after 01.04.2021, which were the subject matter of more than 9,000 petitions/ appeals and further permitting the revenue to deal with about 90,000 notices, with clear directions to make the said decision applicable to PAN India, the submissions of petitioners that the decision in the case of UOI v. Ashish Agarwal (2022) 444 ITR 1/ 213 DTR 217/ 326 CTR 473/ 286 Taxman / AIR 2022 SC 2781 (SC) would be applicable to the cases, where such notices have been challenged before different High Courts are not acceptable.
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