Ajay Bhandari Vs Union of India (Allahabad High Court)
Reassessment — Reopening of assessment — Reopening notice issued under unammended provisions — Reliefs sought in petition is to quash impugned notice u/s 148 — Held, as per Clauses 6.2 and 7.1 of Board’s Circular dated 11.05.2022, if a case does not fall under Clause (b) of sub-Section (i) of Section 149 for Assessment Years 2013-14, 2014-15 and 2015-16 (where income of an assessee escaping assessment to tax is less than Rs.50,00,000/-) and notice has not been issued within limitation under unamended provisions of Section 149, then proceedings under amended provisions cannot be initiated — For all reasons aforestated, impugned notice under Section 148 issued on 01.04.2021 for Assessment Year 2014-15 and impugned notice dated 13.01.2022 under Section 144 and reassessment order dated 13.01.2022 under Section 147 read with Section 144B passed by respondent No.4 are hereby quashed — Assessee’s petition allowed.
As per Clause-7.1 of the CBDT Instruction No. 01/2022 dated 11.05.2022, the notices under Section 148 relating to the Assessment Years 2013-14, 2014-15 and 2015-16, shall not attract the judgment of Hon’ble Supreme Court in the case of Ashish Agarwal and the impugned notice under Section 148 issued on 01.04.2021 for the Assessment Year 2014-15 is, therefore, clearly barred by limitation and consequently without jurisdiction. Therefore, in view of the admission made by the learned Additional Solicitor General on behalf of the respondents, we do not propose to deal with the other arguments of learned counsel for the petitioner as noted in paragraph-6 above and thus all other questions including the question of conferment of jurisdiction etc., are left open.
As per Clauses 6.2 and 7.1 of CBDT Instruction No. 01/2022 dated 11.05.2022, if a case does not fall under Clause (b) of sub-Section (i) of Section 149 of the Act, 1961 for the Assessment Years 2013-14, 2014-15 and 2015-16 (where the income of an assessee escaping assessment to tax is less than Rs.50,00,000/-) and notice has not been issued within limitation under the unamended provisions of Section 149, then proceedings under the amended provisions cannot be initiated.
For all the reasons aforestated, the impugned notice under Section 148 of the Act, 1961 issued on 01.04.2021 for the Assessment Year 2014-15 and the impugned notice dated 13.01.2022 under Section 144 of the Act, 1961 and the reassessment order dated 13.01.2022 under Section 147 read with Section 144B of the Act, 1961 for the Assessment Year 2014-15 passed by the respondent No.4 are hereby quashed. The writ petition is allowed.
FULL TEXT OF THE JUDGMENT/ORDER OFALLAHABAD HIGH COURT
1. Heard Shri Ankur Agarwal, learned counsel for the petitioner, Shri S.P. Singh, learned Additional Solicitor General of India assisted by Shri Krishna Agarwal, learned Senior Standing Counsel for the respondent/Income Tax Department and Shri Anant Kumar Tiwari, learned Central Government Standing Counsel.
2. With the consent of the learned counsel for the parties, this writ petition is being finally heard without calling for a counter affidavit inasmuch as no disputed question of fact is involved in the writ petition. The reliefs sought in the writ petition are reproduced below:
“(i) Issue a Writ, Order or Direction in the nature of Certiorari quashing the impugned notice u/s 148 of the Act, dated 31.03.2021, received by the Petitioner on 01.04.2021, issued by Respondent-No.3, for A.Y. 2014-15. (Annexure No. 2)
(ii) Issue a Writ, Order or Direction in the nature of Certiorari quashing the notice u/s 144 of the Act, dated 13.01.2022, issued by Respondent No.4, for A.Y. 2014-15 to the Petitioner. (Annexure No. 4)
(iii) Issues a Writ, Order or Direction in the nature of prohibition restraining the respondents from completing the reassessment proceeding under 148 of the Act against the Petitioner.
(iv) Issue any other writ order or direction which this Hon’ble Court may deem fit and proper in the Circumstances of the case.
(v) Award the costs of the petition to the petitioner.
(vi) Issue a writ order or direction in the nature of certiorari quashing the impugned order u/s 147 read with Section 144B of the Act against the petitioner dated 31.03.2022 passed by National Faceless Assessment Centre, Delhi Respondent No. 4 (Annexure No. 13)”
3. It has been admitted by the learned counsel for the parties before us that the impugned notice under Section 148 of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act, 1961’) for the assessment year 2014-15 was issued by the respondent no. 3 to the petitioner on 1.4.2021. The “reasons to believe” recorded by the respondent no. 3 for issuing the impugned notice, is as under:
“I have reason to believe that an income to the tune of Rs. 2,63,324/- has escaped assessment for the aforesaid year”.
4. The re-assessment order dated 31.3.2022 has been passed by the respondent no. 4 i.e. National Faceless Assessment Centre, Delhi under Section 147 read with 144B of the Act, 1961.
5. Shri S.P. Singh, learned Additional Solicitor General of India has placed before us a copy of the two Judges Bench judgement of Hon’ble Supreme Court under Article 142 of the Constitution of India in Civil Appeal No. 3005 of 2022 (Union of India and others Vs. Ashish Agarwal) decided on 4.5.2022 and reported in 2022 SCC OnLine SC 543 and submits that the notices issued after 1.4.2021 under Section 148 of the Act, 1961 are liable to be treated as notices under Section 148A of the Act, 1961 as substituted by the Finance Act, 2021. He draws out attention to paragraph 27 of the aforesaid judgement. He placed before us copy of Instruction being F.No 279/Misc./M-51/2022-ITJ, Ministry of Finance, Department of Revenue, Central Board of Direct Taxes, ITJ Section dated 11.5.2022, invited our attention to paragraph 7.1 of the aforesaid Instruction and stated that the notices under Section 148 relating to assessment years 2013-14, 2014-15 and 2015-16 shall not attract the judgement of Hon’ble Supreme Court in the case of Ashish Agarwal (supra). Lastly, Shri S.P. Singh submits that since the notice has been issued on 1.4.2021 for the assessment year 2014-15, therefore, it shall be covered by a Division Bench’s judgement of this Court in the case of Daujee Abhushan Bhandar Pvt. Ltd. Vs. Union of India and 2 others (Writ Tax No. 78 of 2022) decided on 10.3.2022.
6. Learned counsel for the petitioner draws our attention to paragraphs 23 and 25 of the judgement of the Hon’ble Supreme Court in the case of Ashish Agarwal (supra) and submits that the impugned notice under Section 148 of the Act, 1961 issued by the respondent no. 3 is wholly without jurisdiction inasmuch as jurisdiction cannot be assumed after expiry of the period of limitation. He further submits that conferment of jurisdiction is essentially an act of legislature and the jurisdiction cannot be conferred by any circular or even by orders of Court. He submits that even under the amended provisions, which has no application on facts of the present case, impugned notice under Section 148 of the Act, 1961 would be without jurisdiction and barred by limitation inasmuch as for the assessment year 2014-15, the limitation under the amended provisions of Section 148A and 149 of the Act, 1961 had expired on 31.3.2018 inasmuch as the allegation of evaded income is Rs. 2,63,324/-which has been provided to be read as Rs. 26,33,324/- by notice dated 17.3.2022 under Section 142(1) of the Act, 1961, which is much below Rs. 50 Lacs.
7. We have carefully considered the submissions of the learned counsels for the parties and perused the record of the writ petition, the judgment of Hon’ble Supreme Court in the case of Ashish Agarwal (supra) and Circular F.No 279/Misc./M-51/2022-ITJ, dated 11.05.2022 issued by the Ministry of Finance, Department of Revenue, Central Board of Direct Taxes, ITJ Section, New Delhi. Section 147 of the Act, 1961 as it existed till 31.03.2021, empowers the Assessing Officer to assess or reassess or recompute the loss or depreciation allowance or any other allowance, as the case may be, for the concerned assessment year in the case of an assessee if he has reason to believe that income chargeable to tax has escaped assessment, subject to the provisions of Sections 148 to 153. A pre-condition to initiate proceedings under Section 147 is the issuance of notice under Section 148. Thus, notice under Section 148 is jurisdictional notice. Section 149 provides time limit for issuance of notice under Section 148. The time limit is provided under the unamended provisions (existed till 31.03.2021) and the amended provisions (effective from 01.04.2021) as amended by the Finance Act, 2021.
Unamended Section 149 and Amended Section 149 are reproduced below:
