Format of Reply on Letter Issued by AO Pursuant to SC Order in Union of India Vs Ashish Agarwal (Supreme Court of India) in respect of Section 148 Notice under Income Tax Act, 1961
To,
The __________________,
Circle/ Ward_____________
Sir,
Sub.: Your Letter bearing DIN & Notice No. _____________ dated _______
Name of the Assessee: _____________
Asst Year: ____________
PAN: _______________
We are in receipt of your above mentioned letter dated _____________ in respect of consequential reassessment proceeding arising out of Supreme Court Judgment dated 04.05.2022
Further, your honor has kind enough to provide us material vide your email reply dated _______________.
We now submit our response as below:
BARRED BY TIME LIMITATION
1. Honorable Apex Court, in it’s judgment, in Para 10(iv) says as under: All defenses which may be available to the assesses including those available under section 149 of the IT Act and all rights and contentions which may be available to the concerned assessee and Revenue under the Finance Act, 2021 and in law shall continue to be available.
First proviso to the amended section 149 of the Act says that –
“no notice u/s 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April 2021, if such notice could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause (b) of sub-section (1) of this section, as they stood immediately before the commencement of the Finance Act, 2021”.
As per the un-amended provisions of section 149 of the Act, the time barring date to issue the notice u/s 148 of the Act for the AY 2015-16 was 31st March 2022, thereafter no notice could have been issued as the amended proviso to section 149 of the Act clarifies the position of the law that no notice can be issued after 1st April 2021, if it could not be issued as per the provisions stood immediately before the commencement of the Finance Act, 2021.
2. Attention is drawn to the CBDT instruction no. 225/135/2021 dated 10th December 2021, which dwells into the aspect of what constitutes the information for the purposes of formulating the Risk Management System for the issue of notice under the amended section 148 of the Act. The instruction categorically directs the AO to identify the cases pertaining from AY 2015-16 to AY 2018-19 which fall within the ambit of RMS as mentioned therein. Therefore, it can be inferred that the CBDT itself never intended to reopen the cases prior to AY 2015-16.
INCORRECT ASSUMPTION OF JURISDICTION
3. The CBDT has vide notification no. 18/2022 dated 29th March 2022 notified the faceless reassessment scheme with effect from 29th March 2022. On perusal of the scope of the faceless reassessment scheme, it is safely concluded that from 29th March 2022, the show-cause notice u/s 148A(b) should have been issued only by the National Faceless Assessment Centre (“NFAC”) and not by the Jurisdictional Assessing Officer (“JAO”). Therefore, show cause notice issued by any authority other than NFAC is liable to be quashed. Reliance is placed on the Ahmedabad Tribunal in the case of ACIT vs. Resham Petrotech Ltd (2021) (21 taxmann.com 161) wherein it has been held that notice u/s 148 of the Act can be issued only by the AO having jurisdiction over the Assessee. Notice issued by any other officer will be invalid and vitiate the entire proceedings. Post 29.03.2022, the jurisdiction would lie with NFAC, and hence the issuance of show cause notice by NFAC is a mandatory requirement. And in the absence of the same, the entire proceeding becomes void ab initio.
4. That, section 149(1)(b) of the Income Tax Act as amended vide Finance Act 2021, further state that no notice could be issued after three years from the relevant assessment year unless the AO has in his possession i) books of account or ii) other documents or iii) evidence which reveal that the income chargeable to tax, represented in the form of asset which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more for that year.
Meaning thereby, if in a given case, there is escaped income exceeding Rs. 50 Lakhs but if it is not represented by any assets, no reopening could be made for the same.
In our case, Unsecured Loan/ Share Capital of ____________ was taken during the financial year 2014-15 relevant to assessment year 2015-16, out of which a sum of Rs.___________ was repaid in the said year itself leaving a balance of Rs.____________ in the year end. Thus, representation in the form of asset was Rs.__________ only.
Your honour is further requested to please state as to whether your honour is in possession of
i) Books of account or
ii) Other documents or
iii) Evidence which reveal that the income chargeable to tax has escaped assessment, if so, please provide me copies of such relied upon books/ documents/ evidences so as to enable me rebut effectively.
5. That, the above are the condition precedents and jurisdictional ingredients existence of which are sine qua non for acquiring jurisdiction u/s 147. It is settled law that non fulfillment of jurisdictional requirements are fatal and bad in law.
6. That, para 7.1 of CBDT Instruction No.01/2022 dated 11.05.2022 says: Hon’ble Supreme Court has directed that information and material is required to be provided in all cases within 30 days. However, it has also been noticed that notices cannot be issued in a case for AY 2013-14, AY 2014-15 and AY 2015-16, if the income escaping assessment, in that case for that year, amounts to or is likely to amount to less than fifty lakh rupees.
SEEKING FURTHER INFORMATION
7. Please state as to whether the information, as supplied by your good office vide your email dated ___________, has been cropped up in Insight Portal in accordance with the Risk Management Strategy formulated by the Board.
8. On our specific request, your honor has kind enough to provide us material. Kindly provide us materials gathered on conducting preliminary enquiries, if any, after obtaining information from _________, which propelled your honor to form a ‘reason to belief’.
SUBMISSION OF EVIDENCE
9. That, copies of our Bank Statements and Loan Confirmations as obtained from the loan givers, are attached herewith.
NATURAL JUSTICE
10. Please provide us opportunity of cross examination of the person(s) who may have given the adverse depositions against us and referred to in your above-mentioned letter.
11. Please provide us a week’s time to reply on plausible ground as this time would be added in limitation for passing order under 148A(d) and there would not be any prejudice to AO.
PRAYER
a) In view of the forgoing submissions, it is humbly prays to drop the proceedings so initiated in its entirety with consequential relief to the assessee.
b) We wish to be heard in person or through my legal representative before the show cause notice is finally adjudicated or an adverse decision is contemplated.
c) We further request your honor to kindly provide me an opportunity to cross examine the parties on whose documents your honor has relied upon.
The assessee craves leave to add, alter, amend and/ or modify the grounds taken herein.
Thanking you,
Yours faithfully,
For ____________________
( ____________________ )
Place: ____________
Date: __________
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