Madhya Pradesh High Court
Nasir Ali vs Income Tax Officer on 27 April, 2023
Author: Sheel Nagu
1
IN THE HIGH COURT OF MADHYA PRADESH
AT JABALPUR
WP No. 6738 of 2023
(NASIR ALI Vs INCOME TAX OFFICER AND OTHERS)
Dated : 27-04-2023
Shri Sapan Usretha, learned counsel for petitioner.
Shri Siddarth Sharma, learned counsel for respondents.
Since an advanced copy has already been served upon Shri Siddharth
Sharma, Junior Standing Counsel for the Income Tax Department, who is
appearing virtually, the need to issue notice gets obviated.
2. The challenge herein is to a notice under Section 148 in regard to
assessment year 2014-15 issued pursuant to the directives of the Apex court in
the case of Union of India Vs. Ashish Agrawal in Civil Appeal No.3005/2022
dated 4th May 2022. It is submitted that while resolving the controversy
stemming from the amendment caused to various provisions of the Income
Tax Department including Section 148 w.e.f. 01-04-2021, the Apex Court held
thus:
"28. In view of the above and for the reasons stated above, the
present appeals are allowed in part. The impugned common
judgments and orders [Ashok Kumar Agarwal v. Union of India,
2021 SCC OnLine All 799] passed by the High Court of
Judicature at Allahabad in WT No. 524 of 2021 and other allied
tax appeals/petitions, is/are hereby modified and substituted as
under:
28.1. The impugned Section 148 notices issued to the respective
assessees which were issued under unamended Section 148 of
the IT Act, which were the subject-matter of writ petitions before
the various respective High Courts shall be deemed to have been
issued under Section 148-A of the IT Act as substituted by the
Finance Act, 2021 and construed or treated to be show-cause
notices in terms of Section 148-A(b). The assessing officer shall,
within thirty days from today provide to the respective assessees
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information and material relied upon by the Revenue, so that the
assessees can reply to the show-cause notices within two weeks
thereafter.
28.2. The requirement of conducting any enquiry, if required,
with the prior approval of specified authority under Section 148-
A(a) is hereby dispensed with as a one-time measure vis-Ã -
vis those notices which have been issued under Section 148 of the
unamended Act from 1-4-2021 till date, including those which
have been quashed by the High Courts.
28.3. Even otherwise as observed hereinabove holding any
enquiry with the prior approval of specified authority is not
mandatory but it is for the assessing officers concerned to hold
any enquiry, if required.
28.4. The assessing officers shall thereafter pass orders in terms
of Section 148-A(d) in respect of each of the assessees concerned;
Thereafter after following the procedure as required under
Section 148-A may issue notice under Section 148 (as
substituted).
28.5. All defences which may be available to the assessees
including those available under Section 149 of the IT Act and all
rights and contentions which may be available to the assessees
concerned and Revenue under the Finance Act, 2021 and in law
shall continue to be available.
29. The present order shall be applicable PAN INDIA and all
judgments and orders passed by the different High Courts on the
issue and under which similar notices which were issued after 1-
4-2021 issued under Section 148 of the Act are set aside and
shall be governed by the present order and shall stand modified
to the aforesaid extent. The present order is passed in exercise of
powers under Article 142 of the Constitution of India so as to
avoid any further appeals by the Revenue on the very issue by
challenging similar judgments and orders, with a view not to
burden this Court with approximately 9000 appeals. We also
observe that the present order shall also govern the pending writ
petitions, pending before various the High Courts in which
similar notices under Section 148 of the Act issued after 1-4-
2021 are under challenge.
30. The impugned common judgments and orders [Ashok Kumar
Agarwal v. Union of India, 2021 SCC OnLine All 799] passed
by the High Court of Allahabad and the similar judgments and
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orders passed by various High Courts, more particularly, the
respective judgments and orders passed by the various High
Courts particulars of which are mentioned hereinabove, shall
stand modified/substituted to the aforesaid extent only.
31. All these appeals are accordingly partly allowed to the
aforesaid extent. In the facts of the case, there shall be no order
as to costs."
3. The learned counsel for the petitioner herein submits that the Apex
Court has clearly held that all defences available under amended Section 149
shall be available to be availed by the assessee. The amended Section 149 reads
thus:
"149. (1) No notice under section-148 shall be issued
for the relevant assessment year,-
(a) if three years have elapsed from the end of the
relevant assessment year, unless the case falls under clause
(b);
(b) if three years, but not more than ten years, have
elapsed from the end of the relevant assessment year unless
the Assessing Officer has in his possession books of account or
other documents or 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:
Provided that no notice under section-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
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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:
Provided further that the provisions of this sub-section
shall not apply in a case, where a notice under section-153A,
or section-153C read with section-153A, is required to be
issued in relation to a search initiated under section-132 or
books of account, other documents or any assets requisitioned
under section-132A, on or before the 31st day of March,
2021:
Provided also that for the purposes of computing the
period of limitation as per this section, the time or extended
time allowed to the assessee, as per show-cause notice issued
under clause (b) of section-148A or the period during which
the proceeding under section-148A is stayed by an order or
injunction of any court, shall be excluded:
Provided also that where immediately after the
exclusion of the period referred to in the immediately
preceding proviso, the period of limitation available to the
Assessing Officer for passing an order under clause (d) of
section-148A is less than seven days, such remaining period
shall be extended to seven days and the period of limitation
under this sub-section shall be deemed to be extended
accordingly.
Explanation.-For the purposes of clause (b) of this sub-
section, "asset" shall include immovable property, being land
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or building or both, shares and securities, loans and
advances, deposits in bank account.(2) The provisions of sub-
section (1) as to the issue of notice shall be subject to the
provisions of section-151.]
4. The limitation prescribed for issuance of notice under amended
Section 149(1)(b) is a maximum period of 10 years. However, Section 149(1)
(b) is circumscribed by first proviso, which stipulates that no notice under
Section 148 shall be issued qua relevant assessment year beginning on or before
1st day of April 2021 if such notice could not have been issued under the
unamended Section 149 as it stood prior to 01-04-2021.
5 . As such, to find out as to whether the impugned notice qua
(Assessment Year 2014-15) issued under Section 148 was beyond the period
of limitation or not, one has to test the same on the anvil of unamended Section
149, which for ready reference and convenience is reproduced below :-
"149. Time-limit for notice.Â"(1) No notice under Section 148
shall be issued for the relevant assessment year-
(a) if four years have elapsed from the end of the relevant
assessment year, unless the case falls under clause (b) or clause
(c);
(b) if four years, but not more than six years, have elapsed from
the end of the relevant assessment year unless the income
chargeable to tax which has escaped assessment amounts to or is
likely to amount to one lakh rupees or more for that year;
(c) if four years, but not more than sixteen years, have elapsed
from the end of the relevant assessment year unless the income in
relation to any asset (including financial interest in any entity)
located outside India, chargeable to tax, has escaped assessment.
Explanation.Â"In determining income chargeable to tax which
has escaped assessment for the purposes of this sub-section, the
provisions of Explanation 2 of Section 147 shall apply as they
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apply for the purposes of that section.
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(2) The provisions of sub-section (1) as to the issue of notice shall
be subject to the provisions of Section 151.
(3) If the person on whom a notice under Section 148 is to be
served is a person treated as the agent of a non-resident under
Section 163 and the assessment, reassessment or recomputation
to be made in pursuance of the notice is to be made on him as
the agent of such non-resident, the notice shall not be issued after
the expiry of a period of six years from the end of the relevant
assessment year.
Explanation.--For the removal of doubts, it is hereby clarified
that the provisions of sub-sections (1) and (3), as amended by
the Finance Act, 2012, shall also be applicable for any
assessment year beginning on or before the 1st day of April,
2012."
(emphasis supplied)
6. A bare reading of aforesaid unamended Section 149, prevailing prior
to 01/04/2021 reveals that the maximum period of limitation prescribed for
reopening of assessment of income which escaped assessment was 6 years.
7. In the instant case, the assessment year pertaining to which the
assessment is being reopened, is 2014-15 by issuance of impugned notice
under Section 148 on 15/07/2022, which prima facie appears to be beyond the
limitation period of 6 years prescribed under unamended Section 149.
8. Per contra, Shri Sharma, learned counsel appearing for the Income
Tax Department has drawn the attention of this Court to the CBDT instruction
1/2022 dated 11/05/2022 (Annexure P/9), in particular clause 6.1, which is
extracted below:
"Hon'ble Supreme Court has upheld the views of High Courts
that the benefit of new law shall be made available even in
respect of proceedings relating to past assessment years.
Decision of Hon'ble Supreme Court read with the time
extension provided by TOLA will allow extended
reassessment notices to travel back in time to their original
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date when such notices were to be issued and then new
section 149 of the Act is to be applied at that point."
9. Submission of Shri Sharma is that while calculating the period of
limitation to find out as to whether notice u/S.148 is time barred or not, the
extension of time granted by TOLA [Taxation and Other Laws (Relaxation and
Amendment of Certain Provisions) Act, 2020] should also be taken into
account to ensure proper execution of order of Apex Court in Ashish
Agrawal (supra), especially when the Apex Court had also referred to the said
concept of TOLA.
10. True it is that the decision in the case of Ashish Agrawal (supra)
had referred to the extension granted by TOLA to the limitation period but in
the operative portion, the Apex Court has not mentioned anything about TOLA.
Therefore, prima facie the contention of learned junior standing counsel for the
Income Tax Department does not appear to be tenable.
11. As an interim measure, it is directed that impugned order dated
14.07.2022 (Annexure P/2) passed under Section 148A(d) and the
consequential notice under Section 148 dated 15.07.2022 (Annexure P/1)
under the amended Income Tax Act shall remain stayed till the next date of
hearing.
12. List in the week commencing 26/06/2023 along with W.P.
Nos.4128/2023, 4130/2023, 4142/2023, 4145/2023 and 4146/2023.
(SHEEL NAGU) (DWARKA DHISH BANSAL)
JUDGE JUDGE
RS
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Signing time: 5/1/2023
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