Delhi High Court
Atma Ram Singhania vs Assistant Commissioner Of Income Tax … on 20 September, 2024
Author: Yashwant Varma
Bench: Yashwant Varma
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment reserved on: 11 September 2024
Judgment pronounced on: 20 September 2024
+ W.P.(C) 2698/2022
ABHINAV JINDAL HUF .....Petitioner
Through: Mr. Kapil Goel & Mr. Sandeep
Goel, Advs.
versus
INCOME TAX OFFICER WARD 54 (1)
DELHI AND ORS. .....Respondents
Through: Mr. Sanjay Kumar & Ms. Easha,
Advs.
+ W.P.(C) 3151/2022
NANDITA SIKKA .....Petitioner
Through: Mr. Kapil Goel & Mr. Sandeep
Goel, Advs.
versus
INCOME TAX OFFICER WARD 23 (3)
DELHI AND ORS .....Respondents
Through: Mr. Aseem Chawla, SSC with
Ms. Pratishtha Chaudhary, Ms.
Nivedita & Ms. Nancy Jain,
Advs.
+ W.P.(C) 3344/2022
ATMA RAM SINGHANIA .....Petitioner
Through: Mr. Kapil Goel & Mr. Sandeep
Goel, Advs.
versus
ASSISTANT COMMISSIONER OF INCOME
TAX CIRCLE 22 (2) DELHI AND ORS .....Respondents
Signature Not Verified
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By:KAMLESH KUMAR
Signing Date:20.09.2024
18:12:06
Through: Mr. Puneet Rai, SSC with Mr.
Ashvini Kumar & Mr. Rishabh
Nangia, JSCs.
+ W.P.(C) 4676/2022
OMNIPRESENT CREDITS PRIVATE LIMITED .....Petitioner
Through: Mr. Salil Kapoor, Ms. Ananya
Kapoor, Mr. Sumit Lalchandani
& Mr. Tarun Chanana, Advs.
versus
INCOME TAX OFFICER-WARD
19-1 & ANR. .....Respondents
Through: Mr. Puneet Rai, SSC with Mr.
Ashvini Kumar & Mr. Rishabh
Nangia, JSCs.
+ W.P.(C) 4725/2022
SABHARWAL APARTMENTS PRIVATE
LIMITED .....Petitioner
Through: Mr. Salil Kapoor, Ms. Ananya
Kapoor, Mr. Sumit Lalchandani
& Mr. Tarun Chanana, Advs.
versus
ASSISTANT COMMISSIONER OF INCOME
TAX, CIRCLE 22-2, DELHI AND ANR. .....Respondents
Through: Mr. Aseem Chawla, SSC with
Ms. Pratishtha Chaudhary, Ms.
Nivedita & Ms. Nancy Jain,
Advs.
+ W.P.(C) 6225/2022
PRASHANT SOFTWARES PVT. LTD .....Petitioner
Through: Mr. Priyadarshi Manish, Ms.
Anjali Jha Manish, Ms. Muskan
Signature Not Verified
Digitally Signed
W.P.(C) 2698/2022 & Connected Matters Page 2 of 36
By:KAMLESH KUMAR
Signing Date:20.09.2024
18:12:06
Saxena & Mr. Ankur Singh,
Advs.
versus
ADDITIONAL / JOINT / DEPUTY / ASSISTANT
COMMISSIONER OF INCOME TAX & ANR. ....Respondents
Through: Mr. Puneet Rai, SSC with Mr.
Ashvini Kumar & Mr. Rishabh
Nangia, JSCs.
CORAM:
HON'BLE MR. JUSTICE YASHWANT VARMA
HON'BLE MR. JUSTICE RAVINDER DUDEJA
JUDGMENT
YASHWANT VARMA, J.
1. This batch of writ petitions assails the validity of the
reassessment action initiated by the respondents under Section 148 of
the Income Tax Act, 19611 and pertaining to Assessment Year2 2015-
16. The solitary ground on which those reassessments were assailed
before us was a violation of the provisions contained in Section 151 of
the Act.
2. It is the case of the writ petitioners that the sanction for initiation
of reassessment action rests on an approval granted by the Joint
Commissioner of Income Tax3 as opposed to the Principal Chief
Commissioner /Chief Commissioner/ Principal Commissioner/
Commissioner as mandated by Section 151(1) of the Act. It is
contended that since all the impugned Section 148 notices have come to
be issued after the expiry of a period of four years from the concerned
1 Act
2 AY
3 JCIT
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AY, they were liable to be mandatorily approved by the Principal Chief
Commissioner or the other authorities specified in sub-section (1) of
Section 151.
3. According to the writ petitioners, the impugned notices would
not sustain even if they were tested on the basis of Section 151 as it
came to exist on the statute book after Finance Act 2021. It becomes
pertinent to note that after the passing of the Finance Act 2021, Sections
148 and 148A introduced the concept of “specified authority” as the
designated officer which would be liable to accord sanction for
reassessment and which expression was defined by Section 151. In
terms of Section 151(i) after the passing of the Finance Act 2021, if the
notices for reassessment were issued where “three years or less than
three years” had elapsed from the end of the relevant AY, the action
would have to be based on the approval of the Principal
Commissioner/Principal Director/Commissioner/Director. In all other
cases, and which would relate to those reassessments which were
proposed to be commenced “if more than three years” had elapsed from
the end of the concerned AY, the authorities empowered to accord
approval were specified to be the Principal Chief Commissioner/
Principal Director General/ Chief Commissioner/ Director General.
The petitioners would contend that viewed from any angle and
irrespective of whether the unamended Section 151 or the provision as
it came to form part of the statute post Finance Act 2021, the approval
of reassessment by the JCIT would not sustain.
4. The petitioners would assert that the provision for sanction which
stands engrafted in Section 151 assumes significance in light of the
statute clearly stipulating that a reassessment action would not be
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commenced unless the authorities mentioned in that provision are
satisfied that it is a fit case for issuance of notice under Section
148/148A. It is their case that in the absence of sanction being accorded
by the competent authority, the entire action for reassessment is liable
to be set at nought on this ground alone.
5. The respondents, on the other hand, bid us to uphold the
initiation of action in light of the provisions contained in the Taxation
and Other Laws (Relaxation & Amendment of Certain Provisions)
Act, 20204 and which enabled them to initiate action for reassessment
notwithstanding the time frames ordinarily applicable having expired.
To recall, TOLA had come to be promulgated to overcome the
insurmountable difficulties which beset the initiation of action and
compliance with statutory timelines on account of the COVID-19
pandemic which had broken out in March 2020 and raged across the
country. The provisions of TOLA thus provided an extended lifeline for
the issuance of notices, the grant of sanction and other statutory
compliances contemplated under the Act. It is thus submitted that since
the impugned notices, by virtue of TOLA, came to be validly issued
after the expiry of four years, the sanction was liable to be obtained in
accordance with sub-section (2) of Section 151 and consequently, the
approval accorded by the JCIT would be compliant with the statutory
scheme of that provision.
6. It is pertinent to note that Section 151, pre-Finance Act 2021,
categorized the approval liable to be accorded based upon the period
within which a reassessment action was proposed to be initiated when
4 TOLA
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computed from the end of the relevant AY. While sub-section (1)
catered to situations where a notice for reassessment was sought to be
issued after the expiry of four years from the end of the relevant AY and
thus required that action be preceded by approval being obtained from
the Principal Chief Commissioner and the other authorities specified
therein, sub-section (2) constituted the residuary clause and pertained to
cases falling within its ambit where approval was to be obtained from
the JCIT.
7. Section 151 as it stood prior to and as it existed by virtue of the
promulgation of Finance Act 2021 is extracted in a tabular form
hereinbelow:-
Income Tax Act, 1961 – As Amended Income Tax Act, 1961 – As Amended
by Finance Act 2015 by Finance Act 2021[Sanction for issue of notice. [Sanction for issue of notice.
151. (1) No notice shall be issued under 151. Specified authority for the
section 148 by an Assessing Officer, purposes of section 148 and section
after the expiry of a period of four years 148A shall be,–
from the end of the relevant assessment
year, unless the Principal Chief (i) Principal Commissioner or Principal
Commissioner or Chief Commissioner Director or Commissioner or Director,
or Principal Commissioner or if three years or less than three years
Commissioner is satisfied, on the have elapsed from the end of the
reasons recorded by the Assessing relevant assessment year;
Officer, that it is a fit case for the issue
of such notice. (ii) Principal Chief Commissioner or
Principal Director General or where
(2) In a case other than a case falling there is no Principal Chief
under subsection (1), no notice shall be Commissioner or Principal Director
issued under section 148 by an General, Chief Commissioner or
Assessing Officer, who is below the Director General, if more than three
rank of Joint Commissioner, unless the years have elapsed from the end of the
Joint Commissioner is satisfied, on the relevant assessment year. ]
reasons recorded by such Assessing
Officer, that it is a fit case for the issue
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of such notice.
(3) For the purposes of sub-section (1)
and subsection (2), the Principal Chief
Commissioner or Chief Commissioner
or the Principal Commissioner or
Commissioner or the Joint
Commissioner, as the case may be,
being satisfied on the reasons recorded
by the Assessing Officer about fitness
of a case for the issue of notice under
section 148, need not issue such notice
himself. ]
8. Subsequently, by virtue of Finance Act 2023, the phrase “where
there is no Principal Chief Commissioner or Principal Director
General” was deleted from Section 151 as it exists and a proviso had
been inserted clarifying that the period of three years for the purpose of
Section 151(i) would be computed in light of the Third, Fourth, Fifth
and Sixth Provisos to Section 149(1) of the Act. Section 151 has been
further reframed by virtue of Finance Act 2024 to define the „specified
authority‟ for sanction for issuance of notice to be the Additional
Commissioner/ Additional Director/ Joint Commissioner/ Joint
Director. However, in the present batch of writ petitions, we are
concerned with the provisions of Section 151 as it stood immediately
before and after the promulgation of Finance Act 2021.
9. For the purposes of brevity, we deem it apposite to notice the
following salient facts as they obtain in W.P.(C) 2698/2022. For AY
2015-16, the petitioner is stated to have furnished a Return of Income
on 30 October 2015. The aforesaid Return is stated to have been duly
acknowledged in terms contemplated under Section 143(1) of the Act.
Thereafter, a notice under Section 148 dated 31 March 2021 is stated to
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have been issued to the writ petitioner. The notice, it is pertinent to
note, appears to have been digitally signed on 01 April 2021, and, as
per the writ petitioner, served via email on 22 April 2021. Responding
to the aforesaid Section 148 notice, a revised Return is stated to have
been filed by the writ petitioner on 13 July 2021.
10. The petitioner is stated to have taken an objection asserting that
the notice would be invalid being barred by limitation. In addition, the
petitioner also appears to have objected to the Assessing Officer5
having failed to follow the procedure as prescribed under Section 148A
and which had come to be introduced in the Act by virtue of Finance
Act 2021 with effect from 01 April 2021. The aforesaid objections
came to be disposed of with the AO holding that the commencement of
action under the statutory regime as it existed prior to 01 April 2021
was valid and would be in accordance with Central Board of Direct
Taxes6 Circular F. No. 225/40/2021/ITA-II dated 04 March 2021.
11. While the controversy with respect to the applicability of the
changed regime of reassessment and which would govern all notices
issued after 01 April 2021 is no longer res integra and stands
conclusively settled by virtue of the decision of the Supreme Court in
Union of India vs. Ashish Agarwal7, the challenge in the present set of
writ petitions stands confined to the aspect of sanction and approval as
contemplated under Section 151 of the Act. We have, therefore, alluded
to Ashish Agarwal only for the sake of completeness.
12. The respective sides also take contrary positions with respect to
5 AO
6 CBDT
7 (2023) 1 SCC 617
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whether Section 151 in its unamended or its rescripted version would
apply. While the writ petitioners assert that since the notice was
digitally signed on and dispatched after 01 April 2021, it would be
Section 151 as it stood after the said date which would govern, the
respondents would contend that it would be the date appearing on the
notice which would be determinative.
13. However, we note that it was Section 151(2), and as that
provision existed prior to Finance Act 2021, which alone spoke of the
JCIT as the authority competent to accord approval and that too in
cases where the reassessment was being initiated within four years from
the end of the relevant AY. After 01 April 2021, Section 151 post its
amendment makes no reference to a JCIT, and both its clauses specify a
particular set of authorities who are liable to examine the aspect of
sanction dependent solely upon whether reassessment is proposed to be
initiated within or up to three years and in the alternative scenario
where it is initiated beyond that period.
14. As is manifest from a plain reading of the original notice under
Section 148 in W.P.(C) 2698/2022, the same came to be issued with the
approval of the JCIT Range-52, Delhi. Similar is the position that
emerges from a perusal of the Section 148 notices which are impugned
in the connected writ petitions with the solitary distinction being of the
JCITs‟ being authorities conferred with jurisdiction over different
ranges.
15. Leading arguments on behalf of the writ petitioners, Mr. Kapil
Goel learned counsel submitted that the challenge as raised by the writ
petitioners is liable to succeed bearing in mind the consistent position
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with respect to Section 151 which has been taken by the Bombay,
Madras and Orissa High Courts and all of which have taken the view
that the provisions of TOLA cannot be construed as having amended
the procedure for approval as contemplated under Section 151 of the
Act.
16. Mr. Goel further submitted that this aspect had also fallen for
consideration before our High Court in Twylight Infrastructure (P.)
Ltd. vs. Commissioner of Income Tax8 and where too this issue came
to be answered in favour of the assessees as under:-
“4.1. In defence of the writ petitions, the Revenue, inter alia, has
relied upon the Taxation and Other Laws (Relaxation and
Amendment of Certain Provisions) Act, 2020 (in short, “TOLA”)
and paragraphs 6.1 and 6.2(ii) of Instruction No. 1 of 2022 dated
May 11, 2022 ((2022) 444 ITR (St) 43) issued by the Central Board
of Direct Taxes (in short, “CBDT”).
xxxx xxxx xxxx
7. A careful perusal of the above extract would show that after the
amendment, section 151 has been split and the part which enjoins
that the approval of the specified authority is mandatory stands
embedded in the first proviso to section 148.
7.1. The concerned specified authorities, depending on the applicable
timeframe, are adverted to in section 151 of the Act.
8. The first proviso to section 148 and section 151, when read
conjointly, demonstrate the untenability of the submission made on
behalf of the Revenue.
xxxx xxxx xxxx
12. Clearly, the Revenue advanced the argument of interlinkage
between limitation and the ascertainment of the specified authority
due to the plain language of the amended section 151 of the Act.
Section 151, when read alongside the first proviso to section 148,
brings the aspect of inextricable linkage to the fore.
xxxx xxxx xxxx
12.1. Clauses (i) and (ii) of section 151 of the amended Act (which
has been extracted hereinabove) clearly specify the authority whose
approval can trigger the reassessment proceedings. Thus, if three (3)
years or less have elapsed from the end of the relevant assessment
year, the specified authority who would grant approval for initiation
of reassessment proceedings will be the Principal Commissioner or8 2024 SCC OnLine Del 330
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Principal Director or Commissioner or Director. However, if more
than three (3) years from the end of the relevant assessment year
have elapsed, the specified authority for according approval for the
reassessment shall be the Principal Chief Commissioner or Principal
Director General or, where there is no Principal Chief Commissioner
or Principal Director General, Chief Commissioner or Director
General.”
17. As was noticed in the introductory parts of this decision, the
respondents had, contrary to the above, argued that once a notice for
reassessment comes to be issued after the expiry of four years by virtue
of the extended period of time made available by TOLA, all the
impugned notices would fall within the ken of sub-section (2) of the
pre-amendment Section 151 and consequently the sanction and
approval accorded by the JCIT would be in accordance with law.
18. We find that a challenge on identical lines was addressed before
the Bombay High Court in J M Financial and Investments
Consultancy Services Private Limited vs. ACIT, Circle 3(2)(1) &
Ors9. While dealing with these aspects the Bombay High Court had in J
M Financial held as follows:-
“5 Respondents have relied upon a letter dated 18th March 2021
issued by one Income Tax Officer, who has given an opinion to the
Additional Commissioner of Income Tax that in view of the Taxation
and other Laws (Relaxation of Certain Provisions) Act, 2020
(Relaxation Act), limitation, inter alia, under provisions of Section
151(1) and Section 151(2), which were originally expiring on 31st
March 2020 stand extended to 31st March 2021. According to the
Income Tax Officer, in view of the above, Assessment Year 2015-
2016 which falls under the category within four years as on 31st
March 2020, the statutory approval for issuance of notice under
Section 148 of the Act for the Assessment Year 2015-2016 may be
given by the Range Head as per the said provisions. Mr. Sharma
clarifies that the Income Tax Officer is only conveying the view of
the Principal Commissioner of Income Tax because this letter has
been issued on the letterhead of Principal Commissioner of Income9 Writ Petition No. 1050 of 2022 dated 04 April 2022
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Tax.
6 Even for a moment we agree with the view expressed by the
Principal Commissioner of Income Tax, still it applies to only cases
where the limitation was expiring on 31st March 2020. In the case at
hand, the assessment year is 2015-2016 and, therefore, the six years
limitation will expire only on 31st March 2022. Certainly, therefore,
the Relaxation Act provisions may not be applicable. In any event,
the time to issue notice may have been extended but that would not
amount to amending the provisions of Section 151 of the Act.
7 In our view, since four years had expired from the end of the
relevant assessment year, as provided under Section 151(1) of the
Act, it is only the Principal Chief Commissioner or Chief
Commissioner or Principal Commissioner or Commissioner who
could have accorded the approval and not the Additional
Commissioner of Income Tax. On this ground alone, we will have to
set aside the notice dated 31st March 2021 issued under Section 148
of the Act, which is impugned in this petition. In view thereof, the
consequent orders and notices will also have to go.”
19. The decision in J M Financial came to be re-affirmed by that
High Court in Siemens Financial Services Pvt. Ltd. vs. Deputy
Commissioner of Income-Tax & Ors.10. We deem it apposite to
extract the following passages from that decision:-
“24. As per section 151 of the Act, the “specified authority” who has
to grant his sanction for the purposes of section 148 and section
148A is the Principal Chief Commissioner or Principal Director
General or where there is no Principal Chief Commissioner or
Principal Director General, the Chief Commissioner or Director
General if more than three years have elapsed from the end of the
relevant assessment year. The present petition relates to the
assessment year 2016-17, and as the impugned order and impugned
notice are issued beyond the period of three years which elapsed on
March 31, 2020 the approval as contemplated in section 151(ii) of
the Act would have to be obtained which has not been done by the
Assessing Officer. The impugned notice mentions that the prior
approval has been taken of the “Principal Commissioner of Income-
tax-8” (“PCIT-8”) which is bad in law as the approval should have
been obtained in terms of section 151(ii) and not section 151(i) of
the Act and the Principal Commissioner of Income- tax-8 cannot be
the specified authority as per section 151 of the Act. Further, even in
the affidavit-in-reply, the Department has accepted that the approval10 2023 SCC OnLine Bom 2822
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obtained is of the “Principal Commissioner of Income-tax-8” and,
hence, such an approval would be bad in law.
25. The Taxation and Other Laws (Relaxation and Amendment of
Certain Provisions) Act, enacted on September 29, 2020 and came
into force on March 31, 2020 ([2020] 428 ITR (St.) 29 ). It, inter
alia, provided for a relaxation of certain provisions of the Income-tax
Act, 1961. Where any time limit for completion or compliance of an
action such as completion of any proceedings or passing of any order
or issuance of any notice fell between the period March 20, 2020 to
December 31, 2020, the time limit for completion of such action
stood extended to March 31, 2021. Thus, the Taxation and Other
Laws (Relaxation and Amendment of Certain Provisions) Act only
seeks to extend the period of limitation and does not affect the scope
of section 151.
26. The Assessing Officer cannot rely on the provisions of the
Taxation and Other Laws (Relaxation and Amendment of Certain
Provisions) Act and the notifications issued thereunder as section
151 has been amended by the Finance Act, 2021 and the provisions
of the amended section would have to be complied with by the
Assessing Officer, with effect from April 1, 2021. Hence, the
Assessing Officer cannot seek to take the shelter of the Taxation and
Other Laws (Relaxation and Amendment of Certain Provisions) Act
as a subordinate legislation cannot override any statute enacted by
Parliament. Further, the notification extending the dates from March
31, 2021 till June 30, 2021 cannot apply once the Finance Act, 2021
is in existence. The sanction of the specified authority has to be
obtained in accordance with the law existing when the sanction is
obtained and, therefore, the sanction is required to be obtained by
applying the amended section 151(ii) of the Act and since the
sanction has been obtained in terms of section 151(i) of the Act, the
impugned order and impugned notice are bad in law and should be
quashed and set aside.”
20. Dealing with an identical controversy the Madras High Court in
Ramachandran Shivam vs. Income Tax Officer11, explained the legal
position in the following terms:-
“13. The orders and notices are challenged herein not on the ground
that the time limit under preamended section 149 does not apply, but
on the ground that sanction was not granted by the specified
authority. Therefore, it remains to be considered as to whether the
application of the proviso to section 149 has the effect of
incorporating by reference to preamended section 151. In order to11 Citation
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substantiate the contention that preamended section 151 gets
incorporated by reference, learned standing counsel relied on sub-
section (2) to the preamended section 149. It should be noticed that
the proviso to sub-section (1) of the amended section 149 does not
even incorporate the whole of preamended section 149. It merely
makes the time limit prescribed therein applicable to the issuance of
notices for reassessment in respect of any assessment year beginning
before April 1, 2021. A fortiori the proviso certainly does not
incorporate preamended section 151 by reference and make it
applicable.
14. The next question to be examined is the impact of the Taxation
and Other Laws (Relaxation and Amendment of Certain Provisions)
Act, 2020. Undoubtedly, the Taxation and Other Laws (Relaxation
and Amendment of Certain Provisions) Act, 2020 extended the time
limits under specified enactments, including the Income-tax Act. As
per clause (a)(ii) of sub-section(1) of section 3 thereof, time limits
for grant of sanction or approval were also extended. Since the
petitioner does not challenge the sanction with respect to the time
limit, clause (a) of sub-section (1) of section 3 is immaterial. Indeed,
the Taxation and Other Laws (Relaxation and Amendment of Certain
Provisions) Act, 2020, which extends the time limits for completion
of specified tasks up to March 31, 2021, itself becomes irrelevant
because of the nature of the challenge in these writ petitions.
15. In Siemens Financial Services [Siemens Financial Services Pvt.
Ltd. v. Dy. CIT, (2023) 457 ITR 647 (Bom); 2023 SCC OnLine Bom
2822; (2023) 154 taxmann.com 159 (Bom).] , the Division Bench of
the Bombay High Court concluded, in substantially similar facts and
circumstances, that the amended section 151 and not the preamended
section 151 would apply. For reasons set out above, I concur with the
conclusion in Siemens Financial Services [Siemens Financial
Services Pvt. Ltd. v. Dy. CIT, (2023) 457 ITR 647 (Bom); 2023 SCC
OnLine Bom 2822; (2023) 154 taxmann.com 159 (Bom).]
and Ganesh Das Khanna v. ITO [(2024) 460 ITR 546 (Delhi); (2023)
6 HCC (Del) 516; (2023) 156 taxmann.com 417 (Delhi).] as
subsequently followed in Twylight Infrastructure [Twylight
Infrastructure Pvt. Ltd. v. ITO, (2024) 463 ITR 702 (Delhi); 2024
SCC OnLine Del 330.] . Consequently, the validity of sanction for
issuing the orders under section 148A(d) and the notices under
section 148 should be tested with reference to amended section 151.
If so tested, it is evident that sanction was not granted by an
authority specified under clause (ii) of section 151. Hence, the orders
under section 148A(d) and the notices under section 148 are
quashed. As a corollary, the draft assessment orders under section
144B/144C cannot survive and are also quashed.
16. These writ petitions are allowed on the above terms. There will
be no order as to costs. Consequently, the connected miscellaneous
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petitions are also closed.”
21. The Orissa High Court too in Ambika Iron and Steel Pvt. Ltd.
vs. Principal Commissioner of Income Tax12 has taken an identical
view while holding in favour of the assessees as would be apparent
from the following passages of that decision:-
“2. In each of these cases, the challenges to a notice issued by the
Income- tax Department (hereinafter “Department”) under section
148 of the Income-tax Act, 1961, (IT Act) as it stood prior to the
amendment by the Finance Act of 2021 with effect from April 1,
2021. In other words, in each of these cases, the notice under section
148 of the Income-tax Act has been issued prior to April 1, 2021. In
many of them, in fact, the date of the notice is March 31, 2021.
3. In each of these cases, the relevant assessment year (AY) in
relation to which such notice has been issued is more than four years
prior to the date of the reopening, i. e., it is beyond four years from
the expiry of the assessment year in question and is clearly therefore,
time barred in terms of the first proviso to section 147 of the Income-
tax Act.
4. The stand of the Revenue that in view of the notifications issued
by the Central Government in terms of the provisions of the Taxation
and Other Laws (Relaxation and Amendment of Certain Provisions)
Act, 2020, the said time limits stood extended is clearly untenable as
those notifications were issued to deal with the situation arising from
the amendment to the Income-tax Act by the Finance Act, 2021 with
effect from April 1, 2021 whereas in these cases the notices were
issued prior to April 1, 2021.
5. This court had an occasion in similar circumstances to quash an
identical notice under section 148 of the Income-tax Act by its order
dated November 20, 2019 in Writ Petition (C) No. 7618 of 2009 and
which order stood confirmed by this court by the dismissal of the
Department’s review petition, i. e., RVWPET No. 188 of 2020 by the
order dated December 3, 2021 which reads as under :
“1. Although the point made by the Revenue in this review
petition is that this court in its order dated November 20,
2019 erred in drawing a distinction between an Additional
Commissioner and Commissioner in terms of their authority,
the point involved was that for the purpose of section 151(1)
of the Income-tax Act, 1961 since the reopening of the
assessment was beyond four years, it had to have the prior12 2022 SCC OnLine Ori 4162
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approval of the Commissioner of Income-tax, and there was
no such approval in the present case.
2. Consequently, no ground is made out for reviewing the
order dated November 20, 2019 in Writ Petition (C) No. 7618
of 2009.
3. The review petition is dismissed.”
6. Indeed in the notice issued under section 148 of the Income-tax
Act on March 31, 2021 which has been challenged in Writ Petition
(C) No. 41826 of 2021 it has been stated that the notices had been
issued after obtaining “necessary satisfaction of the Joint
Commissioner of Income-tax Range-I, Cuttack” whereas the Officer
authorized to record the necessary satisfaction had to be the Chief
Commissioner of Income-tax/Commissioner of Income-tax.
7. For all the aforesaid reasons, in each of the above cases, the
impugned notice under section 148 of the Income-tax Act is hereby
quashed. The writ petitions are allowed, but in the circumstances,
with no order as to costs.”
22. In Twylight Infrastructure, the Division Bench of our Court while
dealing with a challenge to reassessment action and whether
reassessment would sustain in case escaped income be less than INR 50
lakhs also had an occasion to deal with the aspect of specified authority
under Section 151 of the Act. It ultimately answered the latter issue as
under:-
“10. As indicated above, the specified authority changes depending
on the time limit prescribed in section 151 of the Act. It is on this
account that there is a linkage between ruling rendered in Ganesh
Dass Khanna [Ganesh Dass Khanna v. ITO, (2024) 460 ITR 546
(Delhi); 2023 SCC OnLine Del 7286; 2023 : DHC : 8187-DB.] and
the instant matters.
11. It may also be noted that in Ganesh Dass Khanna [Ganesh Dass
Khanna v. ITO, (2024) 460 ITR 546 (Delhi); 2023 SCC OnLine Del
7286; 2023 : DHC : 8187-DB.] , we had recorded the stand of the
Revenue that the issue concerning limitation and the specified
authority are “intertwined”. For convenience, the relevant part of the
judgment is extracted hereafter (page 567 of 460 ITR):
“24. On behalf of the Revenue, the following broad
submissions were made:…
(viii) Both under the unamended 1961 Act and amended 1961
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Act, the issue concerning limitation is inextricably
intertwined with two aspects:
(a) First, the rank of the authority granting approval/sanction
for triggering reassessment proceedings.
(b) Second, the quantum of income which has escaped
assessment.”
(Emphasis is ours)
12. Clearly, the Revenue advanced the argument of interlinkage
between limitation and the ascertainment of the specified authority
due to the plain language of the amended section 151 of the Act.
Section 151, when read alongside the first proviso to section 148,
brings the aspect of inextricable linkage to the fore.
12.1. Clauses (i) and (ii) of section 151 of the amended Act (which
has been extracted hereinabove) clearly specify the authority whose
approval can trigger the reassessment proceedings. Thus, if three (3)
years or less have elapsed from the end of the relevant assessment
year, the specified authority who would grant approval for initiation
of reassessment proceedings will be the Principal Commissioner or
Principal Director or Commissioner or Director. However, if more
than three (3) years from the end of the relevant assessment year
have elapsed, the specified authority for according approval for the
reassessment shall be the Principal Chief Commissioner or Principal
Director General or, where there is no Principal Chief Commissioner
or Principal Director General, Chief Commissioner or Director
General.
12.2. That the approval is mandatory is plainly evident on perusal of
the first proviso appended to section 148 of the Act. The said
proviso, at the risk of repetition, reads as follows:
“Provided that no notice under this section shall be issued unless
there is information with the Assessing Officer which suggests that
the income chargeable to tax has escaped assessment in the case of
the assessee for the relevant assessment year and the Assessing
Officer has obtained prior approval of the specified authority to issue
such notice.”
12.3. In these cases, there is no dispute that although three (3) years
had elapsed from the end of the relevant assessment year, the
approval was sought from the authorities specified in clause (i), as
against clause (ii) of section 151.
12.4. Before us, the counsel for the Revenue continue to hold this
position. The only liberty that they seek is that if, based on the
judgment in Ganesh Dass Khanna [Ganesh Dass Khanna v. ITO,
(2024) 460 ITR 546 (Delhi); 2023 SCC OnLine Del 7286; 2023 :
DHC : 8187-DB.] , the impugned orders and notices are set aside,
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liberty be given to the Revenue to commence the reassessment
proceedings afresh.
13. Therefore, having regard to the aforesaid, the impugned notices
and orders in each of the above-captioned writ petitions are quashed
on the ground that there is no approval of the specified authority, as
indicated in section 151(ii) of the Act. The direction is issued with
the caveat that the Revenue will have liberty to take steps, if deemed
necessary, albeit as per law.”
23. As is manifest from the aforesaid discussion, High Courts
appear to have consistently taken the position that TOLA does
not impact the working of Section 151 and that the operation of
the latter would not stand amended by TOLA which merely
enabled the specified authority to issue notices or accord sanction
within the extended time frame created by that legislation.
However, and before we proceed to enunciate our position in
respect of the principal issue which was addressed, it would be
appropriate to dispose of an ancillary issue which arose from the
rival submissions that were addressed.
24. As was noticed hereinabove, learned counsels for
respective sides had taken a divergent view with respect to the
date when the impugned notices could be said to have been
“issued” and consequently the version of Section 151 which
would be applicable. Although all the notices bore a date of 31
March 2021, in all the cases before us they came to be served
upon the assessees‟ thereafter. It is also asserted by the writ
petitioners that the notices were digitally signed on or after 01
April 2021 and dispatched thereafter. They would thus contend
that it was the amended regime of reassessment that would be
applicable.
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25. In the counter affidavit which has been filed in the lead
writ petition, we find that the respondents have in paragraphs 6 to
9 taken the following stand:-
“6. It is respectfully submitted that the technical team of ITBA portal
were asked certain queries to clarify the issues regarding issuance of
impugned notice dated 31.03.2021. The technical team of ITBA
clarified the followings-
i. The document with DIN No. ITBA/AST/S/148/2020-
21/1032104440(1) was generated at 7:41 pm on 31.03.2021.
ii. The last transaction time of AO Ward 54(1) on 31.03.2021
was 08:56 pm.iii. Document with DIN No. ITBA/AST/S/148/2020-
21/1032104440(1) was signed by user on 01.04.2021 at
01:12:18 pm, mail was bounced but document read by e-
filing on 02.04.2021 at 10:02 pm. Copy of notice under
Section 148 of the Act dated 31.03.2021 alongwith the email
containing reply from ITBA technical team is annexed
herewith as Annexure-R1 (Colly.).
7. There is no dispute that the DIN of the impugned notice was
generated at 07:41 pm on 31.03.2021.
8. Also, it is evident that DSC was executed for signing the notice on
31.03.2021. However, the same was not getting processed because of
system delay. The logout time of the AO confirmed by ITBA
technical team is 08:56 pm on 31.03.2021, yet the impugned notice
records time of digital signature as 12:42 am. This goes to establish
that the digital signature was put on the notice on the portal by the
AO on or before 08:56 pm on.31.03.2021 which on account of
system delay was recorded as 12:42 am (about after 4 hours) on the
portal. It is pertinent to mention here that the notice was uploaded
and signed by the AO on the system on or before 08:56 pm and thus
the notice was out for dispatch on the system beyond the control of
the AO on or before 08:56 pm on 31.03.2021. Therefore, the
impugned notice was issued on 31.03.2021 itself and not on or after
01.04.2021 as claimed by the Petitioner.
9. Besides, as the impugned notice was not getting processed on the
portal, the AO therefore signed the impugned 148 notice manually
on 31.03.2021 which was sent to the assessee through speed post on
07.04.2021. Copy of manually singed impugned notice under
Section 148 dated 31.03.2021 along with speed post booking receipt
dated 07.04.2021 is annexed herewith as Annexure-R2 (Colly).”
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By:KAMLESH KUMAR
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26. As is apparent from the above, while a document with a DIN
number appears to have been drawn up on 31 March 2021, as per the
respondents themselves, the document was digitally signed on 01
April 2021. They further concede to the fact that although the DSC
was “executed for signing” on 31 March 2021, due to system delay
the digital signature bears the time stamp of 12:42 AM. The
respondents further proceed to significantly aver that since the
impugned notice was not being processed on the portal, it was
manually dispatched vide Speed Post on 07 April 2021.
27. The question of when a reassessment notice could be said to
have been issued is no longer res integra and stands conclusively
answered by the Court in Suman Jeet Agarwal vs. Income Tax
Officer & Ors.13 The Court firstly categorised the various writ
petitions under the following broad heads:-
“Categories identified
1.13. The impugned notices as categorized by the counsel for the
petitioners, Ms. Kavita Jha and recorded by this court vide its order
dated March 24, 2022, are reproduced hereinunder :
“.. . 1. Category A : is in respect of writ petitions where notice
is dated March 31, 2021 or before but digitally signed on or
after April 1, 2021, however sent and received on or after
April 1, 2021.
2. Category B : is in respect of writ petitions where notice is
dated March 31, 2021 or before, digitally not signed,
however sent and received on or after April 1, 2021.
3. Category C : is in respect of writ petitions where notice is
dated March 31, 2021 or before, digitally signed on or before
March 31, 2021, however sent and received on or after April
1, 2021.
4. Category D : is in respect of writ petitions where notice is
dated March 31, 2021 or before, digitally signed on or before13 2022 SCC OnLine Del 3141
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March 31, 2021, no service either by e-mail or by post or any
other mode and assessee came to know later on through
Portal or receipt of subsequent notice under section 142(1).
5. Category E : is in respect of writ petitions where notice is
dated March 31, 2021 or before, manually signed, no service
by e-mail but despatched through speed post on or after April
1, 2021. . .”
28. The Court then proceeded to explain the legal principles which
would govern as under:-
“25.10. The judgment of the Allahabad High Court in Daujee
Abhusan Bhandar (supra), was the earliest to hold that drawing up a
notice on March 31, 2021, and digitally signing the same, in the
absence of despatch, does not amount to issuance of notice within
the meaning of section 149 of the Act of 1961. The High Court after
elaborately discussing the provisions of sections 282 and 282A of the
Act of 1961, and the provisions of section 13 of the Act of 2000,
held that, since the impugned notice therein though dated March 31,
2021, was issued through e-mail on April 6, 2021, the same was time
barred and therefore liable to be quashed. The court at paragraphs 29
and 30 held as under (page 54 of 444 ITR) :
“Thus, considering the provisions of sections 282 and 282A
of the Act, 1961 and the provisions of section 13 of the Act,
2000 and meaning of the word ‘issue” we find that firstly
notice shall be signed by the assessing authority and then it
has to be issued either in paper form or be communicated in
electronic form by delivering or transmitting the copy thereof
to the person therein named by modes provided in section
282 which includes transmitting in the form of electronic
record. Section 13(1) of the Act, 2000 provides that unless
otherwise agreed, the despatch of an electronic record occurs
when it enters into computer resources outside the control of
the originator. Thus, the point of time when a digitally signed
notice in the form of electronic record is entered in computer
resources outside the control of the originator, i. e., the
assessing authority that shall be the date and time of issuance
of notice under section 148 read with section 149 of the Act,
1961.
In view of the discussion made above, we hold that mere
digitally signing the notice is not the issuance of notice. Since
the impugned notice under section 148 of the Act, 1961 was
issued to the petitioner on April 6, 2021 through e-mail,
therefore, we hold that the impugned notice under section
148 of the Act, 1961 is time barred. Consequently, the
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impugned notice is quashed.” (emphasis supplied)
25.11. In the subsequent judgments of the Allahabad High Court in
the case of Santosh Krishna (supra) and Mohan Lal Santwani (supra)
the High Court summoned the details of date and time of triggering
of e-mail by the Income Tax Business Application e-mail software
system to determine the date of issuance of the e-mail attaching the
notice. The High Court held the said date of triggering of e-mail to
be the date of issue of section 148 notice for the purpose of section
149 of the Act of 1961.
25.12. The review of the aforesaid judgments of the Supreme Court
and the several High Courts shows that all courts have consistently
held that the expression “issue” in its common parlance and its legal
interpretation means that the issuer of the notice must after drawing
up the notice and signing the notice, make an overt act to ensure due
despatch of the notice to the addressee. It is only upon due despatch,
that the notice can be said to have been “issued”.
25.13. Further, a perusal of the compliance affidavit reveals that
while the function of generation of notice on Income Tax Business
Application portal and digital signing of the notice is executed by the
jurisdictional Assessing Officer, the function of drafting of the e-mail
to which the notice is attached and triggering the e-mail to the
assessee is performed by the Income Tax Business Application e-
mail software system. Thus, mere generation of notice on the Income
Tax Business Application screen cannot in fact or in law constitute
issue of notice, whether the notice is issued in paper form or
electronic form. In case of paper form, the notice must be despatched
by post on or before March 31, 2021 and for communication in
electronic form the e-mail should have been despatched on or before
March 31, 2021. In the present writ petitions, the despatch by post
and e- mail was carried out on or after April 1, 2021 and therefore,
we hold that, the impugned notices were not issued on March 31,
2021.
25.14. The Department has not disputed the correctness of the law
settled by the Supreme Court in the case of R. K. Upadhyaya (supra)
in which the court was concerned with issuance of the section 148
notice in paper form and concluded that, since the date of despatch
was within the prescribed period of limitation, the notice was validly
issued for the purpose of section 149 of the Act of 1961, and held
that the date of service of notice was not relevant. In fact, the
Department has relied upon the said judgment. The said judgment
squarely applies to the notice classified as category “E”. The
amendments to the Act of 1961 including section 282A was to enable
the Income-tax authority to issue notice either in paper form or
electronic form and were made to provide an adequate legal
framework for paperless assessment. Similarly, setting up of the
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digital platform of Income Tax Business Application portal and the
e-filing portal is for facilitating assessment proceedings
electronically. The said amendments or the use of Income Tax
Business Application portal by the Department for issuing notice in
no manner mitigates against or dispense with the legal requirement
of the Department to ensure due despatch of the section 148 notice to
satisfy the test of section 149 of the Act of 1961. The contention of
the Department that upon generation of the notice on the Income Tax
Business Application screen simplicitor (even before its despatch) is
to be held to be issued does not persuade the court and is contrary to
the judgment relied upon by the said party.
25.15. This court in the case of Court on its Own Motion v. CIT
[2013] 352 ITR 273 (Delhi), while dealing with section 143(1) of the
Act of 1961, has held that the law requires that, the intimation under
section 143(1) should be communicated to the assessee. The
uncommunicated orders or intimations cannot be enforced and are
not valid. The relevant extract of the aforesaid decision is reproduced
herein under (page 295 of 352 ITR) :
“The second grievance of the assessee is with regard to the
uncommunicated intimations under section 143(1) which
remained on paper/file or the computer of the Assessing
Officer. This is serious challenge and a matter of grave
concern. The law requires intimation under section 143(1)
should be communicated to the assessee, if there is an
adjustment made in the return resulting either in demand or
reduction in refund. The uncommunicated orders/intimations
cannot be enforced and are not valid. .. But when there is
failure to despatch or send communication/intimation to the
assessee consequences must follow. Such intimation/order
prior to March 31, 2010, will be treated as non est or invalid
for want of communication/service within a reasonable time.
This exercise, it is desirable should be undertaken
expeditiously by the Assessing Officers. The Central Board
of Direct Taxes will issue instructions to the Assessing
Officers. . .” (emphasis supplied)
25.16. The Department sought to contend that the Madras High
Court in Malavika Enterprises (supra) has struck a discordant chord
with the judgment in the Daujee Abhusan Bhandar (supra). However,
on a perusal of the judgment in Malavika Enterprises (supra), we
find that in the said case the notice had been despatched on March
31, 2021, at 6.42 p. m. by the Income Tax Business Application
server, though served on the assessee on April 1, 2021, at 2.00 am
and therefore, the Madras High Court concluded that the notice has
been validly issued on March 31, 2021. The relevant portion of
paragraph 8 of this judgment reads as follows (page 653 of 445
ITR):
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By:KAMLESH KUMAR
Signing Date:20.09.2024
18:12:06
“Coming to the facts of the case, it is stated that notice under
section 148 of the Act of 1961 is said to have been issued on
March 31, 2021 for the assessment year 2013-14, followed by
consequential notices. It is the case of the petitioner that the
notice is said to have been issued vide e-mail at 6.42 p. m.,
but was served on April 1, 2021 at 2 am and, therefore, the
unamended provisions of section 148 of the Act of 1961
would not be applicable to the case. . .”
We do not find that this judgment takes the case of the Department
any further as the section 148 notice in the case was duly despatched
on March 31, 2021.
25.17. The Department has not cited any judgment which would
support its contention that mere drawing up of notice and signing it
(pending despatch) amounts to issuance. The counsel for the
respondent placed heavy reliance on the judgment of the Supreme
Court in M. M. Rubber and Co. (supra). In the said case as well, the
apex court was concerned with the issue of limitation while
determining if the impugned order therein had been passed within
time. However, the provision under consideration was section 35E(3)
of the Central Excises and Salt Act, 1944 (“Act of 1944”), which
reads as under :
“.. . Sub-section (3) of section 35E of the Act which deals
with the limitation for exercise of the powers under sub-
sections (1) and (2) of the Act and which is the relevant
provision for consideration in this appeal reads as follows :
‘No order shall be made under sub-section (1) or sub-section
(2) after the expiry of one year from the date of the decision
or order of the adjudicating authority.’. . .”
The court in the aforesaid judgment deliberated with reference to the
phrase “no order shall be made” in section 35E(3) of the Act of 1944
and concluded that the date on which the order was made by the
adjudicatory authority by signing it is a relevant date for determining
if it was passed within limitation. As is evident, the expression used
in section 35E(3) of the Act of 1944, is “no order shall be made”
which is distinct from the expression used in section 149 of the Act
of 1961 which reads as “no notice under section 148 shall be issued”.
The two statutory provisions are materially different and the ratio of
the said judgment can have no bearing in interpreting section 149 of
the Act of 1961.”
29. It proceeded to record its conclusions in the following terms:-
“31. For the reasons and principles that we have laid down, we
dispose of these writ petitions with the following directions :
31.1. Category “A” : The notices falling under category “A”, which
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Signing Date:20.09.2024
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were digitally signed on or after April 1, 2021, are held to bear the
date on which the said notices were digitally signed and not March
31, 2021. The said petitions are disposed of with the direction that
the said notices are to be considered as show-cause notices under
section 148A(b) of the Act as per the directions of the apex court in
the Ashish Agarwal, (supra) judgment.
31.2. Category “B” : The notices falling under category “B” which
were sent through the registered e-mail ID of the respective
jurisdictional Assessing Officers, though not digitally signed are held
to be valid. The said petitions are disposed of with the direction to
the jurisdictional Assessing Officers to verify and determine the date
and time of its despatch as recorded in the Income Tax Business
Application portal in accordance with the law laid down in this
judgment as the date of issuance. If the date and time of despatch
recorded is on or after April 1, 2021, the notices are to be considered
as show-cause notices under section 148A(b) as per the directions of
the apex court in the Ashish Agarwal (supra) judgment.
31.3. Category “C” : The petitions challenging notices falling under
category “C” which were digitally signed on March 31, 2021, are
disposed of with the direction to the jurisdictional Assessing Officers
to verify and determine the date and time of despatch as recorded in
the Income Tax
Business Application portal in accordance with the law laid down in
this judgment as the date of issuance. If the date and time of
despatch recorded is on or after April 1, 2021, the notices are to be
considered as show-cause notices under section 148A(b) as per the
directions of the apex court in the Ashish Agarwal (supra) judgment.
31.4. Category “D” : The petitions challenging notices falling under
category “D” which were only uploaded in the e-filing portal of the
assessees without any real time alert, are disposed of with the
direction to the jurisdictional Assessing Officers to determine the
date and time when the assessees viewed the notices in the e-filing
portal, as recorded in the Income Tax Business Application portal
and conclude such date as the date of issuance in accordance with
the law laid down in this judgment. If such date of issuance is
determined to be on or after April 1, 2021, the notices will be
construed as issued under section 148A(b) of the Act of 1961 as per
the Ashish Agarwal (supra) judgment.
31.5. Category “E” : The petitions challenging notices falling under
category “E” which were manually despatched, are disposed of with
the direction to the jurisdictional Assessing Officers to determine in
accordance with the law laid down in this judgment, the date and
time when the notices were delivered to the post office for despatch
and consider the same as date of issuance. If the date and time of
despatch recorded is on or after April 1, 2021, the notices are to be
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By:KAMLESH KUMAR
Signing Date:20.09.2024
18:12:06
construed as show-cause notices under section 148A(b) as per the
directions of the apex court in the Ashish Agarwal (supra) judgment.
31.6. Notices sent to unrelated e-mail addresses : The petitions
challenging notices which were sent to unrelated e-mail addresses
are disposed of with the direction the jurisdictional Assessing
Officers to verify the date on which the notice was first viewed by
the assessee on the e-filing portal and consider the same as the date
of issuance. If such date of issuance is determined to be on or after
April 1, 2021, the notices will be construed as issued under section
148A(b) of the Act of 1961 as per judgment in Ashish Agarwal
(supra).
31.7. We may note that in the writ petitions, the petitioners have
raised additional defenses to challenge the impugned notices. Such
additional defenses have not been considered by this court and the
petitioners shall be at liberty to raise all such additional defenses as
available in law.
31.8. We are conscious that the time granted by the Supreme Court
in Ashish Agarwal to the Department has since expired on June 3,
2022 however, the proceedings in the present writ petitions were
stayed on March 24, 2022 until the pronouncement of this judgment.
Therefore, we grant the jurisdictional Assessing Officers in the first
instance eight (8) weeks time from today to determine the date of
issuance of the notices as per the law laid down in this judgment.
31.9. The notices which in accordance with the law laid down in this
judgment has been verified by the jurisdictional Assessing Officers
to have been issued on or after April 1, 2021 and until June 30, 2021
shall be deemed to have been issued under section 148A of the Act
of 1961 as substituted by the Finance Act, 2021 and construed to be
show-cause notices in terms of section 148A(b) as per the judgment
of the apex court in Ashish Agarwal (supra) and the jurisdictional
Assessing Officers shall thereafter follow the procedure set down by
the Supreme Court in the said judgment which reads as follows
(page 21 of 444 ITR) :
“In view of the above and for the reasons stated above, the
present appeals are allowed in part. The impugned common
judgments and orders passed by the High Court of Judicature
at Allahabad in W. T. No. 524 of 2021 and other allied tax
appeals/petitions, is/are hereby modified and substituted as
under :
(i) The impugned section 148 notices issued to the respective
assessees which were issued under unamended section 148 of
the Income-tax Act, which were the subject matter of writ
petitions before the various respective High Courts shall be
deemed to have been issued under section 148A of theSignature Not Verified
Digitally Signed
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By:KAMLESH KUMAR
Signing Date:20.09.2024
18:12:06
Income-tax Act as substituted by the Finance Act, 2021 and
construed or treated to be show-cause notices in terms of
section 148A(b). The Assessing Officer shall, within thirty
days from today provide to the respective assessees
information and material relied upon by the Revenue, so that
the assessees can reply to the show-cause notices within two
weeks thereafter ;
(ii) The requirement of conducting any enquiry, if required,
with the prior approval of specified authority under section
148A(a) is hereby dispensed with as a one-time measure vis-
a-vis those notices which have been issued under section 148
of the unamended Act from April 1, 2021 till date, including
those which have been quashed by the High Courts.
Even otherwise as observed hereinabove holding any enquiry
with the prior approval of specified authority is not
mandatory but it is for the concerned Assessing Officers to
hold any enquiry, if required ;
(iii) The Assessing Officers shall thereafter pass orders in
terms of section 148A(d) in respect of each of the concerned
assessees.
Thereafter after following the procedure as required under
section 148A may issue notice under section 148 (as
substituted) ;
(iv) All defences which may be available to the assessees
including those available under section 149 of the Income-tax
Act and all rights and contentions which may be available to
the concerned assessees and the Revenue under the Finance
Act, 2021 and in law shall continue to be available.””
30. Tested on the principles which were enunciated in Suman Jeet
Agarwal, the petitioners would appear to be correct in their
submission of the date liable to be ascribed to the impugned notices
and those being viewed as having been issued and dispatched after 01
April 2021. However, and in our considered opinion, the same would
be of little relevance or significance when one bears in mind the
indubitable fact that all the notices were approved by the JCIT and
which was an authority recognised under the unamended Section 151.
The answer to the argument based on the provisions of TOLA would
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also largely remain unimpacted by our finding on this score as would
become evident from the discussion which ensues.
31. We thus proceed on the demurrer that it was the unamended
Section 151 which would be applicable to the impugned proceedings.
However, and before proceeding ahead, it would be appropriate to
briefly notice the provisions of TOLA and on which the defence of the
respondents is founded.
32. TOLA, being Act No. 38 of 2020, came to be promulgated on
29 September 2020. We are in this batch of matters principally
concerned with Section 3 thereof and which reads as follows:-
“3. Relaxation of certain provisions of specified Act.–(1) Where,
any time-limit has been specified in, or prescribed or notified under,
the specified Act which falls during the period from the 20th day of
March, 2020 to the 31st day of December, 2020, or such other date
after the 31st day of December, 2020, as the Central Government
may, by notification, specify in this behalf, for the completion or
compliance of such action as–
(a) completion of any proceeding or passing of any order or
issuance of any notice, intimation, notification, sanction or
approval, or such other action, by whatever name called, by
any authority, commission or tribunal, by whatever name
called, under the provisions of the specified Act; or
(b) filing of any appeal, reply or application or furnishing of
any report, document, return or statement or such other record,
by whatever name called, under the provisions of the specified
Act; or
(c) in case where the specified Act is the Income-tax Act, 1961
(43 of 1961),–
(i) making of investment, deposit, payment, acquisition,
purchase, construction or such other action, by whatever
name called, for the purposes of claiming any deduction,
exemption or allowance under the provisions contained in–
(I) sections 54 to 54GB, or under any provisions of
Chapter VI-A under the heading “B.–Deductions in
respect of certain payments” thereof; or
(II) such other provisions of that Act, subject to fulfilment
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of such conditions, as the Central Government may, by
notification, specify; or
(ii) beginning of manufacture or production of articles or
things or providing any services referred to in section 10AA
of that Act, in a case where the letter of approval, required to
be issued in accordance with the provisions of the Special
Economic Zones Act, 2005 (28 of 2005), has been issued on
or before the 31st day of March, 2020, and where completion
or compliance of such action has not been made within such
time, then, the time-limit for completion or compliance of
such action shall, notwithstanding anything contained in the
specified Act, stand extended to the 31st day of March, 2021,
or such other date after the 31st day of March, 2021, as the
Central Government may, by notification, specify in this
behalf:
Provided that the Central Government may specify different
dates for completion or compliance of different actions:
Provided further that such action shall not include payment of
any amount as is referred to in sub-section (2):
Provided also that where the specified Act is the Income-tax
Act, 1961 (43 of 1961) and the compliance relates to–
(i) furnishing of return under section 139 thereof, for the
assessment year commencing on the–
(a) 1st day of April, 2019, the provision of this sub-
section shall have the effect as if for the figures,
letters and words “31st day of March, 2021”, the
figures, letters and words “30th day of September,
2020” had been substituted;
(b) 1st day of April, 2020, the provision of this sub-
section shall have the effect as if for the figures,
letters and words “31st day of March, 2021”, the
figures, letters and words “30th day of November,
2020” had been substituted;
(ii) delivering of statement of deduction of tax at source
under sub-section (2A) of section 200 of that Act or
statement of collection of tax at source under sub-section
(3A) of section 206C thereof for the month of February or
March, 2020, or for the quarter ending on the 31st day of
March, 2020, as the case may be, the provision of this sub-
section shall have the effect as if for the figures, letters and
words “31st day of March, 2021”, the figures, letters and
words “15th day of July, 2020” had been substituted;
(iii) delivering of statement of deduction of tax at source
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under sub-section (3) of section 200 of that Act or
statement of collection of tax at source under proviso to
sub-section (3) of section 206C thereof for the month of
February or March, 2020, or for the quarter ending on the
31st day of March, 2020, as the case may be, the provision
of this sub-section shall have the effect as if for the
figures, letters and words “31st day of March, 2021”, the
figures, letters and words “31st day of July, 2020” had
been substituted;
(iv) furnishing of certificate under section 203 of that Act
in respect of deduction or payment of tax under section
192 thereof for the financial year commencing on the 1st
day of April, 2019, the provision of this sub-section shall
have the effect as if for the figures, letters and words “31st
day of March, 2021”, the figures, letters and words “15th
day of August, 2020” had been substituted;
(v) sections 54 to 54GB of that Act, referred to in item (I)
of sub-clause (i) of clause (c), or sub-clause (ii) of the said
clause, the provision of this subsection shall have the
effect as if–
(a) for the figures, letters and words “31st day of
December, 2020”, the figures, letters and words “29th
day of September, 2020” had been substituted for the
time-limit for the completion or compliance; and
(b) for the figures, letters and words “31st day of
March, 2021”, the figures, letters and words “30th day
of September, 2020” had been substituted for making
such completion or compliance;
(vi) any provisions of Chapter VI-A under the heading
“B.– Deductions in respect of certain payments” of that
Act, referred to in item (I) of sub-clause (i) of clause (c),
the provision of this sub-section shall have the effect as
if–
(a) for the figures, letters and words “31st day of
December, 2020”, the figures, letters and words “30th
day of July, 2020” had been substituted for the time-
limit for the completion or compliance; and
(b) for the figures, letters and words “31st day of
March, 2021”, the figures, letters and words “31st day
of July, 2020” had been substituted for making such
completion or compliance;
(vii) furnishing of report of audit under any provision
thereof for the assessment year commencing on the 1st
day of April, 2020, the provision of this sub-section shall
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have the effect as if for the figures, letters and words “31st
day of March, 2021”, the figures, letters and words “31st
day of October, 2020” had been substituted:
Provided also that the extension of the date as referred to
in sub-clause (b) of clause (i) of the third proviso shall not
apply to Explanation 1 to section 234A of the Income-tax
Act, 1961 (43 of 1961) in cases where the amount of tax
on the total income as reduced by the amount as specified
in clauses (i) to (vi) of sub-section (1) of the said section
exceeds one lakh rupees:
Provided also that for the purposes of the fourth proviso,
in case of an individual resident in India referred to in sub-
section (2) of section 207 of the Income-tax Act, 1961 (43
of 1961), the tax paid by him under section 140A of that
Act within the due date (before extension) provided in that
Act, shall be deemed to be the advance tax:
Provided also that where the specified Act is the Direct
Tax Vivad Se Vishwas Act, 2020 (3 of 2020), the provision
of this sub-section shall have the effect as if–
(a) for the figures, letters and words “31st day of
December, 2020”, the figures, letters and words “30th
day of December, 2020” had been substituted for the
time limit for the completion or compliance of the
action; and
(b) for the figures, letters and words “31st day of
March, 2021”, the figures, letters and words “31st day
of December, 2020” had been substituted for making
such completion or compliance.
(2) Where any due date has been specified in, or prescribed or
notified under the specified Act for payment of any amount towards
tax or levy, by whatever name called, which falls during the period
from the 20th day of March, 2020 to the 29th day of June, 2020 or
such other date after the 29th day of June, 2020 as the Central
Government may, by notification, specify in this behalf, and if such
amount has not been paid within such date, but has been paid on or
before the 30th day of June, 2020, or such other date after the 30th
day of June, 2020, as the Central Government may, by notification,
specify in this behalf, then, notwithstanding anything contained in
the specified Act,–
(a) the rate of interest payable, if any, in respect of such
amount for the period of delay shall not exceed three-fourth
per cent. for every month or part thereof;
(b) no penalty shall be levied and no prosecution shall be
sanctioned in respect of such amount for the period of delay.
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Explanation.–For the purposes of this sub-section, “the period of
delay” means the period between the due date and the date on which
the amount has been paid.”
33. A plain reading of Section 3 establishes that where the time
limit for the completion or compliance of any action under a specified
Act were to fall between 20 March 2020 to 31 December 2020, the
period for completion and compliance would stand extended up to 31
March 2021 or such other date thereafter as may be specified by the
Union Government by way of a notification. Undisputedly, the date of
31 March 2021 came to be extended thereafter up to 30 April 2021
and lastly up to 30 June 2021.
34. Concededly, Finance Act 2021 was enacted thereafter and came
into effect from 01 April 2021. It is admitted by the respondents that
the terminal point for initiation of reassessment for AY 2015-16 in
ordinary circumstances would have been 31 March 2020 and that date
clearly fell within the period spoken of in Section 3 of TOLA. The
period for issuance of notice for AY 2015-16, thus and principally
speaking, stood extended up to 30 June 2021.
35. However, the key to answering the argument which was
canvassed on behalf of the respondents is contained in Section 3 itself
and which purported to extend the period for completion of
proceedings, passing of an order, issuance of a notice, intimation,
notification, sanction or approval. The provision extended the time
limit for such action, notwithstanding anything contained in the
specified Act, initially up to 31 March 2021 and which date was
extended subsequently to 30 April 2021 and lastly up to 31 June 2021.
36. Section 3 thus essentially extended the time period statutorily
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prescribed for initiation and compliance up to the dates notified by the
Union Government from time to time. The extension of these
timelines was intended to apply to all statutes which were included in
the expression “specified Act” as defined in Section 2(b) of TOLA.
37. TOLA was thus concerned with overcoming the statutory
closure and eclipse which would have otherwise descended upon the
authority to act and take action under the specified statutes. It was
essentially concerned with tiding over the insurmountable hurdles
which arose due to the pandemic and the disruption that followed in
its wake. TOLA, viewed in that light, was neither aimed at nor
designed or intended to confer a new jurisdiction or authority upon an
officer under a specified enactment. On a fundamental plane, it was a
remedial measure aimed at overcoming a position of irretrievable and
irreversible consequences which were likely to befall during the
nationwide lockdown. It was principally aimed at enabling authorities
to take and commence action within the extended timelines that TOLA
introduced. However, it neither altered nor modified or amended the
distribution of functions, the command structure or the distribution of
powers under a specified Act. It was in that light that we had spoken
of the carving or conferral of a new or altered jurisdiction.
38. It would therefore be wholly incorrect to read TOLA as
intending to amend the distribution of power or the categorisation
envisaged and prescribed by Section 151. The additional time that the
said statute provided to an authority cannot possibly be construed as
altering or modifying the hierarchy or the structure set up by Section
151 of the Act. The issue of approval would still be liable to be
answered based on whether the reassessment was commenced after or
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within a period of four years from the end of the relevant AY or as per
the amended regime dependent upon whether action was being
proposed within three years of the end of the relevant AY or thereafter.
The bifurcation of those powers would continue unaltered and
unaffected by TOLA.
39. The fallacy of the submission addressed by the respondents
becomes even more evident when we weigh in consideration the fact
that even if the reassessment action were initiated, as per the extended
TOLA timelines, and thus after the period of four years, Section 151
incorporated adequate measures to deal with such a contingency and
in unambiguous terms identified the authority which was to be moved
for the purposes of sanction and approval. Section 151 distributed the
powers of approval amongst a set of specified authorities based upon
the lapse of time between the end of the relevant AY and the date
when reassessment was proposed. Thus even if the reassessment was
proposed to be initiated with the aid of TOLA after the expiry of four
years from the end of the relevant AY, the authority statutorily
empowered to confer approval would be the Principal Chief
Commissioner /Chief Commissioner /Principal Commissioner
/Commissioner. It would only be in a case where the reassessment was
proposed to be initiated before the expiry of four years from the end of
the relevant AY that approval could have been accorded by the JCIT.
Similar would be the position which would emerge if the actions were
tested on the basis of the amended Section 151 and which divides the
power of sanction amongst two sets of authorities based on whether
reassessment is commenced within three years or thereafter.
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40. What we seek to emphasise is that the TOLA authorisation
merely enables the competent authority to take action within the
extended time period and irrespective of the closure which would have
ordinarily come about by virtue of the provisions contained in the Act.
It does not alter or amend the structure for approval and sanction
which stands erected by virtue of Section 151. TOLA merely extended
the period within which action could have been initiated and which
would have otherwise and ordinarily been governed and regulated by
Sections 148 and 149 of the Act. If the contention of the respondents
were to be accepted it would amount to us virtually ignoring the date
when reassessment is proposed to be initiated and the same being
indelibly tied to the end of the relevant AY. Once it is conceded that
the notice came to be issued four or three years after the end of the
relevant assessment year, the approval granted by the JCIT would not
be compliant with the scheme of Section 151. We thus find ourselves
unable to sustain the grant of approval by the JCIT.
41. It is pertinent to note that the respondents had feebly sought to
urge that the use of the expression “sanction” in Section 3 of TOLA
also merits due consideration and is liable to be read as supportive of
the contentions that were addressed on their behalf. The argument is
however clearly meritless when one bears in consideration the
indisputable fact that the set of provisions with which we are
concerned nowhere prescribe a timeframe within which sanction is
liable to be accorded. „Sanction‟ when used in Section 3 of TOLA
caters to those contingencies where a specified Act may have
prescribed a particular time limit within which an action may be
approved. That is clearly not the position which obtains here. We thus
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find ourselves unable to sustain the impugned action of reassessment.
The impugned notices which rest on a sanction obtained from the
JCIT would thus be liable to be quashed.
42. We accordingly allow the instant writ petitions. The impugned
notices issued under Section 148 of the Act dated 31 March 2024 are
hereby quashed.
43. However, the aforesaid would be without prejudice to the right
of the respondents to initiate such further action as may be otherwise
permissible in law.
YASHWANT VARMA, J.
RAVINDER DUDEJA, J.
SEPTEMBER 20, 2024/kk
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