Gajlaxmi Steel P. Ltd. Through Anoop Gopikishan Jajoo v. The Income Tax Officer And Others

IN THE HIGH COURT OF JUDICATURE AT BOMBAYBENCH AT AURANGABAD WRIT PETITION NO. 11007 OF 2022 Gajlaxmi Steel P. Ltd. Through Anoop Gopikishan Jajoo VERSUS The Income Tax Officer And Others ... Mr. Shubham Rathi h/f Mr. M. R. Malpani, Advocate forthe Petitioner Mr. A. M. Sharma, Advocate for Respondent Nos. 1 to 3 Mr. A. G. Talhar, DSGI for Respondent No. 4/UOI ... CORAM DATE :RAVINDRA V. GHUGE &R. M. JOSHI, JJ:MAY 08, 2024 PER COURT : 1.We have heard the learned Advocates for the respective sides for quite some time. The Respondent/Department opposes the contentions of the Petitionersand prays that the Petitions be dismissed. 2.It is undisputed that the impugned notices have been issued after the amendment to the FinanceAct, on the basis of the provisions that existed priorto the amendment and the said notices are in relationto the Assessment Year 2014-2015. 3.The contention of the Department is that certain quantum of earnings / transactions escaped assessment of income. Hence, the Assessment Officerhad issued notices for reopening the assessment forAssessment Year 2014-2015 with regard to the purportedescaped income assessment. 4.Considering that the Principal Seat hasdelivered a judgment on 15.01.2024in Writ PetitionNo.1945/2023 (The New India Assurance Company LimitedVs. The Assistant Commissioner of Income Tax andOthers) 2014 SCC Online Bom 146, we are referring tothe short issue raised in this Petition. By thejudgment delivered in The New India Assurance CompanyLimited (supra) in relation to the notice issued forAssessment Year 2013-2014, this Court has come to aconclusion in paragraph Nos.36 to 39 as under :- “36 .Therefore, in the present case, as thefoundation of the entire reassessmentproceeding, viz., the notice issued in June2021 itself was barred by limitation in viewofnon-applicabilityofNotificationNo.20/2021,thesuperstructuresittingthereon, viz., the reassessment proceedingsinitiated pursuant to judgment in AshishAgarwal will also be regarded as beyond timelimit. Therefore, on this ground as well, theimpugned reopening notice dated 28th July 2022issued for AY 2013-14 in petitioner's case isbarred by limitation and deserves to bequashed and set aside. Alternatively, it iswell settled that a notice under Section 148 of the Act cannot be issued in order to reopenthe assessment of an assessee in a case wherethe right to reopen the assessment was alreadybarred under the pre-amended Act on the datewhen the new legislation came into force. InCIT V/s. Onkarmal Meghraj (HUF) the Hon'bleApex Court held: "That raises the question whether thatproviso could be applied without reference toany period of limitation. It is a well-settledprinciple that no action can be commenced hasexpired. It is unnecessary to cite authoritiesin support of this position. Does the factthat the second proviso says that there is noperiod of limitation make a difference?xxxxxxxxxx. XXXXXXXXXX In J.P. Jani, Income-taxOfficer v. Induprasad Devshanker Bhatt (1969)72 1.T.R. 595; (1969) 1 S.C.R. 714 (S.C.) thiscourt held that the Income-tax Officer cannotissue a notice under section 148 of the IncomeTax Act, 1961, in order to reopen theassessment of an assessee in a case where theright ti reopen the assessment was barredunder the 1922 Act at the date when the newAct came into force. It was held that section297(2)(d) (ii) of the 1961 Act was applicableonly to this cases where the right of theIncome-tax Officer to reopen an assessment wasnot barred under the repealed Act. Thisdecision is broadly in line with the opinionof Das and Kapur JJ. in Prashar's case (1963)49 1.T.R. (S.C.) 1; (1964) 1 S.C.R. 29 (S.C.)xxxxxxxxxx. XXXXXXXXXX In J.P. Jani, Income-taxOfficer v. Induprasad Devshanker Bhatt (1969)72 1.T.R. 595; (1969) 1 S.C.R. 714 (S.C.) thiscourt held that the Income-tax Officer cannotissue a notice under section 148 of the IncomeTax Act, 1961, in order to reopen theassessment of an assessee in a case where theright ti reopen the assessment was barredunder the 1922 Act at the date when the newAct came into force. It was held that section297(2)(d) (ii) of the 1961 Act was applicableonly to this cases where the right of theIncome-tax Officer to reopen an assessment wasnot barred under the repealed Act. Thisdecision is broadly in line with the opinionof Das and Kapur JJ. in Prashar's case (1963)49 1.T.R. (S.C.) 1; (1964) 1 S.C.R. 29 (S.C.)xxxxxxxxxx. For AY 2013-14, the time limit to issue anotice under Section 148 of the Act hadalready expired on 1" April 2021. On the saiddate, the assessee had a vested right, whichde hors the 1" proviso to the amended Section149 of the Act, could not be taken away andthus, based on the well settled principles oflaw, the reopening of the AY 2013-14 after 31 March 2021 is invalid, without jurisdictionand barred by limitation. We shall deal with Mr. Sharma's submissions asunder: (a) As regards reliance on the provisionsof the Limitation Act, 1963, the provisions ofthe Limitation Act, 1963 do not apply to theprovisions of the Income Tax Act, 1961 andespecially, not in the present case in view ofthe specific period provided for in theprovisions of the Act as well as TOLA. In anycase, this defence of respondents cannot besustained as they have not taken any suchcontention in either the order passed underSection 148A(d) or in the affidavit in reply; (b) As regards applicability of Section 3of TOLA - exclusion of Covid period, thisargument is, in effect, nothing but the theoryof travel back in time which was urged by theRevenue to support the reopening noticesissued between 1" April 2021 to 30th June 2021before this Court, as well as other HighCourts [and which eventually led to thejudgment in Ashish Agarwal (Supra)]. As notedearlier, this Court and other Courts havealready snubbed the relate back/travel back intime theory and also the Instruction No.1 of2022; (c) Asregards applicability ofNotifications No.20 of 2021 dated 31 March2021 and No.38 of 2021 dated 27th April 2021extending the time limit even for AY 2014-15and it is extended till 30 June 2021,respondent, in other words, argues that theNotification No.20 of 2021 seeks to extend thetime limit inter alia for issuing notice underSection 148 which was expiring on 31 March2021 not only under the provisions of the Act,but would also include the time extension inthe Act by virtue of TOLA. To put in anotherway, the time limit expiring on 31 March 2021 specified in Notification No.20 of 2021,according to respondents, would have to beread to include limitation under the Act readwith TOLA. As noted earlier, this contentionis flawed inasmuch as it expands the scope ofthe Notification and violates its plainlanguage, viz., the time limit, specified in,or prescribed or notified under the Income TaxAct falls for completion. The limitation underthe Act (erstwhile Section 149) for reopeningthe assessment for the AY 2013-14 expired on31 March 2020. Hence, Notification No.20 of2021 did not apply to the facts of the presentcase. Notification No.38 of 2021 dated 27thApril 2021 categorically uses the expressionthe time limit for completion of such actionexpires on the 30th day of April 2021 due toits extension by the said notifications, suchtime limit shall further stand extended to the30th day of June 2021. Hence, it is incorrectto say that 31 March 2021 under the Act wouldmean under the Act, plus, extension by TOLA; (d) The submission that the Hon'bleSupreme Court, while deciding Ashish Agarwal(Supra), was conscious of the limitation of 6years expiring on 31 March 2021 under the pre-amendment provisions in respect of AY 2013-14if the Covid period was not excluded, despitewhich the Apex Court has stated that allnotices issued should be read to be issuedunder Section 148A to prevent the Revenuegetting remediless, is unacceptable. Thisargument clearly fails to appreciate that theeffect of Revenue's contention is that despitethe substantive defence available to theassessee in Section 149 of the amended Act, aswell as the express directions of the Hon'bleSupreme Court allowing the assessee to takeall defences available under the Act, thejudgment of Ashish Agarwal (Supra) wouldpermit them to reopen the assessment of AY2013-14 would not only make the defence expressly available to the assessees uselessand unusable, but would be contrary to wellestablished principles of law. In SupremeCourt Bar Association (Supra), the Hon'bleSupreme Court espoused that its powersconferred under Article 142 of theConstitution of India, being curative innature and even with the width of itsamplitude, cannot be construed as powers whichauthorise the Court to ignore the substantiverights of a litigant while dealing with acause pending before it. Article 142 would notbe used to supplant substantive law applicableto a case or cause and it will not be used tobuild a new edifice where none existed earlierby ignoring express statutory provisionsdealing with a subject and thereby to achievesomething indirectly which cannot be achieveddirectly. In the present case, Revenue'sargument, if accepted, would be in conflictwith the above law as despite the expresslanguage of 1 proviso to Section 149,reopening notice for the AY 2013-14 would bepermitted to be issued beyond 6 years on thepretext that the Hon'ble Supreme Court inexercise of its powers under Article 142permitted them to do so and otherwise, theywould be remediless. On the contrary, whilepermitting the Revenue to re- initiate thereassessment proceedings, the Apex Court alsogranted liberty to assessees to raise alldefences available to the assessee includingthe defences under Section 149 of the Act. TheApex Court observed that its order will strikea balance between the rights of the Revenue aswell as the respective assessees. Moreover, inSiemens Financial (Supra), this Court hasalready considered a similar contention of theRevenue and held that equity has no place intaxation or while interpreting taxing statutesuch intendment would have any place and thattaxation statute has to be interpreted strictly. The Revenue also fails to appreciatethat no particular case was considered by theHon'ble Supreme Court while deciding AshishAgarwal (Supra). It is apposite to cite here an extract ofthe judgment of the Hon'ble Supreme Court inParashuram Pottery Works Co. Ltd V/s. IncomeTax Officer, which reads as under: ……..It has been said that the taxes arethe price that we pay for civilization. If so,it is essential that those who are entrustedwith the task of calculating and realisingthat price should familiarise themselves withthe relevant provisions and become well-versedwith the law on the subject. Any remissness ontheir part can only be at the cost of thenational exchequer and must necessarily resultin loss of revenue. At the same time, we haveto bear in mind that the policy of law is thatthere must be a point of finality in all legalproceedings, that stale issues should not bereactivated beyond a particular stage and thatlapse of time must induce repose in and set atrestjudicialandquasi-judicialcontroversies as it must in other spheres ofhuman activity...". ……..It has been said that the taxes arethe price that we pay for civilization. If so,it is essential that those who are entrustedwith the task of calculating and realisingthat price should familiarise themselves withthe relevant provisions and become well-versedwith the law on the subject. Any remissness ontheir part can only be at the cost of thenational exchequer and must necessarily resultin loss of revenue. At the same time, we haveto bear in mind that the policy of law is thatthere must be a point of finality in all legalproceedings, that stale issues should not bereactivated beyond a particular stage and thatlapse of time must induce repose in and set atrestjudicialandquasi-judicialcontroversies as it must in other spheres ofhuman activity...". (e) The contentions that (i) the truemeaning of Apex Court order in Ashish Agrawal(Supra) is that the notices issued underSection 148, irrespective of the AssessmentYear of the unamended Act, between 1st April2021 to 30th June 2021 are to be treated asshow cause notices without being hit bylimitation, if issued on or before 30th March2021 and (ii) the defence under Section 149available to the assessee would mean that ifthe Revenue had issued any notice underSection 148 under the unamended Act during theperiod 1st April 2021 to 30th June 2021pertaining to AY 2013-14, the same would bebarred by limitation under Section 149 ineffect means the Civil Appeal of the Revenue in Ashish Agrawal (Supra) was dismissed, arecompletely flawed. It completely fails toappreciate that the limitation period toissuance of reopening notices under Section148 for all Assessment Years prior to AY 2013-14 had already expired on 31 March 2019 orearlier. The provisions of TOLA obviouslycould not save such a time limit and theRevenue could not have validly issuedreopening notices for years prior to AY 2013-14 on or after 1st April 2019. Therefore, thedefence so expressly allowed to be taken bythe Hon'ble Supreme Court would otherwise beunnecessary; (f) The submission that the Apex Court,in exercise of power under Article 142 of theConstitution, has deemed the notices issuedbetween 1st April 2021 to 30th June 2021 underSection 148A(b) of the Act issued withinlimitation and by following the manner ofcomputation of limitation provided in TOLA,the days from 1st April 2021 to 30th June 2021would stand excluded and, therefore, thenotices could be deemed to be issued on 31stMarch 2021, we find it to be ratherfallacious. The fallacy of this contention ofRevenue is conspicuous inasmuch as if thenotices issued under Section 148 between 1stApril 2021 and 30th June 2021, which accordingto them, are deemed to be issued on 31st March2021, then it is obvious that the provisionsof the new reassessment law introduced by theFinance Act, 2021 cannot apply as they cameinto force w.e.f. 1st April 2021 and onwards.Ashish Agarwal (Supra) in no uncertain wordsstated that the new provisions have to applyto all such notices. Therefore, the argumenturged is completely contrary to law as well asthe binding directions of the Hon'ble SupremeCourt; (g) As regards reliance on TouchstoneHoldings (Supra), the Hon'ble Delhi High Court held that the initial notice dated 29th June,2021 issued under Section 148 is withinlimitation. No findings on the validity orotherwise of the notice issued after May 2022pursuant to the judgment in Ashish Agarwal(Supra) is given. Moreover, in that case,petitioner did not argue that for AY 2013-14the time limit would have expired even underTOLA on 31st March 2021; (g) As regards reliance on TouchstoneHoldings (Supra), the Hon'ble Delhi High Court held that the initial notice dated 29th June,2021 issued under Section 148 is withinlimitation. No findings on the validity orotherwise of the notice issued after May 2022pursuant to the judgment in Ashish Agarwal(Supra) is given. Moreover, in that case,petitioner did not argue that for AY 2013-14the time limit would have expired even underTOLA on 31st March 2021; (h) As regards Salil Gulati (Supra), theDelhi High Court, to reach its conclusion, hasmerely relied upon its earlier decision inTouchstone Holdings (Supra). It will berelevant to note that following Salil Gulati(Supra), a similar view was taken by the DelhiHigh Court in Yogita Mohan V/s. Income TaxOfficer. Against the judgment, in an SLPpreferred by the assessee, the Apex Court hasissued notice vide its order dated 20thFebruary 2023. It should also be noted thatthe Hon'ble Gujarat High Court in KeenaraIndustries (P) Ltd. V/s. Income Tax Officer"and the Allahabad High Court in Rajeev BansalV/s. Union of India have taken a view thatnotices issued for AY 2013-14 were barred bylimitation in view of the amended Section 149of the Act. Subsequently, the Apex Court, inSLPs preferred by the Revenue, has issuednotice and stayed both the orders/judgments; (i) We are unable to comprehend thecontention raised that if the notice dated30th May 2022 under Section 148A(b) of the Actis valid in terms of Apex Court order inAshish Agrawal (Supra), then the notice underSection 148 of the Act cannot be issued on31st March 2021 and respondent cannot beexpected to do impossible. It has nowhere beenurged by petitioner that assessing officerought to complete the proceedings before theshow cause notice under Section 148A(b) of theAct was issued. It is the case of petitionerthat the reopening notice under Section 148 ought to have been issued within 6 years fromthe end of the AY 2013-14. This limitationperiod, as extended by TOLA, expired on 31stMarch 2021. However, in the present case, thereopening notice has been issued in July 2022and, therefore, beyond the statutory timelimit. In any case, as stated above, theHon'ble Supreme Court, while invoking powersunderArticle142,consciouslyandcategorically granted liberty to assessees toraise all defences available to the assessee,including the defences under Section 149 ofthe Act. This specific and express directionscannot be set at naught. Accepting thiscontention of the Revenue would be a travestyof justice. 38. In the circumstances, in our view, the noticeissued under Section 148 of the Act, impugnedin this petition, for AY 2013-14 is issuedbeyond the period of limitation. 39 . Havingdecidedinfavourofassessee/petitioner on this issue oflimitation, we are not discussing the othergrounds of challenge raised in the petition.Petitioner may raise all those contentionsindependently in any other proceeding.” 5. notice issued for Assessment Year 2014-2015 isconcerned, this Court at the Principal Seat in WritPetition No.450/2023 (Original Side), Godrej IndustriesLimited versus The Assistant Commissioner of Income Taxand others, has decided in favour of the Assessee, vide judgment dated 28.02.2024. This Court relied upon theobservations in The New India Assurance Company Limited(supra) and held that the notice issued for theAssessment Year 2014-2015, is also barred bylimitation. 6.In view of the above, this Writ Petition isallowed. The impugned notices are quashed and setaside. 7.We record that this order is restricted onlyto the point of limitation since the impugned noticeshad been issued for the Assessment Year 2014-2015,after the amendment to the Finance Act on 01.04.2021,and that too under the provisions existing prior toit’s amendment. (R. M. JOSHI, J) (RAVINDRA V. GHUGE, J)Malani