Ram Balram Buildhome Pvt. Ltd v. Income Tax Officer And Anr

Signature Not Verified IN THE HIGH COURT OF DELHI AT NEW DELHI % Judgment delivered on: 30.01.2025 + W.P.(C) 16232/2024 & CM APPL. 68188/2024 RAM BALRAM BUILDHOME PVT. LTD. ..... Petitioner Versus INCOME TAX OFFICER AND ANR. ..... Respondents Advocates who appeared in this case: For the Petitioner : Mr Keshav Sehgal, Mr Shivam Gaur, Mr Kshitij Joshi and Mr Aryan Kumar, Advocates. For the Respondent : Mr. Aseem Chawla, Sr. Advocate with Ms. Pratishtha Choudhary, Mr Puneet Rai, Senior Standing Counsel with Mr Ashvini Kumar and Mr Rishabh Nangia, Advocates. CORAM HON’BLE THE ACTING CHIEF JUSTICE HON’BLE MR JUSTICE TUSHAR RAO GEDELA JUDGMENT VIBHU BAKHRU, J INTRODUCTION 1.The petitioner (hereafter the Assessee) has filed the present petition under Article 226 of the Constitution of India, inter alia,impugning (i) a notice dated 01.06.2021 issued under Section 148 of the Income Tax Act, 1961 (hereafter the Act); (ii) a notice dated 30.05.2022 Signature Not Verified issued in furtherance of the notice dated 01.06.2021; (iii) an order dated 30.07.2022 passed under Section 148A(d) of the Act; (iv) a notice dated 30.07.2022 issued under Section 148 of the Act; and (v) an assessment order dated 30.05.2023 framed under Section 147 of the Act read with Section 144 and 144B of the Act. These abovementioned impugned notices and orders were issued in respect of the assessment year (AY) 2013-14. 2.Mr Sehgal, the learned counsel appearing for the Assessee has confined the challenge to the notices and the orders impugned in this petition on a singular ground – that the order dated 30.07.2022 passed under Section 148A(d) of the Act (hereafter the impugned order) as well as the notice dated 30.07.2022 (hereafter the impugned notice) issued under Section 148 of the Act were beyond the period as stipulated under Section 149(1) of the Act. 3.Mr Chawla, learned senior counsel appearing for the Revenue stoutly disputed the Assessee’s claim that the impugned order and the impugned notice, are barred by limitation. He, however, did not dispute that if the Assessee’s contention was accepted and the impugned notice was found to have been issued beyond the period of limitation, further proceedings pursuant to the impugned notice as well as the assessment order dated 30.05.2023, would, as a consequence, be liable to be set aside. 4.In view of the above, the only controversy that is required to be addressed by this court is whether the impugned order and the impugned Signature Not Verified notice was issued beyond the period as prescribed under Section 149(1) of the Act. THE FACTUAL CONTEXT 5.The Assessee is a company incorporated under the Companies Act, 1956. The petitioner claims that it has been regularly filing its return of income and had done so for the AY 2013-14 as well. 6.On 24.03.2020, the Government of India announced the nationwide lockdown (initially for a period of twenty-one days) in the wake of spread of the novel coronavirus (COVID-19) pandemic. 7.On 31.03.2020, the President of India promulgated the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020, whereby time limits as stipulated in respect of various actions and compliances, were extended. Thereafter, the Parliament enacted the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 [hereafter TOLA], which came into force with effect from 31.03.2020. 5.The Assessee is a company incorporated under the Companies Act, 1956. The petitioner claims that it has been regularly filing its return of income and had done so for the AY 2013-14 as well. 6.On 24.03.2020, the Government of India announced the nationwide lockdown (initially for a period of twenty-one days) in the wake of spread of the novel coronavirus (COVID-19) pandemic. 7.On 31.03.2020, the President of India promulgated the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020, whereby time limits as stipulated in respect of various actions and compliances, were extended. Thereafter, the Parliament enacted the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 [hereafter TOLA], which came into force with effect from 31.03.2020. 8.The Assessing Officer [hereafter the AO] issued a notice dated 01.06.2021 under Section 148 of the Act on the basis that he had reason to believe that the income of the Assessee chargeable to tax in respect of AY 2013-14 had escaped assessment within the meaning of Section 147 of the Act. Such reason to believe is the jurisdictional condition for issuance of such notices under the provisions for reassessment as existed prior to 01.04.2021. The Assessee responded to the notice dated 01.06.2021 disputing the validity of the notice. The Assessee claimed Signature Not Verified that the notice was voidab initio as the necessary procedure as prescribed under Section 148A of the Act was not followed. 9.A similar challenge, as raised by the Assessee, was sustained by this court in Mon Mohan Kohli v. ACIT & Anr.[1] and such notices were set aside. However, subsequently, on 04.05.2022, the Supreme Court rendered a decision in Union of India and Ors. v. Ashish Agarwal[2]. And, in exercise of its powers under Article 142 of the Constitution of India, the Supreme Court issued directions construing such notices issued under Section 148 of the Act as the notices under Section 148A(b) of the Act. The AOs were also directed to furnish such material to the assessees, as was required on the basis of which such notices were premised. 10.In compliance with the said directions, the AO issued another notice dated 30.05.2022 in furtherance of the notice dated 01.06.2021 construing the same as a notice under Section 148A(b) of the Act. The Assessee was called upon to furnish a response to the said notice within a period of two weeks from the said date, that is, on or before 13.06.2022. 11.The petitioner furnished its response to the notice dated 30.05.2022 on 13.06.2022. 12.Thereafter, the AO passed the impugned order dated 30.07.2022 under Section 148A(d) of the Act holding that it was a fit case to re-open the Assessee’s assessment for the AY 2013-14. According to the Assessee, the impugned notice was issued beyond the period of 1 Neutral Citation No.: 2021:DHC:4181-DB 2 (2023) 1 SCC 617 Signature Not Verified limitation as prescribed under Section 149(1) of the Act as extended by the Supreme Court. 13.Pursuant to the aforesaid notice, the Assessee filed its return of income on 26.08.2022. The said proceedings culminated in the assessment order dated 30.05.2023, whereby the AO held that an entry amounting to ₹75 lacs remained unexplained and thus, added the said amount under Section 69 of the Act, to the Assessee’s returned income. charged to tax under Section 115BBE of the Act. THE ISSUE 14.As noted at the outset, the question that falls for consideration of this court is whether the impugned order and the impugned notice were issued beyond the period as stipulated for passing such an order or issuance of such a notice. Signature Not Verified limitation as prescribed under Section 149(1) of the Act as extended by the Supreme Court. 13.Pursuant to the aforesaid notice, the Assessee filed its return of income on 26.08.2022. The said proceedings culminated in the assessment order dated 30.05.2023, whereby the AO held that an entry amounting to ₹75 lacs remained unexplained and thus, added the said amount under Section 69 of the Act, to the Assessee’s returned income. charged to tax under Section 115BBE of the Act. THE ISSUE 14.As noted at the outset, the question that falls for consideration of this court is whether the impugned order and the impugned notice were issued beyond the period as stipulated for passing such an order or issuance of such a notice. 15.Section 149(1) of the Act as in force with effect from 01.04.2021 and prior to its substitution with effect from 01.09.2024 by the Finance (No.2) Act, 2024, expressly provided that no notice under Section 148 of the Act can be issued for the relevant assessment year if three years had elapsed from the end of the relevant assessment year unless the case fell within Clause (b) of the said sub-section. Clause (b) proscribed issuance of notice if three years, but not more than ten years, had elapsed from the end of the relevant assessment year unless the AO had in its possession books of account, other documents, or evidence, which revealed that the income chargeable in the form as stipulated, had escaped assessment. And, such income amounted to or was likely to ₹50 lacs or more. Thus, no notice under Section 148 of the Act could Signature Not Verified be issued beyond the period of ten years from the end of the relevant assessment year. However, in terms of the first proviso to Section 149(1) of the Act, no notice under Section 148 of the Act could be issued in respect of the relevant assessment year beginning on or before 01.04.2021, if such a notice could not be issued, inter alia,under Section 148 of the Act. 16.Concededly, no notice under Section 148 of the Act could be issued under the provisions of Section 149(1) of the Act as was in force prior to 01.04.2021 if, (i) four years had elapsed from the end of the relevant assessment year; (ii) four years but not more than six years had elapsed from the end of the relevant assessment year if the income chargeable to tax, which had escaped assessment, amounted to or was likely to amount to ₹1 lac or more for that year; or (iii) four years but not more than sixteen years had elapsed from the end of the relevant assessment year if the income in relation to any asset (including financial interest) in any entity located outside India and chargeable to tax had escaped assessment. 17.In the present case, there is no allegation that the Assessee’s income that had escaped assessment in respect of AY 2013-14 was in relation to any asset located outside India. Thus, in terms of Section 149(1)(b) of the Act as in force prior to 01.04.2021, no notice under Section 148 of the Act could have been issued beyond the period of six years from the end of the relevant assessment year. Signature Not Verified 18.In view of the above, no notice under Section 148 of the Act could have been issued in this case after 31.03.2020 in respect of AY 2013-14. 17.In the present case, there is no allegation that the Assessee’s income that had escaped assessment in respect of AY 2013-14 was in relation to any asset located outside India. Thus, in terms of Section 149(1)(b) of the Act as in force prior to 01.04.2021, no notice under Section 148 of the Act could have been issued beyond the period of six years from the end of the relevant assessment year. Signature Not Verified 18.In view of the above, no notice under Section 148 of the Act could have been issued in this case after 31.03.2020 in respect of AY 2013-14. 19.However, it is the Revenue’s case that the impugned notice is within the time as extended by virtue of the TOLA [Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020] and the decision of the Supreme Court in Union of India & Ors. v. Ashish Agarwal[2].The Revenue contends that the impugned notice has been issued within the time as prescribed under Section 149(1) of the Act computed in accordance with the third and fourth proviso to Section 149 of the Act as was in force at the material time[3]. The learned counsel for the Revenue contends that the issue is substantially covered by the decision of the Supreme Court in Union of India & Ors. v. Rajeev Bansal[4]. Whilst the learned counsel for the Revenue contends that it is favour of the Revenue however, the learned counsel for the Assessee contends otherwise. 20.Thus, the central question to be addressed is whether the impugned notice was issued within the extended time as available to the AO by virtue of the provisions of the TOLA, the directions issued under Article 142 of the Constitution of India by the Supreme Court in the case of Union of India & Ors. v. Ashish Agarwal[2 ]and the timelines as 3 As in force with effect from 01.04.2021 but prior to 01.04.2023 4 2024 SCC OnLine SC 2693 Signature Not Verified explained by the Supreme Court in Union of India & Ors. v. Rajeev Bansal[4]. UNION OF INDIA AND ORS. V.ASHISH AGARWAL[2 ] 21.As noted at the outset, the proceedings for reassessment were initiated by issuance of the notice dated 01.06.2021 under Section 148 of the Act as in force prior to 01.04.2021. The question regarding validity of such notices was considered by the Supreme Court in Union of India & Ors. v. Ashish Agarwal[2 ]. It is thus necessary to briefly consider the import of the directions issued by the Supreme Court in that case and the context in which the same were issued. 22.Substantial amendments were introduced by the Finance Act, 2021 with effect from 01.04.2021 in respect of the provisions relating to re-assessment of income that has escaped assessment and Section 147 to 151 of the Act, were substituted. As noted above, notwithstanding the amendments to the said Sections, the AOs had issued various notices under Section 148 of the Act to various assesses – including the notice dated 01.06.2021 to the Assessee – under the regime for re-assessment that was in force prior to 01.04.2021. 23.The aforementioned notices were issued on the premise that the TOLA permitted the AOs to issue such notices by imputing that the same were issued prior to 31.03.2021. It was, thus, assumed that the notices could be issued under the provisions as were extant prior to 31.03.2021. Signature Not Verified 24.The said notices were impugned in various petitions filed in High Courts across the country. Various High Courts (including this court) sustained the said challenge and set aside such notices issued under Section 148 of the Act on the ground that the same could not be issued under the statutory regime for reassessment as was in force prior to 31.03.2021. The Revenue appealed the said decisions before the Supreme Court. 23.The aforementioned notices were issued on the premise that the TOLA permitted the AOs to issue such notices by imputing that the same were issued prior to 31.03.2021. It was, thus, assumed that the notices could be issued under the provisions as were extant prior to 31.03.2021. Signature Not Verified 24.The said notices were impugned in various petitions filed in High Courts across the country. Various High Courts (including this court) sustained the said challenge and set aside such notices issued under Section 148 of the Act on the ground that the same could not be issued under the statutory regime for reassessment as was in force prior to 31.03.2021. The Revenue appealed the said decisions before the Supreme Court. 25.The Supreme Court examined the amendments introduced in the Act relating to re-assessment of income and concurred with the views expressed by various high courts that it was incumbent upon the AO to follow the procedure as prescribed under Section 148A of the Act after 01.04.2021. The relevant extract of the said decision is set out below: “15. It cannot be disputed that by substitution of sections 147 to 151 of the Income Tax Act (“the IT Act”) by the Finance Act, 2021, radical and reformative changes are made governing the procedure for reassessment proceedings. Amended Sections 147 to 149 and Section 151 of the IT Act prescribe the procedure governing initiation of reassessment proceedings. However, for several reasons, the same gave rise to numerous litigations and the reopening were challenged inter alia, on the grounds such as: (1) no valid “reason to believe”, (2) no tangible/reliable material/information in possession of the assessing officer leading to formation of belief that income has escaped assessment, Signature Not Verified (3) no enquiry being conducted by the assessing officer prior to the issuance of notice; and reopening is based on change of opinion of the assessing officer and (4) lastly the mandatory procedure laid down by this Court in the case of GKN Driveshafts (India) Ltd. Vs. Income Tax Officer and Ors; (2003) 1 SCC 72, has not been followed. 16. Further pre-Finance Act, 2021, the reopening was permissible for a maximum period up to six years and in some cases beyond even six years leading to uncertainty for a considerable time. Therefore, Parliament thought it fit to amend the Income Tax Act to simplify the tax administration, ease compliances and reduce litigation. Therefore, with a view to achieve the said object, by the Finance Act, 2021, Sections 147 to 149 and Section 151 have been substituted. 17. Under the substituted provisions of the IT Act vide Finance Act, 2021, no notice under section 148 of the IT Act can be issued without following the procedure prescribed under Section 148-A of the IT Act. Along with the notice under Section 148 of the IT Act, the assessing officer (“AO”) is required to serve the order passed under Section 148-A of the IT Act. Section 148-A of the IT Act is a new provision which is in the nature of a condition precedent. Introduction of Section 148-A of the IT Act can thus be said to be a game changer with an aim to achieve the ultimate object of simplifying the tax administration, ease compliance and reduce litigation. 18. But prior to pre-Finance Act, 2021, while reopening an assessment, the procedure of giving the reasons for reopening and an opportunity to the assessee and the decision of the objectives were required to be followed as per the judgment of this Court in the case of GKN Driveshafts (India) Ltd. (supra). 19. However, by way of Section 148-A, the procedure has now been streamlined and simplified. It provides that before issuing any notice under Section 148, the assessing officer shall: (i) conduct any enquiry, if required, with the approval of specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment; (ii) provide an opportunity of being heard to the assessee, with the prior approval of specified authority; 18. But prior to pre-Finance Act, 2021, while reopening an assessment, the procedure of giving the reasons for reopening and an opportunity to the assessee and the decision of the objectives were required to be followed as per the judgment of this Court in the case of GKN Driveshafts (India) Ltd. (supra). 19. However, by way of Section 148-A, the procedure has now been streamlined and simplified. It provides that before issuing any notice under Section 148, the assessing officer shall: (i) conduct any enquiry, if required, with the approval of specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment; (ii) provide an opportunity of being heard to the assessee, with the prior approval of specified authority; (iii) consider the reply of the assessee furnished, if any, in response to the show cause notice referred to in clause (b); and (iv) decide, on the basis of material available on record including reply of the assessee, as to whether or not it is a fit case to issue a notice under section 148 of the IT Act: and (v) the AO is required to pass a specific order within the time stipulated. 20. Therefore, all safeguards are provided before notice under Section 148 of the IT Act is issued. At every stage, the prior approval of the specified authority is required, even for conducting the enquiry as per section 148-A(a). Only in a case where, the assessing officer is of the opinion that before any notice is issued under section 148-A(b) and an opportunity is to be given to the assessee, there is a requirement of conducting any enquiry, the assessing officer may do so and conduct any enquiry. Thus if the assessing officer is of the opinion that any enquiry is required, the assessing officer can do so, however, with the prior approval of the specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment. 21. Substituted Section 149 is the provision governing the time-limit for issuance of notice under Section 148 of the IT Act. The substituted Section 149 of the IT Act has reduced the permissible time-limit for issuance of such a notice to three years and only in exceptional cases ten years. It also provides further additional safeguards which were absent under the earlier regime pre-Finance Act, 2021. 22. Thus, the new provisions substituted by the Finance Act, 2021 being remedial and benevolent in nature and substituted with a specific aim and object to protect the rights and interest of the assessee as well as and the same being in public interest, the respective High Courts have rightly held that the benefit of new provisions shall be made available even in respect of the proceedings relating to past assessment years, provided Section 148 notice has been issued on or after 1-4-2021. We are in complete agreement with the view taken by the various High Courts in holding so.” 26.However, the Supreme Court was also of the view that the Revenue could not be left remediless and the object of re-assessment could not be frustrated. Accordingly, the Supreme Court allowed the appeals in part and modified and substituted the directions issued by various high courts. The relevant extract of the said order containing the aforesaid directions is set out below: “28. In view of the above and for the reasons stated above, the present Appeals are allowed in part. The impugned common judgments and orders (Ashok Kumar Aggarwal v. Union of India, 2021 SCC OnLine All 799) passed by the High Court of Judicature at Allahabad in WT No. 524 of 2021 and other allied tax appeals/petitions, is/are hereby modified and substituted as under: 26.However, the Supreme Court was also of the view that the Revenue could not be left remediless and the object of re-assessment could not be frustrated. Accordingly, the Supreme Court allowed the appeals in part and modified and substituted the directions issued by various high courts. The relevant extract of the said order containing the aforesaid directions is set out below: “28. In view of the above and for the reasons stated above, the present Appeals are allowed in part. The impugned common judgments and orders (Ashok Kumar Aggarwal v. Union of India, 2021 SCC OnLine All 799) passed by the High Court of Judicature at Allahabad in WT No. 524 of 2021 and other allied tax appeals/petitions, is/are hereby modified and substituted as under: 28.1. The impugned Section 148 notices issued to the respective assessees which were issued under unamended Section 148 of the IT Act, which were the subject-matter of writ petitions before the various respective High Courts shall be deemed to have been issued under Section 148-A of the IT Act as substituted by the Finance Act, 2021 and construed or treated to be show-cause notices in terms of Section 148-A(b). The assessing officer shall, within thirty days from today provide to the respective assessees information and material relied upon by the Revenue, so that the assesees can reply to the show-cause notices within two weeks thereafter; 28.2. The requirement of conducting any enquiry, if required, with the prior approval of specified authority under Section 148-A(a) is hereby dispensed with as a one-time measure vis-à-vis those notices which have been issued under Section 148 of the unamended Act from 1-4-2021 till date, including those which have been quashed by the High Courts. 28.3. Even otherwise as observed hereinabove holding any enquiry with the prior approval of specified authority is not mandatory but it is for the concerned Assessing Officers to hold any enquiry, if required. 28.4. The assessing officers shall thereafter pass orders in terms of Section 148-A(d) in respect of each of the assessees concerned; Thereafter after following the procedure as required under Section 148-A may issue notice under Section 148 (as substituted). 28.5. All defences which may be available to the assesses including those available under section 149 of the IT Act and all rights and contentions which may be available to the assessees concerned and Revenue under the Finance Act, 2021 and in law shall continue to be available.” [emphasis added] 27.The Supreme Court also directed that the aforesaid directions would be applicable PAN India to all notices issued under Section 148 of the Act after 01.04.2021, which were similar to the ones that were impugned before various high courts. 28.It is apparent from the above that while the Supreme Court had dispensed with the inquiry under Section 148A(a) of the Act and had directed that the notices issued under Section 148 of the unamended Act be treated as a notice under Section 148A(b) of the Act as a onetime measure. The AOs were directed, within a period of thirty days from date, to provide the assessees’ information and material relied upon by the Revenue so that the assessees could respond to the notices within a period of two weeks thereafter. The AOs were required to pass orders under Section 148A(d) of the Act. 29.It is material to note that the Supreme Court expressly held that all defences “including those available under Section 149 of the Act would continue to be available to the assessees”. THE RELEVANT STATUTORY FRAMEWORK 30.The controversy in the present case is required to be addressed is whether in respect of the provisions relating to procedure of re-assessment as were in force with effect from 01.04.2021 but prior to 01.03.2023. The references to Sections 147, 148, 148A and 149 of the Act hereafter, unless the context indicates otherwise, are to the said provisions as in force with effect from 01.04.2021 but prior to 01.03.2023. Signature Not Verified 29.It is material to note that the Supreme Court expressly held that all defences “including those available under Section 149 of the Act would continue to be available to the assessees”. THE RELEVANT STATUTORY FRAMEWORK 30.The controversy in the present case is required to be addressed is whether in respect of the provisions relating to procedure of re-assessment as were in force with effect from 01.04.2021 but prior to 01.03.2023. The references to Sections 147, 148, 148A and 149 of the Act hereafter, unless the context indicates otherwise, are to the said provisions as in force with effect from 01.04.2021 but prior to 01.03.2023. Signature Not Verified 31.In terms of Section 147 of the Act as in force prior to 01.04.2021, an AO would assess/re-assess the income of an assessee for the relevant assessment year if he had reason to believe that the income chargeable to tax for the said relevant AY had escaped assessment. However, this power was not open ended and the period, which an officer could travel back for re-opening the assessment was not indefinite. Section 149(1) of the Act proscribed the issuance of notice under Section 148 of the Act – which was necessary for initiating the assessment/re-assessment proceedings under Section 147 of the Act – beyond the period of four years from the end of the relevant assessment year. This period was extended to six years if the amount, that has, escaped assessment was ₹1 lac or more, and to sixteen years if the income that has escaped assessment was in relation to any asset located outside India. Additionally, the AO could assume jurisdiction to reopen assessments under Section 147 of the Act only where he had reason to believe that the income had escaped assessment. The reason to believe was not construed expansively. It was necessarily required to be based on tangible material having nexus with the view that an assessee’s income had escaped assessment. 32.In GKN Driveshafts (India) Ltd. v. ITO & Ors.[5], the Supreme Court upheld the procedure evolved to ensure that the assessments are not re-opened on the basis of reasons that are unsustainable. The Supreme Court had, thus, enabled the assessee to obtain a copy of the reasons for reopening of the assessments and file objections to the same. 5 (2003) 1 SCC 72 Signature Not Verified The AO was required to consider and decide the same. If the AO accepted the objections, the reassessment proceedings were required to be dropped. 33.The procedure for re-assessment was substantially amended by virtue of the Finance Act, 2021. Section 148A of the Act was introduced, which included the procedure for providing the assessee an opportunity to address any information available with the AO, which was suggestive of the assessee’s income escaping assessment for any relevant year. The procedure enabled the AO to take an informed decision whether it was a fit case for issuance of a notice under Section 148 of the Act after considering the material on record including responses furnished by the assessee. 34.It is relevant to refer to the provisions of Section 148, 148A and 149 of the Act as were brought in force with effect from 01.04.2021. The same are set out below: “148. Issue of notice where income has escaped assessment.—Before making the assessment, reassessment or recomputation under section 147, and subject to the provisions of section 148A, the Assessing Officer shall serve on the assessee a notice, along with a copy of the order passed, if required, under clause (d) of section 148A, requiring him to furnish within such period, as may be specified in such notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; Signature Not Verified “148. Issue of notice where income has escaped assessment.—Before making the assessment, reassessment or recomputation under section 147, and subject to the provisions of section 148A, the Assessing Officer shall serve on the assessee a notice, along with a copy of the order passed, if required, under clause (d) of section 148A, requiring him to furnish within such period, as may be specified in such notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; Signature Not Verified and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139: 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. Explanation 1.—For the purposes of this section and section 148A, the information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment means,— (i) any information flagged in the case of the assessee for the relevant assessment year in accordance with the risk management strategy formulated by the Board from time to time; (ii) any final objection raised by the Comptroller and Auditor General of India to the effect that the assessment in the case of the assessee for the relevant assessment year has not been made in accordance with the provisions of this Act. Explanation 2.—For the purposes of this section, where,— (i) a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A, on or after the 1st day of April, 2021, in the case of the assessee; or (ii) a survey is conducted under section 133A, other than under sub-section (2A) or sub-section (5) of that section, on or after the 1st day of April, 2021, in the case of the assessee; or (iii) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner, that any money, bullion, jewellery or other valuable article or thing, seized or requisitioned under section 132 or section 132A in case of any other person on or after the 1st day of April, 2021, belongs to the assessee; or Signature Not Verified (iv) the Assessing Officer is satisfied, with the prior approval of Principal Commissioner or Commissioner, that any books of account or documents, seized or requisitioned under section 132 or section 132A in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information contained therein, relate to, the assessee, the Assessing Officer shall be deemed to have information which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the three assessment years immediately preceding the assessment year relevant to the previous year in which the search is initiated or books of account, other documents or any assets are requisitioned or survey is conducted in the case of the assessee or money, bullion, jewellery or other valuable article or thing or books of account or documents are seized or requisitioned in case of any other person. Explanation 3.—For the purposes of this section, specified authority means the specified authority referred to in section 151.” “148A. Conducting inquiry, providing opportunity before issue of notice under section 148. —The Assessing Officer shall, before issuing any notice under section 148,— Explanation 3.—For the purposes of this section, specified authority means the specified authority referred to in section 151.” “148A. Conducting inquiry, providing opportunity before issue of notice under section 148. —The Assessing Officer shall, before issuing any notice under section 148,— (a) conduct any enquiry, if required, with the prior approval of specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment; (b) provide an opportunity of being heard to the assessee, with the prior approval of specified authority, by serving upon him a notice to show cause within such time, as may be specified in the notice, being not less than seven days and but not exceeding thirty days from the date on which such notice is issued, or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice under section 148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in his Signature Not Verified case for the relevant assessment year and results of enquiry conducted, if any, as per clause (a); (c) consider the reply of assessee furnished, if any, in response to the show-cause notice referred to in clause (b); (d) decide, on the basis of material available on record including reply of the assessee, whether or not it is a fit case to issue a notice under section 148, by passing an order, with the prior approval of specified authority, within one month from the end of the month in which the reply referred to in clause (c) is received by him, or where no such reply is furnished, within one month from the end of the month in which time or extended time allowed to furnish a reply as per clause (b) expires: Provided that the provisions of this section shall not apply in a case where,— (a) a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A in the case of the assessee on or after the 1st day of April, 2021; or (b) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any money, bullion, jewellery or other valuable article or thing, seized in a search under section 132 or requisitioned under section 132A, in the case of any other person on or after the 1st day of April, 2021, belongs to the assessee; or (c) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any books of account or documents, seized in a search under section 132 or requisitioned under section 132A, in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information contained therein, relate to, the assessee. Explanation.—For the purposes of this section, specified authority means the specified authority referred to in section 151.” “149. Time limit for notice.—(1) No notice under section 148 shall be issued for the relevant assessment year,— Signature Not Verified (a) if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b); (b) if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of (i) an asset; (ii) expenditure in respect of a transaction or in relation to an event or occasion; or (iii) an entry or entries in the books of account, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more: “149. Time limit for notice.—(1) No notice under section 148 shall be issued for the relevant assessment year,— Signature Not Verified (a) if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b); (b) if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of (i) an asset; (ii) expenditure in respect of a transaction or in relation to an event or occasion; or (iii) an entry or entries in the books of account, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more: Provided that no notice under section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April, 2021, if a notice under section 148 or section 153A or section 153C could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause (b) of sub-section (1) of this section or section 153A or section 153C, as the case may be, as they stood immediately before the commencement of the Finance Act, 2021: Provided further that the provisions of this sub-section shall not apply in a case, where a notice under section 153A, or section 153C read with section 153A, is required to be issued in relation to a search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A, on or before the 31st day of March, 2021: Provided also that for the purposes of computing the period of limitation as per this section, the time or extended time allowed to the assessee, as per show-cause notice issued under clause (b) of section 148A or the period during which the proceeding under section 148A is stayed by an order or injunction of any court, shall be excluded: Provided also that where immediately after the exclusion of the period referred to in the immediately preceding Signature Not Verified proviso, the period of limitation available to the Assessing Officer for passing an order under clause (d) of section 148A is less than seven days, such remaining period shall be extended to seven days and the period of limitation under this sub-section shall be deemed to be extended accordingly. Explanation.—For the purposes of clause (b) of this subsection, “asset” shall include immovable property, being land or building or both, shares and securities, loans and advances, deposits in bank account. (2) The provisions of sub-section (1) as to the issue of notice shall be subject to the provisions of section 151.” 35.Subsequent to the Finance Act, 2021, the Finance Act, 2023 was brought into force with effect from 01.04.2023, wherein two additional provisos were added before the third and fourth proviso to Section 149(1) of the Act, making the existing third and fourth provisos to fifth and sixth. In addition, by the Finance Act, 2023, the words “is less than seven days” were replaced by the words “does not exceed seven days” in the sixth proviso to Section 149(1) of the Act. 36.It is also relevant to refer to Section 3 of TOLA. The relevant extract of Section 3(1) of the Act is set out below:- “3(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 proceedings 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, Signature Not Verified 36.It is also relevant to refer to Section 3 of TOLA. The relevant extract of Section 3(1) of the Act is set out below:- “3(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 proceedings 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, Signature Not Verified commission or tribunal, by whatever name called, under the provisions of the specified Act; *** *** *** 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 31st day of March, 2021, as the Central Government may, by notification, specify in this behalf.” 37. In exercise of the powers under Section 3(1)(a) of the TOLA, the Government of India issued three notifications successively extending the time for completion of the specified acts. In terms of the Notification No.93/2020 dated 31.12.2020, the time limit for completion of the specified acts which fell within the period of 20.03.2020 to 31.12.2020 was extended till 31.03.2021. The said period thereafter was extended till 30.04.2021 by the Notification No.20/2021 dated 31.03.2021 and further stood extended till 30.06.2021 by the notification No.38/21 dated 27.04.2021. 38.Thus, by virtue of the provisions of the TOLA and the notifications issued by the Government of India, the time limit for completion of the specified acts [as defined under Section 3(1)(a) of the TOLA] stood extended till 30.06.2021. OVERARCHING PERIOD OF LIMITATION UNDER SECTION 149 OF ACT. 39.For the purposes of the present petition, it is important to examine the time periods for issuing notices and passing orders under Section Signature Not Verified 148A of the Act and the overarching period of limitation as stipulated under Section 149 of the Act. 40.Clause (b) of Section 148A of the Act expressly provides that the AO is required to give a notice to the assessee to show cause why a notice under Section 148 of the Act not be issued, within such time as may be specified in the notice. This time is required to be not less than seven days but not more than thirty days. This time can be further extended by the AO, if an application is made by the assessee in this regard. 41.In terms of Sub-clause (c) of Section 148A of the Act, the AO is required to consider the response to the show cause notice furnished by the Assessee. 42.Clause (d) of Section 148A of the Act requires the AO to decide on the basis of the material on record, including the response furnished by the assessee to the notice issued under Section 148A(b) of the Act, whether it is a fit case for issuance of notice under Section 148 of the Act. The said clause also stipulates that such a decision is required to be made within one month from the end of the month in which a reply referred to Clause (c) is received by the AO or in case where no reply is furnished by the assessee, within one month from the end of the month in which time or extended time to furnish the reply expires. 43.Section 148 of the Act requires the AO to serve a copy of the notice under Section 148 of the Act along with an order passed under Clause (d) of Section 148A of the Act. As is apparent from the above, Signature Not Verified 43.Section 148 of the Act requires the AO to serve a copy of the notice under Section 148 of the Act along with an order passed under Clause (d) of Section 148A of the Act. As is apparent from the above, Signature Not Verified the procedure as prescribed under Section 148A of the Act including holding of inquiry as contemplated under Clause (a) of Section 148A of the Act; issuance of a show cause notic