Salil Gulati v. Assistant Commissioner Of Income Tax,Circle 49(1) Delhi & Ors

$~26 IN THE HIGH COURT OF DELHI AT NEW DELHI+W.P.(C) 12541/2022 & CM APPLs.37959-37961/2022 SALIL GULATI Through: Mr. Rajat Mittal, Advocate. ..... Petitioner versus ASSISTANT COMMISSIONER OF INCOME TAX,CIRCLE 49(1) DELHI & ORS. ..... Respondents Through: Mr. Abhishek Maratha, Advocate. %Date of Decision: 31[st]August, 2022 CORAM:HON’BLE MR. JUSTICE MANMOHANHON’BLE MS. JUSTICE MANMEET PRITAM SINGH ARORAJ U D G M E N T MANMOHAN, J: (ORAL) 1.Present writ petition has been filed challenging the order passed underSection 148A(d) of the Income Tax Act, 1961 (‘the Act’) and the notice issuedunder Section 148 of the Act dated 30[th]July, 2022 for the Assessment Year2013-14. Petitioner primarily challenges the constitutional vires of InstructionNo.1/2022 dated 11[th]May, 2022 issued by the CBDT. The relevant portion ofCBDT Instruction No.01/2022 is reproduced hereinbelow:- “Subject: Implementation of the judgment of the Hon’ble SupremeCourt dated 04.05.2022 (2022 SCC OnLine SC 543) (Union of India v.Ashish Agarwal)- Instruction regarding ....... 6.0Operation of the new section 149 of the Act to identify caseswhere fresh notice under section 148 of the Act can be issued: 6.1With respect of operation of new section 149 of the Act, thefollowing may be seen: xxxxxxxxx Hon’ble Supreme Court has upheld the views of High Courts thatthe benefit of new law shall be made available even in respect ofproceedings relating to past assessment years. Decision of Hon’bleSupreme Court read with the time extension provided by TOLA willallow extended reassessment notices to travel back in time to theiroriginal date when such notices were to be issued and then newsection 149 of the act is to be applied at that point.the benefit of new law shall be made available even in respect ofproceedings relating to past assessment years. Decision of Hon’bleSupreme Court read with the time extension provided by TOLA willallow extended reassessment notices to travel back in time to theiroriginal date when such notices were to be issued and then newsection 149 of the act is to be applied at that point. 6.2Based on above, the extended reassessment notices are to be dealtwith as under:-with as under:- (i)AY 2013-14, AY 2014-15 and AY 2015-16:Fresh notice undersection 148 of the Act can be issued in these cases, with theapproval of the specified authority, only if the case falls underclause (b) of sub-section (1) of section 149 as amended by theFinance Act, 2021 and reproduced in paragraph 6.1 above.Specified authority under section 151 of the new law in this caseshall be the authority prescribed under clause (ii) of that section.”section 148 of the Act can be issued in these cases, with theapproval of the specified authority, only if the case falls underclause (b) of sub-section (1) of section 149 as amended by theFinance Act, 2021 and reproduced in paragraph 6.1 above.Specified authority under section 151 of the new law in this caseshall be the authority prescribed under clause (ii) of that section.” 2.Learned counsel for the petitioner submits that the impugned notice dated30[th]July, 2022 issued under Section 148 of the Act is barred by limitationinasmuch as the Section 149(1)(a) & (b) of the Act as substituted by the FinanceAct, 2021 provides that any case can be reopened within three years from theend of relevant assessment year if Assessing Officer has information whichsuggests that income chargeable to tax has escaped assessment and up to tenyears in case income chargeable to tax which has escaped assessment amountsto or is likely to amount to fifty lakh rupees or more for that year. He, however,submits that the First Proviso to Section 149 provides that no case can bereopened for any assessment year beginning on or before 1[st]April, 2021 if such notice could not have been issued at that time on account of being beyond thetime limit specified under old Section 149(1)(b). notice could not have been issued at that time on account of being beyond thetime limit specified under old Section 149(1)(b). 3.He further states that the time limit for reassessment under old Section149(1)(b) was six years from the end of the Assessment Year which means thatcases for Assessment Year 2013-14 and prior cannot be reopened under clause(b) of Section 149(1) as they have already become time barred on 31[st]March,2020. 4.Learned counsel for the petitioner states that three High Courts havestayed the Section 148 notices on the ground of limitation. 5.Per contra, learned counsel for the respondent-revenue who appears onadvance notice states that the decision of the Supreme Court in Union of Indiavs. Ashish Agarwal, 2022 SCC OnLine SC 543 read with the time extensionprovided by Taxation and Other Laws (Relaxation and Amendment of CertainProvisions) Act, 2020 (for short ‘TOLA’) allows extended reassessment noticesto travel back in time to their original date when such notices were to be issuedand then new Section 149 of the Act is to be applied at that point. He contendsthat had the notice been beyond limitation, the Apex Court would have set asidetheimpugnednotice.HestatesthattheApexCourthasinfactlegalised/validated all the notices issued under unamended provisions bytreating them to be deemed show cause notice under Section 148A of the Act (assubstituted by Finance Act, 2021) as a one time measure. He also states that ifthe submission of the learned counsel for the petitioner is accepted, then itwould render the judgment of the Supreme Court in Union of India vs. AshishAgarwal (supra) nugatory. 6.This Court is of the view that the contention of the learned counsel forthe petitioner that the present proceedings is time barred is not correct, as reassessment proceeding was initiated during the time limit extended by TOLA.Section 149, as it read prior to its amendment by Finance Act, 2021 reads asunder: “Time limit for notice. 149. (1) No notice under Section 148 shall be issued for the relevantassessment year,- (a) if found years have elapsed from the end of the relevant assessmentyear, unless the case falls under clause (b) and clause (c); (b) if four years, but not more than six years, have elapsed from the endof the relevant assessment year unless the income chargeable to taxwhich has escaped assessment amounts to or is likely to amount to onelakh rupees or more for that year;…” 7.The time limit for issuing notice under unamended Section 149 which wasfalling between 20[th]March, 2020 and 31st March 2021 was extended by Section3 of TOLA read with Notification No. 20/2021 dated 31[st]March, 2021, andNotification No. 38/2021 dated 27[th]April, 2021, until 30[th]June, 2021. Theinitial notice in the present proceedings was issued on 23[rd]June, 2021 i.e.extended time limit. The said notice was quashed by this Court in petitioner’searlier writ petition being W.P.(C) 7582/2021 vide judgment reported as MonMohan Kohli vs. Assistant Commissioner of Income Tax and Anr., 2021 SCCOnLine Del 5250 as the mandatory procedure of Section 148A of the Act wasnot followed before issuing the said notice. In the said judgment though thisCourt struck down the Explanations A(a)(ii) and A(b) to the said notifications,yet it clarified that the power of reassessment that existed prior to 31[st]March,2021 continued to exist till the extended period i.e. till 30[th]June, 2021; as theFinance Act, 2021 had merely changed the procedure to be followed prior toissuance of notice with effect from 1[st]April, 2021. 8.When the judgment of this Court in Mon Mohan Kohli (supra) wascarried forward in appeal, the Supreme Court held that the Section 148 noticesissued between 1[st]April 2021 to 30[th]June, 2021, will be deemed to have beenissued under Section 148A of the Act and therefore the notice dated 23[rd]June,2021, issued to the petitioner stood revived. 8.When the judgment of this Court in Mon Mohan Kohli (supra) wascarried forward in appeal, the Supreme Court held that the Section 148 noticesissued between 1[st]April 2021 to 30[th]June, 2021, will be deemed to have beenissued under Section 148A of the Act and therefore the notice dated 23[rd]June,2021, issued to the petitioner stood revived. 9.Consequently, since the time period for issuance of reassessment noticefor assessment year 2013-14 stood extended until 30[th]June, 2021 and theincome alleged to have escaped assessment is beyond Rs.50 lakhs, the firstproviso of Section 149 (as amended by the Finance Act, 2021) is not attracted inthe facts of this case and even without the benefit of Instruction No.01/2022 theimpugned notice is within limitation. 10.Accordingly, the present writ petition along with the pending applicationis dismissed.However, this Court clarifies that the Assessing Officer shalldecide the matter on its own merits without being influenced by any observationmade in the present order, except the issue of limitation. MANMOHAN, J AUGUST 31, 2022js/AS MANMEET PRITAM SINGH ARORA, J