Siemens Financial Services Pvt Ltd.)Plot v. Dr. N. K. Gokhale, Jj

Digitallysigned byMEERAMEERAMAHESHMAHESHJADHAVJADHAVDate:2023.09.0714:10:26+0530 IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTIONWRIT PETITION NO. 4888 OF 2022 Siemens Financial Services Pvt Ltd.)Plot no.2, Sector No.2, Kharghar S. O.)Kharghar, Raigarh, Navi Mumbai 410 201)...Petitioner Vs. 1. Deputy Commissioner of Income Tax)Circle-8(2)(1), Mumbai, Room No.624,)6[th] floor, Aayakar Bhavan, Maharshi Karve ) Road, Mumbai 400 020) 2. The Principal Chief Commissioner of )Income Tax Mumbai, Room No.624, )6[th] floor, Aayakar Bhavan, Maharshi Karve )Road, Mumbai 400 020)3. The Principal Chief Commissioner of )Income Tax Mumbai-8, Room No.611,)6[th] floor, Aayakar Bhavan, Maharshi Karve )Road, Mumbai 400 020)4. Union of India)Through Joint Secretary & Legal Adviser,)Branch Secretariat, Department of Legal)Affairs, Ministry of Law and Justice,)2[nd] Floor, Aayakar Bhavan, M. K.Road,)New Marine Lines, Mumbai 400 020)..Respondents ---- Mr. P. J. Pardiwalla, Senior Advocate a/w Mr. Jeet Kamdar i/b Mr. Atul KJasani for Petitioner. Mr. Suresh Kumar a/w Ms Mohinee Chougule for Respondents. ---- CORAM : K.R. SHRIRAM & Dr. N. K. GOKHALE, JJ DATED : 25[th] AUGUST 2023 (ORAL JUDGMENT PER K. R. SHRIRAM J.) 1Rule. Rule made returnable forthwith as pleadings are completed. Petitioner is registered with the Reserve Bank of India (RBI) as Non-Banking Finance Company and is classified as an Asset Finance Company.On 28[th] November 2016, petitioner filed its return of income for A.Y.-2016-2017 declaring a total income of Rs.44,92,46,370/-. Later petitioner filedrevised return of income on 28[th] March 2018 declaring a total income ofRs.50,67,32,580/-. 2The return of income was selected for scrutiny and a notice dated 5[th]September 2018 under Section 143(2) of the Income Tax Act 1961 (the Act)was issued. This was followed by notice dated 5[th] December 2018 underSection 142(1) of the Act. Petitioner responded by its letter dated 6[th]December 2018 and submitted the transaction wise summary onexpenditure on software consumables. Respondent no.1 passed anassessment order dated 23[rd] December 2018 under Section 143(3) of theAct without making any adjustments to the total income as reported bypetitioner in its revised return of income. 3Almost three years later, petitioner received notice dated 25[th] June2021 under Section 148 of the Act, stating that there was reason to believe,petitioner’s income chargeable to tax for A.Y. 2016-2017 has escapedassessment within the meaning of Section 147 of the Act. The impugnednotice mentioned that necessary satisfaction of Range 8(2), Mumbai hasbeen obtained. Petitioner was also provided with the reasons recorded forreopening the assessment in response to the request made by petitioner. 4Petitioner by its letter dated 22[nd] July 2021 replied to the noticeissued under Section 148 of the Act and submitted that the notice has beenissued as per the provisions of Sections 147 to 151 of the Act as they stoodprior to their substitution vide Finance Act, 2021 and respondent no.1should assume jurisdiction post 1[st] April 2021 in terms of the amendedprovisions. Petitioner pointed out that the notice dated 25[th] June 2021 isbad in law and requested respondent no.1 to drop the assessmentproceedings. 5Petitioner was served with the notice dated 26[th] November 2021under Section 142(1) of the Act. Petitioner responded vide its letter dated20[th] December 2021. 4Petitioner by its letter dated 22[nd] July 2021 replied to the noticeissued under Section 148 of the Act and submitted that the notice has beenissued as per the provisions of Sections 147 to 151 of the Act as they stoodprior to their substitution vide Finance Act, 2021 and respondent no.1should assume jurisdiction post 1[st] April 2021 in terms of the amendedprovisions. Petitioner pointed out that the notice dated 25[th] June 2021 isbad in law and requested respondent no.1 to drop the assessmentproceedings. 5Petitioner was served with the notice dated 26[th] November 2021under Section 142(1) of the Act. Petitioner responded vide its letter dated20[th] December 2021. Thereafter, respondent no.1 issued the letter / show cause noticedated 31[st] May 2022 under Section 148A(b) of the Act, wherein respondentno.1 had referred to the notice issued on 25[th] June 2021 under Section 148of the Act. In the said notice dated 31[st] May 2022, respondent no.1 referredto various writ petitions that had been filed in Bombay High Court as well asthe other courts challenging the validity of the notices issued under Section148 of the Act and also referred to the order of the Apex Court in Union ofIndia Vs. Ashish Agarwal[1]and stated that the notice under Section 148 ofthe Act shall be deemed to be issued under Section 148A of the Act assubstituted by the Finance Act 2021 and shall be treated as show causenotice in terms of Section 148A(b) of the Act. Respondent no.1, therefore, treated the notice issued under Section 148 of the Act as show cause noticein terms of Section 148A(b) of the Act. Respondent no.1 also relied oninformation and material annexed to the show cause notice suggesting thatthe income chargeable to tax has escaped assessment within the meaning ofSection 147 of the Act and also relied on the approval of the competentauthority annexed to the impugned show cause notice. 6The annexure to the impugned show cause notice mentioned thefollowing: a) On perusal of the records, it is noticed that the Petitioner hasdebited an amount of Rs. 6,41,87,931/- on account of softwareconsumables as other expenses to the profit and loss account and asper the information gathered Respondent No. 1 alleged that the saidexpense is a capital expenditure which is not allowable as per section37 of the Act and attracts depreciation at 60%. Thus, the remaining40% of the software consumable amounting to Rs. 2,56,75,172/-should be disallowed and added back to the business income ofpetitioner. b) Respondent no.1 alleged that it resulted in underassessment ofincome of Rs. 2,56,75,172/-. The reasons recorded relied on thefinding of respondent no.1 to form the basis for reason to believe thatincome chargeable to tax of Rs. 2,56,75,172/- has escaped assessmentwithin the meaning of section 147 of the Act. c) The reasons recorded alleged that the requisite material facts wereembedded in such a manner that material evidence could not bediscovered by respondent no.1 and the issues were never examined byrespondent no.1 during the course of regular assessment. The reasonsalleged that petitioner has failed to disclose fully and truly all materialfacts necessary for its assessment and therefore, it is a fit case forreopening the assessment within the meaning of section 147 of theAct. d) Respondent no.1 alleged that CBDT vide Notification No. 20/2021has revised the due date relating to issuing the notice under section148 of the Act as per the time limit specified in section 149 orsanction under section 151 of the Act if it expires on March 31, 2021to April 30, 2021. 7Petitioner responded vide its communications dated 9[th] June 2022 and 7[th] July 2022. Various grounds were taken in its response. Respondent no.1, by an order dated 31[st] July 2022 passed under Section 148A(d) of the Act, rejected the submissions of petitioner and in paragraph 9 of the impugnedorder stated as under: d) Respondent no.1 alleged that CBDT vide Notification No. 20/2021has revised the due date relating to issuing the notice under section148 of the Act as per the time limit specified in section 149 orsanction under section 151 of the Act if it expires on March 31, 2021to April 30, 2021. 7Petitioner responded vide its communications dated 9[th] June 2022 and 7[th] July 2022. Various grounds were taken in its response. Respondent no.1, by an order dated 31[st] July 2022 passed under Section 148A(d) of the Act, rejected the submissions of petitioner and in paragraph 9 of the impugnedorder stated as under: “9. In response to notice issued u/s 148A(b) of the I.T. Act dated01.06.2022, the assessee has filed reply vide letter dated 05.07.2022.The reply of the assessee is considered carefully, however, the same isnot acceptable. The assessee has not submitted any documentaryevidence in support of its claim. Overall, the submission made by theassessee is not satisfactory.” 8Respondent no.1 issued an intimation letter for notice under Section 148 of the Act on 31[st] July 2022 and thereafter issued the notice dated 31[st]July 2022 under Section 148 of the Act stating that respondent no.1 hasinformation suggesting that income chargeable to tax has escapedassessment within the meaning of Section 148 of the Act. None of the boxesin the said notice have been ticked and respondent no.1 has not providedwhat information is available with him for issuing the impugned notice. Atthis stage, petitioner filed this petition impugning the show cause noticedated 31[st] May 2022, the order dated 31[st] July 2022 passed under Section148A(d) of the Act and the notice dated 31[st] July 2022 under Section 148 ofthe Act. 9Mr. Pardiwalla appearing for petitioner submitted that the impugnednotice dated 31[st] May 2022, order dated 31[st] July 2022 and intimation letterdated 31[st] July 2022 are: a) beyond limitation, b) signed by the wrongspecified authority, c) lack “information” as required under Section 148, d) results from change of opinion and e) is in violation of Section 151A of theAct. 10Mr. Pardiwalla on the suggestions made by the court confined hissubmissions primarily to “signed by the wrong specified authority” and“change of opinion”. The court felt, if petitioner succeeds on these twopoints and primarily on the point of wrong ‘specified authority’, the courtneed not go into the other grounds raised. 11On the wrong ‘specified authority’, Mr. Pardiwalla submitted as under: a) The provisions of Section 149(1)(b) as introduced by the FinanceAct, 2021 provides that a notice under section 148 of the Act can be issuedbeyond a period of three years and upto a period of ten years from the endof the relevant assessment year only if the Assessing Officer has in hispossession books of account or other documents or evidence which revealthat income chargeable to tax represented in the form of an asset which hasescaped assessment amounts to or is more than Rs. 50 lakhs. b) There is no income chargeable to tax which is represented in theform of an “asset” which has escaped assessment as expenditure oncomputer software consumables cannot be the asset as per Section 149 ofthe Act. Hence, the extended period of time limits specified in Section 149(1)(b) cannot apply to petitioner and hence notice issued on 31[st] July 2022is bad-in-law. c) As per section 151 of the Act, the specified authority who has togrant his sanction for the purposes of section 148 and section 148A is the Principal Chief Commissioner or Principal Director General or where there isno Principal Chief Commissioner or Principal Director General, the ChiefCommissioner or Director General if more than three years have elapsedfrom the end of the relevant assessment year. d) For A.Y.-2016-2017, three years elapsed on 31[st] March 2020 andhence the provisions of Section 151(i) and 151(ii) of the Act would have tobe fulfilled, which have not been complied with. c) As per section 151 of the Act, the specified authority who has togrant his sanction for the purposes of section 148 and section 148A is the Principal Chief Commissioner or Principal Director General or where there isno Principal Chief Commissioner or Principal Director General, the ChiefCommissioner or Director General if more than three years have elapsedfrom the end of the relevant assessment year. d) For A.Y.-2016-2017, three years elapsed on 31[st] March 2020 andhence the provisions of Section 151(i) and 151(ii) of the Act would have tobe fulfilled, which have not been complied with. e) Respondent no.1 has mentioned in the impugned order dated 31[st]July 2022 that prior approval has been taken from respondent no.3 underSection 151 (i) of the Act. Such sanction would be bad in law as respondentno.1 should have complied with Section 151(ii) and not Section 151(i) ofthe Act. Hence, respondent no.3 cannot be a specified authority as perSection 151 of the Act. f) Respondent no.1 cannot rely on the provisions of the Taxation andother laws (Relaxation and Amendment of certain provisions) Act, 2020(TOLA) and the notification issued thereunder as Section 151 of the Act hasbeen amended by Finance Act 2021 and the provisions of amended Sectionwould have to be complied with by respondent no.1, w.e.f. 1[st] April 2021.Hence, as the sanction of the specified authority has not been obtained, theimpugned order and impugned notice both dated 31[st] July 2022 are bad-in-law and should be quashed and set aside. g) The approval given by respondent no.3 is without any applicationof mind and is mechanical approval as respondent no.3, if properly instructed, could never have granted such approval on the facts andcircumstances of the case of petitioner. h) In any event, deduction of expenditure on computer software asrevenue expenditure was correct and query had been raised during theassessment proceedings by the Assessing Officer. Petitioner has provided allthe details in addition to the documents which were filed alongwith returnof income and the Assessing Officer has accepted the explanation given bypetitioner. Relying on the judgment of Aroni Commercials Ltd. Vs. DeputyCommissioner of Income Tax-2(1)[2], Mr. Pardiwalla submitted that once aquery is raised during the assessment proceedings and the assessee hasreplied to it, it follows that the query raised was a subject of considerationof the Assessing Officer while completing the assessment. It is not necessarythat an assessment order should contain reference and/or discussion todisclose his satisfaction in respect of the query raised. i) The change in the language of Section 147 of the Act has not madeany difference because if we accept what revenue says that will still givearbitrary powers to the Assessing Officer to reopen the assessments on thebasis of mere change of opinion which cannot be per se reason to reopen.There is a conceptual difference between power to review and power to re-assess. If we accept revenue’s submissions then in the garb of re-opening theassessment review would take place. The concept of change of opinion is anin-built test to check abuse of power by the Assessing Officer, as held in the judgment of the Apex Court in CIT Vs. Kelvinator of India Ltd.[3] j) Even the recent judgment of Learned Single Judge of Madras High Court in Dr. Mathew Cherian Vs. Assistant Commissioner of Income Tax[4],the court has held that whether under old or new regime of reassessment, itis settled position that the issues decided categorically by judicial precedentshould not be revisited in the guise of reassessment. 12Mr. Suresh Kumar for revenue, at the outset, submitted that sanctionof the authority has been taken in view of the instructions given by theCentral Board of Direct Taxes on 11[th] May 2022. Mr. Suresh Kumarsubmitted that the instructions reads as under : judgment of the Apex Court in CIT Vs. Kelvinator of India Ltd.[3] j) Even the recent judgment of Learned Single Judge of Madras High Court in Dr. Mathew Cherian Vs. Assistant Commissioner of Income Tax[4],the court has held that whether under old or new regime of reassessment, itis settled position that the issues decided categorically by judicial precedentshould not be revisited in the guise of reassessment. 12Mr. Suresh Kumar for revenue, at the outset, submitted that sanctionof the authority has been taken in view of the instructions given by theCentral Board of Direct Taxes on 11[th] May 2022. Mr. Suresh Kumarsubmitted that the instructions reads as under : “Hon'ble Supreme Court has upheld the views of High Courts that thebenefit 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 the new section149 of the Act is to be applied at that point. Based on above, the extended reassessment notices are to be dealtwith 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 the approvalof the specified authority, only if the case falls under clause (b) of sub-section (1) of section 149 as amended by the Finance Act, 2021 andreproduced in paragraph 6.1 above. Specified authority under section151 of the new law in this case shall be the authority prescribedunder clause (ii) of that section. (ii) AY 16-17. AY 17-18: Fresh notice under section 148 can be issuedin these cases. with the approval of the specified authority, underclause (a) of sub-section (1) of new section 149 of the Act, since theyare within the period of three years from the end of the relevantassessment year. Specified authority under section 151 of the newlaw in this case shall be the authority prescribed under clause (i) ofthat section.” 13Mr. Suresh Kumar also submitted as under: a) That in the instance case, the period that has elapsed is three yearsor less than three years because the assessment year is of AY-2016-2017, asprovided under Section 3 of TOLA and extended by Notification dated 31[st]March 2020 and subsequently until 31[st] March 2021, the three years wouldhave expired on 31[st] March 2020 and has got extended till 30[th] June 2021.The provisions of TOLA read with judgment of the Apex Court in AshishAgarwal (Supra), the sanction has been rightly granted by the PrincipalCommissioner and there is no violation of Section 151 of the Act as allegedor at all. b) The contention of petitioner that TOLA only seeks to extend theperiod of limitation and does not affect the scope of section 151 ismisplaced because Section 151 is time dependent and that the notice asissued being within three years, it is only Section 151(i) which would apply. c) If petitioner’s submissions are accepted, it would apply to a hybridview in the sense that petitioner seeks to partly apply unamended law andpartly the amended law. As held by the Apex Court in Ashish Agarwal(Supra), the notice issued by the Department after 1[st] April, 2021 is deemedto be a Notice under the amended Section 148A(b). This would mean thaton 31[st] March 2020 the time period of 3 years would have expired andhence, TOLA would be and is squarely applicable. d) The judgments prior to TOLA are not applicable because theamended provisions were not considered at that stage. e) Under TOLA, time for issuing notice stood extended and hence thenotice issued under Section 149(1)(b) was within time. The same principlewould apply to a notice issued under Section 148A(d) or notice issuedunder Section 148 alongwith order passed under Section 148A(d). The main thrust,however, was on instructions dated 11[th] May 2022. 14On the change of opinion, Mr. Suresh Kumar submitted:- d) The judgments prior to TOLA are not applicable because theamended provisions were not considered at that stage. e) Under TOLA, time for issuing notice stood extended and hence thenotice issued under Section 149(1)(b) was within time. The same principlewould apply to a notice issued under Section 148A(d) or notice issuedunder Section 148 alongwith order passed under Section 148A(d). The main thrust,however, was on instructions dated 11[th] May 2022. 14On the change of opinion, Mr. Suresh Kumar submitted:- (a) In view of the change in the language of amended Section 147 ofthe Act, it would not be applicable. (b) In any event, the material furnished expressly records that theincome of the year under consideration has escaped assessment because offailure on the part of assessee to disclose fully and truly all material factsnecessary for his assessment for the assessment year under consideration.The Assessing officer has noted that assessee has not fully and trulydisclosed the material facts. The Assessing Officer has also recorded that even though assessee hasproduced books of account, audited profit and loss account and balancesheet, requisite material facts as noted in the reasons for reopening wereembedded in such manner that material evidence could not be discoveredby the Assessing Officer with due diligence and accordingly attracted theprovisions of explanation of sub Section (1) of Section 147 of the Act. c) Therefore, it is not a case of change of opinion but the case whereassessee has failed to make true and full disclosure. 15In rejoinder, Mr. Pardiwalla submitted that in the instructions dated 11[th] May 2022, it is expressly mentioned that it applies only to the notices that were issued between 1[st] April 2021 and ending on 30[th] June 2021 andin any event, even assuming if what Mr. Suresh Kumar argues that it wouldtravel back in time to their original date is accepted, will not be applicableto the case at hand because: a) The instructions itself restricted it to notice issued during the period between 1[st] April 2021 and 30[th] June 2021, where paragraph no.1reads as under: 1. Hon'ble Supreme Court, vide its judgment dated 04.05.2022 (2022SCC Online SC 543), in the case of Union of India v. Ashish Agarwalhas adjudicated on the validity of the issue of reassessment noticesissued by the Assessing Officers during the period beginning on 1[st]April, 2021 and ending with 30[th] June 2021, within the time extendedby the Taxation and Other Laws (Relaxation and Amendment ofCertain Provisions) Act. 2020 [hereinafter referred to as "TOLA"] andvarious notifications issued thereunder (these reassessment noticeshereinafter referred to as "extended reassessment notices"). b) In any case in Tata Communications Transformation Services Ltd. Vs. Assistant Commissioner of Income Tax[5] this court held that only the timefor issuance of notice was extended and the law has not been amended. The court has also expressly observed that TOLA is not applicable toA.Y.-2015-2016 or any subsequent years and, therefore, reliance on TOLAwould be of no assistance. In Ashish Agarwal (Supra), the Apex Court didnot interfere with this view expressed by the Bombay High Court. c) This court in J. M. Financial & Investment Consultancy Services Pvt Ltd. Vs. Assistant Commissioner of Income Tax, Circle 3(2)(1) & ors[6] has held that for A.Y. 2015-2016, the six years limitation was expiring on 31[st] March2022, TOLA will not be applicable and in any event, the time to issue noticemay have been extended but that would not amount to amending theprovisions of Section 151 of the Act. Mr. Pardiwalla emphasised on paragraphs 6 and 7 of the order in J.M.Financial (Supra) which read as under: The court has also expressly observed that TOLA is not applicable toA.Y.-2015-2016 or any subsequent years and, therefore, reliance on TOLAwould be of no assistance. In Ashish Agarwal (Supra), the Apex Court didnot interfere with this view expressed by the Bombay High Court. c) This court in J. M. Financial & Investment Consultancy Services Pvt Ltd. Vs. Assistant Commissioner of Income Tax, Circle 3(2)(1) & ors[6] has held that for A.Y. 2015-2016, the six years limitation was expiring on 31[st] March2022, TOLA will not be applicable and in any event, the time to issue noticemay have been extended but that would not amount to amending theprovisions of Section 151 of the Act. Mr. Pardiwalla emphasised on paragraphs 6 and 7 of the order in J.M.Financial (Supra) which read as under: 6. Even for a moment we agree with the view expressed by thePrincipal Commissioner of Income Tax, still it applies to only caseswhere the limitation was expiring on 31 st March 2020. In the case athand, the assessment year is 2015-2016 and, therefore, the six yearslimitation will expire only on 31 st March 2022. Certainly, therefore,the Relaxation Act provisions may not be applicable. In any event, thetime to issue notice may have been extended but that would notamount to amending the provisions of Section 151 of the Act. 7. In our view, since four years had expired from the end of therelevant assessment year, as provided under Section 151(1) of theAct, it is only the Principal Chief Commissioner or ChiefCommissioner or Principal Commissioner or Commissioner who couldhave accorded the approval and not the Additional Commissioner ofIncome Tax. On this ground alone, we will have to set aside the noticedated 31[st] March 2021 issued under Section 148 of the Act, which isimpugned in this petition. In view thereof, the consequent orders andnotices will also have to go. d) This court in case of Sidhmicro Equities (P) Ltd. Vs. Deputy Commissioner of Income Tax[7] had followed its own judgment in the case of J. M. Financial (supra) and held that the sanction that was given, wasinvalid. The Apex Court in Deputy Commissioner of Income Tax Vs.Sidhmicro Equities (P) Ltd.[8] upheld the view expressed by the Bombay HighCourt. 8. (2023) 150 taxmann.com 461 (SC) -OUR FINDINGS / CONCLUSIONS: 16Before we proceed further, it would be useful to reproduce Sections 147, 148, 148A, 149 and 151 of the Act as it was then applicable : “147. Income escaping assessment—If any income chargeable to tax,in the case of an assessee, has escaped assessment for any assessmentyear, the Assessing Officer may, subject to the provisions of sections148 to 153, assess or reassess such income or recompute the loss orthe depreciation allowance or any other allowance or deduction forsuch assessment year (hereafter in this section and in sections 148 to153 referred to as the relevant assessment year). Explanation.—For the purposes of assessment or reassessment orrecomputation under this section, the Assessing Officer may assess orreassess the income in respect of any issue, which has escapedassessment, and such issue comes to his notice subsequently in thecourse of the proceedings under this section, irrespective of the factthat the provisions of section 148A have not been complied with. Explanation.—For the purposes of assessment or reassessment orrecomputation under this section, the Assessing Officer may assess orreassess the income in respect of any issue, which has escapedassessment, and such issue comes to his notice subsequently in thecourse of the proceedings under this section, irrespective of the factthat the provisions of section 148A have not been complied with. 148. Issue of notice where income has escaped assessment.—Beforemaking the assessment, reassessment or recomputation undersection147, and subject to the provisions ofsection148A, the AssessingOfficer shall serve on the assessee a notice, along with a copy of theorder passed, if required, under clause (d) ofsection148A, requiringhim to furnish within a period of three months from the end of themonth in which such notice is issued, or such further period as maybe allowed by the Assessing Officer on the basis of an applicationmade in this regard by the assessee a return of his income or theincome of any other person in respect of which he is assessable underthis Act during the previous year corresponding to the relevantassessment year, in the prescribed form and verified in the prescribedmanner and setting forth such other particulars as may be prescribed;and the provisions of this Act shall, so far as may be, applyaccordingly as if such return were a return required to be furnishedunder section139: Provided that no notice under this section shall be issued unless thereis information with the Assessing Officer which suggests that theincome chargeable to tax has escaped assessment in the case of theassessee for the relevant assessment year and the Assessing Officerhas obtained prior approval of the specified authority to issue suchnotice: Provided further that no such approval shall be required where theAssessing Officer, with the prior approval of the specified authority,has passed an order under clause (d) ofsection148A to the effect thatit is a fit case to issue a notice under this section: Provided also that any return of income, required to be furnished by an assessee under this section and furnished beyond the periodallowed shall not be deemed to be a return under section139. Explanation 1.—For the purposes of thissectionandsection148A, theinformation with the Assessing Officer which suggests that the incomechargeable to tax has escaped assessment means,— (i) any information in the case of the assessee for the relevantassessment year in accordance with the risk management strategyformulated by the Board from time to time; (ii) any audit objection to the effect that the assessment in the case ofthe assessee for the relevant assessment year has not been made inaccordance with the provisions of this Act; or (iii) any information received under an agreement referred toinsection90 orsection90A of the Act; or (iv) any information made available to the Assessing Officer under thescheme notified under section135A; or (v) any information which requires action in consequence of the orderof a Tribunal or a Court. Explanation 2.—For the purposes of this section, where,— (i) a search is initiated under section132 or books of account, otherdocuments or any assets are requisitioned under section132A, on orafter the 1st day of April, 2021, in the case of the assessee; or (ii) a survey is conducted under section133A, other than under sub-section(2A) of that section, on or after the 1st day of April, 2021, inthe case of the assessee; or (iii) the Assessing Officer is satisfied, with the prior approval of thePrincipal Commissioner or Commissioner, that any money, bullion,jewellery or other valuable article or thing, seized or requisitionedunder section132 or under section132A in case of any other person onor after the 1st day of April, 2021, belongs to the assessee; or Explanation 2.—For the purposes of this section, where,— (i) a search is initiated under section132 or books of account, otherdocuments or any assets are requisitioned under section132A, on orafter the 1st day of April, 2021, in the case of the assessee; or (ii) a survey is conducted under section133A, other than under sub-section(2A) of that section, on or after the 1st day of April, 2021, inthe case of the assessee; or (iii) the Assessing Officer is satisfied, with the prior approval of thePrincipal Commissioner or Commissioner, that any money, bullion,jewellery or other valuable article or thing, seized or requisitionedunder section132 or under section132A in case of any other person onor after the 1st day of April, 2021, belongs to the assessee; or (iv) the Assessing Officer is satisfied, with the prior approval ofPrincipal Commissioner or Commissioner, that any books of accountor documents, seized or requisitioned under section132orsection132A in case of any other person on or after the 1st day ofApril, 2021, pertains or pertain to, or any information containedtherein, relate to, the assessee, the Assessing Officer shall be deemedto have information which suggests that the income chargeable to taxhas escaped assessment in the case of the assessee where the search isinitiated or books of account, other documents or any assets arerequisitioned or survey is conducted in the case of the assessee ormoney, bullion, jewellery or other valuable article or thing or books ofaccount or documents are seized or requisitioned in case of any otherperson. Explanation 3.—For the purposes of this section, specified authoritymeans the specified authority referred to insection151. 148A. Conducting inquiry, providing opportunity before issue ofnotice under section148.—The Assessing Officer shall, before issuingany notice under section148,— (a) conduct any enquiry, if required, with the prior approval ofspecified authority, with respect to the information which suggeststhat the income chargeable to tax has escaped assessment; (b) provide an opportunity of being heard to the assessee, with theprior approval of specified authority, by serving upon him a notice toshow cause within such time, as may be specified in the notice, beingnot less than seven days and but not exceeding thirty days from thedate on which such notice is issued, or such time, as may be extendedby him on the basis of an application in this behalf, as to why a noticeunder section148 should not be issued on the basis of informationwhich suggests that income chargeable to tax has escaped assessmentin his case for the relevant assessment year and results of enquiryconducted, if any, as per clause (a); (c) consider the reply of assessee furnished, if any, in response to theshow-cause notice referred to in clause (b); (d) decide, on the basis of material available on record includingreply of the assessee, whether or not it is a fit case to issue a noticeunder section148, by passing an order, with the prior approval ofspecified authority, within one month from the end of the month inwhich the reply referred to in clause (c) is received by him, or whereno such reply is furnished, within one month from the end of themonth in which time or extended time allowed to furnish a reply asper clause (b) expires: Provided that the provisions of this section shall not apply in a casewhere,— (a) a search is initiated under section132 or books of account, otherdocuments or any assets are requisitioned under section132A in thecase of the assessee on or after the 1st day of April, 2021; or (b) the Assessing Officer is satisfied, with the prior approval of thePrincipal Commissioner or Commissioner that any money, bullion,jewellery or other valuable article or thing, seized in a search undersection132 or requisitioned under section132A, in the case of anyother person on or after the 1st day of April, 2021, belongs to theassessee; or Provided that the provisions of this section shall not apply in a casewhere,— (a) a search is initiated under section132 or books of account, otherdocuments or any assets are requisitioned under section132A in thecase of the assessee on or after the 1st day of April, 2021; or (b) the Assessing Officer is satisfied, with the prior approval of thePrincipal Commissioner or Commissioner that any money, bullion,jewellery or other valuable article or thing, seized in a search undersection132 or requisitioned under section132A, in the case of anyother person on or after the 1st day of April, 2021, belongs to theassessee; or (c) the Assessing Officer is satisfied, with the prior approval of thePrincipal Commissioner or Commissioner that any books of account ordocuments, seized in a search under section132 or requisitionedunder section132A, in case of any other person on or after the 1st dayof April, 2021, pertains or pertain to, or any information containedtherein, relate to, the assessee. Explanation.—For the purposes of this section, specified authoritymeans the specified authority referred to insection151. 149. Time limit for notice.—(1) No notice under section148 shall beissued for the relevant assessment year,— (a) if three years have elapsed from the end of the relevantassessment year, unless the case falls under clause (b); (b) if three years, but not more than ten years, have elapsed from theend of the relevant assessment year unless the Assessing Officer has inhis possession books of account or other documents or evidencewhich reveal that the income chargeable to tax, represented in theform of— (i) an asset; (ii) expenditure in respect of a transaction or in relation to an eventor occasion; or (iii) an entry or entries in the books of account, which has escapedassessment amounts to or is likely to amount to fifty lakh rupees ormore: Provided that no notice under section148 shall be issued at any timein a case for the relevant assessment year beginning on or before 1stday of April, 2021, a notice under section148 orsection153Aorsection153C could not have been issued at that time on account ofbeing beyond the time limit specified under the provisions of clause(b) of sub-section(1) of thissectionorsection153A orsection153C, asthe case may be, as they stood immediately before thecommencement of the Finance Act, 2021: Provided further that the provisions of this sub-section shall not applyin a case, where a notice under section153A, orsection153C readwithsection153A, is required to be issued in relation to a searchinitiated under section132 or books of account, other documents orany assets requisitioned under section132A, on or before the 31st dayof March, 2021: Provided also that for cases referred to in clauses (i), (iii) and (iv) ofExplanation 2 to section148, where,— (a) a search is initiated undersection132; or (b) a search under section132 for which the last of authorisations isexecuted; or (c) requisition is made under section132A, after the 15th day of March of any financial year and the period forissue of notice under section148 expires on the 31st day of March ofsuch financial year, a period of fifteen days shall be excluded for thepurpose of computing the period of limitation as per this section andthe notice issued under section148 in such case shall be deemed tohave been issued on the 31st day of March of such financial year: Provided also that where the information as referred to in Explanation1 to section148 emanates from a statement recorded or documents impounded under section131 or section133A, as the case may be, onor before the 31st day of March of a financial year, in consequence of,— (a) a search under section132 which is initiated; or (b) a search under section132 for which the last of authorisations isexecuted; or (c) a requisition made under section132A, Provided also that where the information as referred to in Explanation1 to section148 emanates from a statement recorded or documents impounded under section131 or section133A, as the case may be, onor before the 31st day of March of a financial year, in consequence of,— (a) a search under section132 which is initiated; or (b) a search under section132 for which the last of authorisations isexecuted; or (c) a requisition made under section132A, after the 15th day of March of such financial year, a period of fifteendays shall be excluded for the purpose of computing the period oflimitation as per this section and the notice issued under clause (b)ofsection148A in such case shall be deemed to have been issued onthe 31st day of March of such financial year: Provided also that for the purposes of computing the period oflimitation as per this section, the time or extended time allowed to theassessee, as per show-cause notice issued under clause (b)ofsection148A or the period during which the proceeding undersection148A is stayed by an order or injunction of any court, shall beexcluded: Provided also that where immediately after the exclusion of theperiod referred to in the immediately preceding proviso, the period oflimitation available to the Assessing Officer for passing an order underclause (d) ofsection148A does not exceed seven days, such remainingperiod shall be extended to seven days and the period of limitationunder this sub-section shall be deemed to be extended accordingly. Explanation.—For the purposes of clause (b) of this sub-section,"asset" shall include immovable property, being land or building orboth, shares and securities, loans and advances, deposits in bankaccount. (1A) Notwithstanding anything contained in sub-section(1), wherethe income chargeable to tax represented in the form of an asset orexpenditure in relation to an event or occasion of the value referred toin clause (b) of sub-section(1), has escaped the assessment and theinvestment in such asset or expenditure in relation to such event oroccasion has been made or incurred, in more than one previous yearsrelevant to the assessment years within the period referred to inclause (b) of sub-section(1), a notice under section148 shall beissued for every such assessment year for assessment, reassessment orrecomputation, as the case may be. (2) The provisions of sub-section(1) as to the issue of notice shall besubject to the provisions of section151 . 151. Sanction for issue of notice.—Specified authority for thepurposes ofsection148 andsection148A shall be,— (i) Principal Commissioner or Principal Director or Commissioner orDirector, if three years or less than three years have elapsed from theend of the relevant assessment year; (ii) Principal Chief Commissioner or Principal Director General orChief Commissioner or Director General, if more than three yearshave elapsed from the end of the relevant assessment year : Provided that the period of three years for the purposes of clause (i)shall be computed after taking into account the period of limitation asexcluded by the third or fourth or fifth provisos or extended by thesixth proviso to sub-section(1) ofsection149.” SPECIFIED AUTHORITY :- 17Section 148 provides that before making the assessment, reassessment (i) Principal Commissioner or Principal Director or Commissioner orDirector, if three years or less than three years have elapsed from theend of the relevant assessment year; (ii) Principal Chief Commissioner or Principal Director General orChief Commissioner or Director General, if more than three yearshave elapsed from the end of the relevant assessment year : Provided that the period of three years for the purposes of clause (i)shall be computed after taking into account the period of limitation asexcluded by the third or fourth or fifth provisos or extended by thesixth proviso to sub-section(1) ofsection149.” SPECIFIED AUTHORITY :- 17Section 148 provides that before making the assessment, reassessment or recomputation under Section 147 and subject to provisions of Section148A, the Assessing Officer shall serve on the assessee a notice alongwith acopy of the order passed, if required under clause (d) of Section 148A. Italso says no notice under Section 148 shall be issued unless there isinformation with the Assessing Officer which suggests that the incomechargeable to tax has escaped assessment in the case of the assessee for therelevant assessment year and the Assessing Officer has obtained priorapproval of the specified authority to issue such notice. No such approvalshall be required where the Assessing Officer, with the prior of the approvalof the specified authority, has passed an order under clause (d) of Section148A to the effect that it is a fit case to issue a notice under Section 148 ofthe Act. 18Section 148A provides that the Assessing Officer shall, before issuingany notice under Section 148 ………….. (d)- decide, on the basis ofmaterial available on record including reply of the assessee, whether or notit is a fit case to issue a notice under Section 148, by passing an order, withthe prior approval of specified authority, within one month from the end of the month …………………”. The explanation below Section 148A says - forthe purposes of this Section, specified authority means the specifiedauthority referred to in Section 151. 19Under Section 149(1)(a), no notice under Section 148 shall be issuedfor the relevant assessment year if three years have elapsed from the end ofthe relevant assessment year, unless the case falls under clause (b). Clause(b) of Section 149(1), provides if three years, but not more than ten years,have elapsed from the end of the relevant assessment year unless theAssessing Officer has in his possession books of account or other documentsor evidence which reveal that the income chargable to tax, represented inthe form of an asset, (as relevant to this case) which has escaped assessmentamounts to or is likely to amount to fifty lakh rupees or more for that year.Explanation below 4[th] proviso says that for the purposes of clause (b) ofthis sub section, “asset” shall include immovable property being land orbuilding or both, shares and securities, loans and advances, deposits in bankaccount. 20Under Section 151 “specified authority” for the purposes of Section148 and Section 148A shall be, if three years or less than three years haveelapsed from the end of the relevant assessment year, PrincipalCommissioner or Principal Director or Commissioner or Director. If morethan three years have elapsed from the end of the relevant assessment year,then Principal Chief Commissioner or Principal Director General or ChiefCommissioner or Director General. 21Admittedly, in this case, the approval/sanction for order under Section148A(d) of the Act has been granted by the Principal Commissioner ofIncome Tax-8. The entire controversy is, therefore, (a) whether the PrincipalCommissioner was the specified authority, who could have granted theapproval / sanction ?, (b) if not, the effect thereof ? 22In our view, the approval is not valid. Hence, the impugned orderpassed under Section 148A(d) read with notice issued under Section 148 ofthe Act dated 31[st] July 2022 is not valid and has to be quashed and setaside. 21Admittedly, in