DAWAR FOOTWEAR INDUSTRIES V. UNION OF INDIA AND 3 OTHERS

WTAX/669/2022

AI Insights

The case involves Dawar Footwear Industries, the petitioner, challenging a notice issued under Section 148 of the Income Tax Act, 1961 by the Union of India and others, the respondents. The notice was intended for reopening reassessment proceedings for the Assessment Year 2015-16 but was issued beyond the permissible limitation period, thus claiming it was without jurisdiction. The respondents argued that the notice could be considered under Section 148A(2) due to amendments by the Finance Act, 2022, and cited a Supreme Court judgment in Ashish Agarwal. However, the petitioner contended that the judgment and the amended provisions did not apply retroactively to their case, which was decided based on the laws and circulars in effect prior to the amendments. The court agreed with the petitioner, referencing the Board's Circular and a similar case, Ajay Bhandari, to conclude that the notice was indeed barred by limitation and thus invalid.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 723467 (HC-ALLAHABAD)
• Appeal Type: Others
• Pronouncement Date: 20-05-2022
• Assessment Year: misc
• Other Referred Cases: Union of India and others Versus Ashish Agarwal 2022 SCC OnLine SC 543, Ajay Bhandari Versus Union of India and 3 others
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: A S G I; GAURAV MAHAJAN; GOPAL VERMA; MANU GHILDIYAL
• Assessee Lawyers: AMIT MAHAJAN
• Keywords: Income Tax; Jurisdiction; Limitation; Notice; Reassessment
• Section: 148; 148A(2)

Judgement Text

"Court No. - 3 Case :- WRIT TAX No. - 669 of 2022 Petitioner :- Dawar Footwear Industries Respondent :- Union Of India And 3 Others Counsel for Petitioner :- Amit Mahajan Counsel for Respondent :- A.S.G.I.,Gaurav Mahajan,Gopal Verma Hon'ble Surya Prakash Kesarwani,J. Hon'ble Jayant Banerji,J. Heard Sri Amit Mahajan, learned counsel for the petitioner, Sri Gopal Varma, learned Senior Standing counsel for the respondent no.1 and Sri Manu Ghildiyal, learned Senior Standing Counsel for the respondent nos. 2,3 and 4- Income Tax Department. This writ petition has been filed praying for the following relief:- (a) Issue a writ, order or direction in the nature of certiorari quashing the notice issued under section 148 of the Income Tax Act, 1961 dated 31.03.2021 digitally signed on 31.03.2021 at 04:04 p.m. and sent through e-mail on 01.04.2021 at 12:47 a.m. (Annexure No.4) which is wholly without jurisdiction for reopening reassessment proceedings for A.Y. 2015-16. (b) Issue a writ, order or direction in the nature of certiorari quashing the order dated 10.03.2022 (Annexure No.7) passed by the respondent revenue rejecting the objections taken by petitioner on the issuance of notice under section 148 of the Income Tax Act, 1961. Learned counsel for the petitioner submits that notice under Section 148 of the Income Tax Act, 1961 dated 31.03.2021 was issued to the petitioner on 01.04.2021, whereas limitation for issuing notice had expired on 31.03.2021. Thus notice itself was without jurisdiction being barred by limitation. Learned counsel for the respondent nos. 2,3 and 4 states on instructions that impugned notice was issued on 01.04.2021 but he submits that impugned notice issued on 01.04.2021 is liable to be treated as notice under section 148A (2) of the Income Tax Act, 1961 in view of judgment of Hon'ble Supreme Court in the case of Union of India and others Versus Ashish Agarwal 2022 SCC OnLine SC 543. He further submits that now under the facts and circumstances of the case and in view of the judgment in the case Ashish Agarwal (supra), the provisions of Income Tax Act, 1961, as amended by the Finance Act, 2022 shall apply and, therefore, the impugned notice cannot be interfered with. Learned counsel for the petitioner now submits that if according to the respondents, Section 148A(2) of the Act, 1961 as amended by Finance Act, 2022 are applied, the period of limitation is three years for the evaded income, upto Rs. 50,00,000/-, and therefore, the limitation for the assessment year in question had expired on 31.03.2019, inasmuch as, \"reason to believe\" records evaded income of less than Rs. 50,00,000/-. He further submits that by judgment in the case of Ashish Agarwal (supra), directions have been issued under Article 142 of the Constitution of India in respect of notice issued after 01.04.2021 and not on or before 01.04.2021. Therefore, the judgment in the case of Ashish Agarwal (supra) has no application in the present case. He also submitted that the jurisdiction upon respondents cannot be conferred by any judgment or order inasmuch as, it is well settled that the jurisdiction can be conferred only by Legislation and not by orders of Court. Therefore, in the absence of any Legislation, conferring the jurisdiction upon the assessing authority to issue notice beyond period of the limitation, the impugned notice is wholly without authority of law and without jurisdiction. We have carefully considered the submissions of the learned counsel for the parties. The impugned notice under Section 148 of the Act,1961 has been admittedly issued by the Assessing Officer on 01.04.2021 for the Assessment Year 2015-16, recording reasons as under:- \" In view of aforementioned facts, I have reason to believe that an income related to date of non- genuine profits/losses of Rs. 48,32,000/- has escaped assessment in the case of M/s Dawar Footwear Industries for A.Y. 2015-16 within meaning of section 147 of Income tax Act, 1961 which is liable to be assessed to tax.\" Since the alleged income escaping assessment to tax is less than Rs. 50,000,00/- for Assessment Year 2015-16, therefore, in view of instructions No.279/ Misc./M-51/2022-ITJ, dated 11.05.2022 issued by the Ministry of Finance, Department of Revenue, Central Board of Direct Taxes, ITJ Section, New Delhi, the impugned notice under section 148 of the Act, 1961 for the Assessment Years 2015-16 is barred by limitation, as the limitation for issuing notice has expired on 31.03.2021. Similar controversy in Writ Tax No. 347 of 2022 (Ajay Bhandari Versus Union of India and 3 others) has been decided by this Court on 17.05.2022 in which the aforesaid Board's Circular dated 11.05.2022 has been relied by the respondents and, therefore, they cannot be allowed to take conflicting stand. The petitioner's case is covered by the aforesaid judgment in the case of Ajay Bhandari (supra) and Board's Circular dated 11.05.2022. Therefore, the writ petition deserves to be allowed. For all the reasons aforestated, the impugned notice under section 148 of the Income Tax Act, 1961 issued on 01.04.2021 for the Assessment Year 2015-16 and the impugned order dated 10.03.2022 and all other consequential proceedings are hereby quashed. The writ petition is allowed. Order Date :- 20.5.2022 T.S. Digitally signed by TRIBHUWAN SINGH Date: 2022.05.24 09:49:25 IST Reason: Location: High Court of Judicature at Allahabad "