GENPACT INDIA HOLDINGS,MAURITIUS V. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 1(3)(1) INTERNATIONAL TAXATION, NEW DELHI

ITA 1527/DEL/2024

AI Insights

The case involves M/s. Genpact India Holdings appealing against the final assessment order passed by the Assessing Officer for the assessment year 2016-17. The primary contention was the legality of the reassessment proceedings initiated by the Assessing Officer, which the appellant argued were barred by time limitation. The Tribunal considered additional grounds of appeal concerning the procedural validity of the reassessment notice and order, specifically the requirement for sanction from the appropriate authority under section 151 of the Act. The Tribunal's decision was influenced by the need for compliance with procedural safeguards intended to prevent arbitrary reassessment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 26107 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2016-2017
• Other Referred Cases: National Thermal Power Co. Ltd. versus CIT [(1998) 229 ITR 383 (SC)], All Cargo Global Logistics Ltd. vs. DCIT 137 ITD 287 (Mum-SB), Union of India v. Rajeev Bansal [2024] 167 taxmann.com 70
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY B. BASANTA
• Assessee Lawyers: SACHIT JOLLY
• Keywords: Reassessment proceedings; Reopening of assessment
• Section: 147; 148; 20

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: ‘D’ NEW DELHI BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA No.1527/Del/2024 Assessment Year: 2016-17 M/s. Genpact India Holdings, C/o- Genpact India Pvt. Ltd, DLF City, Phase-V, Sector- 54, Golf Course Road, Gurugram Vs. ACIT, Circle-1(3)(1), International Taxation, New Delhi PAN: AAFCG0582K (Appellant) (Respondent) ORDER PER SATBEER SINGH GODARA, JM This assessee’s appeal for assessment year 2016-17, is directed against the Assessing Officer’s final assessment order dated 01.03.2024 passed in DIN & Order No. ITBA/AST/S/147/2023-24/1061914443(1) involving proceedings under section 147 r.w.s. 144C(13) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’). 2. Heard both the parties. Case file perused. Assessee by Sh. Sachit Jolly Sr. Adv. Ms. Soumya Singh, Adv. Department by Sh. Vijay B. Basanta, CIT(DR) Date of hearing 05.03.2025 Date of pronouncement 19.03.2025 ITA No.1527/Del/2024 2 | P a g e 3. It emerges at the outset that the assessee/appellate herein has filed its application dated 3rd March, 2024 seeking to admit its following additional grounds: 1. The Appellant had filed the captioned appeal before this Hon'ble Tribunal on 04.04.2024 challenging the assessment order dated 01.03.2024 passed by the Assessing Officer on various grounds mentioned in the aforesaid Appeal. 2. In addition to the grounds of appeals raised by the Appellant in the captioned appeal, the Appellant craves leave of this Hon'ble Tribunal to raise the following additional grounds of appeal, for which the facts are already on record, and prays that the same may be admitted and be heard and considered while adjudicating the aforementioned appeal: \"12. That in view of the facts and circumstances of the case, reassessment proceedings initiated in the case of Appellant are illegal, bad in law and barred by time limitation since the notice dated 29.07.2022 issued under section 148 of the Act as well as the order dated 29.07.2022 under section 148A(d) of the Act have been passed beyond limitation under section 149(1) of the Act and hence, the same are liable to be quashed. Therefore, the consequent Impugned Order passed under section 147 r.w.s. 144C(13) of the Act, is also illegal, bad in law, void ab initio and liable to be quashed. 13. That in view of the facts and circumstances of the case, reassessment proceedings are barred by limitation in terms of section 149 of the Act having been initiated after a period of 3 years from the end of the relevant assessment year, without there being any income represented by an asset of more than Rs. 50 Lakhs, which has escaped assessment. 3. The Appellant further submits that the above-mentioned additional grounds of appeal pertain to purely a legal issue and do not involve any investigation of new facts and should be allowed to be raised at this stage as the same go to the root of the matter and hence, are absolutely necessary for rendering substantial justice in the matter. Furthermore, these grounds are raised in view of the leave granted by this Hon'ble Bench vide order dated 24.02.2025. 4. The Appellant submits that this Hon'ble Tribunal has the inherent power to take into consideration an additional ground, particularly if such grounds of appeal pertain to legality of the proceedings, and facts necessary for adjudication are already on record. Accordingly, it is prayed that the aforementioned grounds may be admitted for adjudication. Reliance is placed on the decision of the Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd. versus CIT [(1998) 229 ITR 383 (SC)]. ITA No.1527/Del/2024 3 | P a g e 5. In view of the aforesaid and in the interest of equity and justice, it is respectfully prayed, that the aforesaid additional grounds of appeal call for being admitted and adjudicated on merits in view of the discretion vested with this Hon'ble Tribunal. Therefore, in light of the above, the Appellant most humbly prays that: (a) The grounds of appeal raised in para 2 above may kindly be admitted and adjudicated while deciding the present appeal; (b) Pass such other and further direction/s as this Hon'ble Tribunal may deem fit and proper in the facts and circumstances of the case. 4. The Revenue vehemently objects to the assessee’s aforesaid application for admission of additional grounds that the same deserve to be rejected since filed at this belated stage. We find no merit in the Revenue’s instant technical objections in light of NTPC Limited Vs. CIT 229 ITR 383 (SC) & All Cargo Global Logistics Ltd. vs. DCIT 137 ITD 287 (Mum-SB) settling the issue in assessee’s favour that the tribunal could very well entertain such additional ground(s) going to the root of the matter for the purposes of determining correct tax liability in a particular case subject to a rider that all relevant facts thereof form part of the records. We make it clear that there is no dispute raised at the Revenue’s behest regarding the relevant facts duly emanating from the case file. We thus admit the assessee’s foregoing additional ground for our apt adjudication. 5. Next comes the legal issue between the parties. Learned senior counsel first of all refers to the Assessing Officer’s section ITA No.1527/Del/2024 4 | P a g e 148 notice dated 30th June, 2021 issued after obtaining the necessary satisfaction of CIT(IT), Delhi-1 (page 68 in the paper- book). He then quotes section 151(ii) of the Act that once the above stated notice has been issued after a period of more than 3 years having elapsed from the end of relevant assessment year; the necessary sanction ought to have been obtained not from the Commissioner but from the “Principal Chief Commissioner or Principal Director…………….” 6. We notice in this factual backdrop that the instant clinching issue i.e. who has to be the learned “prescribed authority” as to whether it should be the jurisdictional commissioner or Principal Commissioner under section 151(i) or the Principal Chief Commissioner under clause (ii) of the Act, as the case may be, is no more res-integra as per hon’ble apex court recent landmark decision in Union of India v. Rajeev Bansal [2024] 167 taxmann.com 70, deciding the same against the department as under: “73. Section 151 imposes a check upon the power of the Revenue to reopen assessments. The provision imposes a responsibility on the Revenue to ensure that it obtains the sanction of the specified authority before issuing a notice under Section 148. The purpose behind this procedural check is to save the assesses from harassment resulting from the mechanical reopening of assessments. 128 A table ITA No.1527/Del/2024 5 | P a g e representing the prescription under the old and new regime is set out below: Regime Time limits Specified authority Section 151(2) of the old regime Before expiry of four years from the end of the relevant assessment year Joint Commissioner Section 151(1) of the old regime After expiry of four years from the end of the relevant assessment years Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner Section 151(i) of the new regime Three years or less than three years from the end of the relevant assessment year Principal Commissioner or Principal Director or Commissioner or Director Section 151(ii) of the new regime More than three years have elapsed from the end of the relevant assessment year Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General 74. The above table indicates that the specified authority is directly co-related to the time when the notice is issued. This plays out as follows under the old regime: (i) If income escaping assessment was less than Rupees one lakh: (a) a reassessment notice could be issued under Section 148 within four years after obtaining the approval of the Joint Commissioner; and (b) no notice could be issued after the expiry of four years; and (ii) If income escaping was more than Rupees one lakh: (a) a reassessment notice could be issued within four years after obtaining the approval of the Joint Commissioner; and (b) after four years but within six years after obtaining the approval of the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner. 75. After 1 April 2021, the new regime has specified different authorities for granting sanctions under Section 151. The new regime is beneficial to the assessee because it specifies a higher level of authority for the grant of sanctions in comparison to the old regime. Therefore, in terms of Ashish Agarwal (supra), after 1 April 2021, the prior approval must be obtained from the appropriate authorities specified under Section 151 of the new regime. The effect of Section 151 of the new regime is thus: ITA No.1527/Del/2024 6 | P a g e (i) If income escaping assessment is less than Rupees fifty lakhs: (a) a reassessment notice could be issued within three years after obtaining PART E the prior approval of the Principal Commissioner, or Principal Director or Commissioner or Director; and (b) no notice could be issued after the expiry of three years; and (ii) If income escaping assessment is more than Rupees fifty lakhs: (a) a reassessment notice could be issued within three years after obtaining the prior approval of the Principal Commissioner, or Principal Director or Commissioner or Director; and (b) after three years after obtaining the prior approval of the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General. 76. Grant of sanction by the appropriate authority is a precondition for the assessing officer to assume jurisdiction under Section 148 to issue a reassessment notice. Section 151 of the new regime does not prescribe a time limit within which a specified authority has to grant sanction. Rather, it links up the time limits with the jurisdiction of the authority to grant sanction. Section 151(ii) of the new regime prescribes a higher level of authority if more than three years have elapsed from the end of the relevant assessment year. Thus, non- compliance by the assessing officer with the strict time limits prescribed under Section 151 affects their jurisdiction to issue a notice under Section 148. 77. Parliament enacted TOLA to ensure that the interests of the Revenue are not defeated because the assessing officer could not comply with the pre- conditions due to the difficulties that arose during the COVID-19 pandemic. Section 3(1) of TOLA relaxes the time limit for compliance with actions that fall for completion from 20 March 2020 to 31 March 2021. TOLA will PART E accordingly extend the time limit for the grant of sanction by the authority specified under Section 151. The test to determine whether TOLA will apply to Section 151 of the new regime is this: if the time limit of three years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under Section 151(i) has an extended time till 30 June 2021 to grant approval. In the case of Section 151 of the old regime, the test is: if the time limit of four years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under Section 151(2) has time till 31 March 2021 to grant approval. The time limit for Section 151 of the old regime expires on 31 March 2021 because the new regime comes into effect on 1 April 2021.” 7. Suffice to say, it has come on record in light of their lordship’s detailed discussion in para 75 hereinabove that section 151(ii) ITA No.1527/Del/2024 7 | P a g e approval in the instant case involving escaped income of Rs.50 lakhs or more, had to be obtained under the “new regime” from the “Principal Chief Commissioner” etc. We accordingly adopt the foregoing detailed discussion mutatis mutandis to conclude that the impugned section 148 proceedings herein are not sustainable in law for want of valid section 151(ii) approval in very terms. The impugned reopening/reassessment stands quashed therefore. 8. All other pleading on merits stands rendered academic. 9. This assessee’s appeal is allowed in above terms. Order pronounced in the open court on 19th March, 2025 Sd/- Sd/- (S. RIFAUR RAHMAN) (SATBEER SINGH GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 19th March, 2025. RK/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi "