RAMCHAND THAKURDAS JHAMTANI,THANE V. ACIT-19(3), MUMBAI

CO 226/MUM/2024

AI Insights

The case involves a dispute between the Additional Commissioner of Income Tax and Thakurdas Jhamtani concerning the reassessment of income for the Assessment Year 2015-2016. Initially, a notice under Section 148 of the Income Tax Act was issued to the Assessee, which was later treated under the new regime introduced by the Finance Act, 2021. The Assessee contested the validity of the reassessment proceedings, arguing that the notice was issued beyond the permissible time limit. The Tribunal examined the applicability of the new regime's time limits on reassessment notices and found that the notice issued was indeed beyond the statutory period, leading to the quashing of both the notice and the subsequent assessment order.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 37718 (ITAT-MUMBAI)
• Appeal Type: Cross Objection
• Pronouncement Date: 28-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2015-2016
• Other Referred Cases: Union of India vs. Ashish Agarwal, Union of India vs. Rajeev Bansal
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ASSESSEE
• Keywords: Period of limitation
• Section: 147; 148; 250; 2

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL \"D\" BENCH, MUMBAI SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER SMT RENU JAUHRI, ACCOUNTANT MEMBER ITA No. 3552/MUM/2024 (Assessment Year: 2015-16) Additional Commissioner of Income Tax 19(3) 513, 5th Floor, Piramal Chambers, Parel, Mumbai – 400020 …………. Appellant Thakurdas Jhamtani Gala No. 120, Rajlaxmi Complex, Q Building, Backside Kalher, Bhiwandi, Thane – 400203, Maharashtra [PAN: AAEPJ8492K] Vs …………. Respondent C. O. No. 226/MUM/2024 (Assessment Year: 2015-16) Ramchand Thakurdas Jhamtani Gala No. 120, Rajlaxmi Complex, Q Building, Backside Kalher, Bhiwandi, Thane – 400203, Maharashtra [PAN: AAEPJ8492K] Additional Commissioner of Income Tax 19(3) 513, 5th Floor, Piramal Chambers, Parel, Mumbai - 400020 …………. Vs …………. Appellant Respondent Appearance For the Appellant/Assessee For the Respondent/Department : : Shri Dharan Gandhi Shri R. R. Makwana Date Conclusion of hearing Pronouncement of order : : 12.02.2025 28.02.2025 O R D E R Per Bench: 1. The present appeal and cross-objection pertain to Assessment Year 2015-2016. The Revenue has preferred appeal against the order, ITA No. 3552/Mum/2024& C.O. No. 226/Mum/2024 Assessment Year 2015-16 2 dated 16/05/2024, passed by the Commissioner of Income Tax, Appeal, Delhi [hereinafter referred to as the ‘CIT(A)’], National Faceless Appeal Centre (NFAC), under Section 250 of the Income Tax Act, 1961[hereinafter referred to as ‘the Act’], whereby the Ld. CIT(A) had disposed off the appeal of the Assessee against the Assessment Order, dated 29/05/2023, passed under Section 147 r.w.s. 144B of the Act, for the Assessment Year 2015-2016. The Assessee has filed cross-objection. 2. The relevant facts in brief are that notice under Section 148 of the Act was issued to the Assessee for the Assessment Year 2015-2016 on 30/06/2021 (i.e., after the expiry of 4 years but before the expiry of 6 years from the end of the relevant assessment year). Subsequently, in compliance with the judgment of the Hon’ble Supreme Court in the case of Union of India vs. Ashish Agarwal 444 ITR 1 (SC) [04/05/2022], communication, dated 25/05/2022, was sent to the Assessee intimating that the aforesaid notice issued under Section 148 of the Act (under old regime) would be treated as the show-cause notice issued in terms of Section 148A(b) of the Act (under new regime introduced by the Finance Act, 2021 w.e.f. 01/04/2021). The Assessing Officer also shared with the Assessee material/information on the basis of which the Assessing Officer had formed a belief that income had escaped assessment. Thereafter, order under Section 148A(d) of the Act was passed on 27/07/2022 which was followed by issuance of notice under Section 148 of the Act on 27/07/2022. The reassessment proceedings culminated into passing of the Assessment Order, dated 29/05/2023, passed under Section 147 read with Section 144B of the Act. The appeal preferred by the Assessee against the aforesaid Assessment Order was allowed by the CIT(A) vide Order, dated 16/05/2024. Being aggrieved, the Revenue has preferred the present appeal before the Tribunal ITA No. 3552/Mum/2024& C.O. No. 226/Mum/2024 Assessment Year 2015-16 3 challenging the relief granted by the CIT(A), while the Revenue has filed cross-objection challenging the validity of the re-assessment proceedings. 3. We would first take up cross-objection filed by the Assessee raising jurisdictional issue. The cross objection raised by the Assessee read as under: “1. The notice issued u/s 148 of the Act dated 27.07.2022 is bad in law. The Ld. AO has not fulfilled the jurisdictional requirements of section 147 to 151 of the Act.” 4. We have heard both the sides and have perused the material on record in relation to this issue. We have also taken into consideration the judicial precedents cited during the course of hearing. 5. The issue that arises for consideration is whether notice, dated 27/07/2022, issued under Section 148 of the Act (new regime) is barred by limitation specified in Section 149 of the Act as has been contended by the Learned Authorised Representative of the Assessee. 6. It is admitted position that the notice, dated 30/06/2021, issued under Section 148 of the Act (old regime) was treated as notice issued under Section 148A(b) of the Act by the Assessing Officer. Thereafter, order under Section 148A(d) of the Act was passed on 27/07/2022, and the same was followed by issuance of notice, dated 27/07/2022, issued under Section 148 of the Act (new regime) (i.e. after the expiry of 6 years from the end of the Assessment Year 2015-2016). 7. The case of the Assessee is that as per First Proviso to Section 149(1) of the Act, no notice under Section 148 of the Act (new ITA No. 3552/Mum/2024& C.O. No. 226/Mum/2024 Assessment Year 2015-16 4 regime) could have been issued after 31/03/2022. 8. At this juncture it would be pertinent to refer to the judgment of the Hon’ble Supreme Court in the case Union of India vs. Rajeev Bansal [2024] 469 ITR 46 (SC)[03/10/2024]. The Hon’ble Supreme Court had made the following observations in relation to notice issued under Section 148 of the Act for the Assessment Year 2015- 2016 and in relation to First Proviso to Section 149(1) of the Act (new regime): “44. We now proceed to analyse the issues given the broad legislative and judicial background discussed above. E. Reading TOLA into the Income-tax Act i. First proviso to Section 149(1) of the new regime 45. The first proviso to Section 149(1)(b) provides thus: 149. (1) No notice under section 148 shall be issued for the relevant assessment year, (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 possession of books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more for that year: 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 such notice 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) ITA No. 3552/Mum/2024& C.O. No. 226/Mum/2024 Assessment Year 2015-16 5 of this section, as they stood immediately before the commencement of the Finance Act, 2021:\"[Emphasis supplied] 46. The ingredients of the proviso could be broken down for analysis as follows: (i) no notice under section 148 of the new regime can be issued at any time for an assessment year beginning on or before 1 April 2021; (ii) if it is barred at the time when the notice is sought to be issued because of the \"time limits specified under the provisions of\" 149(1)(b) of the old regime. Thus, a notice could be issued under section 148 of the new regime for assessment year 2021-2022 and before only if the time limit for issuance of such notice continued to exist under section 149(1)(b) of the old regime. 47. xx xx 48. Notices have to be judged according to the law existing on the date the notice is issued. Section 149 of the old regime primarily provided two time limits: (i) four years for all situations and (ii) beyond four years and within six years if the income chargeable to tax which escaped assessment amounted to Rupees one lakh or more. After 1 April 2021, the time limits prescribed under the new regime came into force. The ordinary time limit of four years was reduced to three years. Therefore, in all situations, reassessment notices could be issued under the new regime if not more than three years have elapsed from the end of the relevant assessment year. For example, for assessment year 2018-2019, the four year period would have expired on 31 March 2023 under the old regime. However, if the notice is issued after 1 April 2021, the three year time limit prescribed under the new regime will be applicable. The three year time limit will expire on 31 March 2022. ITA No. 3552/Mum/2024& C.O. No. 226/Mum/2024 Assessment Year 2015-16 6 49. The first proviso to Section 149(1)(b) requires the determination of whether the time limit prescribed under section 149(1)(b) of the old regime continues to exist for the assessment year 2021-2022 and before. Resultantly, a notice under Section 148 of the new regime cannot be issued if the period of six years from the end of the relevant assessment year has expired at the time of issuance of the notice. This also ensures that the new time limit of ten years prescribed under section 149(1)(b) of the new regime applies prospectively. For example, for the assessment year 2012-2013, the ten year period would have expired on 31 March 2023, while the six year period expired on 31 March 2019. Without the proviso to Section 149(1)(b) of the new regime, the Revenue could have had the power to reopen assessments for the year 2012-2013 if the escaped assessment amounted to Rupees fifty lakhs or more. The proviso limits the retrospective operation of Section 149(1)(b) to protect the interests of the assesses.” (Emphasis Supplied) 9. On bare perusal of the above extract of the judgment of Hon’ble Supreme Court in the case of Rajeev Bansal (supra), we find that the Hon’ble Supreme Court had clarified as under: (a) A notice could be issued under Section 148 of the new regime for Assessment year 2021-2022 and assessment years prior thereto only if the time limit for issuance of such notice continued to exist under Section 149(1)(b) of the old regime. (b) In view of the First Proviso to Section 149(1)(b) of the Act a notice under Section 148 of the Act (new regime) cannot be issued if the period of six years from the end of ITA No. 3552/Mum/2024& C.O. No. 226/Mum/2024 Assessment Year 2015-16 7 the relevant assessment year has expired at the time of issuance of the notice. This also ensures that the new time limit of ten years prescribed under Section 149(1)(b) of the Act (new regime) applies prospectively. The said Proviso limits the retrospective operation of Section 149(1)(b) to protect the interests of the assesses. 10. In the present case, the time limit of 6 years from the end of Assessment Year 2015-2016 expired on 31/03/2022. Therefore, as per Section 149(1)(b) read with First Proviso to Section 149(1) of the Act (new regime), notice under Section 148 of the Act could not have been issued for the Assessment Year 2015-2016 after 31/03/2022. Thus, notice, dated 27/07/2022, issued under Section 148 of the Act was barred by limitation. 11. We find that before the Hon’ble Supreme Court in the case of Rajeev Bansal (supra), the Revenue has conceded that for the Assessment Year 2015-16, notices issued on or after 01/04/2021, would have to be dropped and this has been recorded by the Hon’ble Supreme Court in the following manner: “19. Mr. N Venkataraman, learned Additional Solicitor General of India, made the following submissions on behalf of the Revenue: a. xx xx b. Section 149 of the new regime provides three crucial benefits to the assesses: (i) the four-year time limit for all situations has been reduced to three years; (ii) the first proviso to Section 149 ensures that re-assessment for previous assessment years cannot be undertaken beyond six years; and (iii) the monetary threshold of Rupees fifty lakhs will apply to the re assessment for previous assessment years; c. xx xx d. xx xx ITA No. 3552/Mum/2024& C.O. No. 226/Mum/2024 Assessment Year 2015-16 8 e. The Finance Act 2021 substituted the old regime for re- assessment with a new regime. The first proviso to Section 149 does not expressly bar the application of TOLA. Section 3 of TOLA applies to the entire Income-tax Act, including Sections 149 and 151 of the new regime. Once the first proviso to Section 149(1)(b) is read with TOLA, then all the notices issued between 1 April 2021 and 30 June 2021 pertaining to assessment years 2013-2014, 2014-2015, 2015-2016, 2016-2017, and 2017-2018 will be within the period of limitation as explained in the tabulation below: Assessment Year Within 3 Years Expiry of Limitation read with TOLA for (2) Within six Years Expiry of Limitation read with TOLA for (4) (1) (2) (3) (4) (5) 2013-2014 31-3-2017 TOLA not applicable 31-3-2020 30-6-2021 2014-2015 31-3-2018 TOLA not applicable 31-3-2021 30-6-2021 2015-2016 31-3-2019 TOLA not applicable 31-3-2022 TOLA not applicable 2016-2017 31-3-2020 30-6-2021 31-3-2023 TOLA not applicable 2017-2018 31-3-2021 30-6-2021 31-3-2024 TOLA not applicable f. The Revenue concedes that for the assessment year 2015-16, all notices issued on or after 1 April 2021 will have to be dropped as they will not fall for completion during the period prescribed under TOLA; g. Section 2 of TOLA defines \"specified Act\" to mean and include the Income-tax Act. The new regime, which came into effect on 1 April 2021, is now part of the Income-tax Act. Therefore, TOLA continues to apply to the Income T a x Act even after 1 April 2021; and h. Ashish Agarwal (supra) treated Section 148 notices issued by the Revenue between 1 April 2021 and 30 June 2021 as show-cause notices in terms of Section 148A(b). Thereafter, the Revenue issued notices under section 148 of the new regime between July and August 2022. Invalidation of the ITA No. 3552/Mum/2024& C.O. No. 226/Mum/2024 Assessment Year 2015-16 9 Section 148 notices issued under the new regime on the ground that they were issued beyond the time limit specified under the Income-tax Act read with TOLA will completely frustrate the judicial exercise undertaken by this Court in Ashish Agarwal (supra). xx xx” 12. In view of the above, the notice, dated 27/07/2022, issued under Section 148 of the Act and the consequent the Assessment Order, dated 29/05/2023, passed under Section 147 read with Section 144B of the Act are quashed as being bad in law. Thus, Cross- Objection raised by the Assessee is allowed and accordingly, all the grounds raised by the Revenue in the departmental appeal in relation to the relief granted by the CIT(A) on merits are dismissed as having been rendered infructuous. 13. In terms of the paragraph 12 above, the Cross-Objection raised by the Assessee is allowed and the appeal preferred by the Revenue is dismissed. Order pronounced on 28.02.2025. Sd/- Sd/- (Renu Jauhri) Accountant Member (Rahul Chaudhary) Judicial Member म ुंबई Mumbai; दिन ुंकDated : 28.02.2025 Karishma J. Pawar, Stenographer ITA No. 3552/Mum/2024& C.O. No. 226/Mum/2024 Assessment Year 2015-16 10 आदेशकीप्रतितितिअग्रेतिि/Copy of the Order forwarded to : 1. अपील र्थी/ The Appellant 2. प्रत्यर्थी/ The Respondent. 3. आयकरआय क्त/ The CIT 4. प्रध न आयकर आय क्त/ Pr.CIT 5. दिभ गीयप्रदिदनदध, आयकरअपीलीयअदधकरण, म ुंबई/ DR, ITAT, Mumbai 6. ग र्डफ ईल / Guard file. आिेश न स र/ BY ORDER, सत्य दपिप्रदि //True Copy// उप/सह यकपुंजीक र /(Dy./Asstt.Registrar) आयकरअपीलीयअदधकरण, म ुंबई / ITAT, Mumbai "