Riddhi Agro Industries V. Union of India and Chief Commissioner of Income-tax and Pr. Commissioner of Income-tax and Income-tax Officer, Ward-1(2) and National Faceless Assessment Unit

WA/315/2023

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The case involves Riddhi Agro Industries, which appealed against the order of a learned Single Judge that partly dismissed its writ petition concerning a reassessment notice under Section 148 of the Income-tax Act, 1961. The appellant argued that the notice was issued beyond the statutory period of limitation as prescribed under Section 149(1)(b) of the Act, even considering the extension due to the COVID-19 pandemic. The Division Bench of the High Court examined the timing of the notice issuance and the applicable legal provisions, ultimately finding that the notice was indeed time-barred and the reassessment proceedings lacked jurisdiction.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 800374 (HC-CHHATTISGARH)
• Appeal Type: Others
• Pronouncement Date: 20-11-2024
• Assessment Year: misc
• Other Referred Cases: Union of India and others v. Ashish Agarwal, R.K. Upadhyaya v. Shanabhai P. Patel, Union of India and others v. G.S. Chatha Rice Mills and another
• Laws Referred To: Income-tax Act, 1961, Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, Information Technology Act, 2000
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: AMIT CHAUDHARI; TOPILAL BARETH
• Assessee Lawyers: S RAO
• Keywords: Jurisdiction; Limitation Period; Notice under section 148; Reassessment; Writ appellate jurisdiction
• Section: 148; 143(1); 149(1)(b); 149(1)(a); 149(1)

Judgement Text

"Page 1 of 11 (W.A.No.315/2023) 2024:CGHC:45197-DB AFR HIGH COURT OF CHHATTISGARH AT BILASPUR Writ Appeal No.315 of 2023 {Arising out of order dated 8-5-2023 passed by the learned Single Judge in W.P.(T)No.122/2023} Riddhi Agro Industries [Through Partner Nabin Kumar Jain, S/o Late Shri Bhiku Ram Jain, Aged about 56 years] Shop No. 5, Annapurna Complex, Near Telghani Over Bridge, Samta Colony, Raipur (C.G.), PIN 492001 (Petitioner) ... Appellant versus 1. Union of India, Through Secretary, Central Board of Direct Taxes, North Block, New Delhi. 2. Chief Commissioner of Income-tax, Aaykar Bhawan, Civil Lines, Raipur (C.G.) 3. Pr. Commissioner of Income-tax, Aaykar Bhawan, Civil Lines, Raipur (C.G.) 4. Income-tax Officer, Ward-1(2), Aaykar Bhawan, Central Revenue Building, Civil Lines, Raipur, Distt. Raipur (C.G.) 5. National Faceless Assessment Unit, through Pr. Commissioner of Income-tax, NFAC, New Delhi. (Respondents) ... Respondents For Appellant : Mr. S. Rajeswara Rao, Advocate. For Respondents No.2 to 5 : Mr. Amit Chaudhari and Mr. Topilal Bareth, Advocates. SISTA SOMAYAJULU Digitally signed by SISTA SOMAYAJULU Date: 2024.11.25 14:23:28 +0530 Page 2 of 11 (W.A.No.315/2023) Division Bench: - Hon'ble Shri Sanjay K. Agrawal and Hon'ble Shri Radhakishan Agrawal, JJ. Judgment On Board (20/11/2024) Sanjay K. Agrawal, J. 1. Invoking the writ appellate jurisdiction of this Court under Section 2(1) of the Chhattisgarh High Court (Appeal to Division Bench) Act, 2006, the appellant herein calls in question legality, validity and correctness of judgment & order dated 8-5-2023 passed by the learned Single Judge in WPT No.122/2023 partly dismissing its writ petition and remanding the matter to the Assessing Officer for hearing and disposal afresh, in accordance with law. 2. The appellant herein had filed return of income for the assessment year 2016-17 on 30-9-2016 declaring its total income at ₹ 13,53,820/- and it was processed under Section 143(1) of the Income-tax Act, 1961 (for short, ‘the IT Act’) and it had attained finality. However, the Assessing Officer decided to proceed under Section 148 of the IT Act and notice is said to be issued on 30-6- 2021, however, it was uploaded on the appellant’s registered e- filing account with the Income Tax Department on 3-7-2021. It is the case of the appellant that one year period has been extended by the notification issued by the Ministry of Finance (Department of Revenue) (Central Board of Direct Taxes) on 27-4-2021 in exercise Page 3 of 11 (W.A.No.315/2023) of the powers conferred by sub-section (1) of Section 3 of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. Thereafter, as per the said notification, the due date for issuing notice under Section 148 read with Section 149(1)(a) of the IT Act for the assessment year 2016-17 was up to 30-6-2021, however, the Assessing Officer though claimed to have issued notice on 30-6-2021, but it was without Document Identification Number (DIN) and it was uploaded on the appellant’s registered e-filing account with the Income Tax Department on 3-7- 2021, which is beyond the statutory period of limitation prescribed under Section 149(1)(b) of the IT Act prior to its amendment on 1- 4-2022 and therefore it was barred by limitation, and which the appellant opened on the Income Tax Business Application (ITBA) portal only on 4-7-2021, as such, the entire proceeding is without jurisdiction and without authority of law. 3. Feeling aggrieved and dissatisfied with the time barred proceedings for reassessment under Section 148 of the IT Act, the appellant herein had preferred writ petition before the writ court questioning the said proceeding including notice on the ground that it was barred by limitation and further also that reasons / suggestions for escaped assessment were not given to the appellant herein, however, the learned Single Judge remanded the matter relying upon the decision of the Supreme Court in the matter of Union of Page 4 of 11 (W.A.No.315/2023) India and others v. Ashish Agarwal1, but did not consider the ground that it was barred by limitation which led to filing of the instant writ appeal before the Division Bench of this Court on the ground that since the notice under Section 148 of the IT Act itself was barred by Section 149(1)(b) of the IT Act prior to its amendment, the writ petition deserves to be allowed in toto. 4. Mr. S. Rajeswara Rao, learned counsel appearing for the appellant, would submit that the learned Single Judge is absolutely unjustified in partly dismissing the writ petition by not granting the same in toto ignoring the fact that notice under Section 148 of the IT Act is totally barred by Section 149 (1)(b) of the IT Act read with notification dated 27-4-2021 and therefore the writ petition deserves to be allowed by holding that notice issued under Section 148 read with Section 149(1)(a) of the IT Act is barred by limitation and the order passed by the learned Single Judge deserves to be set-aside. 5. Mr. Amit Chaudhari, learned Standing Counsel appearing for the Income Tax Department / respondents No.2 to 5, would submit that on account of COVID-19 situation, the Assessing Officer was reportedly suffering from COVID, therefore, notice could not be uploaded on 30-6-2021. 1 (2023) 1 SCC 617 Page 5 of 11 (W.A.No.315/2023) 6. We have heard learned counsel for the parties and considered their rival submissions made herein-above and also went through the record with utmost circumspection. 7. Undisputedly, return of income for the assessment year 2016-17 was filed by the appellant on 30-9-2016 declaring total income at ₹ 13,53,820/-, which was processed under Section 143(1) of the IT Act and it had attained finality. However, the Assessing Officer decided to initiate proceeding under Section 147 of the IT Act for issuing notice under Section 148 of the IT Act for which limitation is prescribed under Section 149 of the IT Act. However, at this stage, it would be appropriate to notice the time limit prescribed under Section 149 of the IT Act prior to its amendment with effect from 1-4-2022, which states as under: - “149. Time limit for notice.—(1) No notice under section 148 shall be issued for the relevant assessment year— (a) xxx xxx xxx (b) if four years, but not more than six years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to one lakh rupees or more for that year. xxx xxx xxx” 8. A careful perusal of the aforesaid provision would show that there is a legislative mandate by the law making authority that no notice under Section 148 of the IT Act shall be issued for the relevant Page 6 of 11 (W.A.No.315/2023) assessment year after the period prescribed has lapsed. The provision contained in Section 149(1)(b) of the IT Act is mandatory. Notice under Section 149(1)(b) after the prescribed period of limitation would bar the proceeding under Section 148. 9. In this regard, decision of the Supreme Court in the matter of R.K. Upadhyaya v. Shanabhai P. Patel2 may be noticed herein profitably in which their Lordships of the Supreme Court have clearly held that no notice under Section 148 of the IT Act shall be issued after the prescribed limitation has lapsed. Their Lordships further held that once a notice under Section 148 of the IT Act is issued within the period of limitation under Section 149(1), jurisdiction becomes vested in the Income Tax Officer to proceed to reassess. It has been observed as under: - “2. … A clear distinction has been made out between ‘issue of notice’ and ‘service of notice’ under the 1961 Act. Section 149 prescribes the period of limitation. It categorically prescribes that no notice under Section 148 shall be issued after the prescribed limitation has lapsed. Section 148(1) provides for service of notice as a condition precedent to making the order of assessment. Once a notice is issued within the period of limitation, jurisdiction becomes vested in the Income Tax Officer to proceed to reassess. The mandate of Section 148(1) is that reassessment shall not be made until there has been service. The requirement of issue of notice is satisfied when a notice is actually issued. In this case, admittedly, the notice was issued within the prescribed period of limitation as March 31, 1970, was the last day of that period. Service under the new Act is not a condition precedent to conferment of 2 (1987) 3 SCC 96 Page 7 of 11 (W.A.No.315/2023) jurisdiction in the Income Tax Officer to deal with the matter but it is a condition precedent to making of the order of assessment. ...” 10.Admittedly, in this case, proceeding was sought to be issued for the assessment year 2016-17 which expired on 31-3-2017 and four years limitation has lapsed on 31-3-2021, but the notification issued by the Ministry of Finance (Department of Revenue) (Central Board of Direct Taxes) on 27-4-2021 provides as under (relevant portion):- “S.O. 1703(E).- In exercise of the powers conferred by sub- section (1) of section 3 of the Taxation and Other laws (Relaxation and Amendment of Certain provisions) Act, 2020 (38 of 2020) (hereinafter referred to as the said Act), and in partial modification of the notifications of the Government of India in the Ministry of Finance, (Department of Revenue) No. 93/2020 dated the 31st December, 2020, No. 10/2021 dated the 27th February, 2021 and No. 20/2021 dated the 31st March, 2021, published in the Gazette of India, Extraordinary, Part-II, Section 3, Sub- section (ii), vide number S.O. 4805(E), dated the 31st December, 2020, vide number S.O. 966(E) dated the 27th February, 2021 and vide number S.O. 1432(E) dated the 31st March, 2021, respectively (hereinafter referred to as the said notifications), the Central Government hereby specifies for the purpose of sub-section (1) of section 3 of the said Act that, - (A) where the specified Act is the Income-tax Act, 1961 (43 of 1961) (hereinafter referred to as the Income-tax Act) and, - (a) the completion of any action, referred to in clause (a) of sub-section (1) of section 3 of the said Act, relates to passing of any order for assessment or reassessment under the Income-tax Act, and the time limit for completion of such action under section 153 or section 153B thereof, expires on the 30th day of April, 2021 due to its extension by the said Page 8 of 11 (W.A.No.315/2023) notifications, such time limit shall further stand extended to the 30th day of June, 2021; (b) the completion of any action, referred to in clause (a) of sub-section (1) of section 3 of the said Act, relates to passing of an order under sub-section (13) of section 144C of the Income-tax Act or issuance of notice under section 148 as per time-limit specified in section 149 or sanction under section 151 of the Income-tax Act, and the time limit for completion of such action expires on the 30th day of April, 2021 due to its extension by the said notifications, such time limit shall further stand extended to the 30th day of June, 2021.” 11.It is the case of the appellant that by virtue of notification dated 27- 4-2021, the period up to 30-6-2021 was available to the Assessing Officer to issue notice under Section 148 of the IT Act, but though notice is said to be issued on 30-6-2021, but it was uploaded on the appellant’s registered e-filing account with the Income Tax Department only on 3-7-2021 which is not valid and it ought to have been uploaded on 30-6-2021 itself as per the provisions contained in Section 13 of the Information Technology Act, 2000, which contains provisions for the time and place of the dispatch and receipt of electronic records. 12.In this regard, Section 13 of the Information Technology Act, 2000 may be noticed herein profitably, which states as under: - “13. Time and place of dispatch and receipt of electronic record.— (1) Save as otherwise agreed to between the originator and the addressee, the dispatch of an electronic record occurs when it enters a computer resource outside the control of the originator. Page 9 of 11 (W.A.No.315/2023) (2) Save as otherwise agreed between the originator and the addressee, the time of receipt of an electronic record shall be determined as follows, namely:— (a) if the addressee has designated a computer resource for the purpose of receiving electronic records,— (i) receipt occurs at the time when the electronic record enters the designated computer resource; or (ii) if the electronic record is sent to a computer resource of the addressee that is not the designated computer resource, receipt occurs at the time when the electronic record is retrieved by the addressee; (b) if the addressee has not designated a computer resource along with specified timings, if any, receipt occurs when the electronic record enters the computer resource of the addressee. *** *** ***” 13.Their Lordships of the Supreme Court in the matter of Union of India and others v. G.S. Chatha Rice Mills and another3, considering Section 13 of the Information Technology Act, 2000, held as under: - “85. … The dispatch of a record occurs when it enters a computer resource outside the control of the originator. The time of receipt of the electronic record is fixed by the provisions of sub-section (2) of Section 13. When the addressee has designated a computer resource, receipt occurs when the record enters the computer resource so designated. Otherwise, where no computer resource is designated, the receipt of the record is when it is retrieved by the addressee. These provisions have been incorporated in the law to enable the dispatch and receipt of a record in 3 (2021) 2 SCC 209 Page 10 of 11 (W.A.No.315/2023) the electronic form to be defined with precision with reference to both time and place.” 14.Reverting to the facts of the present case in light of Section 13 of the Information Technology Act, 2000, read with the principles of law laid down in this regard by their Lordships of the Supreme Court in G.S. Chatha Rice Mills’s case (supra), it is quite vivid that though notice is said to be issued on 30-6-2021 by the Assessing Officer, however, it was uploaded on the appellant’s registered e-filing account with the Income Tax Department only on 3-7-2021, which cannot be said to have been issued on 30-6-2021, and therefore notice under Section 148 read with Section 149(1)(b) of the IT Act will be deemed to have been issued only on 3-7-2021, which is barred by Section 149(1)(b) as amended. Once notice under Section 149 of the IT Act is not issued within the period of limitation, jurisdiction under Section 148 of the IT Act would not be vested with the Assessing Officer to proceed with reassessment. In that view of the matter, the learned Single Judge ought to have allowed the writ petition in toto and remanding the matter would amount to conferring the jurisdiction to the Assessing Officer which the Assessing Officer did not have otherwise on account of non- issuance of notice within the period of limitation stipulated under Section 149(1)(b) of the IT Act as amended. Page 11 of 11 (W.A.No.315/2023) 15.As an upshot and fallout of the aforesaid legal analysis, we are of the considered opinion that the learned Single Judge is absolutely unjustified in partly dismissing the writ petition and remanding the matter to the Assessing Officer conferring the jurisdiction to proceed for reassessment ignoring the fact that notice under Section 149(1)(b) of the IT Act is beyond the period of limitation, as Section 149(1)(b) of the IT Act is mandatory. Accordingly, the impugned judgment & order dated 8-5-2023 passed by the learned Single Judge in WPT No.122/2023 is hereby set-aside and the writ petition stands allowed in toto. Proceeding including notice issued under Section 148 read with Section 149(1)(b) of the IT Act is also hereby quashed. 16.The writ appeal stands allowed, but with no order as to costs. Sd/- Sd/- (Sanjay K. Agrawal) (Radhakishan Agrawal) JUDGE JUDGE Soma "