S.148 Income Tax Notice Issued After 31.03.2021 Under Old Regime Invalid Despite TOLA Extension: ITAT
The Chennai Bench of Income Tax Appellate Tribunal (ITAT) has held that S.148 Income Tax notice issued after 31.03.2021 under old regime invalid despite TOLA [Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020] extension. Section 148 of Income Tax Act, 1961 empowers the Income Tax Department to reopen assessments if there's reason to suspect...
The Chennai Bench of Income Tax Appellate Tribunal (ITAT) has held that S.148 Income Tax notice issued after 31.03.2021 under old regime invalid despite TOLA [Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020] extension.
Section 148 of Income Tax Act, 1961 empowers the Income Tax Department to reopen assessments if there's reason to suspect inaccurate income reporting.
George George K. (Vice President) and S.R. Raghunatha (Accountant Member) observed that due to COVID-19, the Government introduced the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (TOLA), extending time limits. Accordingly, the time available for the Department to issue notice u/s 148 of the Act under Old Regime, falling during the period from 20.03.2020 till 31.03.2021, were extended till 30.06.2021.
The Finance Act, 2021 revamped the entire scheme of reassessment procedure u/s 147 to 151, w.e.f 01.04.2021. Thus, the old regime of re-assessment ended on 31.03.2021 and the new regime of re-assessment started from 01.04.2021.
The assessee is an individual. For the assessment year 2013-14, the return of income was filed on 26.03.2024.
Subsequently, a notice u/s.148 of the Income Tax Act was issued on 30.06.2021 as per the old regime within the extended time limit in view of Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (TOLA).
Later on, as per CBDT's instruction No. 1/2022 of F.No.279 /Misc. /M-51/2022-ITJ dated 11th May 2022 on Implementation of judgment of Supreme Court dated 04.05.2022 in the case of Union of India v. Ashish Agarwal reported in 441 ITR 1, adjudicated on the validity of issue of reassessment notice issued during the period from 01.04.2021 to 30.06.2021 within the time extended by TOLA, 2020, the information and material relied upon for issuance of extended reassessment notice dated 30.06.2021 was communicated to the assessee vide letter dated 02.06.2022.
The assessee submitted response which was duly considered while passing order u/s 148A(d) dated 28.07.2022 followed by issue of notice u/s 148 dated 28.07.2022 with prior approval of the competent authority.
The assessment proceeding for the AY 2013-14 was completed u/s 143(3) r.w.s 147 of the Act wherein addition was made on account of long-term capital gains which the assessee failed to offer in ITR filed for the AY 2013-14.
Aggrieved by the said assessment order the assessee filed appeal before the First Appellate Authority (FAA) raising several grounds of appeal. The FAA partly allowed the appeal of the assessee subject to verification by the AO on certain aspects before allowing such reliefs.
Aggrieved by the order of the FAA, the assessee filed appeal before the Tribunal. The assessee, questioned the jurisdictional issues relying on the Apex Court's judgment in the case of Rajiv Bansal vs Union of India reported in 469 ITR 46 (SC).
The Tribunal observed that these assessments triggered a second round of litigation, primarily on the fact that, if the re-assessment notices issued u/s 148 of the New Regime were valid or not. In the Second round, the Supreme Court in the case of UOI & Ors v. Rajeev Bansal, reported in 469 ITR 46, held that after exclusion of limitations, the notices u/s 148 of New Regime should be issued within the “SURVING PERIOD” and anything issued beyond surviving period is time barred and liable to be set-aside.
The bench noted that the starting point of this entire chain of litigation was that, since the old regime of re-assessment had ended on 31.03.2021, was it valid to issue notice based on an ended regime during the extended period of 01.04.2021 to 30.06.2021. Further, to issue notice under New Regime, required a notice u/s 148A(b) and an order passed u/s 148A(d).
Referring to the above case, the Tribunal held that the notice dated 28.07.2022 issued u/s 148 of the New Regime in respect of assessment year 2013-14 is time barred and re-assessment order pursuant to the same is set-aside.
In view of the above, the Tribunal allowed the appeal.
Case Title: Smt. Lakshmi Narasimhan Santhi v. The Asst. Commissioner of Income Tax
Case Number: ITA No.:3013/CHNY/2024
Counsel for Appellant/ Assessee: S.R. Srikrishna
Counsel for Respondent/ Department: Kumar Chandan