RAVINDRA v. GHUGE &R.M. JOSHI, JJ.DATE
Legal Reasoning
( 1 ) 908 wp 10279.22IN THE HIGH COURT OF JUDICATURE AT BOMBAYBENCH AT AURANGABAD908 WRIT PETITION NO. 10279 OF 2022SIDDHARTH RATANLAL BAFNAVERSUSTHE UNION OF INDIA THROUGH ITS SECRETARY AND OTHERSWITHWRIT PETITION NO. 10364 OF 2022TARADEVI RATANLAL BAFNAVERSUSTHE UNION OF INDIA THROUGH ITS SECRETARY AND OTHERS…Advocate for the Petitioner : Mr. Chandak Raviraj R.Advocate for Respondents/UOI : Ms. Sudha Chintamani...CORAM : RAVINDRA V. GHUGE &R.M. JOSHI, JJ.DATE :7th March, 2024P.C. :-1.We have heard the learned Advocates for the respective sides forquite some time. The Respondent/ Department opposes the contentions ofthe Petitioners and prays that the Petitions be dismissed.2.It is undisputed that the impugned notices have been issued afterthe amendment to the Finance Act, on the basis of the provisions that existedprior to the amendment and the said notices are in relation to the AssessmentYear 2014-2015. ( 2 ) 908 wp 10279.223.The contention of the Department is that certain quantum ofearnings / transactions escaped assessment of income. Hence, theAssessment Officer had issued notices for reopening the assessment forAssessment Year 2014-2015 with regard to the purported escaped incomeassessment.4.Considering that the Principal Seat has delivered a judgment on15.01.2024 in Writ Petition No.1945/2023 (The New India AssuranceCompany Limited Vs. The Assistant Commissioner of Income Tax and Others)2014 SCC Online Bom 146, we are referring to the short issue raised in thisPetition. By the judgment delivered in The New India Assurance CompanyLimited (supra) in relation to the notice issued for Assessment Year 2013-2014, this Court has come to a conclusion in paragraph Nos.36 to 39 asunder :-“36 .Therefore, in the present case, as the foundation of the entirereassessment proceeding, viz., the notice issued in June 2021 itself wasbarred by limitation in view of non-applicability of NotificationNo.20/2021, the superstructure sitting thereon, viz., the reassessmentproceedings initiated pursuant to judgment in Ashish Agarwal will alsobe regarded as beyond time limit. Therefore, on this ground as well,the impugned reopening notice dated 28th July 2022 issued for AY2013-14 in petitioner's case is barred by limitation and deserves to bequashed and set aside. Alternatively, it is well settled that a noticeunder Section 148 of the Act cannot be issued in order to reopen theassessment of an assessee in a case where the right to reopen theassessment was already barred under the pre-amended Act on the date ( 3 ) 908 wp 10279.22when the new legislation came into force. In CIT V/s. OnkarmalMeghraj (HUF) the Hon'ble Apex Court held:"That raises the question whether that proviso could be appliedwithout reference to any period of limitation. It is a well-settledprinciple that no action can be commenced has expired. It isunnecessary to cite authorities in support of this position. Does the factthat the second proviso says that there is no period of limitation makea difference? xxxxxxxxxx.XXXXXXXXXX In J.P. Jani, Income-tax Officer v. InduprasadDevshanker Bhatt (1969) 72 1.T.R. 595; (1969) 1 S.C.R. 714 (S.C.)this court held that the Income-tax Officer cannot issue a notice undersection 148 of the Income Tax Act, 1961, in order to reopen theassessment of an assessee in a case where the right ti reopen theassessment was barred under the 1922 Act at the date when the newAct camne into force. It was held that section 297(2)(d) (ii) of the 1961Act was applicable only to this cases where the right of the Income-taxOfficer to reopen an assessment was not barred under the repealed Act.This decision is broadly in line with the opinion of Das and Kapur JJ.in Prashar's case (1963) 49 1.T.R. (S.C.) 1; (1964) 1 S.C.R. 29 (S.C.)xxxxxxxxxx.For AY 2013-14, the time limit to issue a notice under Section148 of the Act had already expired on 1" April 2021. On the said date,the assessee had a vested right, which de hors the 1" proviso to theamended Section 149 of the Act, could not be taken away and thus,based on the well settled principles of law, the reopening of the AY2013-14 after 31 March 2021 is invalid, without jurisdiction andbarred by limitation.37.We shall deal with Mr. Sharma's submissions as under:(a) As regards reliance on the provisions of the Limitation Act,1963, the provisions of the Limitation Act, 1963 do not apply to theprovisions of the Income Tax Act, 1961 and especially, not in thepresent case in view of the specific period provided for in theprovisions of the Act as well as TOLA. In any case, this defence ofrespondents cannot be sustained as they have not taken any suchcontention in either the order passed under Section 148A(d) or in theaffidavit in reply;(b) As regards applicability of Section 3 of TOLA - exclusionof Covid period, this argument is, in effect, nothing but the theory oftravel back in time which was urged by the Revenue to support thereopening notices issued between 1" April 2021 to 30th June 2021 ( 4 ) 908 wp 10279.22before this Court, as well as other High Courts [and which eventuallyled to the judgment in Ashish Agarwal (Supra)]. As noted earlier, thisCourt and other Courts have already snubbed the relate back/travelback in time theory and also the Instruction No.1 of 2022;(c) As regards applicability of Notifications No.20 of 2021dated 31 March 2021 and No.38 of 2021 dated 27th April 2021extending the time limit even for AY 2014-15 and it is extended till 30June 2021, respondent, in other words, argues that the NotificationNo.20 of 2021 seeks to extend the time limit inter alia for issuingnotice under Section 148 which was expiring on 31 March 2021 notonly under the provisions of the Act, but would also include the timeextension in the Act by virtue of TOLA. To put in another way, thetime limit expiring on 31 March 2021 specified in Notification No.20of 2021, according to respondents, would have to be read to includelimitation under the Act read with TOLA. As noted earlier, thiscontention is flawed inasmuch as it expands the scope of theNotification and violates its plain language, viz., the time limit,specified in, or prescribed or notified under the Income Tax Act fallsfor completion. The limitation under the Act (erstwhile Section 149)for reopening the assessment for the AY 2013-14 expired on 31 March2020. Hence, Notification No.20 of 2021 did not apply to the facts ofthe present case. Notification No.38 of 2021 dated 27th April 2021categorically uses the expression the time limit for completion of suchaction expires on the 30th day of April 2021 due to its extension by thesaid notifications, such time limit shall further stand extended to the30th day of June 2021. Hence, it is incorrect to say that 31 March 2021under the Act would mean under the Act, plus, extension by TOLA;(d) The submission that the Hon'ble Supreme Court, whiledeciding Ashish Agarwal (Supra), was conscious of the limitation of 6years expiring on 31 March 2021 under the pre-amendment provisionsin respect of AY 2013-14 if the Covid period was not excluded, despitewhich the Apex Court has stated that all notices issued should be readto be issued under Section 148A to prevent the Revenue gettingremediless, is unacceptable. This argument clearly fails to appreciatethat the effect of Revenue's contention is that despite the substantivedefence available to the assessee in Section 149 of the amended Act, aswell as the express directions of the Hon'ble Supreme Court allowingthe assessee to take all defences available under the Act, the judgmentof Ashish Agarwal (Supra) would permit them to reopen theassessment of AY 2013-14 would not only make the defence expresslyavailable to the assessees useless and unusable, but would be contrary ( 5 ) 908 wp 10279.22to well established principles of law. In Supreme Court BarAssociation (Supra), the Hon'ble Supreme Court espoused that itspowers conferred under Article 142 of the Constitution of India, beingcurative in nature and even with the width of its amplitude, cannot beconstrued as powers which authorise the Court to ignore thesubstantive rights of a litigant while dealing with a cause pendingbefore it. Article 142 would not be used to supplant substantive lawapplicable to a case or cause and it will not be used to build a newedifice where none existed earlier by ignoring express statutoryprovisions dealing with a subject and thereby to achieve somethingindirectly which cannot be achieved directly. In the present case,Revenue's argument, if accepted, would be in conflict with the abovelaw as despite the express language of 1 proviso to Section 149,reopening notice for the AY 2013-14 would be permitted to be issuedbeyond 6 years on the pretext that the Hon'ble Supreme Court inexercise of its powers under Article 142 permitted them to do so andotherwise, they would be remediless. On the contrary, while permittingthe Revenue to re- initiate the reassessment proceedings, the ApexCourt also granted liberty to assessees to raise all defences available tothe assessee including the defences under Section 149 of the Act. TheApex Court observed that its order will strike a balance between therights of the Revenue as well as the respective assessees. Moreover, inSiemens Financial (Supra), this Court has already considered a similarcontention of the Revenue and held that equity has no place in taxationor while interpreting taxing statute such intendment would have anyplace and that taxation statute has to be interpreted strictly. TheRevenue also fails to appreciate that no particular case was consideredby the Hon'ble Supreme Court while deciding Ashish Agarwal (Supra).It is apposite to cite here an extract of the judgment of theHon'ble Supreme Court in Parashuram Pottery Works Co. Ltd V/s.Income Tax Officer, which reads as under:……..It has been said that the taxes are the price that we payfor civilization. If so, it is essential that those who are entrusted withthe task of calculating and realising that price should familiarisethemselves with the relevant provisions and become well-versed withthe law on the subject. Any remissness on their part can only be at thecost of the national exchequer and must necessarily result in loss ofrevenue. At the same time, we have to bear in mind that the policy oflaw is that there must be a point of finality in all legal proceedings,that stale issues should not be reactivated beyond a particular stage andthat lapse of time must induce repose in and set at rest judicial and ( 6 ) 908 wp 10279.22quasi- judicial controversies as it must in other spheres of humanactivity...".(e) The contentions that (i) the true meaning of Apex Courtorder in Ashish Agrawal (Supra) is that the notices issued underSection 148, irrespective of the Assessment Year of the unamendedAct, between 1st April 2021 to 30th June 2021 are to be treated asshow cause notices without being hit by limitation, if issued on orbefore 30th March 2021 and (ii) the defence under Section 149available to the assessee would mean that if the Revenue had issuedany notice under Section 148 under the unamended Act during theperiod 1st April 2021 to 30th June 2021 pertaining to AY 2013-14, thesame would be barred by limitation under Section 149 in effect meansthe Civil Appeal of the Revenue in Ashish Agrawal (Supra) wasdismissed, are completely flawed. It completely fails to appreciate thatthe limitation period to issuance of reopening notices under Section148 for all Assessment Years prior to AY 2013-14 had already expiredon 31 March 2019 or earlier. The provisions of TOLA obviously couldnot save such a time limit and the Revenue could not have validlyissued reopening notices for years prior to AY 2013-14 on or after 1stApril 2019. Therefore, the defence so expressly allowed to be taken bythe Hon'ble Supreme Court would otherwise be unnecessary;(f) The submission that the Apex Court, in exercise of powerunder Article 142 of the Constitution, has deemed the notices issuedbetween 1st April 2021 to 30th June 2021 under Section 148A(b) ofthe Act issued within limitation and by following the manner ofcomputation of limitation provided in TOLA, the days from 1st April2021 to 30th June 2021 would stand excluded and, therefore, thenotices could be deemed to be issued on 31st March 2021, we find it tobe rather fallacious. The fallacy of this contention of Revenue isconspicuous inasmuch as if the notices issued under Section 148between 1st April 2021 and 30th June 2021, which according to them,are deemed to be issued on 31st March 2021, then it is obvious that theprovisions of the new reassessment law introduced by the Finance Act,2021 cannot apply as they came into force w.e.f. 1st April 2021 andonwards. Ashish Agarwal (Supra) in no uncertain words stated that thenew provisions have to apply to all such notices. Therefore, theargument urged is completely contrary to law as well as the bindingdirections of the Hon'ble Supreme Court;(g) As regards reliance on Touchstone Holdings (Supra), theHon'ble Delhi High Court held that the initial notice dated 29th June,2021 issued under Section 148 is within limitation. No findings on the ( 7 ) 908 wp 10279.22validity or otherwise of the notice issued after May 2022 pursuant tothe judgment in Ashish Agarwal (Supra) is given. Moreover, in thatcase, petitioner did not argue that for AY 2013-14 the time limit wouldhave expired even under TOLA on 31st March 2021;(h) As regards Salil Gulati (Supra), the Delhi High Court, toreach its conclusion, has merely relied upon its earlier decision inTouchstone Holdings (Supra). It will be relevant to note that followingSalil Gulati (Supra), a similar view was taken by the Delhi High Courtin Yogita Mohan V/s. Income Tax Officer. Against the judgment, in anSLP preferred by the assessee, the Apex Court has issued notice videits order dated 20th February 2023. It should also be noted that theHon'ble Gujarat High Court in Keenara Industries (P) Ltd. V/s. IncomeTax Officer" and the Allahabad High Court in Rajeev Bansal V/s.Union of India have taken a view that notices issued for AY 2013-14were barred by limitation in view of the amended Section 149 of theAct. Subsequently, the Apex Court, in SLPs preferred by the Revenue,has issued notice and stayed both the orders/judgments;(i) We are unable to comprehend the contention raised that ifthe notice dated 30th May 2022 under Section 148A(b) of the Act isvalid in terms of Apex Court order in Ashish Agrawal (Supra), then thenotice under Section 148 of the Act cannot be issued on 31st March2021 and respondent cannot be expected to do impossible. It hasnowhere been urged by petitioner that assessing officer ought tocomplete the proceedings before the show cause notice under Section148A(b) of the Act was issued. It is the case of petitioner that thereopening notice under Section 148 ought to have been issued within 6years from the end of the AY 2013-14. This limitation period, asextended by TOLA, expired on 31st March 2021. However, in thepresent case, the reopening notice has been issued in July 2022 and,therefore, beyond the statutory time limit. In any case, as stated above,the Hon'ble Supreme Court, while invoking powers under Article 142,consciously and categorically granted liberty to assessees to raise alldefences available to the assessee, including the defences underSection 149 of the Act. This specific and express directions cannot beset at naught. Accepting this contention of the Revenue would be atravesty of justice.38. In the circumstances, in our view, the notice issued under Section 148of the Act, impugned in this petition, for AY 2013-14 is issued beyondthe period of limitation.
Decision
( 8 ) 908 wp 10279.2239 .Having decided in favour of assessee/petitioner on this issue oflimitation, we are not discussing the other grounds of challenge raisedin the petition. Petitioner may raise all those contentions independentlyin any other proceeding.”5.In similar circumstances, insofar as the notice issued forAssessment Year 2014-2015 is concerned, this Court at the Principal Seat inWrit Petition No.450/2023 (Original Side), Godrej Industries Limited versusThe Assistant Commissioner of Income Tax and others, has decided in favourof the Assessee vide judgment dated 28.02.2024. This Court relied upon theobservations in The New India Assurance Company Limited (supra) and heldthat the notice issued for the Assessment Year 2014-2015, is also barred bylimitation.6.In view of the above, the Writ Petitions are allowed. Theimpugned notices are quashed and set aside.7.We record that this order is restricted only to the point oflimitation since the impugned notices had been issued for the AssessmentYear 2014-2015, after the amendment to the Finance Act on 01.04.2021, andthat too under the provisions existing prior to it’s amendment. [R.M. JOSHI, J.][RAVINDRA V. GHUGE, J.]mub