[2023] 150 taxmann.

com 105 (Gujarat)[31-03-2023]

INCOME TAX : Notice issued under section 148 and order passed under section
148A(d) by Assessing Officer in 2022 seeking to reopen assessment for assessment
years 2013-14 and 2014-15 were barred by limitation and same were to be set aside

■■■

[2023] 150 taxmann.com 105 (Gujarat)

HIGH COURT OF GUJARAT
Jain Chain
v.
Income-tax Officer*
N.V. ANJARIA AND NIRAL R. MEHTA, JJ.
R/SPECIAL CIVIL APPLICATION NOS. 5295 & 5366 OF 2023
MARCH  31, 2023 

Section 149, read with sections 148 and 148A, of the Income-tax Act, 1961 - Income escaping
assessment - Time-limit for issuance of notice (Amendment) - Assessment years 2013-14
and 2014-15 - Whether limitation of six years from end of relevant assessment year which
operated as timeline in old regime for issuance of notice under section 148 beyond which
period, it was not competent for Assessing Officer to issue notice for reassessment is made
to continue in new regime i.e. post 1-4-2021 also - Held, yes - Whether, accordingly, notice
issued under section 148 and order passed under section 148A(d) by Assessing Officer in
2022 seeking to reopen assessment of assessee for assessment years 2013-14 and 2014-15
were barred by limitation and same were to be set aside - Held, yes [Paras 5.4.8, 7 and 10]
[In favour of assessee]

Circulars and Notifications: Notification No. 38 of 2021, dated 27-4-2021

FACTS
 
■   A notice dated 1-7-2022 under section 148 was issued upon the assessee for the assessment
year 2013-14 and a notice dated 31-7-2022 was also issued for assessment year 2014-15. Both
the notices were treated as show-cause notice under section 148A(b) and thereupon, the
order under section 148A(d) was passed.

■   The petitioner filed an instant writ petition contending that the notice issued under section
148 and the consequential order passed under section 148A(d) by the department for
assessment years 2013-14 and 2014-15 were barred on the ground of limitation, the notices
 having been issued after passage of six years from the end of the relevant assessment years
2013-14 and 2014-15.

HELD
 
■   In order to properly understand the controversy and the applicable provisions in particular,
prior to coming into force of Finance Act, 2021 called old regime as well as the provisions
introduced in the Finance Act, 2021 described as new regime. [Para 5]

■   Section 147 empowers the Assessing Officer to reassess the income of the assessee subject
to the provisions of sections 148 to 151 in case any income chargeable to tax has escaped
assessment. [Para 5.1]

■   Prior to the applicability of Finance Act, 2021 with effect from 1-4-2021, for the provisions of
section 149 then existed, notice under section 148 could be issued for the relevant
assessment year within four/six years from the end of the relevant assessment year
concerned. [Para 5.1.1]

■   The above section deals with time limit for issuance of notice for reopening of the
assessment. The Assessing Officer thereunder could reopen the case of the assessee beyond
four years, but within six years from the end of the relevant assesssment year in case the
amount escaped the assessment is likely to exceed rupees one lakh. [Para 5.1.2]

■   In the Finance Act, 2021, passed on 28-3-2021, and made applicable with effect from 1-4-2021,
section 148A came to be brought into force under section 42. It relates to conducting of
inquiry and providing opportunity to the assessee before notice under section 148 could be
issued. Along with substitution of new section 148A, section 149 was also recast by the
legislature. [Para 5.2]

■   As per the amended section 149, notice under section 148 could be issued within three years
from the end of the relevant assessment year. What is contemplated is that the Assessing
Officer could reopen the case of the assessee beyond three years, but within 10 years from
the end of the relevant assessment year. This could be done by the Assessing Officer within
10 years provided he is in possession of the books of account or documents or evidence
revealing that income escaped assessment represented in form of asset was likely to exceed
Rs. 50 lakhs. Further condition needed to be satisfied is the approval of the competent
authority of the Income-tax under section 151 which enable the Assessing Officer to assume
the jurisdiction. [Para 5.2.2]

■   What is to be noticed with relevance is that the First Proviso to section 149 as introduced in
Finance Act, 2021, inter alia stipulated that no notice under section 148 shall be issued at any
time in a case for the relevant assessment year beginning on or before 1-4-2021, if such
notice could not have been issued at that time on account of being beyond the time limit
specified under the provision as it stood immediately before the commencement of the
Finance Act, 2021. [Para 5.2.3]
■   In other words, in respect of the notice under section 148 relating to the assessment year
beginning on or before 1-4-2021, the operational conditions in the provision as they stood
before 1-4-2021 were maintained. It thus included the factor of prescription of time limit-the
limitation. [Para 5.2.4]

■   It may be mentioned that in wake of spread of pandemic of Covid-19 around March 2020 and
onwards, leading to the lockdown resulting into societal affairs coming to a standstill,
Ordinance no. 2/20 dated 31-3-2020, was promulgated by the Central Government, titled as
the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Ordinance,
2020, which became the Act subsequently, to be applied retrospectively from 31-3-2020,
being the date of ordinance. Under section 3 of the Taxation and Other Laws (Relaxation and
Amendment of Certain Provisions) Act, 2020, (hereinafter referred to as 'the Taxation and
Other Laws Act, 2020') various notifications were issued from time to time extending the time
line prescribed under section 149 of the Act for issuance of reassessment notice under
section 148 of the Act. The latest amongst the notification was the notification no. 38 of 2021,
dated 27-4-2021 whereby the time limit was extended till 30-6-2021. [Para 5.3]

■   Notwithstanding that the amended sections 147 to 151 came into force with effect from 1-4-
2021 under the Finance Act, 2021, the income-tax department issued innumerable notices
during the period from 1-4-2021 to 30-6-2021 for reopening the assessment under the
provisions of the old regime. The department for issuing such notices, relied on explanation
to the aforesaid notification whereby the time limit was extended as stated above. These
notices became subject matter of challenge before different High Courts. The notifications
issued for extension of time were prayed to be declared ultra vires. [Para 5.3.1]

■   All notices issued under section 148 between 1-4-2021 to 30-6-2021 shall be deemed to have
been issued under section 148A to be treated as show cause notices under section 148A(b).
New provisions substituted by the Finance Act, 2021 were remedial and benevolent in nature,
came to be inserted with an object to protect the right and interests of the assessee as well
to sub-serve the public interest. [Para 5.4.1]

■   All the defences that were available to the assessee under section 149 under the Finance Act,
2021 and in law whatever rights are available to the Assessing Officer under the Finance Act,
2021 are kept open to be continued to be available. [Para 5.4.4]

■   The notice which could not have been issued in the old regime period due to becoming time
barred as per then operating provision, would also not be permissible to be issued post-1-4-
2021. [Para 5.4.6]

■   As already noticed, section 149 as it stood immediately before commencement of Finance

Act, 2021, that is before 1-4-2021 in the old regime inter alia provided for time limit for notice.
It stated inter alia that no notice under section 148 shall be issued for the relevant
assessment year, as per clause (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. [Para 5.4.7]
■   In other words, limitation of six years from the end of relevant assessment year operated as
timeline in the old regime for issuance of notice under section 148 beyond which period, it
was not competent for the Assessing Officer to issue notice for reassessment. This embargo
is made to continue in the new regime also. [Para 5.4.8]

■   As per the old regime, for issuance of notice under section 148, in relation to assessment
year 2013-14, the outer time limit would expire on 31-3-2020 and for issuing such notice in
relation with assessment year 2014-15, the time period would conclude on 31-3-2021. [Para
5.6.2]

■   As already noted, the department took shelter of the time limit extended by Notifications of
the Central Board of Direct Taxes to treat the above class of notices to be within time. [Para
5.7]

■   Enacting the provisions in Taxation and Other Laws (Relaxation & Amendment of Certain
Provisions) Act, 2020, was not the permissible device whereby the time limit could be
legitimately extended for the purpose of issuing notices under section 148, which were
otherwise barred in terms of section 149, as it exists in the old regime. [Para 5.8]

■   The Taxation and Other Laws Act, 2020 was rightly viewed to be a secondary legislation.
Secondary legislation would not override the principal legislation-the Finance Act, 2021. It was
not permissible in law for the revenue to travel back in time. Nor does the Taxation and Other
Laws Act endorse to such concept. Notifications extending the due dates under the old
provisions could not breath any more after the repeal of the old provisions. [Para 5.8.1]

■   Therefore, all original notices under section 148 referable to the old regime and issued
between 1-4-2021 to 30-6-2021 would stand beyond the prescribed permissible timeline of six
years from the end of assessment year 2013-14 and assessment year 2014-15. Therefore, all
such notices when they would relate to assessment year 2013-14 or assessment year 2014-15
would be time barred as per the provisions of the Act as applicable in the old regime prior to
1-4-2021. Furthermore, these notices cannot be issued as per the amended provision of the
Act. [Para 6.4]

■   In view of the above, all the impugned notices in the respective petitions under section 148
relatable to assessment year 2013-14 or the assessment year 2014-15, as the case may be,
are beyond the permissible time limit, therefore, liable to be treated illegal and without
jurisdiction. [Para 7]

■   Since the petitions deserve to be allowed on the aforesaid crisp legal ground alone, the
parties submitted to agree that facts and other legal issues may not be gone into by the
Court. Accordingly, they are neither delineated, nor are gone into in respect of the above
petitions. [Para 8]

■   As a result, the following order is passed,

(i)   Notice dated 1-7-2022 under section 148 and order dated 1-7-2022 under section
148A(d) passed by the Assessing Officer seeking to reopen the assessment for the
 assessment year 2013-14 are hereby set aside;

(ii)   Notice dated 31-7-2022 under section 148 and Order dated 30-7-2022 under section
148A(d) passed by the Assessing Officer seeking to reopen the assessment for the
assessment year 2014-15 hereby set aside. [Para 10]

CASE REVIEW
 
Keenara Industries (P.) Ltd. v. ITO [2023] 147 taxmann.com 585 (Guj.) (para 6.3); Union of India v.
Ashish Agarwal [2022] 138 taxmann.com 64/286 Taxman 183/444 ITR 1 (SC) (para 5.4.5) and Rajeev
Bansal v. Union of India [2023] 147 taxmann.com 549/453 ITR 153 (All.) (para 6.3) followed.
CASES REFERRED TO
 
Union of India v. Ashish Agarwal [2022] 138 taxmann.com 64/286 Taxman 183/444 ITR 1 (SC)/[2023]
1 SCC 617 (para 3.2), Keenara Industries (P.) Ltd. v. ITO [2023] 147 taxmann.com 585 (Guj.) (para 4.1)
and Rajeev Bansal v. Union of India [2023] 147 taxmann.com 549/453 ITR 153 (All.) (para 6.2).

Fenil H. Mehta for the Petitioner. Mrs. Kalpana Raval, Adv. for the Respondent.
JUDGMENT
 
N.V. Anjaria, J. - Both these Special Civil Applications seeking to challenge the notices issued for
re-opening of the assessment for the assessment years concerned under section 148 and the
orders passed under section 148A(d) of the Income-tax Act, 1961.

1.1 The petitions involve similar facts and identical issues, therefore, they were heard together
to be treated for disposal by this common judgment and order.

1.2 In the facts and circumstances of the case, having regard to the issues involved and with
consent and request of learned advocates for the parties, both these Special Civil Applications
were taken up for final consideration today.

2. Rule returnable in each of the Special Civil Applications forthwith. Learned advocate Mrs.
Kalpana Raval for the respondent Revenue waives service of Rule in both the petitions.

2.1 Heard learned advocate Mr.Fenil Mehta for the petitioners and learned advocate for the
respondent.

3. In the present petitions filed under Article 226 of the Constitution, the respective petitioners
have called in question the notice issued by respondent-assessing officer under section 148 of
the Income-tax Act, 1961 seeking to reopen the assessment in respect of assessment year 2013-
14 or assessment year 2014-15 as the case may be. Also challenged are the orders passed under
section 148A(d) of the Income-tax Act, 1961 (hereinafter referred to as "the Act").

3.1 The details of date of notice, date of order under Section 148A(d) of the Act, assessment year,
etc., in respect of all the petitioners are given in the table below,

Sl. Special Civil Date of original Date of Order under Section Assessment
No. Application No. Notice under section 148A(d)/Date of Notice under section Year
 148 148 of the Act
1. 5295 of 2023 07-4-2021 01.07.2022 2013-14
01-7-2022
2. 5366 of 2023 19-4-2021 30-7-2022 2014-15
31-7-2022

3.2 While in the respective impugned orders under section 148A(d) of the Act mentioned are the
factual details and the reasons on the basis of which the assessing officer has found that the
cases are ft to be reopened for the assessment in respect of the year under consideration, it is
inter alia stated that the notice under section 148 of the Act was originally issued for the
assessment years 2013-14 or 2014-15, as the case may be. All the said notices were treated as
show-cause notice under section 148A(b) of the Act in light of the decision of the Supreme Court
in Union of India v. Ashish Agarwal [2022] 138 taxmann.com 64/286 Taxman 183/444 ITR 1 [2023] 1
SCC 617, and that thereupon, the order under section 148A(d) was passed.

4. At the outset, learned advocate for the petitioner submitted that the notice issued under
section 148 of the Act and the consequential order under section 148A(d) of the Act issued by
the department for assessment years 2013-14 and 2014-15 are barred on the ground of
limitation, the notices having been issued after passage of six years from the end of the relevant
assessment year.

4.1 It was submitted that in view of the decision of the Division Bench of this Court in Keenara
Industries (P.) Ltd. v. ITO [2023] 147 taxmann.com 585, beiing special civil Application No. 17321 of
2021 and allied petitions, decided on 7-2-2023 the question of legality of the notice issued in
respect of Assessment Year 2013-14 and Assessment Year 2014-15 is covered and the impugned
notice is without jurisdiction as it is beyond the time limit prescribed.

5. In order to properly understand the controversy and the applicable provisions in particular,
prior to coming into force of Finance Act, 2021 called old regime as well as the provisions
introduced in the Finance Act, 2021 described as new regime, the development of the law
emanating from Keenara Industries (P.) Ltd. (supra) in that regard may be revisited with, by noticing
the aspects considered and decided in the said decision.

5.1 Section 147 of the Act empowers the assessing officer to reassess the income of the
assessee subject to the provisions of sections 148 to 151 of the Act in case any income
chargeable to tax has escaped assessment.
5.1.1 Prior to the applicability of Finance Act, 2021 with effect from 1-4-2021, for the provisions of
section 149 then existed, notice under section 148 could be issued for the relevant assessment
year within four/six years from the end of the relevant assessment year concerned. Section 149
as operated in the old regime prior to the Finance Act, 2021, reads as under,

"149. Time limit for notice.-(1) No notice under section 148 shall be issued" for the relevant
assessment year,-

(a)   if four years have elapsed from the end of the relevant assessment year, unless the
 case falls under clause (b) or clause (c):

(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;

(c)   if four years, but not more than sixteen years, have elapsed from the end of the
relevant assessment year unless the income in relation to any asset (including financial
interest in any entity) located outside India, chargeable to tax, has escaped assessment.

Explanation.-In determining income chargeable to tax which has escaped assessment for the
purposes of this sub-section, the provisions of Explanation 2 of section 147 shall apply as
they apply for the purposes of that section.

(2) The provisions of sub-section (1) as to the issue of notice shall be subject to the
provisions of section 151.

(3) If the person on whom a notice under section 148 is to be served is a person treated as
the agent of a non-resident under section 163 and the assessment, reassessment or
recomputation to be made in pursuance of the notice is to be made on him as the agent of
such non-resident, the notice shall not be issued after the expiry of a period of six years
from the end of the relevant assessment year.

Explanation-For the removal of doubts, it is hereby clarified that the provisions of sub-
sections (1) and (3), as amended by the Finance Act, 2012, shall also be applicable for any
assessment year beginning on or before the 1st day of April, 2012."

5.1.2 The above section deals with time limit for issuance of notice for reopening of the
assessment. The assessing officer thereunder could reopen the case of the assessee beyond
four years, but within six years from the end of the relevant assessment year in case the amount
escaped the assessment is likely to exceed rupees one lakh.

5.2 In the Finance Act, 2021, passed on 28-3-2021, and made applicable with effect from 1-4-2021,
Section 148A came to be brought into force under section 42 of the Finance Act. It relates to
conducting of inquiry and providing opportunity to the assessee before notice under section
148 of the Act could be issued. Along with substitution of new section 148A, section 149 of the
Act was also recast by the legislature.

5.2.1 Section 149 of the Act, as inducted by the Finance Act, 2021 in the statute book and made
applicable with effect from 1-4-2021 is as under,

"149. Time limit for notice- (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 his possession 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) of this section, as they
stood immediately before the commencement of the Finance Act, 2021:

  Provided further that the provisions of this sub-section shall not apply in a case, where
a notice under section 153A, or section 153C read with section 153A, is required to be
issued in relation to a search initiated under section 132 or books of account, other
documents or any assets requisitioned under section 132A, on or before the 31st day of
March, 2021:

  Provided also that for the purposes of computing the period of limitation as per this
section, the time or extended time allowed to the assessee, as per show-cause notice
issued under clause (b) of section 148Aor the period during which the proceeding
under section 148A is stayed by an order or injunction of any court, shall be excluded:

  Provided also that where immediately after the exclusion of the period referred to in
the immediately preceding proviso, the period of limitation available to the Assessing
Officer for passing an order under clause (d) of section 148A is less than seven days,
such remaining period shall be extended to seven days and the period of limitation
under this sub-section shall be deemed to be extended accordingly.

  Explanation.—For the purposes of clause (b) of this sub-section, "asset" shall include
immovable property, being land or building or both, shares and securities, loans and
advances, deposits in bank account.

  (2) The provisions of sub-section (1) as to the issue of notice shall be subject to the
provisions of section 151.' Sanction for issue of notice "151."
5.2.2 As per the aforesaid amended section 149, notice under section 148 of the Act could be
issued within three years from the end of the relevant assessment year. What is contemplated is
that the assessing officer could reopen the case of the assessee beyond three years, but within
10 years from the end of the relevant assessment year. This could be done by the assessing
officer within 10 years provided he is in possession of the books of accounts or documents or
evidence revealing that income escaped assessment represented in form of asset was likely to
exceed Rs. 50 lakhs. Further condition needed to be satisfied is the approval of the competent
authority of the Income-tax under section 151 of the Act, which enable the assessing officer to
assume the jurisdiction.

5.2.3 What is to be noticed with relevance is that the First Proviso to section 149 of the Act as
introduced in Finance Act, 2021, inter alia stipulated 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 provision as it stood immediately before the commencement of
the Finance Act, 2021.

5.2.4 In other words, in respect of the notice under section 148 of the Act relating to the
assessment year beginning on or before 1-4-2021, the operational conditions in the provision as
they stood before 1-4-2021 were maintained. It thus included the factor of prescription of time
limit-the limitation.

5.3 It may be mentioned that in wake of spread of pandemic of Covid-19 around March 2020 and
onwards, leading to the lockdown resulting into societal affairs coming to a standstill, Ordinance
No. 2/20 dated 31-3-2020 was promulgated by the Central Government, titled as the Taxation
and Other Laws (Relaxation and Amendment Of Certain Provisions) Ordinance, 2020, which
became the Act subsequently, to be applied retrospectively from 31-3-2020, being the date of
ordinance. Under section 3 of the Taxation and Other Laws (Relaxation and Amendment Of
Certain Provisions) Act, 2020, (hereinafter referred to as 'the Taxation and other Laws Act, 2020')
various notifications were issued from time to time extending the time line prescribed under
section 149 of the Act for issuance of reassessment notice under section 148 of the Act. The
latest amongst the notification was the Notification No. 38 of 2021 dated 27-4-2021 whereby the
time limit was extended till 30-6-2021.

5.3.1 Notwithstanding that the amended sections 147 to 151 in the Act came into force with
effect from 1-4-2021 under the Finance Act, 2021, the Income-tax Department issued
innumerable notices during the period from 1-4-2021 to 30-6-2021 for reopening the assessment
under the provisions of the old regime. The Department for issuing such notices, relied on
explanation to the aforesaid notification whereby the time limit was extended as stated above.
These notices became subject matter of challenge before different High Courts. The
Notifications issued for extension of time were prayed to be declared ultra vires.

5.4 The Supreme Court had an occasion to consider such cases arrived before it from different
High Courts, wherein the notices issued during the period from 1-4-2021 to 30-6-2021 in relation
to the earlier assessment years were challenged. The provisions post-Finance Act, 2021, under
the new regime had come into force. This controversy before the Apex Court culminated into
decision in Ashish Agarwal (supra).

5.4.1 The Supreme Court striking balance between the notices issued by the Department under
the old regime and the provisions brought into force under the new regime held that all notices
issued under section 148 of the Act between 1-4-2021 to 30-6-2021 shall be deemed to have been
issued under section 148A of the Act to be treated as show-cause notices under section 148A(b)
of the Act. The Supreme Court observed that new provisions substituted by the Finance Act,
2021 were remedial and benevolent in nature, came to be inserted with an object to protect the
right and interests of the assessee as well to sub-serve the public interest.

5.4.2 While allowing various appeals in part, the Supreme Court in Ashish Agarwal (supra),
modified the judgment and orders passed by the different High Courts from where the matters
had travelled by issuing the following directions, extracting from SCC,

"The impugned section 148 notices issued to the respective assessees which were issued
under unamended section 148 of the IT Act, which were the subject matter of writ petitions
 before the various respective High Courts shall be deemed to have been issued under
section 148A of the IT Act as substituted by the Finance Act, 2021 and construed or treated
to be showcause notices in terms of section 148A(b). The assessing officer shall, within thirty
days from today provide to the respective assessees information and material relied upon
by the Revenue, so that the assesees can reply to the showcause notices within two weeks
thereafter;

The requirement of conducting any enquiry, if required, with the prior approval of specified
authority under section 148A(a) is hereby dispensed with as a one-time measure vis-à-vis
those notices which have been issued under section 148 of the unamended Act from 1-4-
2021 till date, including those which have been quashed by the High Courts.

Even otherwise as observed hereinabove holding any enquiry with the prior approval of
specified authority is not mandatory but it is for the concerned Assessing Officers to hold
any enquiry, if required;

The assessing officers shall thereafter pass orders in terms of section 148A(d) in respect of
each of the concerned assessees; Thereafter after following the procedure as required
under section 148A may issue notice under section 148 (as substituted)".

(paras 28.1 to 28.5)

5.4.3 The following direction is material to assume significance in the controversy on hand,

28.5 All defences which may be available to the assesses including those available under
section 149 of the IT Act and all rights and contentions which may be available to the
concerned assessees and Revenue under the Finance Act, 2021 and in law shall continue to
be available.

(para 28.5)

5.4.4 Thus, one of the direction and clarification in Ashish Agarwal (supra), is that all the defences
that were available to the assessee under section 149 under the Finance Act, 2021 and in law
whatever rights are available to the assessing officer under the Finance Act, 2021 are kept open
to be continued to be available.

5.4.5 In light of above direction of the Supreme Court in para 28.5 of Ashish Agarwal (supra), the
First Proviso to section 149 after 1-4-2021 in the new regime may deservedly recapitulated,

"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) of this section, as they stood immediately
before the commencement of the Finance Act, 2021"

5.4.6 In simple words, the notice which could not have been issued in the old regime period due
to becoming time barred as per then operating provision, would also not be permissible to be
issued post-01-4-2021.
5.4.7 As already noticed, Section 149 as it stood immediately before commencement of Finance
Act, 2021, that is before 1-4-2021 in the old regime inter alia provided for time limit for notice. It
stated inter alia that no notice under section 148 shall be issued for the relevant assessment
year, as per clause (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.

5.4.8 In other words, limitation of six years from the end of relevant assessment year operated
as timeline in the old regime for issuance of notice under section 148 beyond which period, it
was not competent for the assessing officer to issue notice for reassessment. This embargo is
made to continue in the new regime also.

5.5 Now the reopening notices which related to the period prior to 1-4-2021, but issued between
1-4-2021 to 30-6-2021 came to be challenged before the Division Bench of this Court in Keenara
Industries (P.) Ltd. (supra), by placing reliance on directions in paragraph 28.5 of Ashish Agarwal
(supra), and thus by contending that since they were issued after six years from the end of the
relevant assessment year, they were barred and were without jurisdiction.

5.6 In Keenara Industries Pvt. Ltd. (supra), the Division Bench noticed the crux of the contents on
that count raised by the petitioners in the following paragraphs,

"2.14 According to the petitioner, the impugned notice is barred by limitation where
attention of this Court has been drawn to the legal provision. As per first proviso to sub-
section (1) of section 149(1), no notice of the Act shall be issued at any time in a case for the
relevant assessment year beginning on or before 1st day of 2021, is such notice could not
have been issued at that time on account of being beyond the time limit specified under
clause (b) of sub-section (1) of section 149, as they stood immediately before the
commencement of the Finance Act, 2021.

2.15 As per clause (b) of sub-section (1) of section 149 of the Act, as they stood immediately
before the commencement of the Finance Act, 2021, no notice under section 148 of the Act
shall be issued for the relevant assessment year 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 Rs. 1 lakh or more
for that assessment year.

2.16 It is, therefore, urged that the notice under section 148 of the Act can be issued on or
after 1-4-2021 only if the limitation for issuing such notice under old regime of reopening
had not expired prior to Finance Act, 2021 coming into force. It is clarified that the new
provisions relating to reopening introduced by the Finance Act, 2021 came into force with
effect from 1-4-2021."

5.6.1 In other words, it was the contention that as per the provisions of Section 149 of the Act in
the old regime, a notice under section 148 could have been issued to the assessee, if four years
had elapsed from the end of the Assessment Year, but not six years. After six years from the end
of the Assessment Year, notice under section 148 was barred.
5.6.2 Stating differently, as per the old regime, for issuance of notice under section 148, in
relation to Assessment Year 2013-14, the outer time limit would expire on 31-3-2020 and for
issuing such notice in relation with Assessment Year 2014-15, the time period would conclude on
31-3-2021.

5.7 As already noted, the department took shelter of the time limit extended by Notifications of
the Central Board of Direct Taxes to treat the above class of notices to be within time.

5.8 In Keenara Industries (P.) Ltd. (supra), this Court proceeded to hold that enacting the provisions
in Taxation and Other Laws (Relaxation & Amendment of Certain Provisions) Act, 2020, was not
the permissible device whereby the time limit could be legitimately extended for the purpose of
issuing Notices under section 148, which were otherwise barred in terms of Section 149, as it
exists in the old regime.

5.8.1 The Taxation and Other Laws Act, 2020 was rightly viewed to be a secondary legislation. It
was therefore held that secondary legislation would not override the principal legislation-the
Finance Act, 2021. Also negatived by the Division Bench in Keenara Industries (P.) Ltd. (supra) as per
observations in paragraph 36 of the judgment, the concept of freezing the time limit. It was held
that it was not permissible in law for the Revenue to travel back in time. Nor does the Taxation
and Other Laws Act endorse to such concept. It was held as per paragraphs 38 and 39 of the
Keenara Industries (P.) Ltd. (supra) that Notifications extending the due dates under the old
provisions could not breath any more after the repeal of the old provisions.

5.8.2 In paragraph 21, it was observed that the Taxation Laws Relaxation Act, 2020, did not
elongate the erstwhile scheme,
"21. It is to be noted that while enacting the Finance Act, 2021, Parliament was aware of the
existing statutory laws both under the Act as amended by the Finance Act, 2021 as also the
ordinance and the TLA Act and Notification issued there under. However, the new scheme
for reassessment which was made effective from 1-4-2021 does not have any saving clause.
This brings an end to the possibility of any fresh proceedings being initiated under the
unamended reassessment provisions after 1-4-2021. Finance Act, 2021 also did not contain
savings clause and since the legislature through Finance Act, 2021 and TLA Act did not
include any intention to protect and extend the erstwhile scheme of section 148 of the Act.
The life of erstwhile scheme of 148 cannot be elongated. The principle that would also
employ is that the substitution for omit and obliterate the pre-existing provision and in
absence of any saving clause either under the ordinance or the TLA Act the Finance Act, 2021
the presumption is available for the old provision to continue beyond 31-3-2021."

6. In Keenara Industries (P.) Ltd. (supra), this Court laid down the proposition of law thus,

"20. Thus, the notice under section 148 of the Act can be issued on or after 1-4-2021 only if
the limitation for issuing such notice under old regime of reopening had not expired prior to
Finance Act, 2021 coming into force, which means w.e.f. 1-4-2021. As per the old regime of
reopening, the reopening notice under section 148 of the Act could have been issued before
the expiry of six years from the end of relevant assessment year. In other words, no notice
could have been issued after expiry of period of six years from the end of the relevant
assessment year.
 20.1 In other words, if the period of six years from the end of relevant assessment year
expired on 31-3-2021, then notice under section 148 of the Act could not have been issued
under the new regime for the said assessment year.

20.2 The example given in para 2.18 has already been given for appreciating these legal
provisions for the assessment year 2013-14 and 14-15. In case of assessment year 2013-14,
the date of expiry of the assessment year is 31-3-2014 and therefore, six years from the end
of assessment year would expire on 31-3-2020. Whereas for the assessment year 2014-15,
the date of expiry of assessment year is 31-3-2015 and the six years would expire on 31-3-
2021. The new provision introduce by Finance Act, 2021 came into force on 1-4-2021
therefore, the limitation for issuance of notice under section 148 of the Act prescribed under
the old regime of reopening expired on 1-4-2021 for assessment year 2013-14 and 2014-15.
20.3 Therefore, in plain words, a notice which had become time barred prior to 1-4-2021 as
per the then provisions cannot be revived under new regime by applying section 149 (1)(b) of
the Act which came into effect from 1-4-2021."

6.1 Keenara Industries (P.) Ltd. (supra) thus considered the question of limitation vis-a-vis notices
for reopening of the assessment issued for the Assessment Year 2013-14 and Assessment Year
2014-15. The final statement of law could be said to be contained in para 52 of Keenara Industries
(P.) Ltd. (supra),

"A conjoint reading of section 149(1) proviso w.e.f. 1-4-2021 along with section 149(1)(b) prior
to 1-4-2021. The case of the petitioner for assessment years 2013-14 and 2014-15 cannot be
reopened. The assessment year is 2013-14 (01-4-2012 to 31-3-2013) and assessment year
2014-15 (01-4-2013 to 31-3-2014). The end of assessment year is 31-3-2014 and 31-3-2015
respectively. Therefore, the last date for issuance of notice under section 148 of the Act
would be 31-3-2020 or 31-3-2021 (being six years from the end of relevant assessment year)
whereas the impugned notices under section 148 is issued beyond that period and hence,
the same are clearly time barred."

6.2 It may also be mentioned that the Allahabad High Court also dealt with similar issues in
Rajeev Bansal v. Union of India [2023] 147 taxmann.com 549/453 ITR 153 and held to answer the
questions posed before it thus,

"(i)   The reassessment proceedings initiated with the notice under section 148 (deemed to
be a notice under section 148-A), issued between 1-4-2021 and 30-6-2021, cannot be
conducted by giving the benefit of relaxation/extension under the Taxation and Other
Laws (Relaxation And Amendment of Certain Provisions) Act' (TOLA) 2020 up to 30-3-
2021, and the time limit prescribed in section 149 (1)(b) (as substituted w.e.f. 1-4-2021)
cannot be counted by giving such relaxation from 30-3-2020 onwards to the revenue.

(ii)   In respect of the proceedings where the first proviso to section 149(1)(b) is attracted,
the benefit of TOLA 2020 will not be available to the revenue, or in other words, the
relaxation law under TOLA 2020 would not govern the time frame prescribed under the
first proviso to Section 149 as inserted by the Finance Act' 2021, in such cases."
6.3 This Court is in agreement with the decision in Keenara Industries (P.) Ltd. (supra), of this Court
as well with Allahabad High Court decision in Rajeev Bansal (supra).

6.4 Therefore, the point is no more res integra that all original notices under section 148 of the
Act referable to the old regime and issued between 1-4-2021 to 30-6-2021 would stand beyond
the prescribed permissible timeline of six years from the end of Assessment Year 2013-14 and
Assessment Year 2014-15. Therefore, all such notices when they would relate to Assessment
Year 2013-14 or Assessment Year 2014-15 would be time barred as per the provisions of the Act
as applicable in the old regime prior to 1-4-2021. Furthermore, these notices cannot be issued as
per the amended provision of the Act.
6.5 Learned advocate for the Revenue was entirely at his receiving end, unable to dispute the
position of law holding the field as above.

7. In view of the above, all the impugned notices in the respective petitions under section 148 of
the Act relatable to Assessment year 2013-14 or the assessment year 2014-15, as the case may
be, are beyond the permissible time limit, therefore, liable to be treated illegal and without
jurisdiction.

8. Since the petitions deserve to be allowed on the aforesaid crisp legal ground alone, learned
advocates for the parties submitted to agree that facts and other legal issues may not be gone
into by the Court. Accordingly, they are neither delineated, nor are gone into in respect of the
above petitions.

9. All other questions on facts involved in the reasons weighed with Assessing Officer seeking to
reopen the assessment are kept open in all cases.

10. As a result, the following order is passed,

(i)   Notice dated 1-7-2022 under section 148 and Order dated 1-7-2022 under section
148A(d) of the Income-tax Act passed by the Assessing Officer seeking to reopen the
assessment for the Assessment Year 2013-14 impugned in Special Civil Applications No.
5295 of 2023 are hereby set aside;

(ii)   Notice dated 31-7-2022 under section 148 and Order dated 30-7-2022 under section
148A(d) of the Income-tax Act passed by the Assessing Officer seeking to reopen the
assessment for the Assessment Year 2014-15 impugned in Special Civil Applications No.
5366 of 2023 are hereby set aside.
11. Both the petitions stand allowed. Rule is made absolute in each petition.
TANVI

*In favour of assessee.