Siemens Financial Services Pvt Ltd v. Dy.CIT (Bom)( HC) www.itatonline .org

S. 148A: Reassessment – Conducting inquiry, providing opportunity before issue of notice – Beyond limitation – Signed by wrong specifying authority – Beyond period of three years – TOLA is not applicable to AY.2015-2016 or any subsequent years- No power to review – Change of opinion – Order is quashed as bad in law . [ S. 147,148 ,148A(b), 148A(d)), 149(1)(b), 151(i), 151 (ii), Art . 226 , Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act. 2020 ( TOLA S. 3 )

The notice under Section 148A(b) of the Act was  issued on 25th June 2021 under Section 148 of the Act relying on the judgement of Apex Court in   UOI v. Ashish Agarwal  (2022) 444 ITR 1 /  138 64(SC) . The petitioner has raised various objection . The Revenue rejected the objection of the assessee and passed an  order under section 148A(d) of the Act and also issued notice under section 148 of the Act .  The assessee challenged the order and notice by filing the  writ petition .  Allowing the petition the Court held that   as per section 151 of the Act, the specified authority who has to  grant his sanction for the purposes of section 148 and section 148A is the Principal Chief Commissioner or Principal Director General or where there is no Principal Chief Commissioner or Principal Director General, the Chief Commissioner or Director General if more than three years have elapsed from the end of the relevant assessment year. For the Assessment year 2016-2017, three years elapsed on 31st March 2020 and hence the provisions of Section 151(i) and 151(ii) of the Act would have to be fulfilled, which have not been complied with.  On the facts of the case  the approval/sanction for order under Section 148A(d) of the Act has been granted by the Principal Commissioner of Income Tax-8. The entire controversy is, therefore, (a) whether the Principal Commissioner was the specified authority, who could have granted the approval / sanction ?, (b) if not, the effect thereof? The impugned notice mentions that the prior approval has been taken of the ‘Principal Commissioner of Income-tax – 8’ (‘PCIT-8’) which is bad in law as the approval should have been obtained in terms of section 151(ii) and not section 151(i) of the Act and the PCIT-8 cannot be the specified authority as per section 151 of the Act.  The Court held that  the approval is not valid. Hence, the order passed under Section 148A(d) read with notice issued under Section 148 of the Act dated 31st July 2022 is not valid.   The Court also held that the Revenue  cannot rely on the provisions of the Taxation and other laws (Relaxation and Amendment of certain provisions) Act, 2020 (TOLA) and the notification issued thereunder as Section 151 of the Act has been amended by Finance Act 2021 and the provisions of amended Section would have to be complied with by respondent no.1, w.e.f. 1st April 2021. Hence, as the sanction of the specified authority has not been obtained, the impugned order and impugned notice both dated 31st July 2022 are bad-in- law  hence quashed and set aside.  The Court also held that if change of opinion concept is given a go by, that would result in giving arbitrary powers to the Assessing Officer to reopen the assessments. It would in effect be giving power to review which he does not possess. The Assessing Officer has only power to reassess not to review. If the concept of change of opinion is removed as contended on behalf of the Revenue, then in the garb of re- opening the assessment, review would take place. The concept of change of opinion is an in-built test to check abuse of power by the Assessing Officer.  As held in Dr. Mathew Cherian  v. ACIT  (2023) 151 154 (Mad)( HC)    whether under old or new regime of reassessment, it is settled position that the issues decided categorically should not be revisited in the guise of reassessment. That would include issues where query have been raised during the assessment and query have been answered and accepted by the Assessing Officer while passing the assessment order .Even if assessment order has not specifically dealt with that issue, once the query is raised it is deemed to have been considered and the explanation accepted by the Assessing officer. It is not necessary that an assessment order should contain reference and/or discussion to disclose his satisfaction in respect of the query raised. The Assessing Officer does not have any power to review his own assessment when during the original assessment petitioner provided all the relevant information which was considered by him before passing the assessment order under section 143(3) of the Act . The Assessing Officer cannot initiate reassessment proceedings to have a relook at the documents that were filed and considered by him in the original assessment proceedings as the power to reassess cannot be exercised to review an assessment.  Relied on  Aroni Commercials Ltd. v. Dy.CIT (2014) 44 304 /224 Taxman 13 (Bombay) (Mag.)/ 362 ITR 403 / 267 CTR 228 (Bom)( HC )  CIT v. Kelvinator of India Ltd ( 2010 ) 320 ITR 561 (SC), Dr. Mathew Cherian v. ACIT  (2023) 151 154  /450 ITR 568 (Mad)( HC)  ,Tata  Communications Transformation Services Ltd. v  ACIT (2022) 443 ITR 49 (Bom)(HC)  J.  M. Financial & Investment Consultancy Services Pvt Ltd. v. ACIT  (2022) 215 DTR 98/ 327 CTR 458 / (2023) 451 ITR 205  ( Bom)( HC),  Sidhmicro Equities (P) Ltd. v. Dy.CIT   (2023) 150 460 (Bom) ( HC)  ( SLP dismissed  Dy.CIT v.Sidhmicro Equities (P) Ltd  (2023) 150 461/ 453 ITR 35  (SC) , MA Multi-Infra Development Pvt Ltd v. ACIT  (2023 149 491/ 451 ITR 181 (Bom)( HC),  DCW Limited v. ACIT ( Bom)( HC))  [WP No. (L) 6546 of 2022 dated 4-7-2022]  Soumya Girdhari Agarwal v. ITO ( Bom)( HC)  (WP No. 3354 of 2022 dated 25-7-2022)  Voltas Limited v. ACIT  (2022) 141 127 /288 Taxman 506  ( Bom)( HC),  Johnson and Johnson v. DCIT (Bom)( HC)  , [WP (L) No. 7733 of 2022 dated 4-5-2022] , Equitable Financial Consultancy Services Pvt Ltd v. ITO (WP No. 43 of 2022 dt. 27-4-2022) Asian Paints Ltd. v. ACIT (Bpm)( HC) ( WP (L) No. 6385 of 2022 dated 26-4-2022] )  Godrej Industries Limited v. DCIT  . (2015) 377 ITR 1 (Bom) ( HC) , KK Agarwal and Sons HUF v. ITO   ( Cal)( HC) (WPA No. 25770 of 2022 dt. 14 -12-2022  )  , Seema Gupta v. ITO ( 2022) 288 Taxman 519 (Delhi)( HC)   Sudesh Taneja v . ITO (2022)  442 ITR 289/ 286 Taxman 284  ( Raj)( HC)  .( AY. 2016 -17)( WP No. 4882 of 2022 dt. 25 -8 -2023 )

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