-“If the foundation of any proceeding is illegal and unsustainable in law, then all consequential proceedings or order are also bad in law.”
In a recent decision, the Jharkhand High Court ruled that reopening of assessment notice liable to be quashed if barred by limitation period under Section 149 of the Income Tax Act, 1961.
The instant application has been preferred by the petitioner praying therein for quashing and setting aside the notice passed by respondent no. 3 under Section 148 of Income Tax Act, 1961 for the Assessment Year 2016-17 and also for quashing and setting aside the order passed by respondent no. 4 under Section 148A(d) of the Income Tax Act, 1961 for the Assessment Year 2016-17.
The counsel for the petitioner prayed that the entire reassessment proceeding be quashed and set aside and all consequential orders passed pursuant to issuance of Notice under Section 148 of the Income Tax Act, which has been issued beyond limitation period prescribed under Section 149 of the Income Tax Act, be also quashed.
The standing counsel for the revenue submitted that in the instant case, notice under Section 148 of the Income Tax Act for the Assessment Year 2016-17 was first issued on 30.06.2021 after getting necessary approval of the competent authority under Section 3(1) of the Income Tax Act and other Laws ( Relaxation in Amendment of Certain Provisions ) Act, 2020 ( ‘TOLA’ ) and the Notifications dated 31.03.2021 and 27.04.2021 issued by the C.B.D.T under the said provisions.
As per Section 149 of the Income Tax Act, 1961, the limitation period for issuance of notice under Section 148 of the Income Tax Act, 1961 is normally three years from the end of the relevant assessment year ( in this case A.Y 2016-17 ) and extendable beyond 3 years till 10 years provided the income which has escaped assessment is Rs. 50,00,000/- or more and the permission of the concerned authority is taken.
A Division Bench of Justices Rongon Mukhopadhyay and Deepak Roshan observed that “If we peruse to the exception which has been carved out by the Hon’ble Apex Court in Whirlpool Corporation, the instant writ application is maintainable as the order or the proceedings are wholly without jurisdiction, inasmuch as, notice under Section 148 of the Income Tax Act, 1961 is normally three years from the end of the relevant assessment year ( in this case A.Y 2016-17 ) and extendable beyond 3 years till 10 years provided the income which has escaped assessment is Rs. 50,00,000/- or more and the permission of the concerned authority is taken and in the instant case it is evident from the notice dated 30.05.2022, under Section 148 A (b) of the Income Tax Act, 1961, which clearly indicates that the alleged income, which has escaped assessment, is only Rs. 39,21, 450/-.”
“Since the impugned notice, under Section 148 of Income Tax Act, 1961, is illegal and unsustainable in law, accordingly, the Impugned Re-assessment order passed under Section 147 and the Notice of Demand issued under Section 156 of the Income Tax Act, 1961 are also bad in law and unsustainable and the same, is hereby, quashed and set aside” the Bench concluded.
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