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Judgment
PER MANISH AGARWAL, A.M.:
The captioned appeals are filed by Revenue and Cross-objections filed by the assessee against the different orders passed by Ld. Commissioner of Income Tax (A)-27, New Delhi [“Ld. CIT(A)”] u/s 250 of the Income Tax Act, 1961 [“the Act”] arising out of different assessment orders pertaining to Assessment Years 2013-14 & 2014-15 respectively tabulated as under:-
| S. No. | Appeal Nos. | Asstt. Year | CIT(A)’s Order dated | Assessment Order dated | Assessment Order passed u/s |
| 1. | ITA No. 3102/Del/2026 | 2013-14 | 31.12.2025 | 31.03.2024 | 143(3) of the Act |
| 2. | C.O.No.-272/Del/2026 | 2014-15 | -Do- | -Do- | -Do- |
| 3. | ITA No. 3103/Del/2026 | 2015-16 | 31.12.2025 | 26.12.2016 | 143(3) of the Act |
| 4. | C.O.No.-273/Del/2026 | 2015-16 | -Do- | -Do- | -Do- |
Before us, both the parties have stated that the facts involved in all these appeals are common, therefore, they are taken together and decided by a common order.
Briefly stated the facts of the case are that the assessee is a company and filed its return of income on 29.10.2013, declaring total income of INR 107,11,01,660/- under normal provisions of Act and book profit of INR 1,95,95,10,306/- was declared u/s 115JB of the Act for the purpose of MAT. The case of the assessee was selected for scrutiny and assessment was completed u/s 143(3) of the Act vide order dated 04.01.2017 wherein total income of the assessee was assessed at INR 1,10,82,62,525/-. Thereafter, a search and seizure operation was conducted u/s 132 in the case of M/s. Perform Interiors Pvt. Ltd. on 09.02.2022. The AO observed that during the course of search conducted in the case of M/s. Perform Interiors Pvt. Ltd., one hard disk was found and seized, containing data in the shape of Excel work book titled as “all accounts statement (current client) dated 13.08.2019”. In the said Excel work book, some Excel Sheets were found which according to the AO, relates to the transactions carried out by the assessee with M/s. Perform Interiors Pvt. Ltd. and contained details of certain payment made in cash as well as through cheque and the cash payments were not recorded in the books of accounts. Therefore, proceedings u/s 147 were initiated by issue of notice u/s 148 on 31.03.2023 after taking approval from the Competent Authority. In response, the assessee had filed return of income on 29.04.2023, declaring total income of INR 1,13,72,75,394/-. The AO thereafter, completed re-assessment proceedings and assessed the total income at INR 1,40,69,97,490/- by making following additions/disallowances, totaling to INR 29,87,34,961/-:
| S. No. | Particulars of addition/disallowance | Amount (in INR) |
|---|---|---|
| 1. | Addition towards unexplained cash expenditure u/s 69C of the Act | 8,71,0000/- |
| 2. | Disallowance of delayed payment of employees contribution to EPF and ESI | 46,09,079/- |
| 3. | Disallowance out of deduction claimed u/s 80-IA | 6,61,73,736/- |
| 4. | Disallowance @ 2% of the total purchases made | 22,70,81,146/- |
| TOTAL | 29,87,34,931/- | |
Against the said order, assessee preferred and appeal before the ld. CIT(A), before whom assessee has taken additional Grounds of appeal, challenging the legality of the re-assessment proceedings on the ground of limitation. Ld. CIT(A) had allowed the additional Grounds of appeal and held as re-assessment proceedings as invalid on the ground of limitation.
Aggrieved by the order of ld. CIT(A), the Revenue is in appeal before the Tribunal by taking following Grounds of appeal mentioned in the appeal memo:-
1.“Whether the Ld. CIT(A) has erred in the facts and in law by ignoring the fact that the notice issued u/s 148 of the Act is not barred by limitation as per the decision laid down in the case of Sh. Rajeev Bansal.
2.Whether on the facts and circumstances of the case, Ld. CIT(A), Delhi, has erred in allowing the appeal by quashing the order u/s 147 dated 31.03.2024 and notice u/s 148 dated 31.03.2023 without appreciating the fact that the phrase at that time mentioned in proviso I to section 149 refers to 1st day of April, 2021.
3.Whether on the facts and circumstances of the case, Ld. CIT(A), Delhi, has erred in quashing the order u/s 147 dated 31.03.2024 and notice u/s 148 dated 31.03.2023 for reassessment pertaining to AY 2013-14 treating the same as time barred by wrongly interpreting the first proviso to section 149(1)(b) of the Act which clearly states that if no notice could have been issued before the commencement of Finance Act, 2021 w.e.f. 01.04.2021 as per the then provisions of sec. 148 OR sec. 153A OR sec. 153C, then the notice for reopening cannot be issued at present
4.Whether on the facts and circumstances of the case, Ld. CIT(A), ignored this statutory position and considered the facts only partially as the AY 2013-14 falls squarely within the extended 10-year block under the old section 153A, meaning it is perfectly covered by the first proviso to the amended section 149 of the Act
5.The Order of the Honble CIT(A), Delhi is erroneous and not tenable in law and on facts.
6.The appellant craves to add, alter OR amend any/all of the grounds of appeal before OR during the course of the hearing of the appeal.”
The assessee also filed cross objection wherein the assessee has raised Cross-objection Nos. 1 to 16 which are in support of the order of ld. CIT(A) and further challenged the disallowances/additions made by the AO.
All the Grounds of appeal taken by the Revenue are against the order of ld. CIT(A) holding the re-assessment proceedings as barred by limitation by following the order of Hon’ble Supreme Court in the case of Rajeev Bansal. The Revenue further challenged the action of ld. CIT(A) in holding that ld. CIT(A) has not considered the first proviso to section 149(1) of the Act in its entirety and thus, all the Grounds of appeal are taken together for consideration.
In the instant case, as observed above, the proceedings u/s 147 of the Act were initiated by issue of notice u/s 148 on 31.03.2023, copy placed at pages 60 to 61 of Paper Book (PB). It is observed that said notice was issued based on the information found or requisitioned u/s 132 of the Act in the case of M/s. Perform Interiors Pvt. Ltd. where AO framed an opinion that such material was pertained to the assessee and income as found noted in the said seized material has escaped assessment. It is further observed that search in the case of M/s. Perform Interiors Pvt. Ltd. was carried out on 09.02.2022 thus, it was the period where the amended provisions of section 149 of the Act were applicable i.e post 01.04.2021. Before going further, the provisions of section 149(1) as applicable to the assessment years under appeal are reproduced as under:-
[Time limit for notice.
149.(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);
27[(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—
(i)an asset;
(ii)expenditure in respect of a transaction or in relation to an event or occasion; or
(iii)an entry or entries in the books of account, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more:]
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 28[a notice under section 148 or section 153A or section 153C 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 or section 153A or section 153C, as the case may be], 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:
29[Provided also that for cases referred to in clauses (i), (iii) and (iv) of Explanation 2 to section 148, where,—
(a)a search is initiated under section 132; or
(b)a search under section 132 for which the last of authorisations is executed; or
(c)requisition is made under section 132A, after the 15th day of March of any financial year and the period for issue of notice under section 148 expires on the 31st day of March of such financial year, a period of fifteen days shall be excluded for the purpose of computing the period of limitation as per this section and the notice issued under section 148 in such case shall be deemed to have been issued on the 31st day of March of such financial year:
Provided also that where the information as referred to in Explanation 1 to section 148 emanates from a statement recorded or documents impounded under section 131 or section 133A, as the case may be, on or before the 31st day of March of a financial year, in consequence of,—
(a)a search under section 132 which is initiated; or
(b)a search under section 132 for which the last of authorisations is executed; or
(c)a requisition made under section 132A, after the 15th day of March of such financial year, a period of fifteen days shall be excluded for the purpose of computing the period of limitation as per this section and the notice issued under clause (b) of section 148A in such case shall be deemed to have been issued on the 31st day of March of such financial year:]
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 148A or 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 30[does not exceed 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.
Before us, ld. CIT DR for the Revenue vehemently supported the order of the AO and submits that ld. CIT(A) while holding the re-assessment order passed as barred by limitation has considered the provision of section 149(1) in part. As per ld. CIT DR, the case of the assessee is re-opened on the basis of documents found and seized from the possession of third party i.e. M/s. Perform Interiors Pvt. Ltd. and therefore, the pre-amended provisions of seciton153C of the Act are applicable and can be invoked in the instant case and thus, extended the parties of 10 years is applicable in the instant case. He thus, submits that the action of ld. CIT(A) in holding that if the case of the assessee could not be re-opened u/s 148 under pre-amended provisions where the limit of 06 years from the end of the relevant year is provided and therefore the order of Ld.CIT(A) is correct to such extent however, the proceedings u/s 153C could be initiated for the extended period and thus the AO has rightly initiated the proceedings u/s 148 of the Act. Ld.CIT Dr submits that the assessee’s case was re-opened in FY 2022-23 and therefore, period of 10 years would be available upto AY 2013-14 and accordingly, he prayed that the order of ld. CIT(A) on this score should be reversed.
On the other hand, ld.AR for the assessee vehemently supported the order of ld. CIT(A) and submits that in the instant case, ld. CIT(A) has followed the order of Hon’ble Apex Court in the case of Rajeev Bansal wherein vide para 19, the Hon’ble Apex Court has held that for issue of notice u/s 148 for AY 2013-14, time limit of Six years from the end of relevant assessment years had expired on 31.03.2020 and as per TOLA, limitations was extended upto 30.06.2021. However, notice u/s 148 was issued on 30.03.2023 therefore, the same is barred by limitation. Regarding the argument raised by the ld. CIT DR that the extended period of 10 years as provided u/s 153C of the Act is applicable, ld.AR submits that case of the assessee was re-opened for escapement of income. Ld.AR submits that as per the approval memo placed at page 76 to 77 of the Paper Book, total income escaped assessment was quantified at INR 13.00 Lakhs and the case of the assessee is being re-opened by applying the provision of section 149(1)(b) of the Act. Ld. AR submits that as per section 149(1)(b) of the Act where notice u/s 148 is issued between the period exceeding three years but before the expiry of Ten years, the income chargeable to tax which has escaped assessment as in the form of assets should be likely to amount of INR 50.00 Lakhs or more. Ld.AR submits that once the satisfaction is recorded of the escapement of income of INR 13.00 Lakhs, the provision of section 149(1)(b) of the Act could not be invoked in the instant case. Ld.AR further submits that AO further applied provision of section 149(1A) of the Act which are not applicable in the instant case as alleged payments of INR 13.00 Lakhs was made in FY 2012-13 & 2013-14 with respect to the transaction against the order in quote No.2230 of INR 26.00 Lakhs and the remaining payments were with respect to the transactions in Quote No.2990 & 2833 therefore, there are three separate transactions carried out which constitutes three separate events and all the three events cannot be clubbed together and more particularly, when they are happened in different time zone. Ld.AR thus requested for the confirmation of the order of ld. CIT(A).
Heard the contentions of both the parties and perused the material available on record. In the instant case, proceedings u/s 147 were initiated on the basis of the information found and seized from the possession of M/s. Perform Interiors Pvt. Ltd. during the course of search carried out at its business premises wherein certain excel sheets were found and seized. According to those excel sheets, cash payments were made by the assessee on different dates in respect of different orders for furniture, interior etc. The AO as per the reasons recorded for re-opening, placed at pages 62 onwards of PB, treated the cash payments in three different orders for different items as a single event and total cash payment of made was taken the basis for re-opening the assessment by applying the provision of section 149(1)(b) r.w.s 149(1A) of the Act. Before going further, we first refer the provisions of section 149 of the Act [as existed for the relevant AY applicable for the search conducted on or after 01.04.2021], which reads as under:-
149.[(1A) “Notwithstanding anything contained in sub-section (1), where the income chargeable to tax represented in the form of an asset or expenditure in relation to an event or occasion of the value referred to in clause (b) of sub-section (1), has escaped the assessment and the investment in such asset or expenditure in relation to such event or occasion has been made or incurred, in more than one previous years relevant to the assessment years within the period referred to in clause (b) of sub-section (1), a notice under section 148 shall be issued for every such assessment year for assessment, reassessment or recomputation, as the case may be.]
(2)The provisions of sub-section (1) as to the issue of notice shall be subject to the provisions of section 151.]”
Further in terms of provision of section 149(1A) of the Act, the cumulative figure of various Assessment years should be taken as escaped income represent as asset or expenditure which relates to an event or occasion that has occurred in more than one assessment year falling within the period referred in clause (b) of sub-section (1) of section 149, in such case notice u/s 148 shall be issued for each such Assessment Year separately for reassessment.
As observed above, the alleged incriminating Excel Sheets retrieved from the digital data seized during the course of search in the case of M/s. Proform Interiors Pvt. Ltd. containing details of transaction entered into by the assessee with it, there were three different quotes for three different order thus they should be treated as three different events or occasion for which cash payments were made by the assessee on different dates and all the three events are in different time zone and therefore they cannot be considered as one event or occasion for the purpose of invoking the provision of section 148 of the Act.
Ld.CIT(A) while holding the notice issued u/s 148 of the Act as barred by limitation has considered the limitations provided in First Proviso to section 149(1)(b), according to which if no notice u/s 148 could be issued under pre-amended era, no notice could be issued in the amended section 149 of the Act. However, such observations of ld. CIT(A) are partially correct as the case of the assessee was re-opened based on the information found from the possession of third party therefore, under pre-amended provisions, proceedings u/s 153C should have been initiated in the case of the assessee. As per the judgement of Hon’ble Supreme Court in the case of Jasjeet Singh reported in [2024] (6) TMI 75 (SC) followed by Hon’ble Jurisdictional High Court in the case of Dinesh Jindal Vs ACIT in WP (C) No. 11164/2023, wherein the Hon’ble High Court has held that the date of handed over the material is to be taken the date of search in the case of third party and the period of 10 years has to be counted from such date. In the case of Dinesh Jindal (supra), the Hon’ble High Court under identical circumstances, wherein the case of the assessee was re-opened u/s 148 of the Act by issue notice dated 30.03.2023 had computed the period of 10 years which ends upto AY 2014-15 and held the AY 2013-14 has fallen beyond the block period of 10 years u/s 153C r.w.s. 153A of the Act. The relevant observations of the Hon’ble Court as contained in para 17 to 20 are as under:-
17.“Insofar as the two Provisos to Section 149 (1) are concerned, we had in Ojjus Medicare Private Limited observed as follows:
“108.We also find ourselves unable to countenance the submissions based upon the two Proviso's placed in Section 149 for the following reasons. It must at the outset be noted that Section 149 regulates the time within which a notice under Section 148 may be issued. It thus neither ventures nor attempts to regulate the search assessment powers that are available to be invoked in terms of Sections 153A or 153C. Secondly, although the First Proviso (and to the extent that it included a reference to Sections 153A and 153C). came to be introduced by virtue of Finance Act. 2022 (Act 6 of 2022] with retrospective effect from 01 April 2021. the non obstante clause in Sections 153A and 153C was left untouched. Of equal significance is the fact that that Sections 153A and 1530 of their own stipulate no period within which a notice initiating search assessment may be issued. We further find that the bar created by virtue of the First Proviso is in relation to Sections 153A and 153C as they stood immediately before the commencement of Finance Act. 2021. The concept of relevant assessment year and the block of ten AYs' was made part of those provisions way back in 2017 itself and thus formed an integral part of those provisions as on 01 April 2021.
109.Any doubt that could have possibly been harboured is in any case stand dispelled by the Second Proviso to Section 149 and which unambiguously proclaims that the provisions of that sub-section would not apply to searches conducted or requisitions made prior to 31 March 2021. Thus, all searches conducted prior to 31 March 2021 remained unimpacted by the Provisos' placed in Section 149 of the Act. These statutory amendments to Section 149 would have to be read in juxtaposition with Section 153C(3) which brought the curtains down upon search assessments liable to be made in accordance with the trinity, provisions with effect from 01 April 2021. This since Parliament by virtue of Finance Act. 2021 had merged the original reassessment power as well as those which may be predicated upon a search within the ambit of Section 148 and its family of provisions."
18.Bearing in mind the aforesaid, the computation of the "relevant assessment year from the date of the impugned Section 148 notice dated 30 March 2023 would be as follows:
AY 2023-24 1
Ay 2022-23 2
AY 2021-22 3
AY 2020-21 4
AY 2019-20 5
AY 2018-19 6
AY 2017-18 7
AY 2016-17 8
AY 2015-16 9
AY 2014-15 10
19.It is therefore ex facie evident that AY 2013-14 falls beyond the ten-year block period as set out under Section 153C read with Section 153A of the Act. Consequently, the impugned notice dated 30 March 2023 has been issued beyond limitation and is liable to be quashed and set aside on this score alone. All consequential actions pursuant to the impugned notice would thus meet a similar fate.
20.On the prayer pertaining to reading down of Explanation 2(iv) to Section 148 of the Act, we note that the said issue along with a challenge to the vires of the said Explanation is being considered by us in WP(C) 1023/2024-Deeksha Holding Limited v. ACIT, Delhi & Anr. Thus, we refrain from answering this question in the instant writ petition. The same is consequently kept open to be urged by the assessee in an appropriate case and if circumstances so warrant.”
Further, as observed above, even if the Revenue’s contention is accepted that the case of the assessee could be re-opened as per provisions of section 149(1)(b) of the Act, the income escaped assessment is less than INR 50.00 Lakhs i.e. [INR 13.00 Lakhs only]. Therefore even though, the provision of section 149(1)(b) of the Act are not applicable in the instant case where case has been re-opened after the expiry of 03 years and before the end of 10 years from the end of the year in which search is taken place. Accordingly, though we are not in agreement with the reasons given by the ld. CIT(A) while holding the reassessment proceedings as barred by limitations however, as observed above, in the instant case, there are three different events and cumulative payment in cash of unexplained expenditure for each individual event was not more than Rs. 50.00 lacs, thus, the provisions of section 149(1A) of the Act cannot be invoked in the instant case. Therefore for this reason, the notice issued u/s 148 of the Act beyond the period of three year from the end of the relevant assessment year based on the satisfaction that income has escaped assessment for various assessment years in the shape of unexplained expenditure cumulatively more than Rs. 50.00 lacs as per 149(1A) of the Act is incorrect and consequent notice issued u/s 148 is hereby quashed. Accordingly, all the Grounds of appeal raised by the Revenue are dismissed.
Since we have dismissed the appeal of the Revenue and quashed the notice issued u/s 148 therefore, Cross-objection filed by the assessee became academic and hence, not adjudicated.
In the result, appeal of the Revenue is dismissed and Cross-objection field by the assessee is also dismissed.
Now we take appeal of the Revenue in ITA No.3103/Del/2026 and Cross-objection of the assessee in C.O. No.273/Del/2026 for Assessment Year 2014-15.
Before us, both the parties have fairly admitted that facts in this year are identical to the facts of the AY 2013-14 where in ITA No.3102/Del/2026 for AY 2013-14 in the above-mentioned paras, we have held the notice issued u/s 148 of the Act as barred by limitations. Thus, by respectfully following the observations as made in ITA No.3102/Del/2026 for AY 2013-14 which are applicable Mutatis Mutandis in the present case, the notice issued u/s 148 of the Act is hereby, quashed as barred by limitation. Accordingly, all the Grounds of appeal raised by the Revenue are dismissed.
Since we have dismissed the appeal of the Revenue and quashed the notice issued u/s 148 therefore, Cross-objection filed by the assessee became academic and hence, not adjudicated.
In the result, appeal of the Revenue is dismissed and Cross-objection filed by the assessee is also dismissed.
In the final result, both appeals of the Revenue in ITA Nos. 3102 & 3103/Del/2026 and Cross-objections of the assessee in C.O. Nos. 272 & 273/Del/2026, all are dismissed.