Research › Search › Judgment

Gujarat High Court · body

2025 DIGILAW 468 (GUJ)

Century Tradeserve Limited v. Union Of India

2025-06-16

BHARGAV D.KARIA, PRANAV TRIVEDI

body2025
JUDGMENT : BHARGAV D. KARIA, J. 1. Heard learned advocate Mr. B.S. Soparkar for the petitioner and learned Senior Standing Counsel Mr. Varun K. Patel for the respondent no.2. 2. Having regard to the controversy arising in the petition which is in narrow compass, with the consent of the learned advocates for the respective parties, the matter is taken up for hearing. 3. Rule returnable forthwith. Learned Senior Standing Counsel Mr. Varun K. Patel waives service of notice of rule on behalf of the respondent. 4. By this petition under Article 226 of the Constitution of India, the petitioner has prayed for quashing and setting aside the notice dated 31.03.2021 issued under Section 148 of the INCOME TAX ACT , 1961 (for short “the Act”) for the Assessment Year 2013-14 as well as the Assessment Order dated 30.03.2022 passed by the respondent – Assessing Officer under Section Section 147 read with Section 144B of the Act during the pendency of this petition. 5. The brief facts of the case are as under: 5.1. The petitioner filed Return of Income for the Assessment Year 2013-14 declaring its gross total income as ‘NIL’ on 28.09.2013. The respondent has issued notice dated 31.03.2021 under Section 148 of the Act under the provisions of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (for short “the TOLA”. It is the case of the petitioner that neither the notice dated 31.03.2021 was uploaded on ITBA portal nor sent to the petitioner through E-mail or speed post on or before 31.03.2021, but the physical copy of the notice was received by the petitioner on 06.04.2021. It is also the case of the petitioner that the web portal does not bear the date of issuance of the impugned notice and it only refers to state that the notice was sent through an E-mail, but in fact, no such E-mail was received by the petitioner. It is also the case of the petitioner that the speed post which was dispatched by the respondent – Assessing Officer was bearing the date 04.04.2021 i.e. after 31.03.2021. 5.2. The petitioner filed the revised Return of Income for the relevant Assessment Year on 27.04.2021 in response to the notice under Section 148 of the Act. Thereafter, the reasons for reopening was provided to the petitioner on 10.06.2021 without any annexures referred therein. 5.2. The petitioner filed the revised Return of Income for the relevant Assessment Year on 27.04.2021 in response to the notice under Section 148 of the Act. Thereafter, the reasons for reopening was provided to the petitioner on 10.06.2021 without any annexures referred therein. The petitioner therefore, preferred Special Civil Application No. 10596 of 2021 challenging the impugned notice. During the pendency of the petition, the petitioner was supplied with the reasons recorded for reopening and subsequently by order dated 18.01.2022, the writ petition was disposed of requiring the petitioner to submit objections against the reasons for reopening. The petitioner filed objections on 12.03.2022 and 19.03.2022 against the reasons supplied for reopening. 5.3. The respondent no. 3 National Faceless Assessment Centre, disposed of the objections by order dated 21.03.2022. The petitioner thereafter preferred this petition on 27.03.2022. This Court (Coram : Hon’ble Mr. Justice J.B. Pardiwala and Hon’ble Ms.Justice Nisha M. Thakore) passed the following order on 29.03.2022 “We have heard Mr. S.N. Soparkar, the learned Senior Counsel assisted by Mr. B.S. Soparkar, the learned counsel appearing for the writ applicant. Issue Notice to the respondents, returnable on 05.07.2022. Let there be ad-interim order in terms of paragraph 9(c).” 5.4. The petitioner also informed the respondent on the web portal that this Court had granted the stay of the further proceedings of the impugned notice by the interim order passed on 29.03.2022 as reflected on page ‘59/B’ along with letter at page ‘59/C’. The respondent Assessing Officer however passed the impugned assessment order dated 30.03.2022 taking into consideration the fact that the petitioner did not provide the copy of the order passed by this Court and made an addition of Rs.6,29,55,000/-. 6. Learned advocate Mr. B.S. Soparkar appearing for the petitioner submitted that the impugned notice dated 31.03.2021 is issued after 01.04.2021 and therefore, as per the new regime, the respondents were supposed to issue the notice under Section 148A(b) of the Act by providing an opportunity to the petitioner to file its reply and thereafter pass an order under Section 148A(d) of the Act as per the direction issued by the Hon’ble Apex Court in case of Union of India v. Ashish Agarwal reported in 444 ITR 1 and thereafter the respondents were required to follow the directions of the Hon’ble Apex Court in case of Union of India and Ors. v. Rajeev Bansal reported in [2024] 469 ITR 46. It was submitted that admittedly the respondent Assessing Officer has not followed directions issued in the aforesaid two decisions and as such the impugned notice has to be treated as time barred notice. 6.1. Learned advocate Mr. Soparkar referred to and relied upon paragraph ‘11’ of the decision of the Hon’ble Apex Court in the case of Ashish Agarwal (supra) to point out that the Hon’ble Apex Court has categorically stated that all the pending writ petitions would be governed by the direction issued by the Hon’ble Apex Court under Article 142 of the Constitution of India and therefore, the stay granted by this Court would be subject to directions issued by the Hon’ble Apex Court. 7. On the other hand, learned Senior Standing Counsel Mr. Varun K. Patel appearing for the respondent referred to and relied upon the further affidavit-in-reply of the respondent no. 2 tendered during the course of hearing to point out that delivery status column in ITBA system for impugned notice under Section 148 of the Act dated 31.03.2021 is blank. He has referred to the copy of the screenshot of the ITBA portal showing the delivery status column. It was submitted that ticket was raised with the ITBA help being ticket no. 2907005, inter alia seeking the details of time and date of delivery of the notice under Section 148 of the Act dated 31.03.2021 as well as the notice under Section 143 (2)of the Act dated 18.06.2021. However, it was informed by the ITBA help- desk that due to unavailability of assesse’s E-mail ID at the time of generation of the document, E-mail was not delivered. However, the document was shared with the assessee on e-filing portal on 03.04.2021, as far as notice under Section 148 of the Act is concerned and with regard to the notice under Section 143 (2)of the Act is concerned on 30.06.2021. Therefore, it was submitted that the notice was sent through speed post on 04.04.2021 which was received by the petitioner on 06.04.2021. Learned Senior Standing Counsel Mr. Patel therefore, fairly submitted that the respondent authorities have not followed the directions issued by Hon’ble Apex Court in case of Ashish Agarwal (supra) by not issuing the notice under Section 148 A(b)of the Act followed by the order under Section 148 A(d) of the Act. 8. Learned Senior Standing Counsel Mr. Patel therefore, fairly submitted that the respondent authorities have not followed the directions issued by Hon’ble Apex Court in case of Ashish Agarwal (supra) by not issuing the notice under Section 148 A(b)of the Act followed by the order under Section 148 A(d) of the Act. 8. Having heard the learned advocates for the respective parties the following facts are not in dispute : (i) That the impugned notice dated 31.03.2021 is issued under the provisions of the TOLA for Assessment Year 2013-14. (ii) The notice dated 31.03.2021 was not issued on the same date, but the notice was issued to the petitioner by speed post on 04.04.2021. (iii) The further affidavit of the respondent no. 2 clearly states that the notice was uploaded on the e-filing portal of the petitioner on 03.04.2021. Therefore, admittedly the notice cannot be said to have been issued on 31.03.2021. (iv) As the notice is issued after 01.04.2021, the provisions of the new regime would be applicable to such notices and as such, the decisions of the Hon’ble Apex Court in case of Ashish Agarwal (supra) as well as in case of Rajeev Bansal (supra) would have to be adhered to. 9. Considering the above undisputed facts, it would be germane to refer to the relevant portion of the decision of Hon’ble Apex Court in the case of Ashish Agarwal (supra): “11. The present order shall be applicable PAN INDIA and all judgments and orders passed by different High Courts on the issue and under which similar notices which were issued after 01.04.2021 issued under Section 148 of the Act are set aside and shall be governed by the present order and shall stand modified to the aforesaid extent. The present order is passed in exercise of powers under Article 142 of the Constitution of India so as to avoid any further appeals by the Revenue on the very issue by challenging similar judgments and orders, with a view not to burden this Court with approximately 9000 appeals. We also observe that present order shall also govern the pending writ petitions, pending before various High Courts in which similar notices under Section 148 of the Act issued after 01.04.2021 are under challenge.” 10. We also observe that present order shall also govern the pending writ petitions, pending before various High Courts in which similar notices under Section 148 of the Act issued after 01.04.2021 are under challenge.” 10. The Hon’ble Apex Court in case of Rajeev Bansal (supra) has further extended and explained the decision of Ashish Agarwal (supra) by making it applicable to all the pending notices which have been covered by the provision of Section 149 of the new regime under the Act so as to find out whether such notice would be considered within the period of limitation or not. 11. The Hon’ble Apex Court in case of Rajeev Bansal (supra) has held as under :- “98. A legal fiction is created for a definite purpose and it should be limited to the purpose for which it is enacted or applied. It is a well- established principle of interpretation that the courts must give full effect to a legal fiction by having due regard to the purpose for which the legal fiction is created.157 The consequences that follow the creation of the legal fiction “have got to be worked out to their logical extent.”158 The court has to assume all the facts and consequences that are incidental or inevitable corollaries to giving effect to the fiction. 101. Under Section 148A(b), the assessing officer has to comply with two requirements: (i) issuance of a show cause notice; and (ii) supply of all the relevant information which forms the basis of the show cause notice. The supply of the relevant material and information allows the assessee to (1992) 3 SCC 1 PART F respond to the show cause notice. The deemed notices were effectively incomplete because the other requirement of supplying the relevant material or information to the assesses was not fulfilled. The second requirement could only have been fulfilled by the Revenue by an actual supply of the relevant material or information that formed the basis of the deemed notice. 105. A direction issued by this Court in the exercise of its jurisdiction under Article 142 is an order of a court. The third proviso to Section 149 of the new regime provides that the period during which the proceedings under Section 148A are stayed by an order or injunction of any court shall be excluded for computation of limitation. 105. A direction issued by this Court in the exercise of its jurisdiction under Article 142 is an order of a court. The third proviso to Section 149 of the new regime provides that the period during which the proceedings under Section 148A are stayed by an order or injunction of any court shall be excluded for computation of limitation. During the period from the date of issuance of the deemed notice under Section 148A(b) and the date of the decision of this Court in Ashish Agarwal (supra), the assessing officers were deemed to have been prohibited from passing a reassessment order. Resultantly, the show cause notices were deemed to have been stayed by order of this Court from the date of their issuance (somewhere from 1 April 2021 till 30 June 2021) till the date of decision in Ashish Agarwal (supra), that is, 4 May 2022. 106. In Ashish Agarwal (supra), this Court directed the assessing officers to provide relevant information and materials relied upon by the Revenue to the assesses within thirty days from the date of the judgment. A show cause notice is effectively issued in terms of Section 148A(b) only if it is supplied along with the relevant information and material by the assessing officer. Due to the legal fiction, the assessing officers were deemed to have been inhibited from acting in pursuance of the Section 148A(b) notice till the relevant material was supplied to the assesses. Therefore, the show cause notices were deemed to have been stayed until the assessing officers provided the relevant information or material to the assesses in terms of the direction issued in Ashish Agarwal (supra). To summarize, the combined effect of the legal fiction and the directions issued by this Court in Ashish Agarwal (supra) is that the show cause notices that were deemed to have been issued during the period between 1 April 2021 and 30 June 2021 were stayed till the date of supply of the relevant information and material by the assessing officer to the assessee. After the supply of the relevant material and information to the assessee, time begins to run for the assesses to respond to the show cause notices. 107. The third proviso to Section 149 allows the exclusion of time allowed for the assesses to respond to the show cause notice under Section 149A(b) to compute the period of limitation. After the supply of the relevant material and information to the assessee, time begins to run for the assesses to respond to the show cause notices. 107. The third proviso to Section 149 allows the exclusion of time allowed for the assesses to respond to the show cause notice under Section 149A(b) to compute the period of limitation. The third proviso excludes “the time or extended time allowed to the assessee.” Resultantly, the entire time allowed to the assessee to respond to the show cause notice has to be excluded for computing the period of limitation. In Ashish Agarwal (supra), this Court provided two weeks to the assesses to reply to the show cause notices. This period of two weeks is also liable to be excluded from the computation of limitation given the third proviso to Section 149. Hence, the total time that is excluded for computation of limitation for the deemed notices is: (i) the time during which the show cause notices were effectively stayed, that is, from the date of issuance of the deemed notice between 1 April 2021 and 30 June 2021 till the supply of relevant information or material by the assessing officers to the assesses in terms of the directions in Ashish Agarwal (supra); and (ii) two weeks allowed to the assesses to respond to the show cause notices. 109. If this Court had not created the legal fiction and the original reassessment notices were validly issued according to the provisions of the new regime, the notices under Section 148 of the new regime would have to be issued within the time limits extended by TOLA. As a corollary, the reassessment notices to be issued in pursuance of the deemed notices must also be within the time 163 East End Dwellings Co. Ltd. v. Finsbury Borough Council, [1952] AC 109. [Lord Asquith, in his concurring opinion, observed: “If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it.”] PART F Page 108 of 112 limit surviving under the INCOME TAX ACT read with TOLA. This construction gives full effect to the legal fiction created in Ashish Agarwal (supra) and enables both the assesses and the Revenue to obtain the benefit of all consequences flowing from the fiction.164 112. Let us take the instance of a notice issued on 1 May 2021 under the old regime for a relevant assessment year. Because of the legal fiction, the deemed show cause notices will also come into effect from 1 May 2021. After accounting for all the exclusions, the assessing officer will have sixty-one days [days between 1 May 2021 and 30 June 2021] to issue a notice under Section 148 of the new regime. This time starts ticking for the assessing officer after receiving the response of the assessee. In this instance, if the assessee submits the response on 18 June 2022, the assessing officer will have sixty-one days from 18 June 2022 to issue a reassessment notice under Section 148 of the new regime. Thus, in this illustration, the time limit for issuance of a notice under Section 148 of the new regime will end on 18 August 2022. 113. In Ashish Agarwal (supra), this Court allowed the assesses to avail all the defences, including the defence of expiry of the time limit specified under Section 149(1). In the instant appeals, the reassessment notices pertain to the assessment years 2013-2014, 2014-2015, 2015-2016, 2016-2017, and 2017-2018. To assume jurisdiction to issue notices under Section 148 with respect to the relevant assessment years, an assessing officer has to: (i) issue the notices within the period prescribed under Section 149(1) of the new regime read with TOLA; and (ii) obtain the previous approval of the authority specified under Section 151. A notice issued without complying with the preconditions is invalid as it affects the jurisdiction of the assessing officer. Therefore, the reassessment notices issued under Section 148 of the new regime, which are in pursuance of the deemed notices, ought to be issued within the time limit surviving under the INCOME TAX ACT read with TOLA. A reassessment notice issued beyond the surviving time limit will be timebarred. G. Conclusions 114. Therefore, the reassessment notices issued under Section 148 of the new regime, which are in pursuance of the deemed notices, ought to be issued within the time limit surviving under the INCOME TAX ACT read with TOLA. A reassessment notice issued beyond the surviving time limit will be timebarred. G. Conclusions 114. In view of the above discussion, we conclude that: a. After 1 April 2021, the INCOME TAX ACT has to be read along with the substituted provisions; b. TOLA will continue to apply to the INCOME TAX ACT after 1 April 2021 if any action or proceeding specified under the substituted provisions of the INCOME TAX ACT falls for completion between 20 March 2020 and 31 March 2021; c. Section 3(1) of TOLA overrides Section 149 of the INCOME TAX ACT only to the extent of relaxing the time limit for issuance of a reassessment notice under Section 148 ; d. TOLA will extend the time limit for the grant of sanction by the authority specified under Section 151. The test to determine whether TOLA will apply to Section 151 of the new regime is this: if the time limit of three years from the end of an assessment year falls between 20 March 2020 and 31 March PART G Page 111 of 112 2021, then the specified authority under Section 151(i) has extended time till 30 June 2021 to grant approval; e. In the case of Section 151 of the old regime, the test is: if the time limit of four years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under Section 151(2) has extended time till 31 March 2021 to grant approval; f. The directions in Ashish Agarwal (supra) will extend to all the ninety thousand reassessment notices issued under the old regime during the period 1 April 2021 and 30 June 2021; g. The time during which the show cause notices were deemed to be stayed is from the date of issuance of the deemed notice between 1 April 2021 and 30 June 2021 till the supply of relevant information and material by the assessing officers to the assesses in terms of the directions issued by this Court in Ashish Agarwal (supra), and the period of two weeks allowed to the assesses to respond to the show cause notices; and h. The assessing officers were required to issue the reassessment notice under Section 148 of the new regime within the time limit surviving under the INCOME TAX ACT read with TOLA. All notices issued beyond the surviving period are time barred and liable to be set aside;” 12. In view of the above directions of the Hon’ble Apex Court we have to examine as to whether the notice issued after 31.03.2021 though bearing the date of 31.03.2021 could be governed by the decision of the Hon’ble Apex Court or not. All notices issued beyond the surviving period are time barred and liable to be set aside;” 12. In view of the above directions of the Hon’ble Apex Court we have to examine as to whether the notice issued after 31.03.2021 though bearing the date of 31.03.2021 could be governed by the decision of the Hon’ble Apex Court or not. Admittedly, the respondent has not issued any notice under Section 148A(b)of the Act within the 30 days from the date of the decision of the Hon’ble Apex Court in case of Ashish Agarwal (supra) that is 04.05.2022 and therefore, the question of considering the deemed notice under Section 148B of the Act would not arise in the facts of the case and as such, the impugned notice dated 31.03.2021 would be a time barred notice as per the decision of the Hon’ble Apex Court in the case of Rajeev Bansal(supra) more particularly, as referred to in paragraph 113 of the said decisions having extracted herein-above. 13. The petition therefore, succeeds and is accordingly allowed. The impugned notice dated 31.03.2021 and consequently the assessment order dated 30.03.2022 are hereby quashed and set aside. Rule is made absolute to the aforesaid extent. No order as to costs.