The Income Tax Appellate Tribunal (ITAT), New Delhi, clarified that the reopening notice under Section 148 of the Income Tax Act issued on April 22, 2021, for the A.Y.2015-16, falls outside the period of completion prescribed under TOLA [Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act].
The Appellate Tribunal pointed out that the relaxations provided under section 3(1) of TOLA override the time limits for issuing a notice under section 148, read with Section 149 of the Income Tax Act, but do not extend the life of the old regime and merely provide a relaxation for the completion or compliance of actions following the procedure laid down under the new regime of Section 148A of the Income Tax Act.
The Division Bench comprising Sudhir Kumar (Judicial Member) and Manish Agarwal (Accountant Member) referred to the decision in the case of Bhagwan Sahai Sharma vs. Deputy Commissioner of Income Tax, to reiterate that the TOLA provisions do not apply to the reopening notice admittedly issued beyond the period of limitation as prescribed under section 149(1) of the Income Tax Act.
Essentially, the TOLA reassessment notices refer to notices issued for reopening tax assessments under the Income Tax Act during the period affected by the COVID-19 pandemic. TOLA, enacted with retrospective effect from March 31, 2020, extended time limits for various tax compliance actions. The reassessment provisions were further impacted by the Finance Act 2021, which amended Sections 147-151 of the Income Tax Act, changing the procedures and timelines for issuing reassessment notices.
Briefly, the respondent company filed its return declaring a loss of Rs. 1.10 lacs, which was, however, disallowed by the AO under Section 14A of the Income Tax Act, after making the due inquiries on the investments made by the respondent. Later, even though the CIT(A) on appeal deleted the disallowances, the AO reopened the case of the respondent by issuing notice under Section 148A(b) in pursuance of the Apex Court’s judgment in the case of Union of India v. Ashish Agarwal [(2022) 444 ITR 1(SC)]. This culminated in the reassessment proceedings, by making the addition of Rs. 163 crores under Section 68 read with Section 115BBE of the Income Tax Act. These additions were, however, deleted by the CIT(A) on appeal.
Appearances:
CIT Sita Srivastava, for the Appellant/ Revenue
Advocates Ananya Kapoor and Shivam Yadav, for the Respondent/ Taxpayer
