[Opinion] Analysis of the CBDT Instruction on the Judgement of the SC in the Case of Abhisar Buildwell Pvt. Ltd.

Ruchesh Sinha & Pankaj Aggarwal – [2023] 153 taxmann.com 675 (Article)

A. Introduction

At the outset, the immediate attention of the readers are invited to the previous article having citation [2023] 150 taxmann.com 7 (Article) published on 1st May 2023. In the said article, while interpreting the judgment of Hon’ble Supreme Court in the case of Pr. CIT v. Abhisar Buildwell (P.) Ltd. [2023] 149 taxman.com 399/293 Taxman 141/459 ITR 212, it was said that there would be practical difficulty in implementing the said judgment. It was also stated that for implementation of the said judgement recourse to Section 150 of the Income Tax Act, 1961 is required to be taken. Now, on 23rd August 2023, the CBDT has issued an instruction i.e., Instruction No. 1 of 2023 pertaining to the guidelines given for implementation of the said judgement and the further recourse to be made in this regard. The present article is endeavoured to throw light upon the said instruction and catering various facets of it’s practical implementation. The earlier article may be gone through, prior to reading the present article for the sake of holistic view of the matter.

B. Interpretation of the Aforesaid Instructions

Before moving further, it shall be worthwhile to reproduce Para 6 and para 7.2 along with its sub-paras the said instruction followed by the interpretation thereof:

“6. Scenarios and action suggested to be taken:

6.1 Considering that (i) significant time has elapsed from the decisions received in completed cases wherein the assessment was made based on ‘other material’ and to provide tax certainty to the taxpayers, the Board has decided that no action is required to be taken under section 147/148 of the Act in cases (except cases covered by paragraph 7.2.1 below) where decisions of the appellate authorities have become final because these decisions have not been contested further in appeal. Further, it is decided that the said judgment is required to be applied in the following cases only:

(a) The lead and tagged cases in the said judgement.

(b) All cases which are pending at appellate levels or before AO or any tax authority.

(c) All cases in which contrary decisions has been given by Appellate authorities after the Apex Court judgement in the Abhisar Buildwell case dated 24.04.2023.

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7.2 Completed/unabated assessments: In respect of cases that were unabated/completed at the time of issue of notices under section 153A/153C and assessments made, the following scenarios will emerge:

7.2.1 In the lead and all the tagged cases, necessary action U/s 148/147 need to be taken in the situation stated by the court in the para 14(iv) of the said order in view of section 150 of the Act. The AO will be required to reopen the cases following the currently applicable procedure for reopening i.e., following the procedure prescribed under section 148A of the Act as inserted by Finance Act, 2021 in accordance with the law laid down by Hon’ble Supreme Court by its order dated 04.05.2022 in Union of India v. Ashish Agarwal [2022] 138 taxmann.com 64/286 Taxman 183/144 ITR 1 (SC). In view of the specific provisions of Section 153(6) of the Act, all the cases reopened U/s 147/148 of the Act will be required to be completed by 30th April 2024.

7.2.2. Cases where appeal is pending (filed either by the Department or assessee or both).

Further, as and when the appeals are disposed of by the appellate authorities, action might be required to be taken by the AO in appropriate cases under section 147/148 of the Act read with section 150 of the Act. It is reiterated that the AO will be required to reopen the cases following the currently applicable procedure for reopening as given in para 7.2.1 above.

7.2.3 In all cases where the decisions of appellate authorities rendered after the Apex Court judgement in Abhisar Buildwell case dated 24.04.2023 are inconsistent with the same, necessary action may be taken to file Miscellaneous application (MA) and Notice of Motion (NoM) to the ITAT and High Court, respectively, requesting the review of the decision in line with the Abhisar judgement, with a prayer of condonation of delay, wherever necessary. It is brought to attention that the time limit for filing Miscellaneous Application before ITAT is 6 months from the end of the month in which order is passed by the ITAT, as per section 254 of the Act. On receipt of the decision of the Hon’ble ITAT/High Court, as the case may be, necessary action as per law and extant instruction should be taken.

Suggestive template for Miscellaneous Application and Notice of Motion is attached for reference purpose. The facts of the case will be required to be mentioned in the Miscellaneous Application or Notice of Motion.”

[Emphasis supplied]

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