2022 (5) TMI 1453 - HC - Income Tax

Reopening of assessment u/s 147 - Scope of new provision section 148A - Validation of notices after quashed by various High Courts - conducting of enquiries or issuance of show-cause notice or passing of order under section 148A - Scope of amendment by the Finance Act, 2021 which has amended Income Tax Act by introducing new provisions i.e. sections 147 to 151 w.e.f. 1st April, 2021 - HELD THAT - All the captioned writ applications are ordered to be disposed of in view of the recent pronouncement of the Supreme Court in the case of Union of India and others vs. Ashish Agarwal 2022 (5) TMI 240 - SUPREME COURT Impugned section 148 notices issued to the respective Assessees which were issued under unamended section 148 of the IT Act, which were the subject matter of writ petitions before the various respective High Courts shall be deemed to have been issued under section 148 as substituted by the Finance Act, 2021 and construed or treated to be show-cause notices in terms of section 148A(b). AO shall, within thirty days from today provide to the respective Assessees information and material relied upon by the Revenue, so that the Assesees can reply to the showcause notices within two weeks thereafter; The requirement of conducting any enquiry, if required, with the prior approval of specified authority under section 148A(a) is hereby dispensed with as a one-time measure vis-avis those notices which have been issued under section 148 of the unamended Act from 01.04.2021 till date, including those which have been quashed by the High Courts. Even otherwise as observed hereinabove holding any enquiry with the prior approval of specified authority is not mandatory but it is for the concerned Assessing Officers to hold any enquiry, if required; AO shall thereafter pass orders in terms of section 148A(d) in respect of each of the concerned Assessees; Thereafter after following the procedure as required under section 148A may issue notice under section 148 (as substituted); All defences which may be available to the assesses including those available under section 149 of the IT Act and all rights and contentions which may be available to the concerned Assessees and Revenue under the Finance Act, 2021 and in law shall continue to be available.

Summary

Issues Involved:
1. Validity of notices issued under unamended Section 148 of the Income Tax Act.
2. Application of the Supreme Court's judgment in Union of India vs. Ashish Agarwal.
3. Liberty to file fresh writ applications for other issues beyond Section 148 of the Income Tax Act.

Detailed Analysis:

Validity of Notices Issued Under Unamended Section 148 of the Income Tax Act:
The core issue in these writ applications was the validity of notices issued under the unamended Section 148 of the Income Tax Act, 1961. The High Court of Gujarat addressed multiple writ applications collectively, focusing on the recent pronouncement by the Supreme Court in the case of Union of India vs. Ashish Agarwal. The Supreme Court's judgment had significant implications, as it addressed the status of such notices issued post-1st April 2021.

Application of the Supreme Court's Judgment in Union of India vs. Ashish Agarwal:
The Supreme Court's judgment in Union of India vs. Ashish Agarwal (Civil Appeal No. 3005 of 2022) was pivotal. The Supreme Court allowed the appeals in part and modified the impugned judgments and orders from various High Courts. The relevant observations from the Supreme Court included:

- Deemed Issuance Under Section 148A: Notices issued under the unamended Section 148 were to be deemed as issued under Section 148A of the IT Act, as substituted by the Finance Act, 2021. These were to be treated as show-cause notices under Section 148A(b). The assessing officer was required to provide information and material relied upon within thirty days, allowing the assessees to reply within two weeks.

- Dispensation of Enquiry Requirement: The requirement for conducting an enquiry with prior approval under Section 148A(a) was dispensed with as a one-time measure for notices issued between 1st April 2021 and the date of the judgment.

- Procedure Under Section 148A(d): Assessing officers were to pass orders in terms of Section 148A(d) and follow the procedure under Section 148A before issuing notices under the substituted Section 148.

- Availability of Defenses and Rights: All defenses and rights available to the assessees and the Revenue under the Finance Act, 2021, and in law, were to continue to be available.

The Supreme Court's order was to be applicable PAN INDIA, affecting all similar judgments and orders from various High Courts.

Liberty to File Fresh Writ Applications for Other Issues:
The Gujarat High Court clarified that if any particular matter involved issues other than Section 148 of the Income Tax Act, 1961, the concerned writ applicant retained the liberty to file a fresh writ application in accordance with the law. This reservation ensured that other legal grievances could still be addressed separately.

Conclusion:
All the captioned writ applications were disposed of in line with the Supreme Court's order in Union of India vs. Ashish Agarwal. The High Court emphasized the applicability of the Supreme Court's directives PAN INDIA and allowed for the possibility of fresh writ applications for issues beyond Section 148 of the Income Tax Act, 1961.