2022 (6) TMI 1431 - HC - Income Tax

Reopening of assessment u/s 147 - procedure laid down u/s 148A - scope of new provisions substituted by the Finance Act, 2021 - section 148 notice issued on or after 1st April, 2021 - eligibility of reasons to believe that income chargeable to tax had escaped assessment - HELD THAT - As decided by Ashish Agarwal 2022 (5) TMI 240 - SUPREME COURT case the new provisions substituted by the Finance Act, 2021 being remedial and benevolent in nature and substituted with a specific aim and object to protect the rights and interest of the assessee as well as and the same being in public interest, the respective High Courts have rightly held that the benefit of new provisions shall be made available even in respect of the proceedings relating to past assessment years, provided section 148 notice has been issued on or after 1st April, 2021. We are in complete agreement with the view taken by the various High Courts in holding so. The present batch of writ petitions would stand disposed of in terms of the judgment of the Supreme Court in Ashish Agarwal (supra). However, there shall be no order as to costs.

Summary

Issues:
Challenging legality and validity of notices under Section 148 of the Income Tax Act, 1961 issued post 01.04.2021 but under the un-amended provision. Compliance with Section 148A of the Act regarding conducting an inquiry, providing opportunity of hearing, and considering the assessee's reply before issuing notices. Modification of judgments by the Supreme Court to allow reassessment proceedings under the amended provisions of sections 147 to 151 of the IT Act. Applicability of the Supreme Court's decision in Ashish Agarwal case on similar notices issued post 01.04.2021 nationwide.

Analysis:
The writ petitions challenged the legality of notices issued under Section 148 of the Income Tax Act post 01.04.2021 but under the un-amended provision. The petitioners contended that the new Section 148A, inserted by recent amendment effective from 01.04.2021, mandates an inquiry and a hearing before issuing such notices. The petitioners argued that non-compliance with Section 148A rendered the impugned notices null and void, leading to a stay on the notices pending resolution.

The Supreme Court, in a related case, observed that the new provisions under the Finance Act, 2021 aimed to protect the rights of the assessee and ensure public interest. While agreeing with the High Courts' views on applying the new provisions to past assessment years, the Supreme Court modified the judgments to allow reassessment proceedings under the amended provisions of sections 147 to 151 of the IT Act. The Court emphasized the need to avoid rendering the Revenue remediless and proposed modifications to facilitate reassessment proceedings under the amended provisions.

The Supreme Court's decision in the Ashish Agarwal case was deemed applicable nationwide to similar cases where notices were issued post 01.04.2021. The Court clarified that its decision under Article 142 of the Constitution would govern cases where similar notices were set aside by High Courts or were pending adjudication. The Central Board of Direct Taxes issued instructions for implementing the Supreme Court's judgment, ensuring compliance with the modified procedure for reassessment.

Consequently, the batch of writ petitions was disposed of in line with the Supreme Court's judgment in the Ashish Agarwal case. The Court emphasized nationwide applicability and closed miscellaneous applications related to the writ petitions, with no order as to costs.