2022 (6) TMI 601 - HC - Income Tax

Reopening of assessment u/s 147 - scope of new section 148A - Whether impugned notice under unamended section 148 is bad in law in view of amendment carried out by the Finance Act, 2021 bringing into force Section 148A which requires a preliminary enquiry before initiating reassessment proceedings - HELD THAT - As all such notices under unamended section 148 of Income Tax Act issued by the Revenue after 01.04.2021 which were the subject matter of more than nine thousand writ petitions before the various High Courts would be deemed to be notices issued under amended section 148-A of Income Tax Act. The Apex Court while dispensing with the inquiry contemplated under section 148-A(a) of the Act with prior approval of the specified authority as a onetime measure, allowed the Assessees to take all defences including those available under section 149 of the Act and all rights and contentions which may be available to the concerned Assessees and Revenue under the Finance Act, 2021. Since the impugned notices in the present writ petitions are dated 31.03.2021 and there is nothing on record to show that they were issued after 31.03.2021 and on the contrary, the assessment order as also the impugned notices themselves shows that they were signed and issued on 31.03.2021, such a plea could not come to the aid of the petitioner. Since the assessment order has already been passed, petitioner should avail the remedy of appeal under the Income Tax Act, 1961. Having heard learned counsel for the parties on the plea raised herein and in view of the assessment proceedings having been concluded pursuant to the notice dated 31.03.2021 issued upon the petitioner, we are of the considered view that the petitioner should avail the alternative remedy of appeal. Petitioner is at liberty to raise the instant plea as well before the Appellate Authority.

Summary

Issues:
Challenging impugned notices issued under unamended section 148 of Income Tax Act, 1961 post amendment by Finance Act, 2021.

Analysis:
The petitioner in two writ petitions challenged the assessment order passed under section 147 read with section 144 and section 144B of the Income Tax Act, 1961, dated 29.03.2022, based on impugned notices dated 31.03.2021. The petitioner argued that the notices were communicated after 31.03.2021, rendering them bad in law due to the amendment by the Finance Act, 2021 introducing Section 148A, which mandates a preliminary enquiry before initiating reassessment proceedings. The petitioner contended that any assessment under such notices would be without jurisdiction and void.

The petitioner cited a judgment by the Apex Court in a case dated May 04, 2022, and a judgment by the Madhya Pradesh High Court in Writ Petition No. 28293/2021 dated 03.03.2022 to support their argument. The Madhya Pradesh High Court noted that an impugned notice issued after 01.04.2021 could not be acted upon without following the mandatory requirement of amended section 148-A of the Income Tax Act, 1961. The petitioner sought relief based on these judgments.

The Respondent Income Tax Department argued that the Apex Court, in the case cited by the petitioner, deemed notices under unamended section 148 of the Income Tax Act issued after 01.04.2021 to be under amended section 148-A as a one-time measure. The Respondent emphasized that the impugned notices in the present case were issued on 31.03.2021 and signed on the same day, hence the plea of invalidity could not aid the petitioner. The Respondent suggested that the petitioner should avail the remedy of appeal under the Income Tax Act, 1961, since the assessment order had already been passed.

After hearing both parties, the Court opined that the petitioner should pursue the alternative remedy of appeal. The Court allowed the petitioner to raise the plea before the Appellate Authority, which should examine it in accordance with the law and after due inquiry on facts. Consequently, the writ petitions were disposed of, and the respective I.A. were closed.