2022 (7) TMI 1056 - HC - Income Tax

Reopening of assessment u/s 147 - scope of new provision section 148A - As contended present case should be governed by the newly amended provisions relating to proceeding under section 147 and the formalities of which have not been observed and complied with, and as such, the same is bad in law - HELD THAT - As decided in UNION OF INDIA ORS. VERSUS VERSUS ASHISH AGARWAL 2022 (5) TMI 240 - SUPREME COURT instead of quashing and setting aside the reassessment notices issued under the unamended provision of IT Act, the High Courts ought to have passed an order construing the notices issued under unamended Act/unamended provision of the IT Act as those deemed to have been issued under section 148A of the IT Act as per the new provision section 148A and the Revenue ought to have been permitted to proceed further with the reassessment proceedings as per the substituted provisions of sections 147 to 151 of the IT Act as per the Finance Act, 2021, subject to compliance of all the procedural requirements and the defences, which may be available to the assessee under the substituted provisions of sections 147 to 151 of the IT Act and which may be available under the Finance Act, 2021 and in law As the present order shall be applicable PAN INDIA and all judgments and orders passed by different High Courts on the issue and under which similar notices which were issued after 01.04.2021 issued under section 148 are set aside and shall be governed by the present order and shall stand modified to the aforesaid extent. The present order is passed in exercise of powers under Article 142 of the Constitution of India so as to avoid any further appeals by the Revenue on the very issue by challenging similar judgments and orders, with a view not to burden this Court with approximately 9000 appeals. We also observe that present order shall also govern the pending writ petitions, pending before various High Courts in which similar notices under Section 148 of the Act issued after 01.04.2021 are under challenge. The impugned common judgments and orders passed by the High Court of Allahabad and the similar judgments and orders passed by various High Courts, more particularly, the respective judgments and orders passed by the various High Courts particulars of which are mentioned hereinabove, shall stand modified/substituted to the aforesaid extent only.

Summary

Issues:
Challenge to notice under section 148 of the Income Tax Act, 1961 post-31st March 2021 based on newly amended provisions.

Analysis:
The petitioner challenged the notice under section 148 of the Income Tax Act, 1961 issued post-31st March 2021, contending that the case should be governed by the newly amended provisions related to proceedings under section 147 of the Act. The petitioner argued that the formalities of the amended provisions were not observed, making the notice bad in law.

The High Court referred to a recent judgment of the Supreme Court in the case of Union of India & Ors. v. Ashish Agarwal, where certain guidelines and laws were laid down. The Supreme Court's judgment allowed the appeals in part and modified the orders passed by the High Court of Judicature at Allahabad. The Supreme Court directed that the notices issued under unamended section 148 of the IT Act should be deemed to have been issued under section 148A of the Act as substituted by the Finance Act, 2021. The assessing officer was required to provide information and material relied upon by the Revenue to the assessees within thirty days, allowing them to reply within two weeks.

The requirement of conducting any enquiry with the prior approval of a specified authority under section 148A(a) was dispensed with as a one-time measure for notices issued under the unamended Act from 01.04.2021 onwards. Assessing officers were directed to pass orders in terms of section 148A(d) for each assessee. The Supreme Court clarified that all defenses available to the assessees under section 149 of the IT Act and rights under the Finance Act, 2021, and in law would continue to be available.

The Supreme Court's order was applicable nationwide, modifying all judgments and orders passed by different High Courts on similar issues. The order aimed to avoid further appeals by the Revenue and reduce the burden on the courts. Pending writ petitions challenging notices issued after 01.04.2021 were also to be governed by the Supreme Court's order.

In light of the Supreme Court's judgment, the High Court dismissed the writ petition and directed the assessing officer to proceed with the reassessment proceedings in accordance with the guidelines and laws laid down by the Supreme Court.