2022 (9) TMI 553 - HC - Income Tax

Reopening of assessment u/s 147 - validity of proceeding and order issued u/s 148A - whether impugned notice issued u/s 148 shall be deemed to have been issued u/s148A as substituted by the Finance Act, 2021? - HELD THAT - Notices under Section 148A (d) of the Act have been issued to Rajendra Kumar Verma and Smt. Jaya Jain for taking up the matter for issuance of notice under Section 148 - Income Tax Returns of present petitioner and other two Rajendra Kumar Verma and Smt. Jaya Jain is liable to be examined for the purpose of reassessment as income has escaped assessment during that relevant year to the tune of Rs.1,00,00,000/-. The cases of all the above three are also liable to be examined together under Section 147 of the Act. So far as the time limit of notice as provided under Section 149 of the Act is concerned, the same is in respect of Section 148 of the Act and not for Section 148A of the Act. The petitioner is free to raise an objection about limitation in a proceeding initiated under Section 148 of the Act. As on today, the authorities have found it a fit case for issuance of notice under Section 148 of the Act in compliance In sub-paragraph (iii), the Apex Court has held ASHISH AGARWAL 2022 (5) TMI 240 - SUPREME COURT that the Assessing Officer shall thereafter pass an order in terms of Section 148A (d) in respect of all assessee; thereafter, after following the procedure as required under Section 148A of the Act may issue a notice u/s 148 (as substituted). It has also been observed that all the defences which may be available to the assessee including those available under Section 149 of the Act may be available to the concerned assessee and revenue under the Finance Act, 2021 shall continue to be available. Therefore, in compliance of the aforesaid order, the Assessing Officer has passed an order under Section 148A of the Act which is not final adjudication but a preliminary order. The final proceedings are liable to be drawn under Section 148 of the Act, in which the petitioner will get the full opportunity to contest the matter. Writ Petition, being premature, is hereby dismissed.

Summary

Issues:
1. Challenge to order under Section 148A (d) of the Income Tax Act, 1961.
2. Interpretation of the judgment of the Hon'ble Apex Court dated 04.05.2022.
3. Objection to reopening of assessment under Section 148 of the Act.
4. Prematurity of the writ petition.

Analysis:

Issue 1: Challenge to order under Section 148A (d) of the Income Tax Act, 1961
The petitioner filed a petition under Article 226 of the Constitution challenging the order dated 26.07.2022 passed by the Income Tax Officer 5(1), Indore under Section 148A (d) of the Income Tax Act, 1961. The order was issued in consequence of the order dated 04.05.2022 by the Hon'ble Apex Court, which found the petitioner's case suitable for a notice under Section 148 of the Act for the Assessment Year 2013-2014.

Issue 2: Interpretation of the judgment of the Hon'ble Apex Court dated 04.05.2022
The Hon'ble Apex Court, in the case of Union of India v/s Ashish Agrawal, held that notices issued under Section 148 of the Act before 01.04.2021 shall be deemed to have been issued under Section 148A of the Act as per the Finance Act, 2021. The Central Board of Direct Tax (CBDT) issued instructions for the implementation of this judgment. In compliance with this, the Income Tax Department issued a fresh notice under the newly inserted Section 148 of the Act to the petitioner, leading to the present challenge.

Issue 3: Objection to reopening of assessment under Section 148 of the Act
The petitioner contended that the assessment should not be reopened under Section 148 of the Act due to the proviso to Section 149(1)(b) of the Act. The petitioner argued that a transaction involving share allotment was wrongly treated as occurring in the relevant assessment year, whereas it actually took place in a prior year, which had become time-barred. The petitioner also highlighted similar issues pending before various High Courts.

Issue 4: Prematurity of the writ petition
The Income Tax Department argued that the order under Section 148A (d) was preliminary and not final adjudication. The Department contended that the petitioner would have the opportunity to contest the matter fully after receiving a notice under Section 148 of the Act. Therefore, the Department asserted that the writ petition was premature and should be dismissed, which the Court upheld.

In conclusion, the High Court dismissed the writ petition as premature, emphasizing that the final proceedings under Section 148 of the Act would provide the petitioner with an opportunity to contest the matter comprehensively.