2024 (5) TMI 170 - HC - Income Tax

Validity of reopening of assessment u/s 147 - scope of new regime of reopening of assessment after introduction of provisions of section 148/148A - whether the respondents, under the facts of the present case, are legally justified in reinitiating assessment proceedings for the same AY, which had already been subjected to reassessment? - HELD THAT - Undisputedly, the respondents have proceeded to pass an order under Section 148(A)(d) of the Act premised on an identical ground of escapement of income as alleged in the original notice for reassessment issued on 31 March 2021. It is also not the case of the respondents that they had sought to recommence the concluded reassessment proceedings based on certain new information or additional grounds of escapement of income. Rather, they have only relied upon the decision of Ashish Agarwal ( 2022 (5) TMI 240 - SUPREME COURT to wield power to proceed with the reassessment. Thus, the only question which needs to be examined is whether the decision in Ashish Agarwal (supra) commands an authority to reopen even concluded assessment proceedings. Recently, we had an occasion to extensively deal with a similar challenge as has been laid in the instant writ petition in the case titled as Anindita Sengupta 2024 (4) TMI 96 - DELHI HIGH COURT whereby, it was held that the procedure envisaged in Ashish Agarwal (supra) unambiguously stood confined to matters where although notices may have been issued, proceedings were yet to have attained finality. The facts that assessment under Section 147 of the Act was already concluded, said proceedings were completely ignored and no new material was unearthed, closely resemble the factual scenario in the case of Anindita Sengupta (supra). Thus, the controversy in hand is squarely covered by our decision in Anindita Sengupta (supra). We, therefore, find it appropriate to allow the instant writ petition. Accordingly, the impugned notices issued under Section 148(A)(b) and Section 148, respectively and the impugned order passed under Section 148(A)(d) of the Act are, hereby, quashed. Decided in favour of assessee.

Summary

Issues Involved:
1. Validity of proceedings initiated u/s 148 of the Income Tax Act, 1961.
2. Legality of notices issued u/s 148A(b) and the consequential order u/s 148A(d).
3. Authority to reopen reassessment proceedings based on the Supreme Court's decision in Union of India v. Ashish Agarwal.

Summary:

1. Validity of Proceedings Initiated u/s 148 of the Income Tax Act, 1961:
The petitioner challenged the notice dated 1 June 2022 issued u/s 148A(b), the consequential order dated 16 July 2022 passed u/s 148A(d), and the notice dated 16 July 2022 issued u/s 148 for AY 2015-16. The initial notice for reassessment was issued on 31 March 2021, and the petitioner filed her ITR on 14 January 2022. An assessment order u/s 147 read with Section 144A(b) was passed on 31 March 2022 by NFAC, making an addition of Rs. 6,54,78,799/- to the petitioner's income. The petitioner contended that the AO erroneously assumed jurisdiction u/s 147 despite becoming functus officio after the assessment order dated 31 March 2022.

2. Legality of Notices Issued u/s 148A(b) and the Consequential Order u/s 148A(d):
The petitioner argued that the reassessment proceedings were already concluded, and no fresh proceedings were justified. The respondents issued a show cause notice u/s 148A(b) on 1 June 2022, which was replied to by the petitioner. Despite this, an order u/s 148A(d) was passed on 16 July 2022, alleging an escapement of income of Rs. 65,47,78,967/-, and a notice u/s 148 was issued on the same date. The respondents contended that the notice dated 31 March 2021 should be deemed a show cause notice u/s 148A(b) as per the Supreme Court's decision in Ashish Agarwal.

3. Authority to Reopen Reassessment Proceedings Based on the Supreme Court's Decision in Union of India v. Ashish Agarwal:
The Court examined whether the decision in Ashish Agarwal allowed the respondents to reopen concluded reassessment proceedings. The Court noted that the decision in Ashish Agarwal was confined to matters where notices were issued, but proceedings had not yet attained finality. The Court referred to its decision in Anindita Sengupta, which held that Ashish Agarwal did not mandate reopening completed assessments. The Court concluded that the respondents erred in reopening the concluded reassessment proceedings without new information or additional grounds of escapement of income.

Conclusion:
The High Court quashed the impugned notices dated 1 June 2022 and 16 July 2022 issued u/s 148A(b) and 148, respectively, and the order dated 16 July 2022 passed u/s 148A(d). The writ petition was allowed, and the pending application(s) were disposed of.