2024 (9) TMI 657 - HC - Income Tax

Validity of the reopening of assessment - Legality of issuing a new Show Cause Notice u/s 148-A(b) after the conclusion of the initial reassessment proceedings - Right of the respondents to reopen the concluded assessment - issuance of SCN u/s 148-A (b) that income chargeable to tax has escaped assessment on the same set of reasons - HELD THAT - Notice u/s 148-A (b) proceeds on the premise that the judgment of Supreme Court in Ashish Agarwal 2022 (5) TMI 240 - SUPREME COURT requires all notices issued under Section 148 of the Act between the period commencing from 01.04.2021 and ending on 30.06.2021 to be treated as SCNs referable to Section 148-A (b) The assessment proceedings in this case were already concluded on 30.03.2022 and reassessment action was re-initiated on the same set of reasons vide SCN dated 02.06.2022 under Section 148-A (b) leading to passing of an order Section 148-A(d) and notice under Section 148 of the Act dated 19.07.2022. In view of the position of law as enunciated in the case of Anindita Sengupta 2024 (4) TMI 96 - DELHI HIGH COURT we find that there was no justification for the respondents to issue notices afresh seeking to reopen the proceedings which had been concluded prior to the judgment passed in Ashish Agarwal. The judgment passed in Ashish Agarwal 2022 (5) TMI 240 - SUPREME COURT does not mandate the completed assessment being reopened. We are therefore unable to sustain the impugned action for reassessment.

Issues Involved:
1. Validity of the reassessment proceedings initiated under Section 148 of the Income Tax Act, 1961 for the Assessment Year (AY) 2014-15.
2. Interpretation and application of the Supreme Court's decision in Union of India vs. Ashish Agarwal (2023) 1 SCC 617.
3. Legality of issuing a new Show Cause Notice (SCN) under Section 148-A(b) after the conclusion of the initial reassessment proceedings.
4. Double addition of income and the concept of finality in reassessment proceedings.

Issue-wise Detailed Analysis:

1. Validity of the reassessment proceedings initiated under Section 148 of the Income Tax Act, 1961 for the Assessment Year (AY) 2014-15:
The petitioner filed his return for AY 2014-15 on 30.09.2014, declaring a total income of Rs. 2,29,80,740/-. The return was processed under Section 143(3) of the Income Tax Act, and the case was assessed at the returned income on 30.12.2016. On receiving information from the Investigation Wing, Mumbai, that the assessee was the beneficiary of Rs. 3.07 crores through misuse of the NSEL Exchange platform, the case was reopened under Section 147. A notice under Section 148 was issued on 31.03.2021, and the reassessment proceedings concluded with an assessed income of Rs. 5,43,20,297/-. The petitioner challenged this reassessment order, and the matter is pending adjudication before CIT (Appeals).

2. Interpretation and application of the Supreme Court's decision in Union of India vs. Ashish Agarwal (2023) 1 SCC 617:
The respondents relied on the Supreme Court's decision in Ashish Agarwal, which held that notices issued under Section 148 during a specific period should be treated as Show Cause Notices under Section 148-A(b) of the new law. The respondents argued that the notice dated 02.06.2022, order under Section 148-A(d), and notice under Section 148 dated 19.07.2022 were in compliance with this decision. However, the petitioner contended that the formation of belief that income chargeable to tax had escaped assessment had already attained finality by the order dated 30.03.2022, and the issuance of a new SCN on the same grounds was invalid and void ab initio.

3. Legality of issuing a new Show Cause Notice (SCN) under Section 148-A(b) after the conclusion of the initial reassessment proceedings:
The court observed that the assessment proceedings were already concluded on 30.03.2022, and the reassessment action was re-initiated on the same grounds via SCN dated 02.06.2022. The court referred to its decision in Anindita Sengupta vs. Assistant Commissioner of Income Tax, which held that Ashish Agarwal did not mandate reopening concluded assessments. The court found no justification for issuing notices afresh to reopen proceedings that had been concluded before the judgment in Ashish Agarwal.

4. Double addition of income and the concept of finality in reassessment proceedings:
The petitioner argued that the reassessment proceedings initiated on the same set of reasons would result in double addition of income, which is not permissible under the law. The court agreed, noting that the Ashish Agarwal judgment was concerned with notices and proceedings that had not attained finality. The court emphasized that Ashish Agarwal did not intend or mandate reopening concluded assessments.

Conclusion:
The court allowed the writ petition, quashing the impugned order dated 19.07.2022 under Section 148-A(d) and the consequential notice under Section 148 of the same date. The court held that there was no justification for the respondents to issue notices afresh seeking to reopen proceedings that had been concluded prior to the judgment in Ashish Agarwal.

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