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TMI Blog2023 (10) TMI 401X X X X Extracts X X X X X X X X Extracts X X X X ..... issued a second notice in April, 2021 and proceedings have been taken forward till the passing of order under Section 148 A(d) and notice u/s 148 dated 04.05.2022. Those proceeding, the Department concedes at para 7 of counter dated 17.10.2022, have been dropped, There is absolutely no justification for the Department to re-visit the proceedings simply invoking the liberty granted in Ashish Agarwal. Having chosen to drop the second round of proceedings, the Department is bound by that decision in full. The explanation tendered for issuance of 148 A (b) notice yet again for the third time on 02.06.2022 is fallacious and unacceptable as the liberty granted under Ashish Agarwal would be available only in those situations where the matters stood at an initial / preliminary stage of re-assessment i.e., at notice stage. In matters where the proceedings have been carried forward to the stage of passing of Section 148A(d) order and issuance of section 148 notice, there is simply no justification in law or in fact, to subject the petitioner to a third round of proceedings. In our view, this is a case, where the liberty granted has not been used but abused by the Department. Submission of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring on the present matter, I encapsulate the trajectory that the matter has taken since 2021. The petitioner filed a return of income in time for AY 2015-2016 declaring total income as NIL. The return was taken up for scrutiny and a regular assessment in terms of Section 143(3) of the Act had been passed on 18.12.2017 accepting the return filed. 4. That order had been passed after service of notice under Section 143(2) and questionnaires under Section 142(1) and after hearing the responses of the petitioner to the notices / questionnaire issued thereto. The returned income had been accepted in full with no addition made and a NIL demand raised under the regular assessment. 5. The first notice under Section 148 had been received by the petitioner on 12.04.2021(first notice) on the premise that the income of the petitioner for AY 2015-2016 had escaped assessment within the meaning of Section 147 of the Act. On 23.03.2021, Finance Act, 2021 had been passed changing the procedure as well as the statutory provisions relating to re-assessment. 6. The new provisions came into effect on 01.04.2021. Since the notice dated 12.04.2021 had been issued in pursuance of the unamended procedur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he petitioner was afforded opportunity to show-cause why the prima facie belief of the Department not be confirmed, and a notice under Section 148 be issued. The distinction between the erstwhile and the presently subsisting systems of re-assessment is that, under the old system it was necessary for the assessing officer to record reasons on the basis of which a notice under Section 148 would be issued. The reasons thus form the substraction of proceedings for reassessment. 10. The assessee would then be called upon to file a return of income on the basis that either a return had not been filed originally or that such return had been deficient in terms of revealing the proper income to be brought to tax. The Hon'ble Supreme Court in the case of Income-Tax Officer v GKN Driveshafts (259 ITR 18) had clarified that upon receipt of a notice under Section 148, the assessee was required to comply by filing the return or adopt the same return as initially filed if it were of the opinion that the return was full and true. 11. It could thereafter seek a copy of the reasons recorded and upon receipt thereof, was entitled to file its objections to the assumption of jurisdiction by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eals 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." 16. Thus, the notice first issued under Section 148 was to be deemed to have been issued under Section 148A of the Act. Liberty was granted to the revenue to continue proceedings under the new regime and all defences were kept available for an assessee to invoke. 17. The question that arises here is to whether at all the liberty granted under the judgment in Ashish Agarwal (supra) would be available / applicable in this case, as, even prior to delivery of that judgment on 04.05.2022, the respondent had issued a notice under Section 148A(b) of the Act followed by an order under Section 148A (d) of the Act accompanied by Section 148 notice dated 18.04.2022. To be noted, that the second notice under Section 148 dated 18.04.2022 was issued even prior to the judgment of the Supreme Court on 04.05.2022. 18. Not content w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per which the officer opened the third innings of re-assessment for the same year. 23. That apart, and addressing the notice on merits, the petitioner also sought screenshots of the information flagged by the risk management strategy of the CBDT or the final objections raised by the CAG in support of the assumption of jurisdiction by the officer. A doubt was raised in regard to the so-called 'flagging' by the computer system under the software driven risk management strategy of the CBDT. This material was never supplied and instead an order is come to be passed on 28.07.2022 under Section 148 A(b) of the Act impugned in this writ petition. 25.The stand of the Department is, in general, that there is no lacunae so far as the assumption of jurisdiction is concerned and that the writ petition is premature as the matters rests only at stage of issuance of notice under Section 148. They rely on several cases for the proposition that the writ court must not assume to itself jurisdiction at this stage. The proceedings have been initiated with necessary approval and there is no merit in the writ petition. 26. At paragraph 7 of the counter, the Department concedes the position that the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound of proceedings. In my view, this is a case, where the liberty granted has not been 'used' but 'abused' by the Department. 33. That apart, the above submission of the Revenue that the proceedings initiated on 01.04.2021 stood revived is also founded to be factually incorrect as there are material differences between the reasons dated 25.06.2021 and those under the Section 148A(b) notice dated 04.05.2022. If, as the Department states, the third round is only a revival of the earlier proceedings, then the reasons ought to have been identical, which is not the case. Thus, the justification for the impugned proceedings is found vitiated on this aspect as well. 34. A reading of the judgment in Ashish Agarwal specifically the directions extracted make it clear that the liberty related relates to Section 148 notices alone as paragraph 26(1) categorically states that 'the impugned Section 148 notices issued to the respective assessees under unamended Section 148 of the IT Act and which were the subject-matter of writ petitions before various respective High Courts shall be deemed to have been issued under Section 148A of the IT Act as substituted by the Finance Act, 2021 and construe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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