2022 Supreme(SC) 398

SUPREME COURT OF INDIA
M.R. Shah, B.V. Nagarathna, JJ.
Union of India & Ors. – Appellants
Versus
Ashish Agarwal – Respondents
Civil Appeal No. 3005 of 2022 with Civil Appeal No. 3006 of 2022 with Civil Appeal No. 3009 of 2022 with Civil Appeal No. 3007 of 2022 with Civil Appeal No. 3008 of 2022 with Civil Appeal No. 3010 of 2022 with Civil Appeal No. 3013 of 2022 with Civil Appeal No. 3011 of 2022 with Civil Appeal No. 3012 of 2022 with Civil Appeal No. 3014 of 2022 with Civil Appeal No. 3015 of 2022 with Civil Appeal No. 3016 of 2022 with Civil Appeal No. 3017 of 2022 with Civil Appeal No. 3019 of 2022 with Civil Appeal No. 3020 of 2022 with Civil Appeal No. of 2022 (Arising out of SLP(C) No. 6448 of 2022) with Civil Appeal No. of 2022 (Arising out of SLP(C) No. 5381 of 2022) with Civil Appeal No. of 2022 (Arising out of SLP(C) No. 5079 of 2022) with Civil Appeal No. of 2022 (Arising out of SLP(C) No. 6092 of 2022) with Civil Appeal No. of 2022 (Arising out of SLP(C) No. 6534 of 2022) with Civil Appeal No. of 2022 (Arising out of SLP(C) No. 6158 of 2022) with Civil Appeal No. of 2022 (Arising out of SLP(C) No. 6316 of 2022) with Civil Appeal No. of 2022 (Arising out of SLP(C) No. 6281 of 2022) with Civil Appeal No. of 2022 (Arising out of SLP(C) No. 6545 of 2022) with Civil Appeal No. of 2022 (Arising out of SLP(C) No. 6038 of 2022)
Decided On : 04-05-2022

IMPORTANT POINT
Reassessment – Under substituted provisions of IT Act vide Finance Act, 2021, no notice under Section 148 of IT Act can be issued without following procedure prescribed under Section 148A of IT Act.

Headnote:

Income Tax Act, 1961 – Sections 148 and 148A – Reassessment notices – Quashing of – Under substituted provisions of IT Act vide Finance Act, 2021, no notice under Section 148 of IT Act can be issued without following procedure prescribed under Section 148A of IT Act – All safeguards are provided before notice under Section 148 of IT Act is issued – -At every stage, prior approval of specified authority is required, even for conducting enquiry as per Section 148A(a) – However, Revenue cannot be made remediless and object and purpose of reassessment proceedings cannot be frustrated – Due to a bonafide mistake and in view of subsequent extension of time vide various notifications, Revenue issued impugned notices under Section 148 after amendment was enforced w.e.f. 01.04.2021, under unamended Section 148 – Same ought not to have been issued under unamended Act and ought to have been issued under substituted provisions of Sections 147 to 151 of IT Act as per Finance Act, 2021 – Impugned Section 148 notices issued to respective assessees which were issued under unamended Section 148 of IT Act, which were subject matter of writ petitions before various respective High Courts shall be deemed to have been issued under Section 148A of IT Act as substituted by Finance Act, 2021 and construed or treated to be show-cause notices in terms of Section 148A(b) – Assessing officer shall, within thirty days from today provide to respective assessees information and material relied upon by Revenue, so that assessees can reply to show-cause notices within two weeks thereafter – Requirement of conducting any enquiry, if required, with prior approval of specified authority under Section 148A(a) is hereby dispensed with as a onetime measure vis-à-vis those notices which have been issued under Section 148 of unamended Act from 01.04.2021 till date, including those which have been quashed by High Courts – Even otherwise, holding any enquiry with prior approval of specified authority is not mandatory but it is for concerned Assessing Officers to hold any enquiry, if required – Assessing officers shall thereafter pass orders in terms of Section 148A(d) in respect of each of concerned assessees – Thereafter after following procedure as required under Section 148A may issue notice under Section 148 (as substituted) – All defences which may be available to assesses including those available under Section 149 of IT Act and all rights and contentions which may be available to concerned assessees and Revenue under Finance Act, 2021 and in law shall continue to be available – 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 of Act are set aside and shall be governed by present Order and shall stand modified to that extent – Present order is passed in exercise of powers under Article 142 of Constitution of India so as to avoid any further appeals by Revenue on the very issue by challenging similar judgments and orders. (Paras 6.2, 6.5, 8, 10, 11 and 12)

Facts of the case:

Feeling aggrieved and dissatisfied with the impugned common judgment and order passed by High Court of Judicature at Allahabad in Writ Tax No. 524/2021 and other allied writ tax petitions, by which the High Court has allowed the said writ petitions and has quashed several reassessment notices issued by the Revenue, issued under Section 148 of the Income Tax Act, 1961, on the ground that the same are bad in law in view of the amendment by Finance Act, 2021 which has amended Income Tax Act by introducing new provisions i.e. Sections 147 to 151 w.e.f. 1st April, 2021, the Revenue has preferred present appeals.

Findings of Court:

Instead of quashing and setting aside the reassessment notices issued under 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 Finance Act, 2021, subject to compliance of all 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.

Result : Appeals Partly allowed.