Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2025 Supreme(Online)(Mad) 76270

IN THE HIGH COURT OF JUDICATURE AT MADRAS
C.Saravanan, J
Kandasamy Veluswamy – Appellant
Versus
Assistant Commissioner of Income Tax – Respondent
W.P.No.26533 of 2022 | W.M.P.Nos.25594 and 25596 of 2022

Advocates:
For the Appellants/Petitioners: G.Vardini Karthik
For the Respondents: B.Ramasamy

Reassessment notices issued under the new regime, stemming from deemed notices under the old regime, are valid if they fall within the limitation period extended by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, and comply with mandatory administrative sanction requirements.

Headnote:(A) Income Tax Act, 1961 - Sections 147, 148, 148A(b), 148A(d), 149(1)(b), 151(ii) - Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 - Reassessment proceedings - Limitation period - Challenge to notice issued under new regime pursuant to directions in a landmark Supreme Court judgment - Whether notice issued beyond limitation period - Held, notice issued after expiry of six-year period under old regime as extended by legislation is invalid, but where notice was issued within extended period, it is sustainable under new regime - Specific approval from competent authority as per governing statutory provisions required for valid initiation of reassessment. (Paras 19, 27, 30, 48, 49, 51)

(B) Reassessment - Change of opinion - Allegation that same transactions were examined during original assessment - Court held that reassessment based on existing material might be hit by change of opinion, but legal questions regarding limitation take precedence in current inquiry. (Paras 13, 14)

Facts of the case:
The petitioner challenged an order and notice issued under the reassessment provisions of the income tax law. The petitioner contended that the reopening of assessment for a past year was barred by limitation, as the time limit for issuing such notice had expired under the old regime. It was further argued that the proceedings were initiated on the basis of a mere change of opinion on issues already considered during the original assessment proceedings.

Findings of Court:
The court observed that reassessment notices issued during the transition between the old and new regimes are governed by specific legal fictions and Supreme Court directions. The limitation period for issuing notices under the new regime, for the relevant assessment year, must account for extensions provided by statutory relaxation acts. As the notice in question was issued within the extended timeline and had obtained the necessary statutory sanction, the challenge to the jurisdiction and limitation was not sustained.

Issues: 1. Whether the notice issued for reassessment was barred by the law of limitation. 2. Whether the initiation of proceedings constituted an impermissible change of opinion by the revenue authority.

Ratio Decidendi: Following the settled legal position, the court held that once an assessment notice is deemed to have been issued under the new regime by virtue of judicial mandate, the limitation period must be computed in accordance with the extended timelines under existing relaxation legislation. If the notice falls within the surviving limitation period and receives due approval from the specified authority, the proceedings remain legally valid.

Result: Writ petition dismissed.

Table of Content
1. assessment of facts and validity of income escapement findings. (Para 1 , 2 , 3 , 4 , 15 , 16 , 17 , 18)
2. limitation challenges and claims of change of opinion. (Para 5 , 6 , 7 , 8 , 9 , 10 , 11 , 12 , 13 , 14)
3. interpretation of supreme court rulings on reassessment limitation periods. (Para 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28 , 29 , 30 , 31 , 32 , 33 , 34 , 35 , 36 , 37 , 38 , 39)
4. application of limitation laws to specific reassessment facts. (Para 40 , 41 , 42 , 43 , 44 , 45 , 47 , 48 , 49 , 50 , 51)
5. dismissal of petition with direction to complete reassessment. (Para 52 , 53 , 54)

ORDER

1.In this Writ Petition, the Petitioner has challenged the impugned order dated 29.07.2022 passed under Section 148A(d) of the Income Tax Act, 1961 and the impugned notice dated 29.07.2022 issued under Section 148 of the Act for the Assessment Year 2014-2015 under the new regime which came into effect from 01.04.2021. BRIEF FACTS OF THE CASE:-

2.The impugned order dated 29.07.2022 has been passed in the background of a Notice dated 02.06.2022 issued under Section 148A(b) of the Act, in the light of the decision of the Hon’ble Supreme Court in Union of India Vs. Ashish Agarwal , (2023) 1 SCC 617.

3.The impugned order dated 29.07.2022 passed under Section 148A(d) of the Act proposes to issue the impugned Notice dated 29.07.2022 under Section 148 for the Assessment Year 2014-2015 on the grounds of (i) limitation and (ii) change of opinion.

4.Reading of the impugned order indicates that the Respondent has examined the petitioner’s reply dated 20.06.2022 to the Notice dated 02.06.2022 issued under Section 148A(b) of the Act. The conclusions arrived at by the respondent for justifying the impugned order and the issuance of consequential Section 148 Notice both dated 29.07.2022, are as follows:

“U/s.148A(d):

13. On perusing the return of income filed for this asst.year as well as previous asst.year and the other details furnished during the course of assessment proceedings as well as with the above submission.

(i) It is noticed that during this asst.year the assessee has got 5575 shares on the demerger transaction from relinquishing the rights over 46600 shares, which, was transferred at the cost of Rs.490 share. Since, the assessee retains these shares as on 31.03.2014 and these transfers are not an exempted one as per the provisions of section 47 of the IT Act, the assessee shall have admitted the capital gain on the above relinquishment, which, the assessee has failed. Accordingly, the sum of Rs.22834000/-, being the sale consideration for the transferring of the 46600 shares has escaped assessment.

(ii) Though, the assessee stated that he got 65500 shares, being an equity shares, as gift from his son, he has failed to furnish any sort of evidences that evinced the gift has actually taken place.

(iii) Further, the assessee has failed to furnish any kind of proof like ledger copy etc with respect to the share dealing that substantiate the claim made in the above submission.

14. All the above information, the evidences and reasons available with the undersigned reveal that during the financial year 2013-2014 relevant to the asst.year 2014-15, the assessee got capital gain chargeable u/s 45 of the IT act to the extent of Rs.22834000/- which is chargeable to tax, represented in the form of investment in shares – an asset as per the provisions of sub-section (1)(b) and explanation to the section 149 of the I.T Act, has escaped assessment.

15. All the above facts and figures clearly established, beyond doubt, that the assessee has failed to disclose the above income to the department.

16. Therefore, in the light of the above facts and reasons, it is concluded that for the asst.year 2014-15, the income at least to the extent of Rs.22834000/- chargeable to tax represented in the form of asset as per the provisions of sub-section (1)(b) and explanation to the section 149 of the I.T Act has escaped assessment and based on the abov

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2025 Supreme(Online)(Mad) 76270

IN THE HIGH COURT OF JUDICATURE AT MADRASC.Saravanan, JKandasamy Veluswamy – AppellantVersusAssistant Commissioner of Income Tax – RespondentW.P.No.26533 of 2022 | W.M.P.Nos.25594 and 25596 of 2022

Cases Referred (1)

IN THE HIGH COURT OF JUDICATURE AT MADRAS
C.Saravanan, J
Kandasamy Veluswamy – Appellant
Versus
Assistant Commissioner of Income Tax – Respondent
W.P.No.26533 of 2022 | W.M.P.Nos.25594 and 25596 of 2022