Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2025 Supreme(Online)(Mad) 9729

IN THE HIGH COURT OF JUDICATURE AT MADRAS

W.P.No.15321 of 2023

DATED : 08.12.2025

CORAM : THE HONOURABLE MR.JUSTICE C.SARAVANAN

W.P.No.15321 of 2023 and W.M.P.Nos.14823 and 14825 of 2023

M/s.AVR Properties and Developers Private Limited, Represented by its Managing Director Anbuvelrajan ... Petitioner Vs. 1.Assistant Commissioner of Income Tax, DC / AC, Central Circle-1(2), No.46 (Old No.108), Mahatma Gandhi Road, Chennai – 34. 2.Director General of Investigation, No.46 (Old No.108), Mahatma Gandhi Road, Chennai – 34. ... Respondents

For Petitioner : Mr.R.Sivaraman
For Respondents : Mr.A.P.Srinivas, Senior Standing Counsel and Mr.A.N.R.Jayaprathap, Junior Standing Counsel

Advocates:
For the Appellants/Petitioners: R.Sivaraman
For the Respondents: A.P.Srinivas, A.N.R.Jayaprathap

Once an assessment for a specific period has been finalized, tax authorities cannot initiate fresh reassessment proceedings under the new regime based on judicial directives meant to validate pending notices, as those directives apply only to assessments that were incomplete at the time of the transition.

Headnote:(A) Income Tax Act, 1961 - Sections 147, 148, 148A, 149 and 154 - Re-assessment proceedings - Petitioner challenged notice issued under new regime for assessment year 2015-2016 after completion of assessment under old regime - Apex court directives regarding transposition of old regime notices into show-cause notices do not permit reopening of already concluded assessments - Once an assessment has been finalized and a consequential order passed, the department cannot re-open the same based on guidelines meant for incomplete assessments. (Paras 36-39)

(B) Limitation - Computation of period for issuance of notice - Exclusion of time during which show-cause notice was pending or proceedings stayed - Notices must be issued within the survival period defined under the statute read with judicial directions. (Paras 21-34)

Facts of the case:
The petitioner challenged a reassessment notice issued under the new regime for the relevant assessment year, despite having already undergone and completed assessment proceedings initiated under the old regime. The respondent contended that the notice was valid in light of legal principles established by the apex court regarding the transition between old and new taxation regimes.

Findings of Court:
The court observed that the legal fiction transforming old notices into show-cause notices for the new regime is exclusively applicable to pending cases where assessments have not been finalized. The department cannot use the transition of laws to re-examine matters that have already reached a stage of finality through a prior assessment order.

Issues: Whether the revenue authority has the jurisdiction to initiate a fresh re-assessment under the new regime for an assessment year where the assessment has already been completed under the old regime.

Ratio Decidendi: The principle allowing authorities to treat old notices as valid show-cause notices is a remedial measure for incomplete assessments. It does not confer upon the authorities a right to re-open assessments that have already culminated in a valid, subsisting assessment order.

Result: Writ petition allowed.

ORDER

Prayer: Writ Petition is filed under Article 226 of the Constitution of India, for issuance of a Writ of Certiorari, to call for the records on the file of the 1st Respondent in PAN No.AAGCA1813Q and quash the impugned notice under Section 148 of the Income Tax Act, 1961 dated 31.07.2022 issued by the 1st Respondent for the subject Assessment Year 2015-2016 and the consequential impugned order under Section 147 of the Income Tax Act, 1961 dated 30.03.2023 having the DIN No.ITBA/AST/S/147/2022-2023/1051705394(1) passed by the 1st Respondent for the Assessment Year 2015-2016 and the consequential impugned Rectification Order passed under Section 154 read with Section 147 of the Income Tax Act, 1961 in DIN No.ITBA/REC/S/154-1/2022-2023/1051786686(1) dated 31.03.2023 passed by the 1st Respondent for the subject Assessment Year 2015-2016 as illegal and without jurisdiction and barred by limitation.

In this Writ Petition, the Petitioner has challenged the Notice dated 31.07.2022 issued under Section 148 of the Income Tax Act, 1961 under the new regime as in force with effect from 01.04.2021 and the Assessment Order dated 30.03.2023 passed under Section 147 of the Act for the Assessment Year 2015-2016 and the subsequent Rectification order dated 31.03.2023 passed by the 1st Respondent.

2. The impugned Section 148 Notice dated 31.07.2022 was issued in the light of the Judgment of the Hon’ble Supreme Court in Ashish Agarwal Vs. Union of India , (2023) 1 SCC 617 on 04.05.2022.

3. The facts on record on reveal that the Petitioner had filed the Return of Income on 30.09.2015 for the Assessment Year 2015-2016. It is noted that a survey was conducted under Section 133A of the Act at the Petitioner’s premises by the 1st Respondent on 22.12.2021 pursuant to which, a Section 148 Notice dated 30.06.2021 was issued under the old regime as in force till 31.03.2021.

4. The Petitioner had participated in the aforestated re-assessment proceedings initiated under Section 148 of the Act under the old regime, which ultimately culminated in the Assessment Order dated 26.03.2022 passed under Section 147 of the Act for the Assessment Year 2015-2016.

5. Meanwhile, the Hon’ble Supreme Court delivered its judgement in Ashish Agarwal case, referred to supra which later clarified by the decision of the Hon’ble Supreme Court in Union of India Vs. Rajeev Bansal , 2024 SCC Online SC 2993.

6. It is in this background, a fresh re-assessment Notice dated 01.06.2022 under Section 148A(b) of the Act under the new regime was issued to the Petitioner for the aforesaid Assessment Year in the light of the aforesaid decisions of the Hon’ble Supreme Court. Relevant portion of the Notice dated 01.06.2022 is extracted hereunder:-

“Information has been received that, Shri.Anbuvelrajan was the land aggregator for the entire property costing around Rs.50.05 crores. And actual land owners have got only around 50% of the consideration mentioned in the sale deeds. The remaining were given to many unrelated parties and Shri Anbuvel Rajan. In the AY 2015-2016, the Loans and Advances given were increased by Rs.95.32 Lakhs in the AY 2015-2016 compared to AY 2014-2015 and the trade payables were also increased by Rs.65 lakhs though there was no business activity shown in AY 2015-2016. The only entries shown in P&L account expenses claimed for Audit fee, Salary and other expenses amounting to Rs.85,254/-. Further, no interest receipts of interest payments were found on the loans and advances given or received. From the above observations it can be concluded that the entries were purposefully made in the balance sheet for balancing the accounts and this requires through verification and the company is showing almost no business activity during these AYs. in view of the above, I have reason to believe that income chargeable to tax has escaped assessment within the meaning and scope of section 148 of the IT Act.

5. You are hereby given an opportunity to explain as to why a notice u

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2025 Supreme(Online)(Mad) 9729

Cases Referred (1)