Leave granted in SLP (C) Nos. 6448/2022, 5381/2022,
5079/2022, 6092/2022, 6534/2022, 6158/2022,
6316/2022, 6281/2022, 6545/2022, 6038/2022.
1.Feeling aggrieved and dissatisfied with the impugned common judgment and order passed by the 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 the 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 the present appeals.
2.Similar judgments and orders are passed by various other High Courts including High Court of Delhi; High Court of Rajasthan; High Court of Calcutta; High Court of Madras; High Court of Bombay, the particulars of which are as under: Sl. No. Particulars 1. Ashok Kumar Agarwal Vs. UOI (Allahabad HC) Judgment passed by the Hon’ble High Court of Allahabad at Allahabad in Writ Tax No. 524/2021 dated 30.09.2021 2. Bpip Infra Pvt. Ltd. Vs. Income Tax Officer & Others (Rajasthan HC) Judgment in S.B. Civil Writ Petition No. 13297/2021 passed by the Hon’ble High Court of Rajasthan at Jaipur dated 25.11.2021
3.Mon Mohan Kohli Vs. ACIT (Delhi HC) Judgment passed by the Hon’ble High Court of Delhi in W.P.(C) No. 6176/2021 dated 15.12.2021
4.Bagaria Properties & Investment Pvt. Ltd. Vs. UOI (Calcutta HC) Judgment passed by the Hon’ble High Court of Calcutta in W.P.O No. 244/2021 dated 17.01.2022
5.Manoj Jain Vs. UOI (Calcutta HC) Judgment passed by the Hon’ble High Court of Calcutta in W.P.A. No. 11950 of 2021 dated 17.01.2022
6.Sudesh Taneja Vs. ITO (Rajasthan HC) Judgment passed by the Hon’ble High Court of Rajasthan in D.B. Civil Writ Petition No. 969 of 2022 dated 27.01.2022
7.Vellore Institute of Technology Vs. CBDT (Madras HC) Judgment passed by the Hon’ble High Court of Madras in W.P. No. 15019/2021 dated 04.02.2022.
8.Tata Communications Transformation Services Vs. ACIT
(Bombay HC)
Judgment passed by the Hon’ble High Court of Bombay
in Writ Petition No. 1334 of 2021 dated 29.03.2022
At this stage, it is required to be noted that
approximately 90,000 such reassessment notices under
section 148 of the unamended Income Tax Act were issued
by the Revenue after 01.04.2021, which were the subject
matter of more than 9000 writ petitions before various
High Courts across the country and by different judgments
and orders, the particulars of which are as above, the High
Courts have taken a similar view and have set aside the
respective reassessment notices issued under section 148
on similar grounds.
2.1 The common judgment and order passed by the Allahabad
High Court is the subject matter of the present appeals.
Shri N. Venkataraman, learned ASG, stated at the bar that
the Revenue is contemplating to prefer appeals against the
similar judgments and orders passed by various High
Courts. However, as the issue is common and there will be
multiplicity of the proceedings and to lessen the burden of
this Court and for the reasons stated hereinbelow, as we
propose to pass an order in exercise of powers under
Article 142 of the Constitution of India the present order
shall govern all the other judgments and orders passed by
various High Courts on the similar issue. Hence, we
observe that the Revenue need not file separate individual
appeals which may be more than 9000 in numbers.
2.2 In fact, we have heard Shri C.A. Sundaram, learned Senior
Advocate, appearing on behalf of the respective assessee,
who were before the Delhi High Court also.
3. While appreciating the controversy, a few facts and the
relevant statutory provisions applicable pre 01.04.2021
and post 01.04.2021 are required to be referred to.
The procedure governing initiation of reassessment
proceedings prior to coming into force of the Finance Act,
2021 was governed by the following provisions:
“Income escaping assessment
147. If the Assessing Officer has reason to believe that any
income chargeable to tax has escaped assessment for any
assessment year, he may, subject to the provisions of
sections 148 to 153, assess or reassess such income and
also any other income chargeable to tax which has escaped
assessment and which comes to his notice subsequently in
the course of the proceedings under this section, or
recomputed the loss or the depreciation allowance or any
other allowance, as the case may be, for the assessment year
concerned (hereafter in this section and in sections 148 to
153 referred to as the relevant assessment year):
Provided that where an assessment under sub-section (3) of
section 143 or this section has been made for the relevant
assessment year, no action shall be taken under this section
after the expiry of four years from the end of the relevant
assessment year, unless any income chargeable to tax has
escaped assessment for such assessment year by reason of
the failure on the part of the assessee to make a return
under section 139 or in response to a notice issued under
sub-section (1) of section 142 or section 148 or to disclose
fully and truly all material facts necessary for his assessment, for that assessment year:
Provided further that nothing contained in the first proviso shall apply in a case where any income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment for any assessment year:
Provided also that the Assessing Officer may assess or reassess such income, other than the income involving matters which are the subject matters of any appeal, reference or revision, which is chargeable to tax and has escaped assessment.
Explanation 1.—Production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso.
Explanation 2.—For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely :—
(a) where no return of income has been furnished by the assessee although his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax;
(b) where a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the Assessing Officer that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return;
(ba) where the assessee has failed to furnish a report in respect of any international transaction which he was so required under section 92E;
(c) where an assessment has been made, but—
(i) income chargeable to tax has been underassessed;
or
(ii) such income has been assessed at too low a rate; or
(iii) such income has been made the subject of
excessive relief under this Act; or
(iv) excessive loss or depreciation allowance or any
other allowance under this Act has been computed;
(ca) where a return of income has not been furnished by the assessee or a return of income has been furnished by him and on the basis of information or document received from the prescribed income-tax authority, under sub-section (2) of section 133C, it is noticed by the Assessing Officer that the income of the assessee exceeds the maximum amount not chargeable to tax, or as the case may be, the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return;
(d) where a person is found to have any asset (including financial interest in any entity) located outside India.
Explanation 3.—For the purpose of assessment or reassessment under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under sub section (2) of section 148.
Explanation 4.—For the removal of doubts, it is hereby clarified that the provisions of this section, as amended by the Finance Act, 2012, shall also be applicable for any assessment year beginning on or before the 1st day of April, 2012.
Issue of notice where income has escaped assessment
148.(1) Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139:
Provided that in a case—
(a) where a return has been furnished during the period commencing on the 1st day of October, 1991 and ending on the 30th day of September, 2005 in response to a notice served under this section, and
(b) subsequently a notice has been served under sub-section (2) of section 143 after the expiry of twelve months specified in the proviso to subsection (2) of section 143, as it stood immediately before the amendment of said sub-section by the Finance Act, 2002 (20 of 2002) but before the expiry of the time limit for making the assessment, re-assessment or recomputation as specified in sub-section (2) of section 153, every such notice referred to in this clause shall be deemed to be a valid notice:
Provided further that in a case— (a) where a return has been furnished during the period commencing on the 1st day of October, 1991 and ending on the 30th day of September, 2005, in response to a notice served under this section, and
(b) subsequently a notice has been served under clause (ii) of sub-section (2) of section 143 after the expiry of twelve months specified in the proviso to clause (ii) of sub-section (2) of section 143, but before the expiry of the time limit for making the assessment, reassessment or recomputation as specified in sub-section (2) of section 153, every such notice referred to in this clause shall be deemed to be a valid notice.
Explanation.—For the removal of doubts, it is hereby declared that nothing contained in the first proviso or the second proviso shall apply to any return which has been furnished on or after the 1st day of October, 2005 in response to a notice served under this section.
(2) The Assessing Officer shall, before issuing any notice under this section, record his reasons for doing so.
Time limit for notice
149. (1) No notice under section 148 shall be issued for the relevant assessment year,—
(a) if four years have elapsed from the end of the
relevant assessment year, unless the case falls under
clause (b) or clause (c);
(b) if four years, but not more than six years, have
elapsed from the end of the relevant assessment year
unless the income chargeable to tax which has
escaped assessment amounts to or is likely to amount
to one lakh rupees or more for that year;
(c) if four years, but not more than sixteen years, have
elapsed from the end of the relevant assessment year
unless the income in relation to any asset (including
financial interest in any entity) located outside India,
chargeable to tax, has escaped assessment.
Explanation.—In determining income chargeable to tax which has escaped assessment for the purposes of this sub section, the provisions of Explanation 2 of section 147 shall apply as they apply for the purposes of that section.
(2) The provisions of sub-section (1) as to the issue of notice shall be subject to the provisions of section 151.
(3) If the person on whom a notice under section 148 is to be served is a person treated as the agent of a nonresident under section 163 and the assessment, reassessment or recomputation to be made in pursuance of the notice is to be made on him as the agent of such non-resident, the notice shall not be issued after the expiry of a period of six years from the end of the relevant assessment year.
Explanation.—For the removal of doubts, it is hereby clarified that the provisions of sub-sections (1) and (3), as amended by the Finance Act, 2012, shall also be applicable for any assessment year beginning on or before the 1st day of April, 2012.
Sanction for issue of notice
151. (1) No notice shall be issued under section 148 by an Assessing Officer, after the expiry of a period of four years from the end of the relevant assessment year, unless the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner is satisfied, on the reasons recorded by the Assessing Officer, that it is a fit case for the issue of such notice.
(2) In a case other than a case falling under sub-section (1), no notice shall be issued under section 148 by an Assessing Officer, who is below the rank of Joint Commissioner, unless the Joint Commissioner is satisfied, on the reasons recorded
by such Assessing Officer, that it is a fit case for the issue of
such notice.
(3) For the purposes of sub-section (1) and sub-section (2),
the Principal Chief Commissioner or the Chief Commissioner
or the Principal Commissioner or the Commissioner or the
Joint Commissioner, as the case may be, being satisfied on
the reasons recorded by the Assessing Officer about fitness
of a case for the issue of notice under section 148, need not
issue such notice himself.”
3.1 In pursuance to the power vested under section 3 of the
Relaxation Act, 2020, the Central Government issued
following Notifications inter-alia extending the time lines
prescribed under section 149 for issuance of
reassessment notices under section 148 of the Income
Tax Act, 1961:
Date of Original limitation for Extended
Notificatio issuance of notice Limitation
n under Section 148 of
the Act
31.03.2020 20.03.2020 to 30.06.2020
29.06.2020
24.06.2020 20.03.2020 to 31.03.2021
31.12.2020
31.03.2021 31.03.2021 30.04.2021
27.04.2021 30.04.2021 30.06.2021
The Explanations to the Notifications dated 31st March,
2021 and 27th April, 2021 issued under section 3 of the
Relaxation Act, 2020 also stipulated that the provisions,
as they existed prior to the amendment by the Finance
Act, 2021, shall apply to the reassessment proceedings
initiated thereunder.
3.2 The Parliament introduced reformative changes to
Sections 147 to 151 of the Income Tax Act, 1961
governing reassessment proceedings by way of the
Finance Act, 2021, which was passed on 28th March,
2021. The substituted sections 147 to 149 and section
151 applicable w.e.f. 01.04.2021, passed in the Finance
Act, 2021, are as under:
Income escaping assessment
“147. If any income chargeable to tax, in the case of an
assessee, has escaped assessment for any assessment year,
the Assessing Officer may, subject to the provisions of
sections 148 to 153, assess or reassess such income or
recompute the loss or the depreciation allowance or any
other allowance or deduction for such assessment year
(hereafter in this section and in sections 148 to 153 referred
to as the relevant assessment year).
Explanation.—For the purposes of assessment or
reassessment or recomputation under this section, the
Assessing Officer may assess or reassess the income in
respect of any issue, which has escaped assessment, and
such issue comes to his notice subsequently in the course of
the proceedings under this section, irrespective of the fact
that the provisions of section 148A have not been complied
with.”.
Issue of notice where income has escaped assessment
148. Before making the assessment, reassessment or
recomputation under section 147, and subject to the
provisions of section 148A, the Assessing Officer shall serve
on the assessee a notice, along with a copy of the order passed, if required, under clause (d) of section 148A, requiring him to furnish within such period, as may be specified in such notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139:
Provided that no notice under this section shall be issued unless there is information with the Assessing Officer which assessment in the case of the assessee for the relevant assessment year and the Assessing Officer has obtained prior approval of the specified authority to issue such notice.
Explanation 1.—For the purposes of this section and section 148A, the information with the Assessing Officer which assessment means,—
(i) any information flagged in the case of the assessee for the relevant assessment year in accordance with the risk management strategy formulated by the Board from time to time;
(ii) any final objection raised by the Comptroller and Auditor General of India to the effect that the assessment in the case of the assessee for the relevant assessment year has not been made in accordance with the provisions of this Act.
Explanation 2.—For the purposes of this section, where,—
(i) a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A, on or after the 1st day of April, 2021, in the case of the assessee; or
(ii) a survey is conducted under section 133A, other than under sub-section (2A) or sub-section (5) of that section, on or after the 1st day of April, 2021, in the case of the assessee; or
(iii) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner, that any money, bullion, jewellery or other valuable article or thing, seized or requisitioned under section 132 or under section 132A in case of any other person on or after the 1st day of April, 2021, belongs to the assessee; or
(iv) the Assessing Officer is satisfied, with the prior approval of Principal Commissioner or Commissioner, that any books of account or documents, seized or requisitioned under section 132 or section 132A in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information contained therein, relate to, the assessee,
the Assessing Officer shall be deemed to have information which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the three assessment years immediately preceding the assessment year relevant to the previous year in which the search is initiated or books of account, other documents or any assets are requisitioned or survey is conducted in the case of the assessee or money, bullion, jewellery or other valuable article or thing or books of account or documents are seized or requisitioned in case of any other person.
Explanation 3.—For the purposes of this section, specified authority means the specified authority referred to in section 151.”
Conducting inquiry, providing opportunity before issue of notice under section 148
“148A. The Assessing Officer shall, before issuing any notice under section 148,—
(a) conduct any enquiry, if required, with the prior approval of specified authority, with respect to the information which assessment;
(b) provide an opportunity of being heard to the assessee, with the prior approval of specified authority, by serving upon him a notice to show cause within such time, as may be specified in the notice, being not less than seven days and but not exceeding thirty days from the date on which such notice is issued, or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice under section 148 should not be issued on the basis of
information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year and results of enquiry conducted, if any, as per clause (a);
(c) consider the reply of assessee furnished, if any, in response to the show-cause notice referred to in clause (b);
(d) decide, on the basis of material available on record including reply of the assessee, whether or not it is a fit case to issue a notice under section 148, by passing an order, with the prior approval of specified authority, within one month from the end of the month in which the reply referred to in clause (c) is received by him, or where no such reply is furnished, within one month from the end of the month in which time or extended time allowed to furnish a reply as per clause (b) expires:
Provided that the provisions of this section shall not apply in a case where,—
(a) a search is initiated under section 132 or books of
account, other documents or any assets are
requisitioned under section 132A in the case of the
assessee on or after the 1st day of April, 2021; or
(b) the Assessing Officer is satisfied, with the prior
approval of the Principal Commissioner or
Commissioner that any money, bullion, jewellery or
other valuable article or thing, seized in a search
under section 132 or requisitioned under section
132A, in the case of any other person on or after the
1st day of April, 2021, belongs to the assessee; or
(c) the Assessing Officer is satisfied, with the prior
approval of the Principal Commissioner or
Commissioner that any books of account or
documents, seized in a search under section 132 or
requisitioned under section 132A, in case of any other
person on or after the 1st day of April, 2021, pertains
or pertain to, or any information contained therein,
relate to, the assessee.
Explanation.—For the purposes of this section, specified authority means the specified authority referred to in section 151.”
Time limit for notice
“149. (1) No notice under section 148 shall be issued for the relevant assessment year,—
(a) if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b);
(b) if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more for that year:
Provided that no notice under section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April, 2021, if such notice could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause (b) of sub-section (1) of this section, as they stood immediately before the commencement of the Finance Act, 2021:
Provided further that the provisions of this sub-section shall not apply in a case, where a notice under section 153A, or section 153C read with section 153A, is required to be issued in relation to a search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A, on or before the 31st day of March, 2021:
Provided also that for the purposes of computing the period of limitation as per this section, the time or extended time allowed to the assessee, as per show-cause notice issued under clause (b) of section 148A or the period during which the proceeding under section 148A is stayed by an order or injunction of any court, shall be excluded:
Provided also that where immediately after the exclusion of the period referred to in the immediately preceding proviso, the period of limitation available to the Assessing Officer for passing an order under clause (d) of section 148A is less than seven days, such remaining period shall be extended to seven days and the period of limitation under this sub-section shall be deemed to be extended accordingly.
Explanation.—For the purposes of clause (b) of this
subsection, “asset” shall include immovable property, being
land or building or both, shares and securities, loans and
advances, deposits in bank account.
(2) The provisions of sub-section (1) as to the issue of notice
shall be subject to the provisions of section 151.’
Sanction for issue of notice
“151. Specified authority for the purposes of section 148 and
section 148A shall be—
(i) Principal Commissioner or Principal Director or
Commissioner or Director, if three years or less than
three years have elapsed from the end of the relevant
assessment year;
(ii) Principal Chief Commissioner or Principal Director
General or where there is no Principal Chief
Commissioner or Principal Director General, Chief
Commissioner or Director General, if more than three
years have elapsed from the end of the relevant
assessment year.”
3.3 In sub-section (1) of section 151A of the Income Tax Act, in
the opening portion, after the words and figures “issuance
of notice under section 148”, the words, figures and letter
“or conducting of enquiries or issuance of show-cause
notice or passing of order under section 148A” are
inserted.
4. Despite the substituted sections 147 to 151 of the Income
Tax Act, 1961 by the Finance Act, 2021 coming into force
on 1st April, 2021, according to learned ASG, the Revenue
issued approximately 90,000 reassessment notices to the
respective assessees under the erstwhile sections 148 to
151 thereof by relying on explanations in the Notifications
dated 31st March, 2021 and 27th April, 2021. The said
reassessment notices were the subject matter of writ
petitions before the various High Courts. The respective
High Courts have held that all the respective reassessment
notices issued under the erstwhile sections 148 to 151 of
the Income Tax Act, 1961, are bad in law as the
reassessment notices issued after 01.04.2021 are governed
by the substituted sections 147 to 151 of the Income Tax
Act, 1961, substituted by the Finance Act, 2021.
Consequently, the respective High Courts have set aside all
the reassessment notices issued under section 148 of the
Income Tax Act, 1961 wherever assailed. The common
judgment and order passed by the High Court of Allahabad
is the subject matter of the present appeals. However, the
High Court of Delhi in its common judgment and order
dated 15.12.2021 while quashing the respective
reassessment notices has also observed that if the law
permits the revenue to take further steps in the matter
they shall be at liberty to do so.
5. We have heard Shri N. Venkataraman, learned ASG
appearing on behalf of the Revenue and Shri C.A.
Sundaram and Shri S. Ganesh, learned Senior Advocates
and other learned counsel appearing on behalf of the
respective assessee.
6. It cannot be disputed that by substitution of sections 147
to 151 of the Income Tax Act (IT Act) by the Finance Act,
2021, radical and reformative changes are made governing
the procedure for reassessment proceedings. Amended
sections 147 to 149 and section 151 of the IT Act prescribe
the procedure governing initiation of reassessment
proceedings. However, for several reasons, the same gave
rise to numerous litigations and the reopening were
challenged inter alia, on the grounds such as (1) no valid
“reason to believe” (2) no tangible/reliable
material/information in possession of the assessing officer
leading to formation of belief that income has escaped
assessment, (3) no enquiry being conducted by the
assessing officer prior to the issuance of notice; and
reopening is based on change of opinion of the assessing
officer and (4) lastly the mandatory procedure laid down by
this Court in the case of GKN Driveshafts (India) Ltd. Vs.
Income Tax Officer and ors; (2003) 1 SCC 72, has not
been followed.
6.1 Further pre-Finance Act, 2021, the reopening was
permissible for a maximum period up to six years and in
some cases beyond even six years leading to uncertainty
for a considerable time. Therefore, Parliament thought it fit
to amend the Income Tax Act to simplify the tax
administration, ease compliances and reduce litigation.
Therefore, with a view to achieve the said object, by the
Finance Act, 2021, sections 147 to 149 and section 151
have been substituted.
6.2 Under the substituted provisions of the IT Act vide Finance
Act, 2021, no notice under section 148 of the IT Act can be
issued without following the procedure prescribed under
section 148A of the IT Act. Along with the notice under
section 148 of the IT Act, the assessing officer (AO) is
required to serve the order passed under section 148A of
the IT Act. section 148A of the IT Act is a new provision
which is in the nature of a condition precedent.
Introduction of section 148A of the IT Act can thus be said
to be a game changer with an aim to achieve the ultimate
object of simplifying the tax administration, ease
compliance and reduce litigation.
6.3 But prior to pre-Finance Act, 2021, while reopening an
assessment, the procedure of giving the reasons for
reopening and an opportunity to the assessee and the
decision of the objectives were required to be followed as
per the judgment of this Court in the case of GKN
Driveshafts (India) Ltd. (supra).
6.4 However, by way of section 148A, the procedure has now
been streamlined and simplified. It provides that before
issuing any notice under section 148, the assessing officer
shall (i) conduct any enquiry, if required, with the
approval of specified authority, with respect to the
information which suggests that the income chargeable to
tax has escaped assessment; (ii) provide an opportunity of
being heard to the assessee, with the prior approval of
specified authority; (iii) consider the reply of the assessee
furnished, if any, in response to the show-cause notice
referred to in clause (b); and (iv) decide, on the basis of
material available on record including reply of the
assessee, as to whether or not it is a fit case to issue a
notice under section 148 of the IT Act and (v) the AO is
required to pass a specific order within the time stipulated.
6.5 Therefore, all safeguards are provided before notice under
section 148 of the IT Act is issued. At every stage, the prior
approval of the specified authority is required, even for
conducting the enquiry as per section 148A(a). Only in a
case where, the assessing officer is of the opinion that
before any notice is issued under section 148A(b) and an
opportunity is to be given to the assessee, there is a
requirement of conducting any enquiry, the assessing
officer may do so and conduct any enquiry. Thus if the
assessing officer is of the opinion that any enquiry is
required, the assessing officer can do so, however, with the
prior approval of the specified authority, with respect to
the information which suggests that the income chargeable
to tax has escaped assessment.
6.6 Substituted section 149 is the provision governing the time
limit for issuance of notice under section 148 of the IT Act.
The substituted section 149 of the IT Act has reduced the
permissible time limit for issuance of such a notice to
three years and only in exceptional cases ten years. It also
provides further additional safeguards which were absent
under the earlier regime pre-Finance Act, 2021.
7. Thus, the new provisions substituted by the Finance Act,
2021 being remedial and benevolent in nature and
substituted with a specific aim and object to protect the
rights and interest of the assessee as well as and the same
being in public interest, the respective High Courts have
rightly held that the benefit of new provisions shall be
made available even in respect of the proceedings relating
to past assessment years, provided section 148 notice has
been issued on or after 1st April, 2021. We are in complete
agreement with the view taken by the various High Courts
in holding so.
8. However, at the same time, the judgments of the several
High Courts would result in no reassessment proceedings
at all, even if the same are permissible under the Finance
Act, 2021 and as per substituted sections 147 to 151 of
the IT Act. The Revenue cannot be made remediless and
the object and purpose of reassessment proceedings
cannot be frustrated. It is true that due to a bonafide
mistake and in view of subsequent extension of time vide
various notifications, the Revenue issued the impugned
notices under section 148 after the amendment was
enforced w.e.f. 01.04.2021, under the unamended section
148. In our view the same ought not to have been issued
under the unamended Act and ought to have been issued
under the substituted provisions of sections 147 to 151 of
the IT Act as per the Finance Act, 2021. There appears to
be genuine non-application of the amendments as the
officers of the Revenue may have been under a bonafide
belief that the amendments may not yet have been
enforced. Therefore, we are of the opinion that some
leeway must be shown in that regard which the High
Courts could have done so. Therefore, instead of quashing
and setting aside the reassessment notices issued under
the 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 the
Finance Act, 2021, subject to compliance of all the
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.
Therefore, we propose to modify the judgments and orders
passed by the respective High Courts as under:
(i) The respective impugned section 148 notices issued
to the respective assessees shall be deemed to have
been issued under section 148A of the IT Act as
substituted by the Finance Act, 2021 and treated to
be show-cause notices in terms of section 148A(b).
The respective assessing officers shall within thirty
days from today provide to the assessees the
information and material relied upon by the
Revenue so that the assessees can reply to the
notices within two weeks thereafter;
(ii) The requirement of conducting any enquiry with the
prior approval of the specified authority under
section 148A(a) be dispensed with as a one-time
measure vis-à-vis those notices which have been
issued under Section 148 of the unamended Act
from 01.04.2021 till date, including those which
have been quashed by the High Courts;
(iii) The assessing officers shall thereafter pass an order
in terms of section 148A(d) after following the due
procedure as required under section 148A(b) in
respect of each of the concerned assessees;
(iv) All the defences which may be available to the
assessee under section 149 and/or which may be
available under the Finance Act, 2021 and in law
and whatever rights are available to the Assessing
Officer under the Finance Act, 2021 are kept open
and/or shall continue to be available and;
(v) The present order shall substitute/modify respective
judgments and orders passed by the respective High
Courts quashing the similar notices issued under
unamended section 148 of the IT Act irrespective of
whether they have been assailed before this Court or
not.
9.There is a broad consensus on the aforesaid aspects amongst the learned ASG appearing on behalf of the Revenue and the learned Senior Advocates/learned counsel appearing on behalf of the respective assessees. We are also of the opinion that if the aforesaid order is passed, it will strike a balance between the rights of the Revenue as well as the respective assesses as because of a bonafide belief of the officers of the Revenue in issuing approximately 90000 such notices, the Revenue may not suffer as ultimately it is the public exchequer which would suffer. Therefore, we have proposed to pass the present order with a view avoiding filing of further appeals before this Court and burden this Court with approximately 9000 appeals against the similar judgments and orders passed by the various High Courts, the particulars of some of which are referred to hereinabove. We have also proposed to pass the aforesaid order in exercise of our powers under Article 142 of the Constitution of India by holding that the present order shall govern, not only the impugned judgments and orders passed by the High Court of Judicature at Allahabad, but shall also be made applicable in respect of the similar judgments and orders passed by various High Courts across the country and therefore the present order shall be applicable to PAN INDIA.
10.In view of the above and for the reasons stated above, the present Appeals are ALLOWED IN PART. The impugned common judgments and orders passed by the High Court of Judicature at Allahabad in W.T. No. 524/2021 and other allied tax appeals/petitions, is/are hereby modified and substituted as under: (i) The impugned section 148 notices issued to the respective assessees which were issued under unamended section 148 of the IT Act, which were the subject matter of writ petitions before the 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 construed or treated to be show-cause notices in terms of section 148A(b). The assessing officer shall, within thirty days from today provide to the respective assessees information and material relied upon by the Revenue, so that the assesees can reply to the show-cause notices within two weeks thereafter; (ii) The requirement of conducting any enquiry, if required, with the prior approval of specified authority under section 148A(a) is hereby dispensed with as a one-time measure vis-à-vis those notices which have been issued under section 148 of the unamended Act from 01.04.2021 till date, including those which have been quashed by the High Courts. Even otherwise as observed hereinabove holding any enquiry with the prior approval of specified authority is not mandatory but it is for the concerned Assessing Officers to hold any enquiry, if required; (iii) The assessing officers shall thereafter pass orders in terms of section 148A(d) in respect of each of the concerned assessees; Thereafter after following the procedure as required under section 148A may issue notice under section 148 (as substituted); (iv) All defences which may be available to the assesses including those available under section 149 of the IT Act and all rights and contentions which may be available to the concerned assessees and Revenue under the Finance Act, 2021 and in law shall continue to be available.
11.The 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 the Act are set aside and shall be governed by the present order and shall stand modified to the aforesaid extent. The present order is passed in exercise of powers under Article 142 of the Constitution of India so as to avoid any further appeals 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.
12.The impugned common judgments and orders passed by the High Court of Allahabad and the similar judgments and orders passed by various High Courts, more particularly, the respective judgments and orders passed by the various High Courts particulars of which are mentioned hereinabove, shall stand modified/substituted to the aforesaid extent only. All these appeals are accordingly partly allowed to the aforesaid extent. In the facts of the case, there shall be no order as to costs. (M. R. SHAH) (B.V. NAGARATHNA) New Delhi, May 4, 2022.