LexUNION OF INDIA & ORS. versus ASHISH AGARWAL
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
A B C D E F G H 638 SUPREME COURT REPORTS [2022] 3 S.C.R. UNION OF INDIA & ORS. v. ASHISH AGARWAL (Civil Appeal No. 3005 of 2022) MAY 04, 2022 [M. R. SHAH AND B. V. NAGARATHNA, JJ.] Income Tax Act, 1961: ss.148 to 151, ss. 147 to 151(as amended by the Finance Act, 2021) – Issuance of notice where income has escaped assesssment – On facts, substituted ss.147 to 151 of the 1961 Act by the Finance Act, 2021 came into force on 01.04.2021 – However, after 01.04.2021, the Revenue issued reassessment notices under the erstwhile ss. 148 to 151 of the unamended IT Act – Quashed by the High Court on the ground that the same are bad in law in view of new provisions-ss. 147 to 151 – On appeal, held: Amended provisions prescribe the procedure governing initiation of reassessment proceedings – No notice u/s. 148 can be issued without following the procedure prescribed u/s. 148A – Ss 148A-151 was introduced with the object of simplifying the tax administration, ease compliance and reduce litigation – New provisions being remedial and benevolent in nature, were substituted with a specific aim and object to protect the rights and interest of the assessee as well as the same being the public interest – Thus, the High Courts rightly held that the benefit of new provisions to be made available even in respect of the proceedings relating to past assessment years if the notices u/s. 148 has been issued on or after 01.04.2021 – Revenue cannot be made remediless and the object and purpose of reassessment proceedings cannot be frustrated – However, it is true that the Revenue issued impugned notices under the unamended section due to bonafide mistake and in view of subsequent extension of time vide various notifications – Some leeway must be shown in that regard which the High Courts could have done so – Thus, instead of quashing and setting aside the notices issued under unamended provisions, order passed by the High Courts ought to construe the notices to deemed to have been issued u/s. 148A and Revenue ought to be permitted to proceed further with the reassessment as per the substituted provisions – [2022] 3 S.C.R. 638 638 A B C D E F G H 639 Thus, the judgments and orders of the respective High Courts stands modified – Finance Act, 2021. Partly allowing the appeals, the Court HELD: 1.1 By substitution of Sections 147 to 151 of the Income Tax Act, 1961 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 no valid “reason to believe”, no tangible/reliable material/information in possession of the assessing officer leading to formation of belief that income has escaped assessment, 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 lastly the mandatory procedure laid down by this Court in the GKN Driveshafts (India) Ltd.’s case, has not been followed. [Para 6][657-A-D] 1.2 The 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. 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 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. [Para 6.1, 6.2][657-D-G] UNION OF INDIA & ORS. v. ASHISH AGARWAL A B C D E F G H 640 SUPREME COURT REPORTS [2022] 3 S.C.R. 1.3 By way of section 148A,
Excerpt shown. Read the full judgment & AI analysis in Lexace.