Indira Ajay V. The Assistant Commissioner of Income Tax

WP/18584/2022

AI Insights

Dr. Indira Ajay filed a writ petition challenging the notice issued under Section 148 of the Income Tax Act, 1961, for the assessment year 2013-14, claiming it was void, illegal, and arbitrary. The notice was issued by the Assistant Commissioner of Income Tax, Circle 6(1), Hyderabad, proposing to reassess the income on grounds of escaped assessment. The petitioner argued that the procedural requirements under the newly amended Section 148A, which mandates an inquiry and opportunity of hearing before reassessment, were not followed. The Supreme Court had previously addressed similar issues in Ashish Agarwal, modifying High Court judgments to allow reassessments under the new provisions. Consequently, the Telangana High Court disposed of the petition in alignment with the Supreme Court's directive, keeping all contentions open for future consideration.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 692394 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 28-09-2022
• Assessment Year: misc
• Other Referred Cases: Union of India vs. Ashish Agarwal
• Laws Referred To: Income Tax Act, 1961, Constitution of India
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: SAPNA REDDY
• Assessee Lawyers: NAGA DEEPAK
• Keywords: Barred by limitation; Income Tax; Natural Justice; Notice under section 148; Reassessment; Writ of Mandamus
• Section: 148; 151; 148A; 226

Judgement Text

"7,'l' N t 3295 I HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) WEDNESDAY, THE TWENry EIGHTH DAY OF SEPTEIVBER TWO THOUSAND AND TWENTY TWO PRESENT THE HONOURABLE THE CHIEF JUSTICE UJJAL BHUYAN AND THE HONOURABLE SRI JUSTICE C.V. BHASKAR REDDY Between: Dr. lndira Ajay, D/o. K. Satyanarayana, Age 62 years, 5D, 6-3-1097 and 1098, Garden Manor, Somajiguda, Hyderabad - 500082. ...PETITIONER AND 1. The Assistant Commissioner of lncome Tax, Circle 6 (1), Hyderabad. 2. Deputy Commissioner of lncome Tax, Circle 6('1), Hyderabad. ...RESPONDENTS Petition Under Article 226 of the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue a writ, direction or order more particularly in the nature of a writ of mandamus declaring the notice issued under section 148 of the lncome Tax Act dated 07lo4t2o21 bearing DtN No ITBA/AS Tlsl14812021 -2211032256052(1 ) as being void, illegal, arbitrary, without jurisdiction, without authority of law, violative oi principles of natural iustice and barred by limitation and consequently set aside the same. l.A.NO:'l OF 2022 Petition Under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to stay all further proceedings under Notice dated 07 -04-2021 issued by Reipondent No.1 U/s.148 of the Act bearing DIN No.;TBA/AS1 lSl14Bl2O21- 22t1032256052(1). Counsel for the Petitioner : SRI.NAGA DEEPAK Counsel for the Respondents : Ms.SAPNA REDDY, ADV FOR SRI-J.V.PRASAO, Sc FOR INCOME TAx The Court made the following oRDER WRIT PETITION NO: 18584 OF 2022 tBtr_ THE HON'BLE THE CHIEF JUSTICE UJJAL BHI.TYAN AND THE HON'BLE SRI JUSTICE C.V.BHASKAR REDDY WRIT PETITION No. 18584 of 2022 ORDER: i:re. the I ,on i):t the t)tieJ JusLic( Ujjal BhuycrL) Heard N,{r. Naga Deepak, learned counsel for the petitioner and Ms- Sapna Reddy, learned counsel for the respondents. 2. Challenge nrade in this u,rit petition is to the legality and validity ol the notice dated O7.O4.2O21 issued by respondent No.1 under Section 148 of the Income Tax Act, 1961 (briefly, 'the Act' hereinafter). 3. By the aforesaid notice, assessing officer proposed to assess/ re-assess income of the petitioner for the assessment year 2013-14 on the ground that he has reasons to believe that income chargeable to tax had escaped assessment. 4. Contention of the petitioner is that Section 14BA of the Act has been inserted in the Act by way of recent amendment and which has come into effect - I6m O1.04.2021. As per Section 148A of the Act, the assessing officer is required to conduct an enquiry with the approval ol the specified authority rvith respect to the information suggesting that income chargeable to tax has escaped assessment prior to issuing any notice under Section 148 of the Act. He is also required to provide an opportunity of hearing to the assessee and to consider a reply of the assessee. Thereafter, under Section lagA(d) of the Act, he has to take a decision on the basis of the available materials including reply of the assessee as to whether it is a fit case for reopening and only thereafter and if he is satislied that it is a fit case for reopening, then notice under Section l48 of the Act is required to be issued. 5. The impugned notice has been cha-llenged in the present writ petition on the ground that the procedure laid down under Section l48A of the Act has not been followed, which has rendered the impugned notice null ald void. 6. By order dated 13.04.2022, status quo was directed to be maintained. ,t+ttf f,.ItrG 7 . It may be mentioned that several High Courts had passed judgments setting aside such notices including the of Judicature at Allahabad in Writ Tax High Court No.524 l2O2I, against which Union of India fiied Special Leave Petitions' On leave being granted' Civil Appeal No.30O5/2022 (Union of India vs' Ashish Agarwal) along with other connected Civil Appeals were heard by the Supreme Court and decided uide the judgment and order dated 04.05.2022, wlrich has since been reported in 2o22 SCConlineSCS43'Afteranalysingtheprovisionsofthe Act from Sections 147 to 151 of the Act' more particularly the provisions contained in Section 14BA of the Act' Supreme Court observed as follows: Thus, the new provisions substituted by the Finance Act, 2O2l being remedial and benevolent in nature and substituted with a specihc aim and object to protect the rights and interest of the assessee as well as and the same being in public interest, the respective Higtr Courts have rightly held that the benefrt of new provisions shall be made available even il respect of the proceedings relating to past assessment years, provided section 148 notice has been issued on or a{ter 1st April' 2O21 We \"7 lI :rre in complete agrccmcnt with the view taken by the r.,arious High Courts in holding so.. 8. However, taking the view that judgments of the High Courts would result in no re-assessment proceedings at all, Supreme Court proposed to modify the judgments and orders passed by various High Courts in the following manner: \"8 Howevcr, at thc sarne time, the judgments of the severa-l High Courts would result in no reassessment proceedings at all, even if the same are permissible under the Finance Act,2O2L and, as per substituted sections 147 to 75I of the IT Act. The Revenuc cannot be made remediless and the object and purpose of reassessment proceedings cannot be frustrated. It is true that due to a bonafrde 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 . Ol.O4.2O2 l, 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 tlne -^ -* amendments may not yet have been enforced. { €tr'€ O (rr>>r'' Thcrefore, we a.re of the opinion that some leeway must be shown in that regard $'hich 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 construlng the Acti notices issued under unamended unamended provision of the IT Act as those deemed to have been issued under section 148A of lhe IT Act as per the new provision section 148A and the Revenue ought to have been permitted to proceed lurther with the .\".\"\".\"\"-\",tt proceedings as per the substituted provisions of sections 147 to 151 of the IT Act as pe. the finalc e Act, 2O2l ' subject to compliance of a-ll 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' 2O2l and in law' Therefore, we propose to modify the judgments ald orders passed by the respective High Courts as under:- (1) 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 Einance Act' 2021 a-nd treated to be show-cause notices in terms of section l48A(b) The respective assessing ofhcers 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 ttvo weeks thereafter; (iil The requirement of conducting any enquiry with the prior approval of the specified authority under section l48A(a) be dispensed with as a one-time measure vis-a-vis those notices which have been issued under Section 148 of the unamended Act from O1.O4.2O21 till date, including those which have been quashed by the High Courts; (iii) The assessing ofhcers 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 availabie under the Finalce Act,2O2l and in law and whatever rights are available to the Assessing Officer under tlle Finance Act, 2O2l are kept open and/or shall continue to be available and; (r, () The present order shall substitute/modify respective judgments and orders passed by the respective High Courts quashing *- -. s\"l{ I 1 the similar nodces issued -under unamended section 148 of the IT Act irrespective of whether they havc been assailed before this Court or not\"' g. Finally, the Civil Appeals were allowed in part and judgments of the various High Courts have been modified and sub stituted as under: ln vlew of the above and for the reasons stated 266vg, the present Appeals are ALLOWED IN PART. The impugned common judgments and \"rU\".\" n**O by the High Court of Judicature at Aliahabad in W'T No 524l2)2l and other allied tax appeals / petitions' is/are hereby modihed \"10 and substituted as under:- (i) The impugned section 148 nodces issued to the respective assessees which were issued under unamended secdon 148 of the IT Act, which were the subject matter of writ petitions before the various respective High Courts shall tre deemed to have been issued under section 148A of the IT Act as substituted by the Finance Act' 2O2l and construed - \"\"\":U -t:':: shovr-cause notices in terms of secuon 148A(b)' The assessing offrcer shall' within thirty days from today provide to the respective assessees ioformation and material relied upon by the Revenue' so I 3 that the assesees can reply to the show- causc notices within two weeks thereafter; (ii) The requirement ol 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-a-vis those notices which have been issucd under section 148 of the unamended Act from O1.O4.2021 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 i48A(d) in respect of each of the concerned assessees; Thereafter after following the procedure as required under section 148.{ may issue notice under section 148 (as substituted); (i\") 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 - 3t