M/s Mittal Pigments Pvt. Ltd., through its Director and Authorized Signatory Shri Ramesh Agarwal V. Commissioner Of Income Tax(Appeals), Room No. 202, C R Building, Rawat Bhata Road, Kota, Rajasthan and Additional/joint/deputy/assesstant/ Commissioner of Income Tax/income Tax Officer, National Faceless Assessment Center, Mayur Bhawan, Connaught Lane, Barakhamba, New Delhi, Delhi 110001 and Deputy Commissioner of Income Tax, Circle -2 Kota, Income Tax Office, Dainik Navjyoti Bhawan, Rawatbhata Road, Kota, Rajasthan- 324001

CW/8626/2023

AI Insights

The case involves M/s Mittal Pigments Pvt. Ltd., represented by its director Shri Ramesh Agarwal, challenging the reassessment order and demand notice issued under the Income Tax Act. The primary contention was regarding the legality of the notices and orders issued following the Supreme Court's decision in Union of India Vs. Ashish Agarwal, which affected the procedural handling of reassessment notices under Sections 148 and 148A of the Act. The petitioner argued that the reassessment and subsequent notices were impermissible under the revised legal framework. The respondents defended the actions taken under the amended provisions, which were influenced by the Supreme Court's ruling.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 683280 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 10-07-2023
• Assessment Year: misc
• Other Referred Cases: Union of India Vs. Ashish Agarwal
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: SHANTANU SHARMA; BAVANA LODHA
• Assessee Lawyers: MAHI YADAV
• Keywords: Demand notice; Income Tax; Notice; Reassessment; Supreme Court judgment; Union of India Vs. Ashish Agarwal
• Section: 147; 148; 148A(b); 148A(d)

Judgement Text

"[2023:RJ-JP:13756-DB] HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Civil Writ Petition No. 8626/2023 M/s Mittal Pigments Pvt. Ltd., through its Director and Authorized Signatory Shri Ramesh Agarwal S/o Late Shri Gulabchand Agarwal aged about 67 Years Old, Registered Office at 217, Gali No. 2, Gururam Das Nagar, Delhi, Laxmi Nagar, S.O. East Delhi, Delhi, India 110092. ----Petitioner Versus 1. Commissioner Of Income Tax(Appeals), Room No. 202, C R Building, Rawat Bhata Road, Kota, Rajasthan 2. Additional/joint/deputy/assesstant/ Commissioner of Income Tax/income Tax Officer, National Faceless Assessment Center, Mayur Bhawan, Connaught Lane, Barakhamba, New Delhi, Delhi 110001 3. Deputy Commissioner of Income Tax, Circle -2 Kota, Income Tax Office, Dainik Navjyoti Bhawan, Rawatbhata Road, Kota, Rajasthan- 324001. ----Respondents For Petitioner(s) : Ms. Mahi Yadav For Respondent(s) : Mr. Shantanu Sharma (on advance copy) with Ms. Bavana Lodha HON'BLE MR. JUSTICE MANINDRA MOHAN SHRIVASTAVA HON'BLE MR. JUSTICE PRAVEER BHATNAGAR Order 10/07/2023 1. Heard learned counsel for the petitioner and also learned counsel for the respondents on advance copy. 2. This petition arises out of assessment order dated 24.03.2022 issued under Section 147 of the Income Tax Act (hereinafter ‘the Act’ in short) as also demand notice dated 24.03.2022. The petitioner has also challenged the notice under Section 148 of the Act issued on 26.07.2022 reopening the assessment. 3. Learned counsel for the petitioner would submit that the respondent issued a notice under Section 148 of the Act reopening [2023:RJ-JP:13756-DB] (2 of 4) [CW-8626/2023] assessment and passed reassessment order on 24.03.2022, which is under challenge in the appeal and the appeal is still pending. 4. Now in the garb of order passed by the Hon’ble Supreme Court in the case of Union of India Vs. Ashish Agarwal, the earlier notice under Section 148 of the Act has been treated as notice under Section 148A(b) of the Act, which eventually resulted in passing of the impugned order on 26.07.2022 followed by another notice under Section 148 of the Act which is impermissible in law. 5. Though, on advance copy, learned counsel appearing for revenue has drawn attention of this Court to order dated 26.07.2022 passed in exercise of powers under Section 148A (d) of the Act and submits that in view of the decision in the case of Union of India Vs. Ashish Agarwal, all those notices under Section 148 of the Act, which were issued and served on or after 01.04.2021, have to be treated as notice under Section 148A (b) of the Act. Therefore, the authority treated earlier notice dated 31.03.2021, issued and served on 01.04.2021, as notice under Section 148A (b) of the Act and after giving an opportunity of hearing, passed order under Section 148A (d) of the Act. He would further submit that as the reassessment order passed on 24.03.2022 is outcome of the notice under Section 148 of the Act issued earlier, the said order no longer survives in the eye of law, which is clearly stated in Section 148A (d) of the Act passed on 26.07.2022 therefore, the petitioner should not have any apprehension. 6. We find that earlier notice under Section 148 of the Act was generated on 31.03.2021 through ITBA system with the prior [2023:RJ-JP:13756-DB] (3 of 4) [CW-8626/2023] approval of the competent authority but the same could be issued and served upon the assessee only on 01.04.2021 through ITBA system. As the notice was actually issued and served on 01.04.2021, in view of the decision of Hon’ble Supreme Court in the case of Union of India Vs. Ashish Agarwal 2022 SCC 543: dated 04.05.2022, the notice under Section 148 of the Act was required to be treated as notice under Section 148A (b) of the Act and further further proceedings were required to be drawn complying with the mandate of Section 148A of the Act, introduced after the amendment effective from 01.04.2021. The order under Section 148A (d) of the Act dated 26.07.2022 clearly records that in view of the judgment of Hon’ble Supreme Court, no scrutiny assessment could be made on the basis of show cause notice hence scrutiny assessment order passed by AO has become infructuous. In Para 6 (ii) of the order passed under Section 148A(d) of the Act, it has been clearly stated as under: - “(ii) Further, the Hon’ble Supreme Court in the case of Union of India Vs. Ashish Agarwal directed that notice u/s 148 of the Act may be treated as show cause notice u/s 148A(b) of the Income Tax Act. As a result of said judgment of Hon’ble Apex Court notice u/s 148 is treated as show cause notice u/s 148A (b) of the Act and no scrutiny assessment can be made on the basis of said show cause notice, hence scrutiny assessment order so passed by the AO has been infructuous as a result of said judgment. Hence, argument of the assesses is no genuine on this issue.” 7. It is therefore, vividly clear that the assessment order which has been passed on 24.03.2022 is in the teeth of the judgment of Hon’ble the Supreme Court in the case of Union of India Vs. Ashish Agarwal. The order does not survive in the eye of law. [2023:RJ-JP:13756-DB] (4 of 4) [CW-8626/2023] Consequently, all subsequently demand notices, which have been issued also are rendered ineffective and inoperative in law. What survives is an order passed under Section 148A (d) on 26.07.2022 under the new regime of law after amendment in the Income Tax Act with effect from 01.04.2021. 8. Therefore, in view of the above, the appeal which has been filed by the petitioner assailing legality and validity of scrutiny assessment order dated 24.03.2022 is also rendered infructuous. It goes without saying that the pre deposit amount, if any, made by the petitioner while filing appeal against the order dated 24.03.2022 is required to be refunded forthwith to the petitioner. The impugned demand notice dated 24.03.2022 is also rendered ineffective and inoperative in law. 9. This petition is accordingly partly allowed declaring the scrutiny assessment order dated 24.03.2022 as also demand notice dated 24.03.2022 ineffective and inoperative in law. The pre deposit amount, if any, shall be refunded to the petitioner. 10. We may, however, hasten to add that we have not interfered with the order dated 26.07.2022 passed in exercise of powers under Section 148A (d) of the Act. In case the petitioner is aggrieved by fresh order of reassessment, which may be passed in future, the petitioner would be at liberty to work out such remedy as may be available to him under the law. 11. All pending applications also stand disposed of. (PRAVEER BHATNAGAR),J (MANINDRA MOHAN SHRIVASTAVA),J 14/- DHARMEDNRA RAKHECH "