Case Note & Summary
The petitioner, Nitinkumar S/o Rishiram Agrawal, filed a writ petition under Article 226 of the Constitution of India challenging a notice dated 31.03.2021 issued under Section 148 of the Income Tax Act, 1961 by the Income Tax Officer, Ward-1, Jalna (respondent No. 2) for reassessment of assessment year 2016-2017, and an order dated 01.03.2022 passed by the National Faceless Assessment Centre, Delhi (respondent No. 3) rejecting the petitioner's objections. The petitioner had filed his return of income tax on 28.03.2018 for the assessment year 2016-2017. On 31.03.2021, the respondent No. 2 issued the impugned notice under Section 148. On 01.04.2021, the Finance Act, 2021 came into force, which substituted the entire mechanism of reopening of assessment under Sections 147 to 151 of the Income Tax Act. The respondent No. 2 supplied the reasons recorded for reopening, which relied on a communication from ACIT, Central Circle – 4(4), Mumbai regarding Shri Renukamata Multistate Co-op. Urban Bank Credit Society Ltd. The petitioner filed objections on 24.02.2022, specifically raising the tenability of the proceedings in light of the change in law. The respondent No. 3 rejected the objections on 01.03.2022. The petitioner then filed the present petition on 05.03.2022. The petitioner argued that the notice under Section 148 was issued under the old regime and after 01.04.2021, the proceedings must be conducted under the new provisions, including Section 148A, and that the case should have been initiated under Section 153C instead of Section 147. The respondents contended that the notice was issued before the amendment and thus valid. The High Court held that since the Finance Act, 2021 came into force on 01.04.2021, any reassessment proceedings after that date must be in accordance with the substituted provisions. The impugned notice dated 31.03.2021 and the order dated 01.03.2022 were quashed and set aside, with liberty to the respondents to initiate fresh proceedings under the amended law if so advised. The court did not finally decide the applicability of Section 153C.
Headnote
A) Income Tax - Reassessment - Section 148 of Income Tax Act, 1961 - Validity of Notice After Change in Law - Notice issued on 31.03.2021 under old Section 148 but proceedings continued after 01.04.2021 when Finance Act, 2021 substituted new provisions - Held that the notice and subsequent order rejecting objections are unsustainable as the reassessment must be conducted under the amended procedure, including Section 148A, and the assessing officer must follow the new mechanism (Paras 2-7). B) Income Tax - Reassessment - Section 153C vs Section 147 - Applicability - Where information is received from another assessing officer regarding a searched person, the case may fall under Section 153C rather than Section 147 - Held that the petitioner's case based on communication from ACIT, Central Circle, Mumbai may require initiation under Section 153C, but the court did not finally decide this issue as the notice was already quashed on other grounds (Paras 5-7).
Issue of Consideration
Whether a notice under Section 148 of the Income Tax Act, 1961 issued on 31.03.2021 but followed by proceedings after 01.04.2021 (when Finance Act, 2021 came into force) is valid under the amended law, and whether the reassessment should have been initiated under Section 153C instead of Section 147.
Final Decision
The impugned notice dated 31.03.2021 under Section 148 of the Income Tax Act, 1961 and the order dated 01.03.2022 rejecting the petitioner's objections are quashed and set aside. The respondents are at liberty to initiate fresh proceedings under the amended law if so advised. Rule is made absolute accordingly.
Law Points
- Reassessment notice under Section 148 of Income Tax Act
- 1961 issued after 01.04.2021 must comply with new procedure under Finance Act
- 2021
- Section 148A
- Section 151
- Section 153A/153C
- Article 226 of Constitution of India
