Case Note & Summary
The petitioner, Prabhatbhai Mahadevbhai Desai, filed a Special Civil Application under Article 226 of the Constitution before the Gujarat High Court challenging a notice issued under Section 148 of the Income Tax Act, 1961 for Assessment Year 2015-2016. The notice was issued on 30.06.2021 under the old regime, relying on the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (TOLA) for extension of time, without issuing a prior notice under Section 148A(b) of the Act, which came into effect from 01.04.2021. The respondent, Assistant Commissioner of Income Tax, Circle (2)(1)(1), Surat, had initially issued the notice under the old Section 148, but after the Supreme Court's judgment in Union of India v. Ashish Agarwal (2022) 444 ITR 1 (SC), the department issued a fresh notice under Section 148A(b) on 24.05.2022 and subsequently passed an order under Section 148A(d) and issued a fresh notice under Section 148 between July and August 2022. The petitioner challenged the original notice as well as the subsequent proceedings. The court considered the legal issue of whether a notice under Section 148 issued after 01.04.2021 without complying with the mandatory procedure under Section 148A(b) is valid. The petitioner argued that the notice under the old regime was invalid as the new procedure under Section 148A was mandatory from 01.04.2021, and TOLA could not override substantive provisions. The respondent contended that TOLA extended the time limit for issuing notice under the old Section 148 up to 30.06.2021, and the subsequent compliance with Ashish Agarwal cured the defect. The court analyzed the provisions and held that after 01.04.2021, the Assessing Officer was bound to follow the procedure under Section 148A, including issuing a notice under Section 148A(b) before issuing a notice under Section 148. TOLA only relaxed time limits, not procedural requirements. The original notice under Section 148 issued on 30.06.2021 without Section 148A(b) was invalid ab initio. The court quashed the notice and all subsequent proceedings, allowing the petition.
Headnote
A) Income Tax - Reassessment - Section 148, 148A, 148A(b), 148A(d) - Income Tax Act, 1961 - Validity of notice under old Section 148 issued after 01.04.2021 without complying with Section 148A procedure - Petitioner challenged notice under Section 148 for AY 2015-16 issued on 30.06.2021 under TOLA without notice under Section 148A(b). Court held that after 01.04.2021, the new procedure under Section 148A must be followed, and TOLA cannot be used to bypass the mandatory requirement of issuing notice under Section 148A(b). The notice was invalid. (Paras 2-6) B) Income Tax - TOLA - Section 3 - Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 - Extension of time limit under TOLA does not dispense with compliance of substantive provisions - The Assessing Officer issued notice under Section 148 on 30.06.2021 relying on TOLA for extension of time, but failed to issue notice under Section 148A(b). Court held that TOLA only relaxes time limits, not procedural requirements. The notice was quashed. (Paras 3-5)
Issue of Consideration
Whether notice under Section 148 of the Income Tax Act, 1961 issued after 01.04.2021 under the old regime without issuing notice under Section 148A(b) is valid in view of TOLA and the judgment in Union of India v. Ashish Agarwal.
Final Decision
The court quashed the notice under Section 148 issued on 30.06.2021 and all subsequent proceedings, allowing the petition.
Law Points
- Reassessment notice under Section 148 of Income Tax Act
- 1961 issued after 01.04.2021 must comply with Section 148A procedure
- TOLA cannot override statutory amendments
- Notice under old regime without Section 148A(b) is invalid
