Case Note & Summary
The petitioner, Chandrakant Babubhai Patel, filed a Special Civil Application under Article 226 of the Constitution before the Gujarat High Court challenging a reassessment notice issued under section 148 of the Income Tax Act, 1961 for Assessment Year 2015-2016. The notice was issued after 31.03.2021, when the new reassessment regime under sections 148A and 149 had come into force. The petitioner contended that the notice was invalid because it did not comply with the mandatory procedure under section 148A(b), which requires providing an opportunity of being heard before issuing a reassessment notice. The respondent, Income Tax Officer, argued that the notice was saved by the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (TOLA), which extended the time limit for issuing notices under section 148 up to 30.06.2021. However, the court noted that the notice in question was issued on 27.05.2022, well after the extended deadline. The court also considered the Supreme Court's decision in Union of India v. Ashish Agarwal, which held that notices issued under section 148 between 01.04.2021 and 30.06.2021 would be deemed to be notices under section 148A(b). However, that decision did not apply to notices issued after 30.06.2021. The court further noted that similar issues had been decided in Keenara Industries (P.) Ltd v. ITO, where the Gujarat High Court allowed petitions challenging such notices. The matter was also considered by the Supreme Court in Union of India v. Rajeev Bansal, which dealt with delay and sanction issues. The court held that the reassessment notice was invalid for non-compliance with section 148A(b) and quashed the notice. The petition was allowed.
Headnote
A) Income Tax - Reassessment - Section 148, 148A, 149 of Income Tax Act, 1961 - Validity of Notice - The petitioner challenged reassessment notice issued under section 148 for AY 2015-2016 without complying with section 148A(b) procedure which came into force from 01.04.2021. The court held that the notice issued after 30.06.2021 cannot be saved by TOLA extension and must follow the new procedure under section 148A(b). The court quashed the notice as invalid. (Paras 2-6) B) Income Tax - TOLA Extension - Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 - Time Limit - The court considered that TOLA extended time for issuance of notice under section 148 only up to 30.06.2021. Notices issued after that date cannot rely on TOLA and must comply with the new regime under section 148A(b). (Paras 3-4) C) Income Tax - Precedent - Union of India v. Ashish Agarwal, (2022) 444 ITR 1 (SC) - Applicability - The Supreme Court in Ashish Agarwal held that notices issued under section 148 between 01.04.2021 and 30.06.2021 shall be deemed to be notices under section 148A(b). However, the present notice was issued after 30.06.2021, hence Ashish Agarwal does not apply. (Paras 3-4)
Issue of Consideration
Whether the reassessment notice issued under section 148 of the Income Tax Act, 1961 for Assessment Year 2015-2016 after 31.03.2021 is valid without complying with section 148A(b) of the Act, and whether the extension under TOLA applies.
Final Decision
The court allowed the petition and quashed the reassessment notice issued under section 148 of the Income Tax Act, 1961 for Assessment Year 2015-2016.
Law Points
- Reassessment notice under section 148 of Income Tax Act
- 1961 issued after 31.03.2021 must comply with section 148A(b) procedure
- TOLA extension only up to 30.06.2021
- Notices issued after 30.06.2021 without section 148A(b) are invalid
- Decision in Ashish Agarwal applies only to notices issued between 01.04.2021 and 30.06.2021
