Case Note & Summary
The petitioner, Arham Share Private Limited, challenged a notice issued under Section 148 of the Income Tax Act, 1961 for Assessment Year 2015-2016. The notice was issued after 01.04.2021, relying on the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (TOLA) to extend the time limit. The petitioner contended that the notice was invalid because it did not comply with the mandatory procedure under Section 148A(b) of the Act, which came into effect from 01.04.2021, and that the sanction for issuance was not obtained from the competent authority under Section 151 as amended. The respondent Assessing Officer argued that the notice was deemed to be a notice under Section 148A(b) following the Supreme Court's decision in Union of India v. Ashish Agarwal (2022) 444 ITR 1 (SC), and that the procedure was subsequently followed. The court examined the provisions of Sections 148, 148A, 149, 151, and 155 of the Income Tax Act, 1961, and the impact of TOLA. It noted that similar issues were decided in Keenara Industries (P.) Ltd v. ITO [2023] 147 taxmann.com 585 (Guj) and affirmed by the Supreme Court in Union of India v. Rajeev Bansal (2024) 469 ITR 46 (SC). The court held that the notice was invalid as the procedure under Section 148A was not followed before issuance, and the sanction was not granted by the authority specified under the amended Section 151. Consequently, the court quashed the reassessment notice.
Headnote
A) Income Tax - Reassessment - Section 148, 148A, 149, 151, 155 of Income Tax Act, 1961 - Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 - Validity of notice - The petitioner challenged notice under Section 148 for AY 2015-2016 issued after 01.04.2021 without complying with Section 148A(b) and without valid sanction under Section 151 as per new regime. The court held that the notice was invalid as the procedure under Section 148A was not followed and the sanction was not granted by the competent authority under the amended provisions. (Paras 1-6) B) Income Tax - Sanction - Section 151 of Income Tax Act, 1961 - Requirement of valid sanction - The court held that the sanction for issuance of reassessment notice must be granted by the authority specified under Section 151 as amended with effect from 01.04.2021, and failure to obtain such sanction renders the notice invalid. (Paras 5-6) C) Income Tax - Time Limit - Section 149 of Income Tax Act, 1961 - Delay in issuance - The court considered the issue of delay in issuance of notice under Section 149 and held that the time limits under the new regime must be complied with, and TOLA cannot extend the period beyond 30.06.2021 for notices under the old regime. (Paras 4-6)
Issue of Consideration
Whether the reassessment notice issued under Section 148 of the Income Tax Act, 1961 for Assessment Year 2015-2016 after 01.04.2021 without complying with Section 148A(b) and without valid sanction under Section 151 is valid.
Final Decision
The court 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 01.04.2021 must comply with Section 148A procedure
- Sanction under Section 151 must be granted by the specified authority as per the new regime
- TOLA cannot extend time limits for issuance of notice under old regime after 31.03.2021
