Case Note & Summary
The petitioner, Varshaben Dhirajkumar Shah, 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, purportedly under the old regime, relying on the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (TOLA) to extend the time limit up to 30.06.2021. The petitioner contended that the notice was invalid as it did not comply with the mandatory procedure under section 148A(b) of the Act, which came into effect from 01.04.2021. The respondent Assessing Officer initially issued the notice under section 148 without issuing a show cause notice under section 148A(b). Subsequently, after the Supreme Court's decision in Union of India v. Ashish Agarwal (2022) 444 ITR 1 (SC), the department issued a notice under section 148A(b) on 27.05.2022 and passed an order under section 148A(d) before issuing the final reassessment notice. The petitioner argued that the entire process was flawed as the initial notice under section 148 was void ab initio. The court noted that similar issues had been decided in Keenara Industries (P.) Ltd v. ITO [2023] 147 taxmann.com 585 (Guj), which allowed such petitions. The matter was later considered by the Supreme Court in Union of India v. Rajeev Bansal (2024) 469 ITR 46 (SC), which settled the law on the validity of reassessment notices issued after 01.04.2021 without following the new procedure. The Gujarat High Court, following the Supreme Court's decision, held that the notice under section 148 issued after 01.04.2021 without complying with section 148A(b) is invalid. The court quashed the impugned notice and all consequential proceedings. The judgment emphasizes that the TOLA extension cannot override the mandatory procedural requirements under the amended provisions of the Income Tax Act.
Headnote
A) Income Tax - Reassessment - Section 148, 148A, 149 of Income Tax Act, 1961 - Validity of Notice - The petitioner challenged notice under section 148 issued after 01.04.2021 without prior notice under section 148A(b) as required under the new regime. The court held that the notice issued under the old regime after the cut-off date is invalid and must be quashed, following the ratio in Union of India v. Ashish Agarwal and Union of India v. Rajeev Bansal. (Paras 2-6) B) Income Tax - Time Limit - Section 149 of Income Tax Act, 1961 - Delay in Issuance - The court considered the issue of delay under section 149 as per the new provisions effective from 01.04.2021 and held that the notice was barred by limitation. The extension under TOLA cannot be used to bypass the mandatory procedure under section 148A. (Paras 4-6) C) Income Tax - Sanction - Section 151 of Income Tax Act, 1961 - Validity - The court also examined the validity of sanction granted under section 151 and found that the sanction was not in accordance with law, as the notice itself was invalid ab initio. (Para 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) is valid in light of the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 and the decision in Union of India v. Ashish Agarwal.
Final Decision
The court quashed the impugned notice under section 148 and all consequential proceedings, following the Supreme Court's decision in Union of India v. Rajeev Bansal.
Law Points
- Reassessment notice under section 148 of Income Tax Act
- 1961 issued after 01.04.2021 must comply with section 148A procedure
- TOLA extension cannot override mandatory provisions
- Notice under old regime invalid if issued without section 148A(b) show cause notice
