Case Note & Summary
The petitioner, Nova Dye Stuff Industries Pvt. Ltd., filed a Special Civil Application under Article 226 of the Constitution of India challenging a notice issued under Section 148 of the Income Tax Act, 1961 for the Assessment Year 2015-2016. The notice was issued by the Assistant Commissioner of Income Tax, Circle 1(1), Surat. The petitioner contended that the notice was issued without complying with the mandatory procedure under Section 148A(b) of the Act, which came into effect from 01.04.2021. The respondent relied on the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (TOLA) to extend the time limit for issuance of notice up to 30.06.2021. However, the notice was actually issued on 26.05.2022 after the Supreme Court's decision in Union of India v. Ashish Agarwal (2022) 444 ITR 1 (SC). The court noted that similar notices for Assessment Years 2013-2014 to 2017-2018 were challenged on grounds of delay and invalid sanction. The Gujarat High Court in Keenara Industries (P.) Ltd. v. ITO [2023] 147 taxmann.com 585 (Guj) had allowed such petitions. The matter was taken to the Supreme Court in Union of India v. Rajeev Bansal (2024) 469 ITR 46 (SC), which decided the issues regarding delay under Section 149 and validity of sanction under Section 151. Following the Supreme Court's decision, the High Court held that the notice under Section 148 was invalid as it did not comply with Section 148A procedure and the sanction under Section 151 was not granted by the competent authority. The court quashed the notice and allowed the petition.
Headnote
A) Income Tax - Reassessment - Section 148, 148A, 149, 151, 155 of Income Tax Act, 1961 - 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) procedure. The court held that the notice was invalid as it did not follow the mandatory procedure under Section 148A and the sanction under Section 151 was not granted by the competent authority. (Paras 1-6) B) Income Tax - Sanction - Section 151 of Income Tax Act, 1961 - Invalid Sanction - The court found that the sanction for issuance of notice under Section 148 was granted by an authority not competent under Section 151 as per the new regime. The sanction was held to be invalid, rendering the notice void. (Paras 5-6) C) Income Tax - Time Limit - Section 149 of Income Tax Act, 1961 - Delay - The notice was issued beyond the time limit prescribed under Section 149 as applicable after 01.04.2021. The court held that the extension under TOLA cannot validate a notice that is otherwise barred by limitation. (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 is valid when it was issued without complying with Section 148A(b) and without proper sanction under Section 151 of the Act.
Final Decision
The court allowed the petition and quashed the notice 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
- TOLA cannot override substantive provisions of the Act
