Case Note & Summary
The petitioner, Hardik Girishbhai Desai, 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 after 01.04.2021, when the new reassessment regime under the Finance Act, 2021 had come into force, which introduced section 148A requiring the Assessing Officer to conduct an inquiry, provide an opportunity to the assessee, and pass an order before issuing a notice under section 148. The petitioner contended that the impugned notice was issued without complying with the mandatory procedure under section 148A(b) and that the sanction under section 151 was not obtained from the competent authority as per the amended provisions. The respondent, Income Tax Officer, relied on the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (TOLA) to extend the time limit for issuance of notice and argued that the notice was deemed to be a notice under section 148A(b) as per the decision of the Supreme Court in Union of India v. Ashish Agarwal. The court examined the facts and found that the notice was issued after 31.03.2021 without following the procedure under section 148A(b). The court also noted that similar notices for other assessment years had been quashed by this Court in Keenara Industries (P.) Ltd v. ITO, and the Supreme Court in Union of India v. Rajeev Bansal had clarified the issues regarding delay and sanction. The court held that the impugned notice was invalid as it did not comply with the mandatory provisions of section 148A and the sanction was not valid. Consequently, the court allowed the petition and quashed the reassessment notice.
Headnote
A) Income Tax - Reassessment - Section 148, 148A, 149, 151 of Income Tax Act, 1961 - Validity of Notice - The petitioner challenged reassessment notice issued under section 148 for AY 2015-2016 after 01.04.2021 without complying with section 148A(b) procedure. The court held that the notice issued under the old regime without following the mandatory procedure under section 148A(b) is invalid and liable to be quashed. (Paras 2-4) B) Income Tax - Sanction - Section 151 of Income Tax Act, 1961 - Requirement of Valid Sanction - The court noted that the sanction for issuance of reassessment notice must be obtained from the appropriate authority as per the amended provisions of section 151. In the absence of valid sanction, the notice is unsustainable. (Para 5) C) Income Tax - Delay - Section 149 of Income Tax Act, 1961 - Time Limit - The court considered the issue of delay in issuance of notice beyond the time limit prescribed under section 149 and held that the notice was barred by limitation. (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 is valid when the procedure under section 148A(b) was not followed and the sanction under section 151 was not obtained from the competent authority as per the amended provisions.
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 01.04.2021 must comply with new procedure under section 148A
- including issuance of notice under section 148A(b) and passing order under section 148A(d)
- TOLA cannot override substantive provisions
- sanction under section 151 must be obtained from the appropriate authority as per the amended provisions
- delay in issuance of notice beyond the time limit prescribed under section 149 renders the notice invalid.
