Case Note & Summary
The petitioner, Parthav Girishbhai Desai, filed a Special Civil Application under Article 226 of the Constitution of India before the Gujarat High Court challenging a notice issued under section 148 of the Income Tax Act, 1961 for the Assessment Year 2015-2016. The notice was issued after 31.03.2021, i.e., after the new reassessment regime under sections 147 to 151 of the Act came into force with effect from 01.04.2021. The respondent, Income Tax Officer, Ward 2(3)(1), Surat, issued the notice under the old regime by relying on the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (TOLA) which extended the time limit for issuance of such notices 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 requires the Assessing Officer to provide an opportunity of being heard to the assessee before issuing a notice under section 148. 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 28.05.2022 and thereafter passed an order under section 148A(d) and issued a fresh notice under section 148. The court noted that similar issues were considered in Keenara Industries (P.) Ltd v. ITO [2023] 147 taxmann.com 585 (Guj) and the matter was carried to the Supreme Court in Union of India v. Rajeev Bansal (2024) 469 ITR 46 (SC). The court held that the original notice under section 148 issued after 01.04.2021 without complying with section 148A(b) was invalid and quashed the same. The court allowed the petition.
Headnote
A) Income Tax - Reassessment - Section 148, 148A, 149 of Income Tax Act, 1961 - Validity of Notice - The petitioner challenged a notice under section 148 issued after 01.04.2021 for AY 2015-2016 without complying with section 148A(b) procedure. The court held that the notice issued under the old regime after the new provisions came into force is invalid and quashed the same. (Paras 1-6) B) Income Tax - TOLA - Extension of Time - Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 - The respondent relied on TOLA to extend time for issuance of notice under section 148. The court held that TOLA cannot override the mandatory procedure under section 148A which came into effect from 01.04.2021. (Paras 2-4) C) Income Tax - Precedent - Ashish Agarwal - Union of India v. Ashish Agarwal, (2022) 444 ITR 1 (SC) - The Supreme Court 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). The department thereafter issued fresh notices under section 148 after following section 148A procedure, but the original notice was invalid. (Paras 3-4)
Issue of Consideration
Whether a notice under section 148 of the Income Tax Act, 1961 issued after 01.04.2021 for Assessment Year 2015-2016 without complying with the mandatory procedure under section 148A(b) of the Act is valid.
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
- TOLA extension does not override new regime
- Notice issued without section 148A(b) is invalid
