Case Note & Summary
The petitioner, Ambalal Chimanlal Patel (HUF), challenged a notice issued under Section 148 of the Income Tax Act, 1961 for Assessment Year 2015-2016. The notice was issued on 17.05.2021 under the old regime, relying on the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (TOLA) to extend the time limit. However, with effect from 01.04.2021, the new regime under Section 148A(b) required the Assessing Officer to issue a show-cause notice and provide an opportunity of hearing before issuing a reassessment notice. The respondent issued the Section 148 notice without complying with 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) and passed an order under Section 148A(d) between July and August 2022. The petitioner argued that the initial notice was invalid ab initio. The Court, relying on its earlier decision in Keenara Industries (P.) Ltd v. ITO [2023] 147 taxmann.com 585 (Guj) and the Supreme Court's decision in Union of India v. Rajeev Bansal (2024) 469 ITR 46 (SC), held that the notice issued without complying with Section 148A(b) was invalid. The Court quashed the reassessment notice and all subsequent proceedings.
Headnote
A) Income Tax - Reassessment - Section 148, 148A, 149 of Income Tax Act, 1961 - TOLA - Validity of Notice - The petitioner challenged a notice under Section 148 issued on 17.05.2021 for AY 2015-2016 without complying with Section 148A(b) which came into effect from 01.04.2021. The respondent relied on TOLA to extend time. The Court held that the notice was invalid as it did not follow the mandatory procedure under Section 148A(b) and the TOLA extension could not cure the procedural defect. (Paras 1-6)
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 Section 148A(b) is valid, and whether the extension under TOLA saves such notice.
Final Decision
The Court allowed the petition and quashed the notice under Section 148 dated 17.05.2021 and all subsequent proceedings.
Law Points
- Reassessment notice under Section 148 of Income Tax Act
- 1961 issued after 01.04.2021 must comply with Section 148A(b)
- TOLA cannot override mandatory procedure
- Notice issued without Section 148A(b) is invalid
Case Details
2026 LawText (GUJ) (03) 473
R/Special Civil Application No. 19457 of 2022
A.S. Supehia, Pranav Trivedi
B.S. Soparkar for petitioner, Maithili D. Mehta for respondent
Ambalal Chimanlal Patel (HUF) Through Karta Ambalal Chimanlal Patel
The Assistant Commissioner of Income Tax Circle, Gandhinagar
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Nature of Litigation
Challenge to reassessment notice under Section 148 of Income Tax Act, 1961 for Assessment Year 2015-2016.
Remedy Sought
Quashing of notice under Section 148 and all subsequent proceedings.
Filing Reason
Notice issued without complying with Section 148A(b) of the Act.
Previous Decisions
Similar notices for AYs 2013-2014 to 2017-2018 were allowed by Gujarat High Court in Keenara Industries (P.) Ltd v. ITO; Supreme Court in Union of India v. Rajeev Bansal decided issues on delay under Section 149.
Issues
Whether the notice under Section 148 issued after 01.04.2021 without complying with Section 148A(b) is valid.
Whether the extension under TOLA can validate a notice issued without following mandatory procedure.
Submissions/Arguments
Petitioner argued that notice under Section 148 was issued without complying with Section 148A(b) as required from 01.04.2021.
Respondent argued that due to TOLA, time limit for issuance of notice was extended upto 30.06.2021 and subsequent compliance with Section 148A(b) after Ashish Agarwal decision cured the defect.
Ratio Decidendi
A notice under Section 148 issued after 01.04.2021 must comply with the mandatory procedure under Section 148A(b) of the Income Tax Act, 1961. The extension under TOLA does not override the requirement of following the new procedure. Non-compliance renders the notice invalid ab initio.
Judgment Excerpts
The petitioner has challenged notices issued under section 148 of the Income Tax Act, 1961 for the Assessment Year 2015-2016 under the old regime by placing reliance on the provisions of the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020.
It is the case of the petitioner that the said notice was issued without complying Section 148A(b) of the Act, as required to be issued with effect from 01.04.2021, under the new regime governing reopening provisions which had came into force.
Procedural History
Notice under Section 148 issued on 17.05.2021. After Supreme Court decision in Ashish Agarwal, department issued notice under Section 148A(b) and passed order under Section 148A(d) between July and August 2022. Petitioner filed Special Civil Application No. 19457 of 2022 challenging the notice. Similar petitions for other assessment years were allowed by Gujarat High Court in Keenara Industries and Supreme Court in Rajeev Bansal.
Acts & Sections
- Income Tax Act, 1961: 148, 148A, 149
- Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020:
