Case Note & Summary
The petitioner, Jayeshkumar Narsidas Madlani, filed a Special Civil Application under Article 226 of the Constitution 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, relying on the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (TOLA) to extend the time limit. The petitioner contended that the notice was invalid because 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 the old regime, but 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 21.07.2022 and subsequently passed an order under Section 148A(d) before issuing a fresh notice under Section 148. The court noted that similar notices for other assessment years had been challenged on grounds of delay and lack of valid sanction, and 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 155. The court, following the ratio in Rajeev Bansal, held that the reopening notice was invalid for non-compliance with Section 148A(b) and quashed the notice. The judgment emphasizes that the new regime under Section 148A is mandatory and TOLA cannot be used to circumvent it.
Headnote
A) Income Tax - Reopening of Assessment - Section 148, 148A, 149, Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 - Validity of Notice - The petitioner challenged a notice under Section 148 for AY 2015-2016 issued after 31.03.2021 without complying with Section 148A(b). The court held that the notice was invalid as the new regime under Section 148A came into effect from 01.04.2021 and TOLA cannot be used to bypass the mandatory procedure. The court followed the decision in Ashish Agarwal and Rajeev Bansal, quashing the notice. (Paras 2-6)
Issue of Consideration
Whether the reopening notice under Section 148 of the Income Tax Act, 1961 issued after 01.04.2021 without complying with Section 148A(b) is valid in light of TOLA and the decision in Ashish Agarwal
Final Decision
The court quashed the notice under Section 148 of the Income Tax Act, 1961 for Assessment Year 2015-2016, holding it invalid for non-compliance with Section 148A(b) procedure.
Law Points
- Reopening notice under Section 148 issued after 01.04.2021 must comply with Section 148A procedure
- TOLA cannot override new regime
- Notice issued without Section 148A(b) is invalid
