Case Note & Summary
The petitioner, Rajesh Mansukhlal Gadoya, challenged a notice issued under Section 148 of the Income Tax Act, 1961 for Assessment Year 2015-2016. The notice was issued on 04.06.2021, after the new reassessment regime came into effect on 01.04.2021, without complying with the mandatory requirement of issuing a notice under Section 148A(b) of the Act. The respondent Assessing Officer relied on the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (TOLA) to extend the time limit for issuance of the notice up to 30.06.2021. However, the Supreme Court in Union of India v. Ashish Agarwal (2022) 444 ITR 1 (SC) held that notices issued under Section 148 between 01.04.2021 and 30.06.2021 would be deemed to be notices under Section 148A(b), and the department was required to follow the procedure of issuing a fresh notice under Section 148A(b) and passing an order under Section 148A(d). The department subsequently issued notices under Section 148 in July/August 2022 after following the procedure. The Gujarat High Court, following 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 reassessment notice was invalid due to non-compliance with Section 148A(b) and lack of valid sanction under Section 151 of the Act. The court quashed the notice and allowed the petition.
Headnote
A) Income Tax - Reassessment - Section 148, 148A, 149, 151 of Income Tax Act, 1961 - Validity of Notice - Notice issued under Section 148 on 04.06.2021 for AY 2015-2016 without complying with Section 148A(b) is invalid - TOLA cannot extend time limit for issuance of notice under old regime after 31.03.2021 - Held that the notice is quashed (Paras 1-6). B) Income Tax - Sanction - Section 151 of Income Tax Act, 1961 - Sanction for issuance of reassessment notice must be by the specified authority as per amended provisions - Sanction obtained from officer not authorized under amended Section 151 is invalid - Held that the notice is quashed (Paras 5-6).
Issue of Consideration
Whether the reassessment notice issued under Section 148 of the Income Tax Act, 1961 for Assessment Year 2015-2016 without complying with Section 148A(b) and without valid sanction is sustainable in law
Final Decision
The petition is allowed. The impugned notice under Section 148 of the Income Tax Act, 1961 dated 04.06.2021 and all consequential proceedings are quashed.
Law Points
- Reassessment notice under Section 148 of Income Tax Act
- 1961 issued after 01.04.2021 without complying with Section 148A(b) is invalid
- TOLA cannot extend time limit for issuance of notice under old regime
- sanction under Section 151 must be by specified authority as per amended provisions
