The Supreme Court on Wednesday, while ruling in favour of the Income Tax Department, held that the notices issued by it under old section 148 will be deemed to have been issued under section 148A.
While hearing a special review petition filed by the Union of India against the order passed by Allahabad High Court in favour of one Ashish Agarwal for hearing, the SC has made its judgment applicable in various cases wherein the high courts of Delhi, Allahabad and Rajasthan had ruled against the IT.
Only the Chattishgarh High Court had ruled in favour of the IT. A division bench of Justices M R Shah and BV Nagarathna said: “The present order shall be applicable pan-India and all judgments and orders passed by different High Courts on the issue and under which similar notices which were issued after 01.04.2021 issued under section 148 of the Act are set aside and shall be governed by the present order and shall stand modified to the aforesaid extent.”
The apex court exercised its powers under Article 142 of the Constitution of India by which it issued order to avoid any further appeals by the IT Department on the issue by challenging similar judgments and orders. This was done with a view not to burden the SC with over 9000 appeals. The SC has clarified that this order will be applicable to writ petitions which are pending before various High Courts in which similar notices under section 148 of the Act issued after April 01, 2021 are under challenge. The HC said, “The impugned common judgments and orders passed by the High Court of Allahabad and the similar judgments and orders passed by various High Courts, more particularly, the respective judgments and orders passed by the various High Courts particulars of which are mentioned hereinabove, shall stand modified/substituted to the aforesaid extent only.”
At the same time, the SC has said that “the judgments of the several High Courts would result in no reassessment proceedings at all, even if the same are permissible” under the Finance Act, 2021 and as per substituted sections 147 to 151 of the IT Act. “The Revenue cannot be made remediless and the object and purpose of reassessment proceedings cannot be frustrated,” said the apex court in its 34-page judgment. The court took note of the fact that due to “bonafide mistake” and in view of subsequent extensions of time for reopening assessments, the Revenue Department issued these notices under the unamended provisions of the IT Act after April 1, 2021, the date from which the amendment was to be enforced.
“There appears to be genuine nonapplication of the amendments as the officers of the Revenue may have been under a bonafide belief that the amendments may not yet have been enforced. Therefore, we are of the opinion that some leeway must be shown in that regard which the High Courts could have done so,” said the apex court. it further added that instead of quashing and setting aside the reassessment notices issued under the unamended provisions, the high courts should have deemed to have been issued under the amended provisions, subject to compliance of all the procedural requirements.
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