Wp/18584/2022 Of Indira Ajay v. The Assistant Commissioner Of Income Tax

HIGH COURT FOR THE STATE AT HYDERABAD(Special Original Jurisdiction) WEDNESDAY, THE TWENry EIGHTH TWO THOUSAND AND TWENTY TWO PRESENT THE HONOURABLE THE CHIEF JUSTICE AND THE HONOURABLE SRI JUSTICE C.V. BHASKAR WRIT PETITION NO: 18584 OF 2022 Between: Dr. lndira Ajay, D/o. K. Satyanarayana, [Age ][62 ][years, 5D, ][6-3-1097 ][and ][1098,]Garden Manor, Somajiguda, [Hyderabad ]- [500082.] ...PETITIONER AND 1. The Assistant Commissioner of [lncome ][Tax, ][Circle ][6 ][(1), ][Hyderabad.] 2. Deputy Commissioner of lncome [Tax, Circle ][6('1), ][Hyderabad.] ...RESPONDENTS Petition Under Article 226 of the Constitution [of ][lndia praying ][that in ][the]circumstances stated in the affidavit [filed ][therewith, ][the ][High ][Court may ][be]pleased to issue a writ, direction or order more [particularly ][in ][the ][nature ][of ][a ][writ]of mandamus declaring the [notice ][issued under ][section ][148 ][of ][the ][lncome ][Tax]Act dated 07lo4t2o21 bearing [DtN No ITBA/AS Tlsl14812021 ][-2211032256052(1]) [as ][being ][void, illegal, ][arbitrary, without jurisdiction, ][without ][authority ][of ][law,]violative oi principles of natural iustice [and barred ][by ][limitation and ][consequently]set aside the same. l.A.NO:'l OF 2022 Petition Under Section 151 CPC [praying ][that ][in ][the ][circumstances ][stated]in the affidavit filed in support [of ][the ][petition, ][the ][High Court ][may be ][pleased ][to]stay all further [proceedings ]under [Notice ][dated ][07 ][-04-2021 ][issued ][by]Reipondent No.1 U/s.148 of [the ][Act ][bearing ] [No.;TBA/AS1 lSl14Bl2O21-]22t1032256052(1). Counsel for the Petitioner [: SRI.NAGA DEEPAK] Counsel for the Respondents [: ][Ms.SAPNA ][REDDY, ADV ] [SRI-J.V.PRASAO, ][Sc ] [TAx] The Court made the following [oRDER] THE HON'BLE THE CHIEF JUSTICE UJJAL [BHI.TYAN]ANDTHE HON'BLE SRI JUSTICE C.V.BHASKAR REDDY WRIT PETITION No. 18584 of 2022 ORDER: i:re. the I [,on ]i):t the t)tieJ JusLic( Ujjal [BhuycrL)] Heard N,{r. Naga Deepak, learned counsel for [the]petitioner and Ms- Sapna Reddy, learned counsel for [the]respondents. 2. Challenge nrade in this u,rit [petition ][is to ][the ][legality]and validity ol the notice dated [O7.O4.2O21 ][issued ][by]respondent No.1 under Section 148 [of the ][Income ][Tax ][Act,]1961 (briefly, 'the Act' hereinafter). 3. By the aforesaid notice, assessing [officer ][proposed ][to]assess/ re-assess income of the [petitioner ][for ][the]assessment year 2013-14 on the [ground ][that ][he ][has]reasons to believe that [income][chargeable ][to tax ][had]escaped assessment. 4. Contention of the [petitioner ][is ][that ][Section ][14BA ][of]the Act has been inserted in the [Act by ][way ][of ][recent]amendment and which has come [into ][effect ][- ][I6m] O1.04.2021. As per Section 148A of the Act, the assessingofficer is required to conduct an enquiry with the approvalol the specified authority rvith respect to the informationsuggesting that income chargeable to tax has escapedassessment prior to issuing any notice under Section 148of the Act. He is also required to provide an opportunity ofhearing to the assessee and to consider a reply of theassessee. Thereafter, under Section lagA(d) of the Act, hehas to take a decision on the basis of the availablematerials including reply of the assessee as to whether it isa fit case for reopening and only thereafter and if he issatislied that it is a fit case for reopening, then noticeunder Section l48 of the Act is required to be issued. 5. The impugned notice has been cha-llenged in thepresent writ petition on the ground that the procedure laiddown under Section l48A of the Act has not been followed,which has rendered the impugned notice null ald void. 6. By order dated 13.04.2022, status quo was directedto be maintained. 5. The impugned notice has been cha-llenged in thepresent writ petition on the ground that the procedure laiddown under Section l48A of the Act has not been followed,which has rendered the impugned notice null ald void. 6. By order dated 13.04.2022, status quo was directedto be maintained. 7 . It may [be ][mentioned ][that ][several ][High Courts ][had]passed [judgments ][setting aside such notices ][including ][the]High Courtof Judicature [at ][Allahabad ][in Writ ][Tax]No.524 l2O2I,[against ][which ][Union ][of India fiied ][Special]Leave Petitions' [On ][leave ][being ][granted' ][Civil ][Appeal]No.30O5/2022 [(Union ][of India vs' ][Ashish ][Agarwal) ][along]with other [connected ][Civil ][Appeals ][were ][heard ][by ][the]Supreme [Court ][and ][decided uide ][the ][judgment ][and ][order]dated 04.05.2022, [wlrich ][has ][since been ][reported ][in ][2o22]SCConlineSCS43'AfteranalysingtheprovisionsoftheAct from [Sections ][147 ][to ][151 of ][the ][Act' ][more ][particularly]the provisions [contained ][in ][Section ][14BA ][of the ][Act']Supreme [Court ][observed ][as ][follows:] "7Thus, the [new provisions substituted ][by ][the]Finance [Act, ][2O2l ][being ][remedial ][and]benevolent [in ][nature ][and ][substituted ][with ][a]aim [and object to ][protect ][the ][rights ][and]specihc interest of [the ][assessee ][as ][well ][as ][and ][the ][same]in [public ][interest, ][the ][respective ][Higtr]being Courts have [rightly ][held ][that ][the benefrt ][of ][new]provisions [shall ][be ][made ][available ][even ][il]of [the ][proceedings ][relating ][to ][past]respect assessment [years, ][provided ][section ][148 ][notice]has been [issued ][on or a{ter ][1st ][April' ][2O21 ][We] :rre in complete agrccmcnt with the view takenby the r.,arious High Courts in holding so..by the r.,arious High Courts in holding so.. 8. However, taking the view that judgments of the HighCourts would result in no re-assessment proceedings at all,Supreme Court proposed to modify the judgments andorders passed by various High Courts in the followingmanner: "8Howevcr, at thc sarne time, the judgments of thesevera-l High Courts would result in noreassessment proceedings at all, even if the sameare permissible under the Finance Act,2O2L and,as per substituted sections 147 to 75I of the ITAct. The Revenuc cannot be made remedilessas per substituted sections 147 to 75I of the ITAct. The Revenuc cannot be made remedilessand the object and purpose of reassessmentproceedings cannot be frustrated. It is true thatdue to a bonafrde mistake and in view ofdue to a bonafrde mistake and in view ofsubsequent extension of time vide variousnotifications, the Revenue issued the impugnednotifications, the Revenue issued the impugnednotices under section 148 after the amendmentwas enforced w.e.f . Ol.O4.2O2 l, under thewas enforced w.e.f . Ol.O4.2O2 l, under theunamended section 148. In our view the sameought not to have been issued under theunamended Act and ought to have been issuedought not to have been issued under theunamended Act and ought to have been issuedunder the substituted provisions of sections 147to 151 of the IT Act as per the Finance Act, 2021.to 151 of the IT Act as per the Finance Act, 2021.There appears to be genuine non-application ofthe amendments as the officers of the Revenuemay have been under a bonafide belief that tlne -*-^ the amendments as the officers of the Revenuemay have been under a bonafide belief that tlne -*-^ amendments may not yet have been enforced. €tr'€ (rr>>r'' €tr'€ (rr>>r'' Thcrefore, [we ][a.re ][of ][the ][opinion ][that ][some]leeway [must ][be shown ][in ][that ][regard ][$'hich ][the]High [Courts could have done ][so' ][Therefore']instead [of ][quashing ][and ][setting aside ][the]reassessment [notices issued under ][the]unamended [provision of IT ][Act' the ][High ][Courts]ought [to ][have ][passed ][an ][order ][construlng][ the]Actinotices [issued ][under ][unamended]unamended [provision ][of ][the ] [Act ][as][ those]deemed [to ][have ][been ][issued ][under ][section ][148A]of lhe [Act ][as ][per the ][new provision ][section]148A [and ][the ][Revenue ][ought ][to ][have ][been]permitted [to ][proceed ][lurther with ][the]."."".""-",tt [proceedings as ][per the substituted]provisions [of sections ][147 ][to ][151 ][of the ] [Act ][as]pe. the [finalc ][e ][Act, ][2O2l ]' [subject ][to ][compliance]of a-ll [the ][procedural ][requirements ][and ][the]defences, [which ][may be available ][to the ][assessee]under the [substituted ][provisions ][of sections ][147]to 151 [of ][the ][IT Act and which ][may be available]under the [Finance ][Act' 2O2l and ][in ][law']Therefore, [we ][propose ][to ][modify the ][judgments]ald orders [passed ][by ][the respective ][High ][Courts]as under:- The [respective ][impugned ][section ][148](1) notices [issued ][to ][the ][respective ][assessees]shall [be ][deemed ][to ][have ][been ][issued]under [section ][148A ][of ][the ] [Act ][as]substituted [by ][the Einance ][Act' ][2021 ][a-nd]treated [to ][be show-cause notices ][in ][terms]of section [l48A(b) ][The ][respective]assessing [ofhcers ][shall ][within ][thirty ][days]notices [issued ][to ][the ][respective ][assessees]shall [be ][deemed ][to ][have ][been ][issued]under [section ][148A ][of ][the ] [Act ][as]substituted [by ][the Einance ][Act' ][2021 ][a-nd]treated [to ][be show-cause notices ][in ][terms]of section [l48A(b) ][The ][respective]assessing [ofhcers ][shall ][within ][thirty ][days] from today provide to the assessees theinformation and material relied upon bythe Revenue so that the assessees caninformation and material relied upon bythe Revenue so that the assessees canreply to the notices within ttvo weeksthereafter;thereafter; (iilThe requirement of conducting anyenquiry with the prior approval of thespecified authority under section l48A(a)be dispensed with as a one-time measurevis-a-vis those notices which have beenissued under Section 148 of theunamended Act from O1.O4.2O21 till date,including those which have been quashedby the High Courts;enquiry with the prior approval of thespecified authority under section l48A(a)be dispensed with as a one-time measurevis-a-vis those notices which have beenissued under Section 148 of theunamended Act from O1.O4.2O21 till date,including those which have been quashedby the High Courts; (iii) The assessing ofhcers shall thereafterpass an order in terms of section 148A(d)after following the due procedure asrequired under section 148A(b) in respectof each of the concerned assessees;pass an order in terms of section 148A(d)after following the due procedure asrequired under section 148A(b) in respectof each of the concerned assessees; (iv) All the defences which may be available tothe assessee under section 149 and,/ orwhich may be availabie under the FinalceAct,2O2l and in law and whatever rightsare available to the Assessing Officerunder tlle Finance Act, 2O2l are keptopen and/or shall continue to be availableand;the assessee under section 149 and,/ orwhich may be availabie under the FinalceAct,2O2l and in law and whatever rightsare available to the Assessing Officerunder tlle Finance Act, 2O2l are keptopen and/or shall continue to be availableand; (r,The present order shall substitute/modifyrespective judgments and orders passedby the respective High Courts quashing *- -.respective judgments and orders passedby the respective High Courts quashing *- -. (iv) All the defences which may be available tothe assessee under section 149 and,/ orwhich may be availabie under the FinalceAct,2O2l and in law and whatever rightsare available to the Assessing Officerunder tlle Finance Act, 2O2l are keptopen and/or shall continue to be availableand;the assessee under section 149 and,/ orwhich may be availabie under the FinalceAct,2O2l and in law and whatever rightsare available to the Assessing Officerunder tlle Finance Act, 2O2l are keptopen and/or shall continue to be availableand; (r,The present order shall substitute/modifyrespective judgments and orders passedby the respective High Courts quashing *- -.respective judgments and orders passedby the respective High Courts quashing *- -. the [similar nodces ][issued ]-underunamended [section ][148 ][of ][the ] [Act]irrespective [of ][whether ][they ][havc ][been]assailed [before ][this ][Court ][or ][not"'] g. Finally, [the ][Civil ][Appeals ][were ][allowed ][in ][part ][and]judgments [of the ][various ][High ][Courts have ][been modified]and [sub ][stituted ][as ][under:] "10ln vlew [of ][the ][above ][and for the ][reasons ][stated]266vg, [the ][present ][Appeals ][are ] PART. [The ][impugned ][common ][judgments ][and]"rU"." [n**O ][by the ][High Court ][of ][Judicature at]Aliahabad [in ][W'T ][No ][524l2)2l ][and other ][allied]tax [appeals ][/ ][petitions' ][is/are ][hereby ][modihed]and [substituted ][as ][under:-]266vg, [the ][present ][Appeals ][are ] PART. [The ][impugned ][common ][judgments ][and]"rU"." [n**O ][by the ][High Court ][of ][Judicature at]Aliahabad [in ][W'T ][No ][524l2)2l ][and other ][allied]tax [appeals ][/ ][petitions' ][is/are ][hereby ][modihed]and [substituted ][as ][under:-] The [impugned section ][148 nodces issued](i) to the [respective ][assessees ][which ][were]issued [under ][unamended ][secdon ][148 ][of]the [IT Act, which ][were ][the ][subject matter]of writ [petitions before ][the ][various]respective [High Courts shall ][tre ][deemed ][to]have [been issued ][under ][section ][148A of]the [IT Act as ][substituted ][by ][the ][Finance]Act' [2O2l ][and construed ][- ]""":U -t:'::to the [respective ][assessees ][which ][were]issued [under ][unamended ][secdon ][148 ][of]the [IT Act, which ][were ][the ][subject matter]of writ [petitions before ][the ][various]respective [High Courts shall ][tre ][deemed ][to]have [been issued ][under ][section ][148A of]the [IT Act as ][substituted ][by ][the ][Finance]Act' [2O2l ][and construed ][- ]""":U -t:'::shovr-cause [notices ][in ][terms ][of ][secuon]148A(b)' [The ][assessing offrcer ][shall' ][within]thirty [days ][from ][today ][provide ][to ][the]respective [assessees ][ioformation ][and]material [relied upon ][by ][the ][Revenue' ][so]148A(b)' [The ][assessing offrcer ][shall' ][within]thirty [days ][from ][today ][provide ][to ][the]respective [assessees ][ioformation ][and]material [relied upon ][by ][the ][Revenue' ][so] I that the assesees can reply to the show-causc notices within two weeks thereafter; (ii)The requirement ol conducting anyenquiry, if required, with the priorapproval of specified authority undersection 148A(a) is hereby dispensed withas a one time measure vis-a-vis thosenotices which have been issucd undersection 148 of the unamended Act fromO1.O4.2021 till date, including thosewhich have been quashed by the HighCourts.enquiry, if required, with the priorapproval of specified authority undersection 148A(a) is hereby dispensed withas a one time measure vis-a-vis thosenotices which have been issucd undersection 148 of the unamended Act fromO1.O4.2021 till date, including thosewhich have been quashed by the HighCourts. Even otherwise as observedhereinabove holding any enquiry with theprior approval of specified authority is notmandatory but it is for the concernedAssessing Officers to hold any enquiry, ifrequired; Even otherwise as observedhereinabove holding any enquiry with theprior approval of specified authority is notmandatory but it is for the concernedAssessing Officers to hold any enquiry, ifrequired; (iii) The assessing officers shall thereafterpass orders in terms of section i48A(d) inrespect of each of the concernedassessees; Thereafter after following theprocedure as required under section 148.{may issue notice under section 148 (assubstituted);pass orders in terms of section i48A(d) inrespect of each of the concernedassessees; Thereafter after following theprocedure as required under section 148.{may issue notice under section 148 (assubstituted); (i")All defences which may be available to theassesses including those available undersection 149 of the IT Act and all rightsand contentions which may be available tothe concerned assessees and Revenue -assesses including those available undersection 149 of the IT Act and all rightsand contentions which may be available tothe concerned assessees and Revenue - 3t<!tf 1. under [the ][Finance ][Act' 2021 ][and ][in ][ian']shall continue [to ][be ][available'"] 1O. Supreme [Court also ][clarified ][that ][its ][decision ][in]Ashish [Agarwal ][(supra) rendered ][ot ][O4'O5'2O22 ][was ][an]order [passed ][under ][Article ][142 ][of ][the ][Constitution ][of ][India]and would [be ][binding ][in ][all ][cases ][where ][similar ][notices]have [either ][been ][set ][aside ][by ][the ][High ][Courts ][or ][a-re]pending [adjudication ][before ][the High ][Courts' ][It ][has ][been]held as [follou's:] "11Thc [prcsent ][order shall ][be ][applicable ] and all [judgments ][and orders ][passed ][by different]High [Courts ][on ][the ][issue ][and ][under ][which]notices [which ][were ][issued ][after],i-ilt, Ol.O4.2O2l [issued ][under ][section ][148 ][of ][the ][Act]are [set ][aside ][and shall ][be ][governed ][by ][the]present [order ][and ][shall ][stand ][modihed ][to ][the]aforesaid [extent ][The ][plesent ][order ][is ][passed ][in]exercise [o[ ][powers ][under ][Article ][142 ][of ][the]Constitution [of India ][so ][as ][to ][avoid any ][further]appeals [by the ][Revenue ][on the ][very issue ][by].fr"tl..rgi.tg [similar judgments ][and orders' ][with ][a]vierv not [to ][burden ][this ][Court ][with ][approximateiy]SOOO [appeals' ][We ][also ][observe ][that ][present order]sha1l also [govern ][the ][pending ][writ ][petitions']pending [before ][various ][High ][Courts ][in ][which].i-ilrt [.roti""" ][under ][Section 148 ][of ][the ][Act]issued [after ][Ol'O4'2021are ][under ][challenge ]["] ( ! II \ 1 1. Ms. Sapna Reddy, learned Standing Counsel [has]placed before us Instruction No.Ol12022 dated 11.O5.2022issued by the Centra,l Board ol Direct Taxe s [(CBDT) ]issuinginstructions to the assessing officers [regarding]implementation of the [judgment ]of the Supreme Court inAshish Agarwal (supra) which we have duly taken [note ]of. 12. That being the position, the writ petition [stands]disposed of in terms of the [judgment ]of the Supreme [Court]in Ashish Agarwal (supra). We clarify that all contentionsare kept open. Miscellaneous applications pending, if any, shallstand closed. However, there shall be no order as [to ][costs.] SD/. MOHD. SANAULLAH ANSARIASSISTANT REGISTRAR//TRUE CoPY/l L)I)/--'SECTION OFFICER To1. The Assistant Commissioner [of ][lncome ][Tax, ][Circle ][6 (1), ][Hyderabad] 2. The Deputy Commissioner of lncome [Tax, ][Circle ][6{1), ][Hyderabad.] 3. One CC to'SRI.NAGA DEEPAK, [Advocate ] 4. One CC to SRI.J.V.PRASAD [(SC ] [TAX) ] 5 Two CD Copies6. One spare copy S.AGJP.yGJP.y ,f* or'f HIGH COURT DATED:2810912022 ORDERWP.No.18584 ot 2022 DISPOSING OF THE W.PWITHOUT COSTS. V^(, , [rt6 ][il ] ,4:.,,;t-0 fr i,ii 2[n\i,\ R(hq.tr,