United Associates Vs ITO (Delhi High Court)
The Delhi High Court examined the validity of reassessment proceedings initiated under Section 148 of the Income Tax Act, 1961, after the original assessment had already attained finality. Both parties agreed that the issue stood covered by an earlier decision of the Court, which clarified the scope of the Supreme Court’s ruling in Union of India v. Ashish Agarwal. The Court reiterated that the Supreme Court judgment was limited to addressing reassessment notices that had been invalidated by High Courts solely because they were issued under the unamended reassessment provisions, despite the Finance Act, 2021 having come into force.
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The Court held that Ashish Agarwal did not intend, nor did it mandate, the reopening of concluded assessments. The Supreme Court’s directions were confined to salvaging reassessment proceedings at the notice stage by deeming such notices to be show-cause notices under Section 148A(b), followed by orders under Section 148A(d). These directions were aimed at procedural correction and did not authorize the reopening of assessments that had already been completed and closed.
It was further noted that the assessee had never challenged the original reassessment notices on the procedural grounds raised before other High Courts and had instead contested the reassessment proceedings on merits. The assessee was also not a party to the batch of matters considered by the Supreme Court. Consequently, there was no justification for issuing fresh notices to reopen proceedings that had already concluded prior to the Supreme Court’s judgment. The Court emphasized that Ashish Agarwal neither addressed completed assessments nor contained any direction that could be construed as reversing final decisions rendered earlier.
