Jose Kattadyil Joseph Vs ACIT-19(1) (Bombay High Court)
The Bombay High Court heard a writ petition challenging a notice dated 31.03.2021 issued under Section 148 of the Income Tax Act, 1961, and the consequential assessment order dated 29.03.2022. The petitioner contended that although the notice bore the date 31.03.2021, it was digitally signed and therefore issued only on 01.04.2021. Since the Finance Act, 2021 came into force on 01.04.2021, the petitioner argued that the reassessment proceedings could not continue under the unamended provisions of Section 148 and were required to comply with the substituted reassessment regime.
The Court examined the impugned notice and found that it was digitally signed on 01.04.2021. The notice itself stated that where it was digitally signed, the date of the digital signature would be treated as the date of the document. The Revenue did not dispute that the notice was digitally signed on 01.04.2021. The Court therefore held that the Revenue could not proceed under the unamended provisions of Section 148.
The Court noted that the Supreme Court in Union of India & Ors v/s Ashish Agarwal (444 ITR 1) had held that notices issued on or after 01.04.2021 under the unamended Section 148 would be deemed to have been issued under Section 148A as substituted by the Finance Act, 2021 and treated as show cause notices under Section 148A(b). The Supreme Court had also dispensed, as a one-time measure, with the requirement of conducting an enquiry under Section 148A(a) with prior approval in respect of such notices. It further directed that the Assessing Officer should provide the information and material relied upon, pass an order under Section 148A(d) after following the prescribed procedure, and thereafter issue a notice under the substituted Section 148, if warranted. The Supreme Court also clarified that all defences available to the assessee under Section 149, the Finance Act, 2021, and law, as well as the Revenue’s rights, would remain available, and that its decision would govern pending writ petitions involving similar notices.
Following the Supreme Court’s directions, the Bombay High Court directed that the impugned Section 148 notice be treated as a show cause notice under Section 148A(b). It directed the Assessing Officer to provide the petitioner with the information and material relied upon within thirty days, permit the petitioner to respond within two weeks thereafter, and thereafter pass an order under Section 148A(d) before taking any further action under the substituted Section 148. The Court further held that the assessment order dated 29.03.2022 could not survive and accordingly quashed and set it aside. The writ petition was disposed of without any order as to costs.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
1. Respondents waive service. With the consent of the parties, Rule made returnable forthwith and heard finally.
2. The above Writ Petition is filed to quash and set aside the notice dated 31st March 2021 issued under Section 148 of the Income Tax Act, 1961 (for short “ T. Act”) as well as the consequent Assessment Order dated 29th March 2022. The short ground on which the aforesaid notice and the Assessment Order are challenged is that though the notice issued under Section 148 is dated 31st March 2021, the same was issued only on 1st April 2021. If this be the case, then, the re-assessment proceedings cannot continue under the unamended provisions of Section 148 of the I. T. Act and the same would have to comply with the provisions which were brought into effect by the Finance Act of 2021, which came into effect from 1st April 2021.
3. We have perused the papers and proceedings in the above Writ Petition. The impugned notice issued under Section 148 of the I. T. Act can be found at page 56 of the paper book. This notice is dated 31st March 2021. However, on perusing page 56, it is clear that the said notice is digitally signed on 1st April 2021. In fact, there is a note in the very said notice which states that if the notice is digitally signed, the date of digital signature may be taken as the date of the document. The fact that the notice was digitally signed on 1st April 2021 is not disputed by the Revenue. Once this is the case, we find that the Revenue cannot proceed under the unamended provisions of Section 148 of the I. T. Act.
4. We find that this very issue came up for consideration before the Hon’ble Supreme Court in the case of Union of India & Ors v/s Ashish Agarwal (444 ITR 1). In that matter, the Supreme Court inter alia was of the opinion that the notices that have been issued on or after 1st April 2021 shall be deemed to have been issued under Section 148A of the I. T. Act as substituted by the Finance Act, 2021 and treated to be show cause notices in terms of Section 148A(b) of the I. T. Act.
5. The Supreme Court also further directed that the requirement of conducting any enquiry with the prior approval of the specified authority under Section 148A(a), be dispensed with as a one-time measure vis-a-vis those notices which have been issued under Section 148 of the unamended Act from 1st April 2021. The Supreme Court further directed that the Assessing Officer thereafter shall pass an order in terms of Section 148A(d) after following the due procedure as required under Section 148A(b) in respect of each of the concerned Assessees before the Supreme Court.
6. The Supreme Court also clarified that all the defences which may be available to the Assessee under Section 149 and/or which may be available under the Finance Act, 2021, and in law, and whatever rights are available to the Assessing Officer under the Finance Act, 2021 were kept open and/or continued to be available. The Supreme Court also clarified that the order passed in Ashish Agarwal shall also govern all Writ Petitions pending before various High Courts in which similar notices under Section 148 of the I. T. Act [issued on or after 1st April 2021] were under challenge.
7. In light of this authoritative pronouncement of the Hon’ble Supreme Court, we dispose of the above Writ Petition by passing the same directions that were passed by the Hon’ble Supreme Court in Ashish Agarwal’s case. These directions are as under:-
(i) The impugned Section 148 notice issued to the Petitioner under the unamended Section 148 of the I. T. Act shall be deemed to be issued under Section 148A of the I.T. Act as substituted by the Finance Act, 2021 and construed or treated to be a show-cause notice in terms of Section 148A(b). The Assessing Officer shall, within thirty days from today provide to the Petitioner information and material relied upon by the Revenue, so that the Petitioner can reply to the show-cause notice within two weeks thereafter;
(ii) The requirement of conducting any enquiry, if required, with the prior approval of the specified authority under Section 148A(a) is hereby dispensed with as a one-time measure vis-à-vis the notice which have been issued under Section 148 of the unamended Act from 01.04.2021.
(iii) The Assessing Officer shall thereafter pass an order in terms of Section 148A(d) in respect of the Petitioner. Thereafter, after following the procedure as required under Section 148A, the Assessing Officer may issue the notice under Section 148 (as substituted);
(iv) All defences which may be available to the Petitioner including those available under Section 149 of the I. T. Act, and all rights and contentions which may be available to it and the Revenue under the Finance Act, 2021, and in law, shall continue to be available.
8. In light of the aforesaid directions, naturally the impugned Assessment Order dated 29th March 2022 cannot stand and is hereby quashed and set aside.
9. Rule is accordingly made absolute and the Writ Petition is also disposed of in terms thereof. However, there shall be no order as to costs.
10. This order will be digitally signed by the Private Secretary/ Personal Assistant of this Court. All concerned will act on production by fax or email of a digitally signed copy of this order.
