Union of India Vs Ashish Agarwal (Supreme Court)
Summary: In Union of India & Ors. v. Ashish Agarwal & Ors., the Supreme Court partly allowed the Revenue’s appeals concerning approximately 90,000 reassessment notices issued under the erstwhile Section 148 of the Income-tax Act, 1961 after the substituted reassessment regime took effect on 1 April 2021. Agreeing with the High Courts that the new Sections 147 to 151 applied from that date, the Court held that the Revenue should have followed the new procedure, including the safeguards under Section 148A. However, noting that the officers had acted under a bona fide mistake in light of extensions granted under the Relaxation Act, 2020, the Court exercised its powers under Article 142 of the Constitution to preserve the proceedings. It directed that the old-regime notices issued from 1 April 2021 until the date of judgment—including those already quashed—be treated as show-cause notices under Section 148A(b). Assessing Officers were to provide the relied-upon information and material within 30 days, allow assessees two weeks to respond, and then pass orders under Section 148A(d) before issuing any fresh notice under Section 148. For this one-time measure, the prior-approval enquiry under Section 148A(a) was dispensed with. Assessees’ defences under Section 149, the Finance Act, 2021 and other applicable law, along with the Revenue’s corresponding contentions, were kept open. The directions applied pan-India, modified similar High Court judgments whether or not challenged before the Supreme Court, and governed pending writ petitions concerning comparable notices.
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