Hon’ble Supreme Court in the case of Union of India & Ors. Vs Ashish Agarwal held that notices issued under section 148 of Income-tax Act, 1961 between 1st April,2021 to 30th June, 2021 deemed to be issued under section 148A.
Introduction:
The Finance Act, 2021 has changed the regime of reassessment by introducing section 148A of the Income-tax Act, 1961 (“the Act”) with effect from 01st April, 2021.
However, on account of the nationwide pandemic, The Taxation and Other Laws (Relaxation of Certain Provisions) Act, 2020, extended the last date for issuance of notice under section 148, i.e., the erstwhile reassessment regime till 30th June, 2021.
Validity of Notices issued under section 148 between 1st April, 2021 to 30th June, 2021:
The issue of validity of notices issued between April 01, 2021 and June 30, 2021 has been a subject matter of major litigation in the past year. Large number of writ petitions were filed across the country, challenging the constitutional validity of the notices issued under section 148 of the Act.
Various High Courts had quashed reassessment notices issued under section 148 of the Act between 1st April,2021 to 30th June, 2021, on the ground that the same is bad in law in view of the new reassessment procedure
Hon’ble Supreme Court authenticates Section 148 notices issued after 31st March 2021
The Revenue has filed a Special Leave Petition before the Hon’ble Supreme Court against the order of the Hon’ble Allahabad High Court.
The Hon’ble Supreme Court modified the judgments passed by the respective High Courts and held as under:
I. SC Modified following aspects of the HC order as follows:
(a) The impugned notices issued under section 148 of the Act shall be deemed to have been issued u/s. 148A and has to be treated as show cause notices in terms of section 148A(b).
(b) AO shall within thirty days from 04th May 2022, provide to the assessee the information and material relied upon by the Revenue for initiating reassessment proceedings.
(c) After receipt of information, the assessee has to reply to the notices within two weeks from the date of receipt of information and material relied upon by the Revenue.
(d) The requirement of conducting enquiry u/s. 148A(a) is dispensed with as a onetime measure with respect to those notices which have been issued under Section 148 of the un-amended Act from 01.04.2021 till date, including those which have been quashed by the High Courts;
(e) AO shall thereafter pass an order in terms of section 148A(d). Then, after following the procedure as required under section 148A AO may issue notice under section 148 of the Act.
(f) All the defences which may be available to the assessee u/s 149 and all rights and contention which may be available to the assessee and Revenue under the Finance Act, 2021 and in any other law shall continue to be available.
II. Hon’ble Supreme Court also held that:
(a) The order shall be applicable PAN INDIA.
(b) All judgments and orders passed by different High Courts on the issue and under which similar notices were issued under section 148 of the Act after 01.04.2021 are set aside and shall be governed by the present order and shall stand modified to the aforesaid extent.
(c) The order is passed in exercise of powers under Article142 of the Constitution of India so as to avoid any further appeals by the Revenue on the very issue by challenging similar judgments and orders
Author Bio
Own Observations (Critique):
Me, for one, – going by own limited understanding of the legal principles the matter entails,- for one thought (rather have been thinking/ of firm conviction, rightly or otherwise, so far) that the court’s power is confined to give its opinion only to rule on the constitutional propriety (vires ), if so questioned, of any deeming provision in a legislative enactment ?!?
Premised so, the Judgment makes for a strikingly clean departure and seemingly runs counter to the well established principles of ‘justice’.
The point made /had in mind is to the effect that it is not within the powers of adjudication or interpretation (inherent or otherwise) of courts, not barring the apex court, to indulge in any ‘deeming’.
Attention is invited to Palkhivala’s Text Book commentary on the proposition, – “Legal Fiction can neither be indulged in by courts nor can be created by an administrative order” and the case law cited in support.
Further, in the instant case, in so indulging in ‘deeming’, quite a few of the well settled/long established principles/rules of interpretation, as enunciated in decided cases, for serving as aids unto selves, have been glossed over.
Moreover, the legal significance of ‘ EFFECTIVE DATE’ as prescribed by the legislature (herein it is April 1, 2021) seems to have been simply wished away or grossly oversighted.
Last but not least, there is no clue /way to know, in the absence of any clear mention, whether at all the representing counsel (s) had, during the proceedings, any indication even remotely or an inkling to get to know substance or the manner in which / grounds on which the Bench intended to pronounce its Ruling. So that counsel (s) for taxpayers (in the cases covered in the Judgment) had an opportunity to have suitably addressed and countered on inter alia the afore mentioned clinching aspects.
For a detailed discussion covering those aspects/ mentioned general propositions , suggest to go through the two published Articles of relevance, –
1. https://taxguru.in/income-tax/law-and-vs-case-law-on-flats-a-critical-study.html
2. [2008] 173 TAXMAN pg. 80 (Mag)
In the instant case, though the matter has been decided by a 2 -Member Bench, having due regard to the spate of genuine controversies given rise to by, and the far-reaching consequences of a very serious nature the Judgment is potent with, there may be, in own perspective, a good scope for justifiably moving and having the matter finally decided by a larger or the largest Bench, thereby avoiding and saving the enormous cost , -to both taxpayers and the government,- of the otherwise inevitable procrastination and prolongation of the litigation.
OVER/BacK to >>>
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