Anindita Sengupta Vs ACIT (Delhi High Court)
he Delhi High Court, in the case of Anindita Sengupta Vs ACIT, addressed the interpretation and application of the Supreme Court’s decision in Union of India v. Ashish Agarwal. The core issue was whether the Ashish Agarwal judgment mandated the reopening of income tax reassessment proceedings that had already been concluded, particularly those initiated under the pre-amended Income Tax Act provisions before the Finance Act, 2021 amendments took effect on April 1, 2021.
The court recalled that the Ashish Agarwal judgment aimed to strike a balance between the Income Tax Department’s right to reassess escaped income and protecting assessees’ interests. The Supreme Court had acknowledged that while High Courts correctly held that notices issued after April 1, 2021, should follow the new procedure (Sections 147-151 as amended), the Department had operated under a bona fide mistaken belief that the old regime continued. To prevent the Revenue from being left remediless, especially where High Courts had quashed notices without allowing further action, the Supreme Court invoked Article 142 of the Constitution. It deemed the notices issued under the old Section 148 between April 1, 2021, and June 30, 2022, as notices under the new Section 148A(b), requiring the Assessing Officers (AOs) to follow the subsequent procedure outlined in Section 148A.
However, the Delhi High Court firmly opined that the Ashish Agarwal decision was intended to apply only to proceedings that were still pending and had not attained finality at the time of the judgment. The High Court reasoned that the Supreme Court’s direction to treat the old notices as show cause notices under Section 148A(b) and allowing AOs to proceed further under Section 148A(d) inherently applied to ongoing, not concluded, matters. The objective was to salvage the process of reassessment where notices were challenged on procedural grounds related to the applicability of the Finance Act, 2021 amendments, not to undo assessments that had already been completed.
The High Court highlighted that the petitioner, Anindita Sengupta, had not initially challenged the validity of the original notice on the grounds debated in Ashish Agarwal (i.e., the use of the unamended provisions). Instead, she contested the reassessment on its merits, and the proceedings related to her case had concluded before the Ashish Agarwal judgment was delivered. Furthermore, citing the Constitution Bench decision in High Court Bar Association, the court observed that directions under Article 142 should not annul substantive rights or benefits validly accrued to litigants, especially those not party to the original dispute addressed by the Supreme Court. Reopening a concluded assessment would violate this principle.
Consequently, the Delhi High Court ruled in favour of the petitioner. It concluded that the Ashish Agarwal judgment did not provide justification for reopening assessments that were already finalized prior to its pronouncement, particularly where the assessee had not contested the initial proceedings on the procedural grounds addressed by the Supreme Court. The court quashed the fresh show cause notice under Section 148A(b), the subsequent order under Section 148A(d), and the Section 148 notice issued to the petitioner following the Ashish Agarwal decision, thereby preventing the reopening of her concluded assessment.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
