Pravin Bhati Vs ITO (Bombay High Court)
Bombay High Court heard a batch of petitions challenging the validity of notices issued under Section 148 of the Income Tax Act, 1961. These notices were issued for various dates pertaining to assessment years prior to 2023–24. The petitioners sought an interim stay on the operation of these reassessment notices, alleging that the proceedings were not in conformity with the legal framework introduced by the Finance Act, 2021.
The primary contention of the petitioners was that the entire reassessment procedure had undergone a transformation effective from 1 April 2021, when Sections 147 to 151 of the Act were substituted by the Finance Act, 2021. According to the petitioners, any reassessment proceedings initiated on or after 1 April 2021 must strictly comply with the new statutory provisions. The impugned notices, they contended, were issued contrary to this amended legal scheme and were therefore invalid.
The petitioners also argued that the reassessment process, as redefined by the 2021 amendments, contains two mandatory requirements:
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All reassessment proceedings must be carried out in a faceless manner; and
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The issuance of notices must adhere to the Faceless Jurisdiction of the Income Tax Authorities Scheme, 2022, and the Reassessment of Income Escaping Assessment Scheme, 2022.
Since the impugned notices were not issued through the faceless mechanism prescribed under these schemes, the petitioners claimed that the Revenue had failed to comply with the statutory mandate, rendering the proceedings unlawful.
During the hearing, the Court noted that all petitions raised an identical legal question, though the dates of notice issuance and assessment years varied from case to case. Representing the petitioners, Ms. Pawar drew the Court’s attention to a previous order passed by a Division Bench of the Bombay High Court at its Principal Seat in J.D. Printers (P) Ltd. v. Income Tax Officer. In that case, the Bench headed by Justice G.S. Kulkarni had referred to earlier judgments, particularly the decision in Hexaware Technologies Ltd. v. Assistant CIT [(2024) 162 Taxmann.com 225 (Bom.)], where similar reassessment notices had been challenged.
In Hexaware Technologies, the Division Bench had granted a stay on reassessment notices issued under Section 148, observing that the reassessment process post–Finance Act 2021 must align with the amended provisions. The Revenue subsequently challenged this decision before the Supreme Court, and the matter is currently pending before the Apex Court.
Referring to this development, the counsel for the petitioners requested that similar interim relief be extended in the present batch of petitions until the Supreme Court renders its decision.
Counsel for the Revenue, Ms. Linhares, did not dispute the factual position presented by the petitioners and acknowledged that the legal issue raised in these petitions was substantially similar to those pending before the Supreme Court.
After hearing both sides, the Division Bench observed that, since the legal question regarding the validity of post–Finance Act 2021 reassessment notices is already under consideration before the Supreme Court, it would be appropriate to maintain judicial consistency with prior orders passed by coordinate Benches of the Court. Accordingly, the Bench deemed it fit to issue the following directions:
