Arjun Sahu Vs ACIT (Allahabad High Court)
The Allahabad High Court heard four connected writ petitions filed by Arjun Sahu, Syed Quamer Abbas Zaidy, Shashi Kiran, and Nikhil Nirwal, all challenging reassessment proceedings initiated under Section 148 of the Income Tax Act, 1961. The petitioners contended that the reassessment notices were issued after the Finance Act (No. 2) of 2024, which introduced amendments to Section 148-A effective from 1 September 2024, mandating that taxpayers be given an opportunity to respond before reassessment proceedings are initiated.
The petitioners argued that no material indicating escapement of income had been found against them and that they had not been given an opportunity to contest the initiation of reassessment. They claimed that no incriminating material was discovered during the search proceedings relevant to them, rendering the proceedings jurisdictionally invalid.
The Revenue countered that the amended Section 148-A provisions did not apply to searches conducted before 1 September 2024. Since the searches in question occurred prior to that date, the Assessing Officer was not legally required to provide an opportunity to the assessees before initiating reassessment. The Revenue maintained that the assessees could challenge any issues during the ongoing proceedings after filing their returns.
The Court, however, held that the Revenue’s objection was hyper-technical. Even before the statutory insertion of Section 148-A, the *Supreme Court in GKN Driveshafts (India) Ltd. v. ITO (2003) 259 ITR 19) had established a binding principle requiring the Assessing Officer to provide the assessee with reasons for reopening assessment and an opportunity to object before proceeding further. The High Court emphasized that this principle remains valid under Article 141 of the Constitution, unaffected by the subsequent amendments.
