Sooriya Hospital Vs DCIT (Madras High Court)
The Madras High Court considered a writ petition in the second round of litigation concerning the validity of reassessment proceedings initiated under the Income-tax Act, 1961. Earlier, the petitioner had been issued a notice under Section 148 under the unamended provisions applicable till 31 March 2021. The petitioner had challenged the jurisdiction of the assessing officer in issuing that notice.
By a common order dated 4 February 2022, a Division Bench of the Madras High Court quashed such reassessment notices issued on or after 1 April 2021 under the unamended provisions. The Court followed the views of the Allahabad and Delhi High Courts and held that reassessment notices issued after 1 April 2021 must comply with the amended provisions introduced by the Finance Act, 2021. However, liberty was granted to the assessing authorities to initiate reassessment proceedings afresh under the amended law, subject to compliance with statutory requirements and surviving limitation.
Subsequently, the Supreme Court delivered its decision in Union of India v. Ashish Agarwal on 4 May 2022. The Supreme Court modified the High Court orders and held that reassessment notices issued under the unamended Section 148 between 1 April 2021 and 30 June 2021 would be deemed to have been issued under Section 148A(b) of the amended Act. The assessing officers were directed to provide information and material relied upon, allow the assessees to respond, and thereafter pass orders under Section 148A(d), while preserving all defences available to the assessees, including limitation under Section 149.
