ACIT Vs Anil Kumar Bhikhabhai Virani (Supreme Court of India)
The proceedings arose from a batch of writ petitions before the Gujarat High Court challenging reassessment notices issued under Section 148 of the Income Tax Act, 1961 for Assessment Years 2013-14 and 2014-15. The controversy followed the substitution of Sections 147 to 151 by the Finance Act, 2021 with effect from 01.04.2021, including the introduction of Section 148A. Despite the new regime coming into force, reassessment notices had been issued under the erstwhile provisions between 01.04.2021 and 30.06.2021, relying upon the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) and related notifications.
Following the Supreme Court’s judgment in Union of India vs. Ashish Agarwal, the earlier notices were treated as show-cause notices under Section 148A(b), information and material were supplied to the assessees, replies were filed, orders under Section 148A(d) were passed, and fresh notices under Section 148 were issued. In the petitions forming Batch-I, concerning AY 2013-14, an example recorded in the judgment shows the original Section 148 notice dated 24.06.2021, followed by a Section 148A(b) notice dated 28.05.2022, reply dated 09.06.2022, Section 148A(d) order dated 26.07.2022 and fresh Section 148 notice dated 26.07.2022. Similar proceedings applied to Batch-II concerning AY 2014-15.
The petitioners challenged the reassessment proceedings on several grounds, including limitation, change of opinion, absence of fresh information, and the requirement that escaped income be represented in the form of an asset under Section 149. The High Court heard the petitions specifically on the limitation issue. The petitioners contended that under the first proviso to substituted Section 149(1), the old six-year limitation remained relevant for determining whether reassessment could be initiated. Six years had expired on 31.03.2020 for AY 2013-14 and on 31.03.2021 for AY 2014-15. They argued that TOLA and its notifications could not extend the operation of the repealed provisions beyond 31.03.2021 and that the Supreme Court in Ashish Agarwal had expressly kept the assessees’ defences under Section 149 open.
The Revenue submitted that TOLA and its notifications had extended the limitation for issuing Section 148 notices up to 30.06.2021 and that Ashish Agarwal, exercising powers under Article 142, had made the conversion of the old notices into Section 148A(b) notices applicable PAN India. It contended that the subsequent reassessment proceedings could not therefore be challenged as time-barred.
The Gujarat High Court accepted the limitation challenge. It held that the substituted provisions applied from 01.04.2021 and that the first proviso to Section 149(1) required consideration of whether the notice could have been issued under the earlier limitation provisions. The Court held that, for AYs 2013-14 and 2014-15, the six-year periods had already expired and that the notifications could not extend the operation of the repealed provisions. It specifically declined to endorse the contrary approach adopted by the Delhi High Court in Touchstone Holdings Pvt. Ltd. vs. ITO, stating that that decision proceeded on the premise that the original notice was legally valid and issued within an extended limitation period.
The High Court ultimately held that the notices were barred by limitation and allowed the petitions. It quashed and set aside the notices under Section 148 and the impugned orders under Section 148A(d), expressly stating that the other legal and factual grounds were not examined because the petitions were decided solely on limitation.
The Revenue challenged the High Court’s decision before the Supreme Court. The Supreme Court’s order records that the Special Leave Petition was squarely covered by its judgment dated 03.10.2024 in Union of India & Ors. vs. Rajeev Bansal, Civil Appeal No.8629/2024 etc., reported in 2024 (11) Scale 473. The Supreme Court accordingly disposed of the Revenue’s petition, directed that the assessee would be governed by the reasons discussed in Rajeev Bansal, and directed the Assessing Officers to dispose of the objections in accordance with the law laid down by the Supreme Court. It further preserved the assessee’s right to pursue available rights and remedies, except on issues concluded by that judgment. Pending applications, if any, were disposed of.
Thus, the Supreme Court did not independently reproduce reasoning on the limitation controversy in this order; instead, it disposed of the Revenue’s petition by applying Rajeev Bansal. The High Court judgment, which had quashed the reassessment notices and Section 148A(d) orders on limitation, therefore stood subject to the Supreme Court’s directions and the reasons governing the matter under Rajeev Bansal.
Cases Discussed
- Union of India & Ors. vs. Rajeev Bansal (Supreme Court), 2024 (11) Scale 473
- Union of India vs. Ashish Agarwal (Supreme Court), (2022) 444 ITR 1 (SC)
- Tata Communications Transformation Services Ltd. vs. ITO (Bombay High Court), (2022) 137 taxmann.com 2 (Bombay)
- Sudesh Taneja vs. Income-tax Officer, Ward-1(3), Jaipur (Rajasthan High Court), (2022) 135 taxmann.com 5 (Rajasthan)
- Mon Mohan Kohli vs. Assistant Commissioner of Income-tax (Delhi High Court), 2021 133 taxmann.com 166 (Delhi)
- Touchstone Holdings Pvt. Ltd. vs. ITO (Delhi High Court), WPC 13102 of 2022 dated 09.09.2022
- Ashok Kumar Agarwal vs. Union of India (Allahabad High Court), (2021) 131 taxmann.com 22 (Allahabad)
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
1. Delay condoned.
2. This Special Leave Petition(s) is squarely covered by the Judgment of this Court rendered on 3-10-2024 in “Union of India & Ors. vs. Rajeev Bansal” (Civil Appeal No.8629/2024 etc.) 2024 (11) Scale 473.
3. In view of the above, the petition(s) filed by the Revenue is disposed of. The assessee will be governed by reasons discussed in the said Judgment.
4. The assessing officers will dispose of the objections in terms of the law laid down by this Court. Thereafter, the assessee who is aggrieved will be at liberty to pursue all the rights and remedies in accordance with law, save and except for the issues which have been concluded in the Judgment.
5. Pending application(s), if any, stands disposed of.
