SC Judgment on Section 148 Notices – Using Missile where Rifle could have sufficed

Yogesh S. Limaye 08 May 2022 3,009 Views 0 comment Print Income Tax | Articles

Objective

Author, in this article, analyses the decision of Supreme Court in the matter of Ashish Agarwal Vs. UOI dated 4-May-2022 against order of Allahabad High Court in the case of WP No. 524/2021 dated 30-09-2021.

Though now an academic one the author is of an opinion that,

1) the same relief could have been given by other ways and means without invoking article 142 of the Constitution of India. Hence the title.

2) The observation of Supreme court in para 8 that the revenue is remediless is incorrect.

Take Away Points

Apparently, like T-20 cricket, Supreme court was in a hurry to achieve the results and in achieving the objective, the manner or the process got compromised. Supreme court has used all the shots like “upper cut”, “scoop shot”, “palti shot”, “reverse sweep” which though not illegal might not be necessary.

1) Firstly, the leeway was available to the Revenue and this additional concession was completely uncalled for.

2) Secondly, the conditions precedent before issuing notice u/s 148 on or before 31-3-2021 and those on or after 1-04-2021 are different, for old section 148, there was a qualitative criterion i.e. “reason to believe” where application of mind of AO was required. For new section 148, what is required is “information”

3) Thirdly, there is not even a whisper about the lone dissenting decision in the case of Palak Khatuja V/s. Union of India and Ors. by Jharkhand High Court.

4) Fourthly, evenif undisclosed income upto 50 lakhs is found, the same now cannot be assessed to income as section 148A does not permit it.

5) Fifthly, the observation of the Apex court that the notices were issued under bonafide mistake itself is an assumption which has lead the court to grant a leeway (uncalled for) to the revenue itself is an assumption.

6) Sixthly, because now notices issued under section 148 are deemed to be notices under section 148A, they cease to be notices under section 148. It means that, the Dept will have to follow the timeline given by the court of one month for issue of notices and two weeks time for respondent to respond to that notice. These timelines itself are in contradiction with the timelines given in section 149.

7) Seventhly, only the judgement of Allahabad High Court was challenged and supreme court has sealed the fate of all the citizens of India. In such a case, others were not even heard in this matter.

8) Eighthly, the supreme court accepted that the revenue officers were at fault in issuing notice(s) under old section 148.

9) Ninthly, there is a passing observation that there was a consensus among the lawyers of applicants and respondents. But the order does not appear to be a decree with the consent of both the parties.

10) Tenthly and lastly, when the supreme court acknowledged that it was mistake of revenue officers in issuing the notices under old section 148, the plan of Revenue to file appeal in 90,000 or 70,000 cases amounts to blackmailing the Court. They have expressly protected those who were going to file frivolous appeals.

Invoking Article 142 in Income Tax matters

Mafatlal Industries Ltd v UOI civil appeal 3255 of 1984 – A judgement under the Central Excise Act, 1944. Though this judgement was not directly on any provision of Income Tax Act, 1961, there were implications under Income Tax Act and the power of article 142 was used to have the effect of the judgement prospectively. IT was on the principle of unjust enrichment.

Secondly, in the case of B.C. Chaturvedi vs Union Of India And Ors on 1996 AIR 484, 1995 SCC (6) 749 dated 1 November, 1995 though not on the issue of taxation but clarified that even high court have the powers of article 142.

This decision will go a long way to be treated as an aberration in the judicial wisdom.

Structure-:

The article gives authors own analysis. This article is based on a judicial pronouncement and is divided into following parts.

Part – I – case in brief	PART – II – case in detail

Citation of the case	Facts of the case
Facts of the case	Decision of SC in a nutshell
Question posed	Invoking power under article 142
Answer	Power under article 142
	Incorrect observations
	Consequences / conclusions

PART – I Case in brief

The purpose of Part I is to create awareness among the readers about the SC decision.

Citation of the case

Supreme Court Decision in the case of UOI Vs. Ashish Agarwal CIVIL APPEAL NO. 3005/2022 dated 4-May-2022 arising out of decision of Ashok Kumar Agarwal Vs. UOI 524/2021 dated 30-09-2021

Facts of the case

Parliament, in its wisdom, amended the scheme of re-assessment vide the Finance Act, 2021.

Later In pursuance to the power vested under section 3 of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (the Relaxation Act, 2020), the Central Government issued following Notifications inter-alia extending the time-lines prescribed under section 149 for issuance of reassessment notices under section 148 of the Income Tax Act, 1961:

Date of Notification	Original limitation for issuance of notice u/s 148 of the Act	Extended Limitation	The Explanations to the Notifications dated 31st March, 2021 and 27th April, 2021 issued under section 3 of the Relaxation Act, 2020 also stipulated that the provisions, as they existed prior to the amendment by the Finance Act, 2021, shall apply to the reassessment proceedings initiated thereunder. The Parliament introduced reformative changes to Sections 147 to 151 of the Income Tax Act, 1961 governing reassessment proceedings by way of the Finance Act, 2021, which was passed on 28th March, 2021. The substituted sections 147 to 149 and section 151 applicable w.e.f. 01.04.2021, passed in the Finance Act, 2021, are as under: –
31.03.2020	20.03.2020 to 29.06.2020	30.06.2020
24.06.2020	20.03.2020 to 31.12.2020	31.03.2021
31.03.2021	31.03.2021	30.04.2021
27.04.2021	30.04.2021	30.06.2021

The amendments made by the Finance Act, 2021 are given in Annexure in a comparative format i.e. what was the position before amendment (old regime) and the actual amendments (new regime).

Questions posed

The validity of notification u/s 3 of relaxation Act for this period of 01-04-2021 to 30-06-2021 was under challenge. The consequentially the fate of over 90,000 (or more?) reassessment notices was under challenge.

Answer

Supreme Court ruled that the notices issued in these 3 months under old section 148 be treated as notices u/s 148A(b) of the Act as per the new regime and all the re-assessments be made as per new regime.

PART – II – case in detail

Facts of the case

The facts given above, including Annexure A are good enough. If one really wants to go deep in the facts, it is recommended to refer the judgement of Delhi HC in the case of Mon Mohan Kohli Vs. ACIT with WP No. 6176/2021 dated 15-Dec-2021.

Decision of SC in a nutshell

The common judgment and order passed by the Allahabad High Court is the subject matter of the present appeals. Shri N. Venkataraman, learned ASG, stated at the bar that the Revenue is contemplating to prefer appeals against the similar judgments and orders passed by various High Courts.

However, as the issue is common and there will be multiplicity of the proceedings and to lessen the burden of this Court and for the reasons stated hereinbelow, as we propose to pass an order in exercise of powers under Article 142 of the Constitution of India the present order shall govern all the other judgments and orders passed by various High Courts on the similar issue. Hence, we observe that the Revenue need not file separate individual appeals which may be more than 9000 in numbers.

…
…

Sl. No.	Name of the case	Hon’ble High Court	Writ. Tax No.	Date of judgement

1	Ashok Kumar Agarwal Vs. UOI	Allahabad	524/2021	30-09-2021
2	Bpip Infra Pvt. Ltd. Vs. Income Tax Officer & Others	Rajasthan	13297/2021	25.11.2021
3	Mon Mohan Kohli Vs. ACIT	Delhi	6176/2021	15-12-2021
4	Bagaria Properties & Investment Pvt. Ltd. Vs. UOI	Calcutta	244/2021	17.01.2022
5	Manoj Jain Vs. UOI	Calcutta	11950/2021	17-01-2022
6	Sudesh Taneja Vs. ITO	Rajasthan	969/2022	27-1-2022
7	Vellore Institute of Technology Vs. CBDT	Madras	15019/2021	04-02-2022
8	Tata Communications Transformation Services Vs. ACIT	Bombay	1334/2021	29-03-2022

Thus, the new provisions substituted by the Finance Act, 2021 being remedial and benevolent in nature and substituted with a specific aim and object to protect the rights and interest of the assessee as well as and the same being in public interest, the respective High Courts have rightly held that the benefit of new provisions shall be made available even in respect of the proceedings relating to past assessment years, provided section 148 notice has been issued on or after 1st April, 2021. We are in complete agreement with the view taken by the various High Courts in holding so.

8. However, at the same time, the judgments of the several High Courts would result in no reassessment proceedings at all, even if the same are permissible under the Finance Act, 2021 and as per substituted sections 147 to 151 of the IT Act. The Revenue cannot be made remediless and the object and purpose of reassessment proceedings cannot be frustrated.

It is true that due to a bonafide mistake and in view of subsequent extension of time vide various notifications, the Revenue issued the impugned notices under section 148 after the amendment was enforced w.e.f. 01.04.2021, under the unamended section 148. In our view the same ought not to have been issued under the unamended Act and ought to have been issued under the substituted provisions of sections 147 to 151 of the IT Act as per the Finance Act, 2021. There appears to be genuine non-application of the amendments as the officers of the Revenue may have been under a bonafide belief that the amendments may not yet have been enforced. Therefore, we are of the opinion that some leeway must be shown in that regard which the High Courts could have done so.

Therefore, instead of quashing and setting aside the reassessment notices issued under the unamended provision of IT Act, the High Courts ought to have passed an order construing the notices issued under unamended Act / unamended provision of the IT Act as those deemed to have been issued under section 148A of the IT Act as per the new provision section 148A and the Revenue ought to have been permitted to proceed further with the reassessment proceedings as per the substituted provisions of sections 147 to 151 of the IT Act as per the Finance Act, 2021, subject to compliance of all the procedural requirements and the defenses, which may be available to the assessee under the substituted provisions of sections 147 to 151 of the IT Act and which may be available under the Finance Act, 2021 and in law. Therefore, we propose to modify the judgments and orders passed by the respective High Courts as under: –

(i) The respective impugned section 148 notices issued to the respective assessees shall be deemed to have been issued under section 148A of the IT Act as substituted by the Finance Act, 2021 and treated to be show-cause notices in terms of section 148A(b). The respective assessing officers shall within thirty days from today provide to the assessees the information and material relied upon by the Revenue so that the assessees can reply to the notices within two weeks thereafter;

(ii) The requirement of conducting any enquiry with the prior approval of the specified authority under section 148A(a) be dispensed with as a one-time measure vis-à-vis those notices which have been issued under Section 148 of the unamended Act from 01.04.2021 till date, including those which have been quashed by the High Courts;

(iii) The assessing officers shall thereafter pass an order in terms of section 148A(d) after following the due procedure as required under section 148A(b) in respect of each of the concerned assessees;

(iv) All the defenses which may be available to the assessee under section 149 and/or which may be available under the Finance Act, 2021 and in law and whatever rights are available to the Assessing Officer under the Finance Act, 2021 are kept open and/or shall continue to be available and;

9. The present order shall substitute/modify respective judgments and orders passed by the respective High Courts quashing the similar notices issued under unamended section 148 of the IT Act irrespective of whether they have been assailed before this Court or not. There is a broad consensus on the aforesaid aspects amongst the learned ASG appearing on behalf of the Revenue and the learned Senior Advocates/learned counsel appearing on behalf of the respective assessees’. We are also of the opinion that if the aforesaid order is passed, it will strike a balance between the rights of the Revenue as well as the respective assesses as because of a bonafide belief of the officers of the Revenue in issuing approximately 90000 such notices, the Revenue may not suffer as ultimately it is the public exchequer which would suffer.

Therefore, we have proposed to pass the present order with a view avoiding filing of further appeals before this Court and burden this Court with approximately 9000 appeals against the similar judgments and orders passed by the various High Courts, the particulars of some of which are referred to hereinabove. We have also proposed to pass the aforesaid order in exercise of our powers under Article 142 of the Constitution of India by holding that the present order shall govern, not only the impugned judgments and orders passed by the High Court of Judicature at Allahabad, but shall also be made applicable in respect of the similar judgments and orders passed by various High Courts across the country and therefore the present order shall be applicable to PAN INDIA.

Operative Part of the order

10. In view of the above and for the reasons stated above, the present Appeals are ALLOWED IN PART. The impugned common judgments and orders passed by the High Court of Judicature at Allahabad in W.T. No. 524/2021 and other allied tax appeals/petitions, is/are hereby modified and substituted as under: –

(i) The impugned section 148 notices issued to the respective assessees which were issued under unamended section 148 of the IT Act, which were the subject matter of writ petitions before the various respective High Courts shall be deemed to have been issued under section 148A of the IT Act as substituted by the Finance Act, 2021 and construed or treated to be show-cause notices in terms of section 148A(b). The assessing officer shall, within thirty days from today provide to the respective assessees information and material relied upon by the Revenue, so that the assesees can reply to the show-cause notices within two weeks thereafter;

(ii) The requirement of conducting any enquiry, if required, with the prior approval of specified authority under section 148A(a) is hereby dispensed with as a one-time measure vis-à-vis those notices which have been issued under section 148 of the unamended Act from 01.04.2021 till date, including those which have been quashed by the High Courts.

Even otherwise as observed hereinabove holding any enquiry with the prior approval of specified authority is not mandatory but it is for the concerned Assessing Officers to hold any enquiry, if required;

(iii) The assessing officers shall thereafter pass orders in terms of section 148A(d) in respect of each of the concerned assessees; Thereafter after following the procedure as required under section 148A may issue notice under section 148 (as substituted);

(iv) All defenses which may be available to the assesses including those available under section 149 of the IT Act and all rights and contentions which may be available to the concerned assessees and Revenue under the Finance Act, 2021 and in law shall continue to be available.

11. The present order shall be applicable PAN INDIA and all judgments and orders passed by different High Courts on the issue and under which similar notices which were issued after 01.04.2021 issued under section 148 of the Act are set aside and shall be governed by the present order and shall stand modified to the aforesaid extent. The present order is passed in exercise of powers under Article 142 of the Constitution of India so as to avoid any further appeals by the Revenue on the very issue by challenging similar judgments and orders, with a view not to burden this Court with approximately 9000 appeals. We also observe that present order shall also govern the pending writ petitions, pending before various High Courts in which similar notices under Section 148 of the Act issued after 01.04.2021 are under challenge.

12. The impugned common judgments and orders passed by the High Court of Allahabad and the similar judgments and orders passed by various High Courts, more particularly, the respective judgments and orders passed by the various High Courts particulars of which are mentioned hereinabove, shall stand modified/substituted to the aforesaid extent only.

All these appeals are accordingly partly allowed to the aforesaid extent.

In the facts of the case, there shall be no order as to costs.

Emphasis supplied by Paragraph heading, underline, italics, bold.

The author has two points, firstly being, the observations of SC especially in para 8 are not fully correct and secondly invoking of article 142 could have been avoided.

Invoking power under article 142

Observation of Supreme Court

Re-drafted Paragraph

The present order is passed in exercise of powers under Article 142 of the Constitution of India

so as to avoid any further appeals by the Revenue on the very issue by challenging similar judgments and orders, with a view not to burden this Court with approximately 9000 appeals. We also observe that present order shall also govern the pending writ petitions, pending before various High Courts in which similar notices under Section 148 of the Act issued after 01.04.2021 are under challenge.

Attention is drawn to article – of constitution of India that order of SC is law of land.

Power under article 142

The shortest definition of power is “Power is Liability”. Article 142 of Constitution of India practically hands over a nuclear weapon to Supreme Court

Article 142 in Constitution of India

“142. Enforcement of decrees and orders of Supreme Court and unless as to discovery, etc.-

(1) The Supreme Court in the exercise of its jurisdiction may pass such decree or make such order as is necessary for doing complete justice in any cause or matter pending before it, and any decree so passed or orders so made shall be enforceable throughout the territory of India in such manner as may be prescribed by or under any law made by Parliament and, until provision in that behalf is so made, in such manner as the President may by order prescribe.

(2) Subject to the provisions of any law made in this behalf by Parliament, the Supreme Court shall, as respects the whole of the territory of India, have all and every power to make any order for the purpose of securing the attendance of any person, the discovery or production of any documents, or the investigation or punishment of any contempt of itself.”

Looking at the history, it appears that the Supreme Court believes that usage of article 142 is necessary to intervene in complex cases related to the environment, history and religion and the current laws were insufficient for the current scenario. Consider two examples and observations of the Supreme Court.

In view of above, SC could have achieved the same benevolent objective without invoking article 142.

Refer — where the question for adjudication was framed

Ayodhya Case	UNION CARBIDE CASE (BHOPAL GAS TRAGEDY)

The Hon’ble Supreme Court has recently invoked this article while passing a unanimous judgment on Ayodhya case wherein the bench handed over the disputed land of 2.77 acres to a trust to be formed by the central government within three months for the construction of a temple, under the Acquisition of Certain Area at Ayodhya Act, 1993. Another 5 acres of land was allotted for the construction of a mosque in Ayodhya.	In 1989, the Hon’ble Supreme Court invoked Article 142 during the infamous case of Union Carbide and provided relief to the thousands of people who were affected during the black night of Bhopal Gas Tragedy. In the said judgment, the Hon’ble Supreme Court while awarding the compensation of $470 million to victims observed that to do “complete justice” it could even override the laws made by Parliament. The specific part of the judgment is hereunder:
In the said case the Hon’ble Supreme Court described its power under Article 142 – “The phrase ‘is necessary for doing complete justice’ is of a wide amplitude and encompasses a power of equity which is employed when the strict application of the law is inadequate to produce a just outcome. The demands of justice require a close attention not just to positive law but also to the silences of positive law to find within its interstices, a solution that is equitable and just. The legal enterprise is premised on the application of generally worded laws to the specifics of a case before courts.”	“prohibitions or limitations or provisions contained in ordinary laws cannot, ipso facto, act as prohibitions or limitations on the constitutional powers under Article 142……..But we think that such prohibition should also be shown to be based on some underlying fundamental and general issues of public policy and not merely incidental to a particular statutory scheme or pattern. It will again be wholly incorrect to say that powers under Article 142 are subject to such express statutory prohibitions. That would convey the idea that statutory provisions override a constitutional provision. Perhaps, the proper way of expressing the idea is that in exercising powers under Article 142 and in assessing the needs of ―”complete justice” of a cause or matter, the apex Court will take note of the express prohibitions in any substantive statutory provision based on some fundamental principles of public policy and regulate the exercise of its power and discretion accordingly. The proposition does not relate to the powers of the Court under Article 142, but only to what is or is not ‘complete justice‘ of a cause or matter and in the ultimate analysis of the propriety of the exercise of the power. No question of lack of jurisdiction or of nullity can arise.”

Incorrect observations

The portion high-lighted is the problem area for the author. The same is addressed in a para-phrased manner.

Observation of Supreme Court	Preliminary Response of the author

The Revenue cannot be made remediless and the object and purpose of reassessment proceedings cannot be frustrated.	The Revenue was not, at all, remediless and the object and purpose of reassessment proceedings cannot be frustrated.
It is true that due to a bonafide mistake and in view of subsequent extension of time vide various notifications, the Revenue issued the impugned notices under section 148 after the amendment was enforced w.e.f. 01.04.2021, under the unamended section 148. In our view the same ought not to have been issued under the unamended Act and ought to have been issued under the substituted provisions of sections 147 to 151 of the IT Act as per the Finance Act, 2021.	Prima facie, by itself, there was no source to identify whether the notice is sent under old section 148 or new section 148. It will have to be deducted that because a show case u/s 148A has not been received, it must be a notice under old section 148. This only was the prayer of the assessees who were served with notices under old section 148.
There appears to be genuine non-application of the amendments as the officers of the Revenue may have been under a bonafide belief that the amendments may not yet have been enforced.	The author is in respectful dis-agreement with this assumption. With faceless systems in place, the notices are being issued after checks and balances conducted by the system.
Therefore, we are of the opinion that some leeway must be shown in that regard which the High Courts could have done so. Therefore, instead of quashing and setting aside the reassessment notices issued under the unamended provision of IT Act, the High Courts ought to have passed an order construing the notices issued under unamended Act / unamended provision of the IT Act as those deemed to have been issued under section 148A of the IT Act as per the new provision section 148A and the Revenue ought to have been permitted to proceed further with the reassessment proceedings as per the substituted provisions of sections 147 to 151 of the IT Act as per the Finance Act, 2021,	High Courts indeed granted leeway whereby, notices could very well be issued under new section 148 read with section 148A for very those years. Otherwise also whether old section 148 or new section 148, the notice can-not be issued for AY 2014-15 or for period before that.

Refer last paragraphs of the Decision by Bombay High Court in the case of Tata Communications Transformation Services v ACIT

51 All the impugned notices issued under Section 148 of the Act are quashed and set aside.

52 It will be open to the Assessing Officers concerned to initiate fresh reassessment proceedings in accordance with the relevant provisions of the Act as amended by the Finance Act, 2021 after strictly complying with the provisions of the Act

Refer relevant paragraphs of decision of Delhi High Court in the case of Mon Mohan Kohli Vs. ACIT

52. It is pertinent to mention that the Legislature had even prior to Finance Act, 2021 enhanced/reduced time limit specified in section 149 of the Income-tax Act, 1961, by way of Finance Acts, 1961, 1989, 2001, 2012 and pertinently such enhancement/reduction to the time limit was made effective from different dates of the relevant financial year. A tabular chart showing previous changes to time limits under section 149 is reproduced hereinbelow :—

Amendments to section 149 of the Income-tax Act, 1961

Amending Act	Permissible Time limit (from the end of assessment year) for issuance of notice under section 148	Effective Date of coming into force
Income-tax Act, 1961	-8 years	1-4-1962
	-16 years
	-4 years
Direct Tax Amendment Act, 1987	-4 years	1-4-1989
	-7years
	-10 years
	(All the provisions were substituted)
Finance Act, 2001	-4 years	1-6-2001
	-6 years
	(All the provisions were substituted)
Finance Act, 2012	-4 years	1-7-2012
	-6 years
	-16 years
	(16 years condition has been newly inserted, rest were undisturbed)
Finance Act, 2021	-3 years	1-4-2021
	-10 years
	(All the provisions are substituted)

53. This Court in C.B. Richards Ellis Mauritius Ltd.’s case (supra), while interpreting the applicability of an earlier amendment to section 149 of the Income-tax Act, 1961 vide Finance Act, 2001, whereby the earlier existing time limit of ten years was reduced to six years, has held that the reduced time limit applied with effect from the Finance Act coming into force. The relevant portion of the said judgment is reproduced hereinbelow :—

….

64. The reformative substitutions carried out by the Finance Act, 2021 with effect from 1st April, 2021 can be summarized as under:—

a.	Section 147: The earlier existing concept of income escaping assessment was simplified by substituting a new provision;
b.	Section 148: The provision governing issuance of notice for initiation of reassessment proceedings was substituted with a new provision, inter alia, prohibiting issuance of such notice, (a) in absence of any ‘information’ [as explained in Explanation 1] with the Assessing Officer suggesting escapement of income; (b) in absence of approval from the specified authority & (c) without following the procedure prescribed under section 148A of the Income-tax Act, 1961. Moreover, the said notice issued under section 148 was now required to be served alongwith order passed under section 148A of the Income-tax Act, 1961;
c.	Section 148A: New provision was introduced in the Income-tax Act, 1961, inter alia prescribing, (a) Assessing Officer to conduct inquiry, if required, with prior approval; (b) opportunity of heard to be given to the assessee, with prior approval; (c) Assessing Officer to consider reply of assessee; and (d) order to be passed as to whether it was a fit case for issuance of notice under section 148 of the Income-tax Act, 1961;
d.	Section 149: The provisions governing time limit for issuance of notice under section 148 of the Income-tax Act, 1961 were replaced with new provisions, inter alia, reducing the permissible time limit for issuance of such notice to three years [and ten years only in exceptional cases] and further changing the earlier existing criteria governing such time limit;
e.	Section 151: The earlier existing provision prescribing the sanctioning authorities for issuance of notice under section 148 was replaced with new provisions prescribing the sanctioning authorities for the purposes of sections 148 & 148A; pertinently for issuance of notice after three years from the end of relevant Assessment Year, wherein reopening is permitted in exceptional cases, sanction from the highest level of Income Tax Department is required to be obtained.

65. Based on the aforesaid substituted provisions as well as the speech of Finance Minister and the Memorandum explaining the provisions in the Finance Bill, 2021, it is apparent that the legislative intent behind the aforesaid substitutions/amendments is to reduce the time limit in ordinary cases to three years and to increase the threshold amount of income having escaped assessment to Rs.50 lakhs for invoking extended time limit of ten years is to reduce litigation and compliance burden, remove discretion, impart certainty and promote ease of doing business.

66. This Court is of the opinion that the new provisions are remedial and benevolent provisions which are meant and intended to protect the rights and interests of assessees as well as promote public interest. In Imperial Tobacco Ltd. v. Attorney General [1979] QB 555, Omrod LJ said, ‘The object of all procedural rules is to enable justice to be done between the parties consistently with the public interest’. If the procedural rules are defective, the legal apparatus works less efficiently and the public interest suffers. If legislation is introduced to remedy the defective rule and no one suffers thereby, it is sensible to apply it to pending proceedings.

67. Consequently, this Court is of the view that the Finance Act, 2021 introduces a new regime regarding the procedure to be complied with in respect of the re-opening of an Income-tax assessment and accordingly, the benefit of the new provisions must necessarily be made available even in respect of proceedings relating to past Assessment Years provided, of course, section 148 notice has been issued on or after 1st April, 2021 M.D. Frozen Foods Exports (P.) Ltd. v. Hero Fincorp Ltd. [2017] 86 taxmann.com 92/144 SCL 220 (SC).

…

If the Argument of the Respondents that the Explanation in Notification No. 20 Dated 31st March, 2021 extended the Applicability of old Procedure of Reassessment Beyond 31st March, 2021 is Accepted, the same shall lead to Manifest Arbitrariness and conflict.

74. Further, if the argument of learned counsel for the respondents that the Explanation in Notification No. 20 dated 31st March, 2021 extended the applicability of old procedure of reassessment beyond 31st March, 2021 is accepted the same shall lead to patent arbitrariness since :

a.	during the period from 1st April, 2021 to 30th June, 2021, both old as well as new procedure as enacted by Finance Act, 2021 shall simultaneously operate [more so, since there is no statutory provision deferring the implementation of the new/mandatory procedure];
b.	for example: For A.Ys. 2015-16 to 2017-18 [with limitation upto March, 22 to 24], in case of two identically placed taxpayers (say A & B) with “information” of having asset above Rs.50 lakh, Assessing Officer shall have absolute discretion to choose either the old or the new mechanism;
c.	‘doctrine of election’ normally confers two separate alternative statutory powers/remedies (like sections 154, 147, 263) for same/similar cause, but same provision (section 147) with two opposite procedure for same cause can never be envisaged and shall necessarily lead to manifest arbitrariness and conflict.

75. Also, the new scheme of reassessment provides for a uniform manner of reassessment of two categories of cases, namely, regular reassessments and search/survey cases. Insofar as search/survey cases are concerned, the provisions are clear that the new scheme is to apply where the proceedings are initiated after 1st April, 2021 as Explanation 2 to section 148 states that the Assessing Officer will be deemed to have ‘information’ for the purposes of section 148/148A when search/survey is initiated on or after 1st April, 2021 and the first proviso to section 148A states that the procedure in section 148A will not apply to cases where search/survey is initiated after 1st April, 2021. Also, the second proviso to section 149 states that the new limitation will not apply where search/survey is initiated on or before 1st April, 2021. In fact, the department’s interpretation would also make the provisions relating to search cases completely unworkable. As per sections 153A and 153C, the provisions of these two sections will not apply where search/survey is done after 1st April, 2021. Department contends that the erstwhile law continues to apply from 1st April, 2021 to 30th June, 2021. The erstwhile law on reopening did not cover search/survey cases. Consequently, for the search/survey done from 1st April to 30th June, there can neither be an assessment under section 153A/153C or under 147, which cannot be the case. Further, sections 148, 148A and 149 specifically cover cases where search/survey is done after 1st April, 2021. If department’s interpretation is accepted, this specific date in all three sections will have to be changed and read as 1st July, 2021, which cannot be done. Moreover, as the new provisions seek to bring uniformity between regular reassessments and search/survey cases, it follows that the cut off date for initiation of reassessment proceedings even for regular reassessment is 1st April, 2021.

Consequences / conclusion

Apparently, like T-20 cricket, Supreme court was in a hurry to achieve the results and in achieving the objective the manner or the process got compromised. Supreme court has used all the shots like “upper cut”, “scoop shot”, “palti shot”, “reverse sweep”.

1) Firstly, the leeway was available to the Revenue and this additional concession was completely uncalled for.

3) Thirdly, there is not even a whisper about the lone dissenting decision in the case of Palak Khatuja V/s. Union of India and Ors. by Jharkhand High Court.

4) Fourthly, evenif undisclosed income upto 50 lakhs is found, the same now can not be assessed to income as section 148A does not permit it.

5) Fifthly, the observation of the Apex court that the notices were issued under bonafide mistake itself is an assumption which has lead the court to grant a leeway (uncalled for) to the revenue.

7) Seventhly, only the judgement of Allahabad High Court was challenged and supreme court has sealed the fate of all the citizens of India. In such a case, others were not even heard in this matter.

8) Eighthly, the supreme court accepted that the revenue officers were at fault in issuing notice(s) under old section 148.

9) Ninthly, there is a passing observation that there was an overall consensus among the lawyers of applicants and respondents. But the order does not appear to be a decree with the consent of both the parties.