Union of India Vs Ashish Agarwal (Supreme Court)
Hon. Supreme Court Validates Section 148 Notices issued after 31st March 2021- Surprising Turn of Events
Introduction: –
Various High Courts had quashed reassessment notices issued u/s 148 of the act, on the ground that the same are bad in law in view of the new reassessment procedure, against such orders the Revenue had preferred an appeal before The Hon. Supreme Court.
Contention raised by the Revenue:
Approximately 90,000 reassessment notices have been issued under the old scheme of reassessment, various High Courts have quashed the reassessment notices under erstwhile 148 of the Income Tax Act, 1961.
Observations of Hon. Supreme Court:
1. Through the Finance Act, 2021, radical and reformative changes are made governing the procedure for reassessment proceedings.
2. The Old Scheme of reassessment gave rise to numerous litigations and the reopening were challenged inter alia, on the grounds such as:
a) no valid “reason to believe” ;
b) no tangible/reliable material/information in possession of the AO leading to formation of belief that income has escaped assessment;
c) no enquiry being conducted by the AO prior to the issuance of notice;
d) reopening is based on change of opinion of the AO; and
e) procedure laid down in GKN Driveshafts 1 SCC 72 not followed.
3. Under the old scheme reopening was permissible for a maximum period up to six years which has been reduced to three years in the new scheme.
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