Case Law Details
Radha Soami Satsang Beas vs. National Faceless Assessment Centre (Supreme Court)
Supreme Court (SC) on Monday issued notice and stayed proceedings initiated against the Petitioner Assessee i.e. Radha Soami Satsang Beas on an appeal challenging the judgment of the Punjab and Haryana High Court whereby a Civil Writ Petition challenging notice issued to the Petitioner Assessee under Section 148 of the Income Tax Act, 1961 had been dismissed citing availability of alternative statutory remedies.
A Bench comprising of Justice A.S. Bopanna and Justice Ravindra Bhat passed the following order:
Issue notice to the respondents.
In the meantime, there shall be interim stay of further proceedings pursuant to the impugned notice dated 29.03.2022.
Before the Supreme Court, the Petitioner’s counsel Adv. Ekakshra Mahajan Mandhar – Managing Partner of Mandhar Associates, argued that the Petitioner Assessee being a Religious Trust established under Section 12 of the Income Tax Act, the provisions as cited in the impugned notice for Assessment Year 2018-19 shall be inapplicable therefore making the present petition amenable to the writ jurisdiction of the Hon’ble Court.
Pursuant to the enactment of the Finance Act, 2021, the entire system of assessment and reassessment of income escaping assessment was completely reformed and a new procedure was adopted which was expected to result in less litigation. A new Section was incorporated i.e. Section 148A which requires that a notice can be issued only when there is information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the relevant assessment year. Negating the laudatory intent of the Legislature, various such notices have been challenged across different High Courts in the country.
Lamenting the same, a Division bench of the Delhi High Court comprising of Justice Manmohan and Justice Dinesh Kumar Shah had observed in its judgment rendered in Divya Capital One Private Limited v. Assistant Commissioner of Income Tax & Ors. W.P. (C) 7406/2022 that:
“This Court takes judicial notice that in a majority of reassessment cases post 1st April, 2021, the orders under Section 148A(d) of the Act use a template / general reason to reject the defence of the assessee on merits, namely, “found devoid of any merit because the assessee company has failed to produce the relevant documents in respect of transactions mentioned in show cause notice……..it is established that the assessee has no proper explanation……” Consequently, this Court is of the opinion that a progressive as well as futuristic scheme of re-assessment whose intent is laudatory has in its implementation not only been rendered nugatory but has also had an unintended opposite result.”
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