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HomeIncome Tax ActSupreme Court upholds the validity of notices issued under Old Sec 148...

Supreme Court upholds the validity of notices issued under Old Sec 148 of Income Tax Act after 31st Mar 2021:

Union of India & Ors. Versus Ashish Agarwal (CIVIL APPEAL NO. 3005/2022)

Background:
Several High Courts had allowed the writ petitions and had quashed several reassessment notices issued by the Revenue, issued under old section 148 of the Income Tax Act, 1961, on the ground that the same are bad in law in view of the amendment by the Finance Act, 2021 which had amended Income Tax Act by introducing new provisions i.e. sections 147 to 151 w.e.f. 1st April, 2021.

Following is the procedure laid down by the Hon SC in respect of such notices issued under old Sec 148:

  1. Such notices 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 show­cause notices in terms of section 148A(b).
  2. 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 show­cause notices within two weeks thereafter.
  3. All defences 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.

Following are the observations of the Hon SC:

  1. 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.
  2. The present order shall be applicable PAN INDIA and all judgments and orders passed by different High Courts on the issue
  3. The present order is passed in exercise of powers under Article 142 of the Constitution of India with a view not to burden this Court with approximately 9000 appeals.

Note: Article 142 of the Constitution: 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.

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