Union of India v. Ashish Agarwal

Case snapshot

Sections / provisions: 148

Questions before the Court / Tribunal

• S. 148 : Reassessment – Notice – Section 148 notices issued by the Assessing Officers shall be deemed to have been issued under Section 148A as substituted by the Finance Act, 2021 and to be treated as show¬ cause notices in terms of Section 148A(b) of the Act -The Assessing Officers shall, within 30 days from 04-05-2022, provide the information and material relied upon so that the assessees can reply to the notices within two weeks thereafter. [S. 148A(b), 149, Art. 142] Allowing the appeal of the revenue the Court held that the Notices under section 148 of the Income-tax Act, 1961 (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 Act or treated to be show-cause notices in terms of section 148A(b). The assessing officer within thirty days from the date of the Order should provide…
• Which factual, statutory and procedural conditions controlled the requested relief?
• How did the forum apply the governing provisions to the evidence and procedural history recorded in this case?

Material facts and procedural background

REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 3005/2022 Union of India & Ors. ..Appellant (S) Versus Ashish Agarwal ..Respondent (S) With Civil Appeal No. 3006/2022 With Civil Appeal No. 3009/2022 With Civil Appeal No. 3007/2022 With Civil Appeal No. 3008/2022 With Civil Appeal No. 3010/2022 With Civil Appeal No. 3013/2022 With

Civil Appeal No. 3011/2022 With Civil Appeal No. 3012/2022 With Civil Appeal No. 3014/2022 With Civil Appeal No. 3015/2022 With Civil Appeal No. 3016/2022 With Civil Appeal No. 3017/2022 With Civil Appeal No. 3019/2022 With Civil Appeal No. 3020/2022 With Civil Appeal No. /2022 (arising out of SLP(C) No. 6448/2022) With Civil Appeal No. /2022 (arising out of SLP(C) No. 5381/2022) With

Civil Appeal No. /2022 (arising out of SLP(C) No. 5079/2022) With Civil Appeal No. /2022 (arising out of SLP(C) No. 6092/2022) With Civil Appeal No. /2022 (arising out of SLP(C) No. 6534/2022) With Civil Appeal No. /2022 (arising out of SLP(C) No. 6158/2022) With Civil Appeal No. /2022 (arising out of SLP(C) No. 6316/2022) With Civil Appeal No. /2022 (arising out of SLP(C) No. 6281/2022) With Civil Appeal No. /2022 (arising out of SLP(C) No. 6545/2022) With Civil Appeal No. /2022 (arising out of SLP(C) No. 6038/2022) J U D G M E N T

2. Bpip Infra Pvt. Ltd. Vs. Income Tax Officer & Others (Rajasthan HC) Judgment in S.B. Civil Writ Petition No. 13297/2021 passed by the Hon’ble High Court of Rajasthan at Jaipur dated 25.11.2021 3. Mon Mohan Kohli Vs. ACIT (Delhi HC) Judgment passed by the Hon’ble High Court of Delhi in W.P.(C) No. 6176/2021 dated 15.12.2021 4. Bagaria Properties & Investment Pvt. Ltd. Vs. UOI (Calcutta HC) Judgment passed by the Hon’ble High Court of Calcutta in W.P.O No. 244/2021 dated 17.01.2022 5. Manoj Jain Vs. UOI (Calcutta HC)

Judgment passed by the Hon’ble High Court of Calcutta in W.P.A. No. 11950 of 2021 dated 17.01.2022 6. Sudesh Taneja Vs. ITO (Rajasthan HC) Judgment passed by the Hon’ble High Court of Rajasthan in D.B. Civil Writ Petition No. 969 of 2022 dated 27.01.2022

Appellant / petitioner / assessee submissions

permits the revenue to take further steps in the matter they shall be at liberty to do so. 5. We have heard Shri N. Venkataraman, learned ASG appearing on behalf of the Revenue and Shri C.A. Sundaram and Shri S. Ganesh, learned Senior Advocates and other learned counsel appearing on behalf of the respective assessee. 6. It cannot be disputed that by substitution of sections 147 to 151 of the Income Tax Act (IT Act) by the Finance Act, 2021, radical and reformative changes are made governing the procedure for reassessment proceedings. Amended sections 147 to 149 and section 151 of the IT Act prescribe the procedure governing initiation of reassessment proceedings. However, for several reasons, the same gave rise to numerous litigations and the reopening were challenged inter alia, on the grounds such as (1) no valid “reason to believe” (2) no tangible/reliable material/information in possession of the assessing officer leading to formation of belief that income has escaped assessment, (3) no enquiry being conducted by the

procedure as required under section 148A(b) in respect of each of the concerned assessees; (iv) All the defences 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; (v) 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. 9. 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.

Revenue / respondent submissions

The judgment does not separately label the respondent’s submissions in an independently extractable passage. No contention is inferred; read the full record.

Court / Tribunal analysis and reasoning

2.2 In fact, we have heard Shri C.A. Sundaram, learned Senior Advocate, appearing on behalf of the respective assessee, who were before the Delhi High Court also. 3. While appreciating the controversy, a few facts and the relevant statutory provisions applicable pre 01.04.2021 and post 01.04.2021 are required to be referred to. The procedure governing initiation of reassessment proceedings prior to coming into force of the Finance Act, 2021 was governed by the following provisions: “Income escaping assessment 147. If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recomputed the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year): Provided that where an assessment under subsection (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under subsection (1) of section 142 or section 148 or to disclose

assessing officer prior to the issuance of notice; and reopening is based on change of opinion of the assessing officer and (4) lastly the mandatory procedure laid down by this Court in the case of GKN Driveshafts (India) Ltd. Vs. Income Tax Officer and ors ; (2003) 1 SCC 72, has not been followed. 6.1 Further preFinance Act, 2021, the reopening was permissible for a maximum period up to six years and in some cases beyond even six years leading to uncertainty for a considerable time. Therefore, Parliament thought it fit to amend the Income Tax Act to simplify the tax administration, ease compliances and reduce litigation. Therefore, with a view to achieve the said object, by the Finance Act, 2021, sections 147 to 149 and section 151 have been substituted. 6.2 Under the substituted provisions of the IT Act vide Finance Act, 2021, no notice under section 148 of the IT Act can be issued without following the procedure prescribed under section 148A of the IT Act. Along with the notice under

information which suggests that the income chargeable to tax has escaped assessment; (ii) provide an opportunity of being heard to the assessee, with the prior approval of specified authority; (iii) consider the reply of the assessee furnished, if any, in response to the showcause notice referred to in clause (b); and (iv) decide, on the basis of material available on record including reply of the assessee, as to whether or not it is a fit case to issue a notice under section 148 of the IT Act and (v) the AO is required to pass a specific order within the time stipulated. 6.5 Therefore, all safeguards are provided before notice under section 148 of the IT Act is issued. At every stage, the prior approval of the specified authority is required, even for conducting the enquiry as per section 148A(a). Only in a case where, the assessing officer is of the opinion that before any notice is issued under section 148A(b) and an opportunity is to be given to the assessee, there is a requirement of conducting any enquiry, the assessing officer may do so and conduct any enquiry. Thus if the assessing officer is of the opinion that any enquiry is required, the assessing officer can do so, however, with the

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 nonapplication 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 defences, 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:

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

Operative decision and relief

various High Courts across the country and therefore the present order shall be applicable to PAN INDIA . 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 showcause 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 showcause 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 onetime measure vis àvis 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 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. 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. …………………………………J. (M. R. SHAH) …………………………………J. (B.V. NAGARATHNA) New Delhi, May 4, 2022.

Ratio and legal principle

The narrow proposition associated with Union of India v. Ashish Agarwal concerns s. 148 : reassessment – notice – section 148 notices issued by the assessing officers shall be deemed to have been issued under section 148a as substituted by the finance act, 2021 and to be treated as show¬ cause notices in terms of section 148a(b) of the act -the assessing officers shall, within 30 days from 04-05-2022, provide the information and material relied upon so that the assessees can reply to the notices within two weeks thereafter. [s. 148a(b), 149, art. 142] allowing the appeal of the revenue the court held that the notices under section 148 of the income-tax act, 1961 (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 act or treated to be show-cause notices in terms of section 148a(b). the assessing officer within thirty days from the date of the order should provide… The proposition cannot be separated from the judgment’s facts, the governing statutory version, the forum’s jurisdiction, and the exact relief recorded in CIVIL APPEAL NO. 3005/2022.

For working-paper purposes, the decision should be cited only after matching the material facts and reading the passages under the judgment-grounded record above. The editorial outcome label “Quashed / set aside” is a navigation aid; it does not replace the operative order or explain every issue in a multi-issue case.

Why this judgment matters

This decision is relevant when a file raises the same central question identified in the source headnote: S. 148 : Reassessment – Notice – Section 148 notices issued by the Assessing Officers shall be deemed to have been issued under Section 148A as substituted by the Finance Act, 2021 and to be treated as show¬ cause notices in terms of Section 148A(b) of the Act -The Assessing Officers shall, within 30 days from 04-05-2022, provide the information and material relied upon so that the assessees can reply to the notices within two weeks thereafter. [S. 148A(b), 149, Art. 142] Allowing the appeal of the revenue the Court held that the Notices under section 148 of the Income-tax Act, 1961 (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 Act or treated to be show-cause notices in terms of section 148A(b). The assessing officer within thirty days from the date of the Order should provide… Its practical value lies in the way the Supreme Court of India connected the governing provisions—148—to the procedural posture and evidence before it.

The authority level is Supreme Court. That affects persuasive or binding weight, but authority level alone is never enough. Territorial jurisdiction, statutory period, the identity of the challenged order, and later appellate treatment must all be checked before the case is used in advice, a submission, or litigation strategy.

Practitioner action points

• Begin with the complete judgment and mark the paragraphs supporting the exact proposition relied upon.
• Match the statutory version of 148 and the decision date 2021-11-25; do not assume the current text is identical.
• Compare the notice, assessment, appeal or other procedural sequence with the chronology recorded in this case.
• Verify the stated later-history status and any review, appeal, SLP, curative or rectification proceedings before citation.
• Record why the client’s evidence is materially similar, and also record any fact capable of distinguishing the result.

Does this case match your facts?

Detailed reliance and distinction analysis

Identity check. Confirm that the cited cause title is Union of India v. Ashish Agarwal, the proceeding is CIVIL APPEAL NO. 3005/2022, and the decision is dated 2021-11-25. These fields are taken from the judgment record and should appear exactly in the citation note.

Bench check. The judgment identifies the coram as M. R. Shah, J. (authoring judge identified in judgment). A later order by another bench, a larger bench, or a higher forum may alter the weight or interpretation of the proposition.

Provision check. The source associates the dispute with 148. The practitioner should place the historical statutory text next to the current text and identify every amendment, proviso, explanation, rule or notification that could change the analysis.

Fact check. The source issue is not a free-standing abstract rule. It arises from the concrete record summarized above. A reliable application note should list the common facts, the different facts, and whether each difference affects jurisdiction, admissibility, limitation, burden, computation or relief.

Remedy check. The recorded result is Quashed / set aside. Where a matter is remanded, set aside, partly allowed, or disposed with directions, the exact operative language is more important than a binary winner/loser label.

History check. The current closure state is SUBSEQUENT_SC_CLARIFICATION_VERIFIED_RAJEEV_BANSAL_2024. If that state is pending, the page does not assert that no later case exists. It means the check remains open and must be completed at the point of professional reliance.

Section / provision impact

• 148 — apply the exact version considered in the judgment.

Case network

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