Court stays proceedings on Section 148 notice due to amended Section 149 threshold, emphasizing compliance.

The court stayed further proceedings regarding a notice issued under Section 148 of the Income Tax Act, finding it prima facie barred by the amended Section 149 as the income involved was below the threshold. Emphasizing adherence to the amended provisions, the court rejected reliance on the old regime. The case was listed for further proceedings after completing service on Respondent No.3, with liberty for the revenue to seek early final disposal post-pleadings completion.

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Issues Involved:
1. Legality and validity of the notice under Section 148 of the Income Tax Act, 1961.
2. Applicability of the amended provisions of Section 149 of the Income Tax Act, 1961.
3. Impact of the Supreme Court's decision in Union of India & Others Vs. Ashish Agarwal on the present case.
4. Jurisdictional bar under Section 149(1)(a) of the Income Tax Act, 1961.

Detailed Analysis:

1. Legality and Validity of the Notice under Section 148 of the Income Tax Act, 1961:
The petitioner contended that the notice under Section 148 of the Income Tax Act, issued on 26.07.2022 for the assessment year 2016-2017, is barred by law. The argument was based on the amended provisions of Section 149, which stipulate that if three years have elapsed from the end of the relevant assessment year, a notice under Section 148 cannot be issued unless the case falls under Clause (b) of sub-section (1) of Section 149. The income alleged to have escaped assessment in this case is Rs.8 lacs, which is below the Rs.50 lacs threshold, thus invoking the bar under Clause (a).

2. Applicability of the Amended Provisions of Section 149 of the Income Tax Act, 1961:
The revenue argued that the provisions of Section 149, sub-section 1(a) would not apply as the notice under Section 148 was initially issued on 19.04.2021, before the amendment came into effect. They contended that the notice should relate back to the initial date of issuance. However, the court noted that the notice issued on 19.04.2021 was deemed to be under Section 148A as per the Supreme Court's direction in Union of India & Others Vs. Ashish Agarwal. Consequently, the notice issued on 26.07.2022 must be judged based on the law in force on that date, which includes the amended Section 149.

3. Impact of the Supreme Court's Decision in Union of India & Others Vs. Ashish Agarwal on the Present Case:
The Supreme Court in Union of India & Others Vs. Ashish Agarwal directed that notices issued under Section 148 after 01.04.2021 should be treated as notices under Section 148A. The court observed that the notice issued on 19.04.2021 was deemed to be under Section 148A, and the subsequent notice on 26.07.2022 must comply with the amended provisions. The court rejected the revenue's contention that the notice should be considered under the old regime, emphasizing that the amended Section 149 governs the current notice's legality.

4. Jurisdictional Bar under Section 149(1)(a) of the Income Tax Act, 1961:
The court highlighted that the amended Section 149(1)(a) clearly bars the issuance of a notice under Section 148 if three years have elapsed from the end of the relevant assessment year unless the income exceeds Rs.50 lacs. The court found no provision allowing the reopening of assessments under the old regime post-amendment. The court concluded that the notice issued on 26.07.2022 is prima facie barred by the amended Section 149, as the income involved is only Rs.8 lacs.

Conclusion:
The court, considering the prima facie case and the legislative intent behind the amendments, stayed further proceedings pursuant to the notice dated 26.07.2022 under Section 148 of the Act until the final disposal of the writ petition. The court emphasized the need to adhere to the amended provisions and rejected the revenue's reliance on the old regime for the issuance of the notice. The case was listed for further proceedings after the service of Respondent No.3 is complete, with liberty for the revenue to apply for an early final disposal once pleadings are complete.

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