2022 (4) TMI 238 - HC - Income Tax

Court clarifies requirements for Income Tax Act notices under Section 148, emphasizing evidence, approval, and assessee's rights.

The court examined the challenge to notices issued under Section 148 of the Income Tax Act in 2021 and the interpretation of amended Section 148 and ... Reopening of assessment u/s 147 - applicability of the newly inserted provisions of Section 148A and the amendments brought inter alia w.e.f. 1.4.2021- identity of Section 148 as prevailing prior to amendment and insertion of section 148A - Validity of re-assessment notice issued under the erstwhile section147/148 after 1.4.2001 without following the mandate of new section 148A - Validity of the re-assessment proceedings initiated against the individual petitioners, after 01.04.2021, having resort to the provisions of the Income Tax Act, 1961 as they existed, read with the provisions of Act No. 38 of 2020 and the notifications issued thereunder - HELD THAT:- As decided in VELLORE INSTITUTE OF TECHNOLOGY VERSUS CENTRAL BOARD OF DIRECT TAXES, THE ASSISTANT COMMISSIONER OF INCOME TAX (EXEMPTIONS) [2022 (2) TMI 923 - MADRAS HIGH COURT] while accepting the challenge to the reassessment notices under Section 148 of the Act of 1961, we hold that the Explanations A(a)(ii)/A(b) to the Notification No.20, dated 31.3.2021 and Notification No.38, dated 27.4.2021 must be read as applicable to the reassessment proceedings as on 31.3.2021 in view of the judgments of the different High Courts reassessment notices under Section 148 of the Act of 1961 served on the petitioners on or after 1.4.2021 are set aside having been issued in reference to the unamended provisions and the Explanations are to be read as applicable to reassessment proceedings if initiated on or prior to 31.3.2021, but it would be with liberty to the assessing authorities to initiate reassessment proceedings in accordance with the provisions of the Act of 1961, as amended by the Finance Act, 2021, after making all the compliances as required by law, if limitation for it survives. Issues:Challenge to impugned notice under Income Tax Act, interpretation of Section 148 and Section 148(A) post-amendment.Analysis:The writ petitions challenged notices issued in 2021 under Section 148 of the Income Tax Act. The amended Section 148 and Section 148(A) were examined, emphasizing the need for information suggesting escaped income before issuing a notice. The provisions required prior approval for issuing notices and conducting inquiries, ensuring the assessee's opportunity to be heard. The judgment referred to a decision by the Allahabad and Delhi High Courts, setting aside reassessment notices issued post-amendment due to reference to unamended provisions. Assessing authorities were granted liberty to initiate reassessment proceedings under the amended Act after fulfilling legal requirements if the limitation period allowed. Consequently, all writ petitions were disposed of with no costs, allowing reassessment proceedings under the amended Act if compliant with the law and within the limitation period.