High Court treats Section 148 notices as show-cause under 148A post Supreme Court ruling

The High Court directed that notices issued under Section 148 should be treated as show-cause notices under Section 148A, following the Supreme Court judgment in Union of India v. Ashish Agarwal. Assessing officers were instructed to provide information and material to Assessees within two weeks. The judgment allowed for dispensing with the requirement of prior approval under Section 148A(a) for notices issued under the unamended Act from 01.04.2021 onwards. Proceedings were to continue in accordance with the Supreme Court's directions, ensuring compliance with recent judicial interpretations of the Income Tax Act.

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Issues:
1. Interpretation of Section 148 of the Income Tax Act post-amendment by the Finance Act of 2021.
2. Applicability of Section 148A procedure in re-assessment proceedings.
3. Compliance with Supreme Court judgment in Union of India v. Ashish Agarwal regarding notices issued under Section 148.

Analysis:
1. The petitioners challenged notices under Section 148 of the Income Tax Act, contending that post-amendment by the Finance Act of 2021, the procedure under Section 148A had to be followed before re-assessment proceedings were initiated by the Department. The Supreme Court judgment in Union of India v. Ashish Agarwal clarified that notices issued under unamended Section 148 shall be deemed as issued under the amended Section 148, with a requirement for the assessing officer to provide information and material relied upon by the Revenue to the Assessees for a response within two weeks.

2. The judgment further dispensed with the requirement of conducting any inquiry with prior approval under Section 148A(a) as a one-time measure for notices issued under the unamended Act from 01.04.2021 till date. Assessing officers were directed to pass orders in terms of Section 148A(d) for each Assessee and then issue notices under the substituted Section 148. The judgment emphasized that all defenses available to Assessees under Section 149 of the IT Act and rights under the Finance Act, 2021, and in law shall continue to be available.

3. The learned Standing Counsel for the Department acknowledged that the Supreme Court judgment covered the matters at hand. Consequently, the High Court directed that notices issued under Section 148 to the petitioners should be treated as show-cause notices under Section 148A. The proceedings were to be completed in accordance with the directions provided by the Supreme Court in the aforementioned judgment. This disposal aligned with the interpretation and application of the amended provisions under the Income Tax Act as per the recent judicial pronouncements.

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