Reassessment Notices Quashed: Court Rules Misapplication of Supreme Court Decision Harassed Public Charitable Trust.

The HC quashed the reassessment notices and proceedings against the petitioner, a public charitable trust, regarding AY 2015-2016. The Court found that the Department misapplied the Supreme Court's decision in Union of India v. Ashish Agarwal by issuing multiple reassessment notices beyond the scope of the liberty granted. The repeated reassessment attempts were deemed harassment, and the writ petition was allowed with no costs, closing all related miscellaneous petitions.

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Issues Involved:
1. Validity of reassessment proceedings under Section 147 of the Income-Tax Act, 1961.
2. Applicability of the Supreme Court's judgment in Union of India v. Ashish Agarwal.
3. Justification for multiple rounds of reassessment proceedings.

Summary:

1. Validity of reassessment proceedings under Section 147 of the Income-Tax Act, 1961:
The petitioner, a public charitable trust, challenged reassessment proceedings initiated for AY 2015-2016. The initial assessment was completed under Section 143(3) with a NIL demand. A notice under Section 148 was issued on 12.04.2021, which was later challenged and quashed by the Division Bench of the High Court, granting liberty to the Department to initiate reassessment in accordance with the new provisions effective from 01.04.2021. Subsequently, a second notice under Section 148A(b) was issued on 31.03.2022, which was followed by an order under Section 148A(d) and a notice under Section 148 dated 18.04.2022.

2. Applicability of the Supreme Court's judgment in Union of India v. Ashish Agarwal:
The Hon'ble Supreme Court in Union of India v. Ashish Agarwal directed that notices issued after 01.04.2021 under the old regime should be deemed as issued under the new regime. The Department issued a third notice on 02.06.2022, claiming it was acting on the liberty granted by the Supreme Court. However, the Court noted that the second notice under Section 148A(b) was issued even before the Supreme Court's judgment, and thus, the liberty granted under Ashish Agarwal was misapplied.

3. Justification for multiple rounds of reassessment proceedings:
The Court observed that the Department had already issued a second notice and allowed those proceedings to lapse. Initiating a third round of reassessment was seen as an abuse of the liberty granted by the Supreme Court. The Court emphasized that the liberty granted under Ashish Agarwal was only applicable to initial stages of reassessment and not to cases where proceedings had already advanced to the issuance of notices under Section 148A(d). The reasons provided in the third notice were also found to be materially different from those in the previous notices, further invalidating the proceedings.

Conclusion:
The Court concluded that the repeated reassessment proceedings constituted harassment to the assessee and quashed the impugned notices and proceedings. The writ petition was allowed with no costs, and all connected miscellaneous petitions were closed.

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