Two Section 148 notices for same assessment year create procedural complications, assessment order quashed

Madras HC held that two notices issued under Section 148 for Assessment Year 2013-2014 created procedural complications. The first notice dated 30.03.2021 was served on 07.04.2021, requiring compliance with new Section 148A regime effective from 01.04.2021 per Supreme Court's Ashish Agarwal decision. The assessment order dated 30.03.2022 was quashed, directing fresh proceedings under new provisions within six months. The second notice dated 07.04.2021 was deemed unnecessary and quashed. Writ petition allowed.

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Issues Involved:
1. Validity of the notice dated 30.03.2021 issued under Section 148 of the Income Tax Act, 1961.
2. Validity of the notice dated 07.04.2021 issued under Section 148 of the Income Tax Act, 1961.
3. Validity of the consequential Assessment Order dated 30.03.2022.

Summary:

Issue 1: Validity of the notice dated 30.03.2021 issued under Section 148 of the Income Tax Act, 1961
The petitioner challenged the validity of the notice dated 30.03.2021, arguing it was not signed by a competent officer and was only electronically transmitted on 15.04.2021, after the insertion of Section 148A effective from 01.04.2021. The court noted that, under Rule 127A of the Income Tax Rules, 1962, electronic communication of notices is deemed authenticated if the name and office of the issuing authority are included. The court found that the notice dated 30.03.2021, though not digitally signed, was validly issued as per the rules and confirmed that it was served on the petitioner on 07.04.2021.

Issue 2: Validity of the notice dated 07.04.2021 issued under Section 148 of the Income Tax Act, 1961
The petitioner argued that the notice dated 07.04.2021 was barred by law as per the Supreme Court's decision in Union of India vs. Ashish Agarwal. The court agreed, stating that the second notice was unnecessary and quashed it.

Issue 3: Validity of the consequential Assessment Order dated 30.03.2022
The petitioner contended that the Assessment Order dated 30.03.2022, based on the notice dated 30.03.2021, should be quashed as it did not follow the new procedure under Section 148A. The court concurred, noting that the assessment should have been conducted under the new regime effective from 01.04.2021, as per the Supreme Court's decision in Union of India vs. Ashish Agarwal. Consequently, the court quashed the Assessment Order dated 30.03.2022 and remanded the case for a fresh order under the new regime.

Conclusion:
The court allowed W.P.No.14343 of 2022 by remanding the case for a fresh order under the new regime. W.P.No.14348 of 2022 was allowed by quashing the notice dated 07.04.2021. The connected Miscellaneous Petitions were closed with no costs.

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