2024 (9) TMI 744 - HC - Income Tax

Reopening concluded tax assessment under Section 148 invalid based on Ashish Agarwal ruling, reassessment quashed

Jaswant Singh Juneja Versus Income Tax Officer, Ward-63 (1), Delhi

The HC held that the reopening of a concluded assessment under Section 148, relying on the Supreme Court's decision in Ashish Agarwal, was invalid. The ... Reopening of the concluded assessment - reassessment u/s 148 despite a prior assessment order under Section 147 - validity of passing of an order under Section 148-A (d) - HELD THAT:- The right of the respondent to reopen the concluded assessment on the basis of the decision of the Supreme Court in Ashish Agarwal [2022 (5) TMI 240 - SUPREME COURT] was the question which fell for our consideration in Anindita Sengupta [2024 (4) TMI 96 - DELHI HIGH COURT] held that Ashish Agarwal neither intended nor mandated concluded assessments being reopened. The respondent clearly appears to have erred in proceedings along lines contrary to the above as would be evident from the reasons which follow. Firstly, Ashish Agarwal was principally concerned with judgments rendered by various High Courts’ striking down Section 148 notices holding that the respondents had erred in proceeding on the basis of the unamended family of provisions relating to reassessment. They had essentially held that it was the procedure constructed in terms of the amendments introduced by Finance Act, 2021 which would apply. None of those judgements were primarily concerned with concluded assessments. As would be manifest from the aforesaid extract, the emphasis clearly was on the notices which formed the subject matter of challenge before various High Courts’ and the aim of the Supreme Court being to salvage the process of reassessment. This is further evident from the Supreme Court observing that the AO would thereafter proceed to pass orders referable to Section 148A (d). We consequently find ourselves unable to construe Ashish Agarwal as an edict which required completed assessments to be invalidated and reopened. Ashish Agarwal cannot possibly be read as mandating the hands of the clock being rewound and reversing final decisions which may have come to be rendered in the interregnum. Admittedly, in this case, assessment proceedings had already concluded on 26.03.2022 and the reassessment action was reinitiated on the same set of reasons vide Show Cause Notice dated 31.05.2022 under Section 148-A (b), leading to the passing of an order under Section 148-A (d) and issuance of notice under Section 148 of the Act, both dated 20.07.2022 - Thus we find ourselves unable to sustain the impugned action of reassessment. Decided in favour of assessee. Issues:Challenge to order under Section 148-A (d) and notice under Section 148 of the Income Tax Act, 1961 for AY 2014-15.Analysis:The petitioner, a proprietor of a firm dealing in electronic goods, challenged the reassessment initiated through a notice under Section 148 for AY 2014-15. The respondent issued multiple notices despite a prior assessment order under Section 147 accepting the petitioner's submissions. The respondent relied on a Supreme Court judgment to reopen the assessment. The petitioner argued that the judgment should not apply since the assessment had concluded. The court referred to a previous case where it was clarified that the Supreme Court's directions did not mandate reopening concluded assessments. As the assessment proceedings had already concluded before the reassessment action, the court found the reassessment invalid. Consequently, the impugned order and notice were quashed.Key Points:- Petitioner challenged reassessment under Section 148 for AY 2014-15 despite a prior assessment order under Section 147.- Respondent issued notices under Section 148-A (b) and subsequently under Section 148 based on a Supreme Court judgment.- Petitioner argued that the assessment had concluded, and the judgment should not apply.- Court referred to a previous case clarifying that the Supreme Court's directions did not mandate reopening concluded assessments.- As assessment proceedings had concluded before the reassessment action, the court found the reassessment invalid.- The impugned order under Section 148-A (d) and the consequential notice under Section 148 were quashed.