AI Drafter 
TaxTMI 
TaxTMI 
2024 (4) TMI 96
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....n a perceived understanding of the decision rendered by the Supreme Court in Union of India & Ors. vs. Ashish Agarwal [(2023) 1 SCC 617] and its purport being the recommencement of all proceedings for reassessment which stood initiated in terms of notices issued under Section 148 of the Act post 01 April 2021 and the judgement mandating them to rewind pending proceedings to the stage of Section 148A(b). Section 148A of the Act which came to be placed in the enactment by virtue of Finance Act, 2021 places the Assessing Officer under an obligation to invite objections in terms of which the assessee may explain why reassessment is not liable to be initiated or would otherwise be unsustainable in law. Ashish Agarwal held that all reassessment notices issued after 01 April 2021 would be treated as notices referable to clause (b) of Section 148A of the Act and the procedure prescribed therein being followed thereafter. The respondents thus read Ashish Agarwal as mandating the aforesaid procedure being liable to be followed irrespective of the stage of the reassessment proceedings and thus extending even to situations where final orders may have come to be passed on culmination of reasses....
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....imit builders allotted to various parties. The assessee, Ms. Anindita Sengupta has been identified s one of the parties who were allotted share of Nimit Builders Pvt. Ltd. The total shares 42,5000 were allotted to Ms. Anindita Sengupta. These shares were allotted at premium of Rs. 190/share on face value of Rs. 10 each share. The total value of the shares weas Rs. 8,50,00,000/-. For these shares the assessee has made part payment to the tune of Rs. 4,50,00,000/-. The assessee has also purchased shares having value of Rs. 4,50,00,000/ from BDR Builders and Developers Pvt. Ltd. The ITR for A.Y. 2013-14 has also been perused. The assessee has declared her income of Rs. 4,83,099/-. However, the assessee has invested on share to the tune of Rs. 8,50,00,000/- and Rs. 4,50,00,000/-. In view of the same, it is clear that the credit worthiness of the assessee does not allow such huge investment in share. Hence, the above investment of Rs. 13,00,00,000/- (Rs. 8,50,00,000 + Rs. 4,50,00,000) is her unexplained increase earned during the F.Y. 2012-13 relevant to A.Y. 2013-14. Considering the above facts, I have analysed the information and gone through the details and found th....
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...., I would request that henceforth the notices/notifications may also be sent to me on my email and/or phone. Please note that in the Annexure to your Notice dated 21.03.2022, your good self has stated in paragraph no. 2 that "In this regard, you are requested to furnish the confirmation from M/s. Nimit Builders Pvt. Ltd. (along with annual report and valuation report) to justify your say" In compliance with the aforesaid directions issued by your good self, I am enclosing the following documents:- 1. Confirmation dated 22.03.2022 issued by M/s. Nimit Builders Pvt. Ltd. certifying and confirming that I only paid a sum of Rs. 4,25,00,000/- for purchasing 4,25,000 partly paid-up equity shares having face value of Rs. 5/- per equity share and share premium of Rs. 95/- per share (total Rs. 100/-) and that I did not pay the balance amount of Rs. 5/- per equity share and share premium of Rs. 95/- per share (total Rs. 100/- per share) on the aforesaid 4,25,000 equity shares. As already informed to your good self, I once gain respectfully reiterate that apart from the aforesaid sum of Rs. 4,25,00,000/- I never paid the balance amount in order to make the ....
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....Central Lane, Bengali Market, New Delhi-110001. Mobile No. 9910523322. In the Sale-Deed dated 14.12.2012, Mr. Apoorv P. Tripathi was represented by his mother, Mrs. Neelima Tripathi, wife of Mr. Parag P. Tripathi as his General Power of Attorney. The Mobile Number of Mrs. Neelima Tripathi is 9810099919. Her email id is [email protected] Off. Address: 18, Bahar Lane, New Delhi-I 10001. Sir, it is a matter of great regret that the buyers of the property, who are also reputed lawyers, have no courtesy even to write a few lines in confirming the true facts that they have purchased the property situated at 18 Babar Lane, New Delhi at a price of Rs. 17,88,00,000/- and paid the same to me, my mother and two sisters in equal share, the receipt of which we have also acknowledged. In any event, I have submitted the certified copy of the sale-deed to your good self in support of my statement. I hope you will find the aforementioned information/documents in order." 7. Based upon the aforesaid, a final assessment order came to be framed on 28 March 2022 and which is extracted hereinbelow: - "ASSESSMENT ORDER The assessee filed ....
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....s 143(3) r.w.s.147 and 144B of the I.T. Act, 1961. Issue Demand notice and computation of income." 8. As would be evident from the above, the petitioner's explanation with respect to the source of investment made in the shares of Nimit Builders as well as in relation to the sale of the immovable property came to be accepted with no additions being made. It was only thereafter that the impugned notices came to be issued. 9. The notice dated 30 May 2022 purporting to be under Section 148A(b) proceeds on the premise that the judgment of the Supreme Court in Ashish Agarwal requires all notices issued under Section 148 of the Act between the period commencing from 01 April 2021 and ending on 30 June 2021 to be treated as SCN's referable to Section 148A(b) of the Act. The respondents further assert that the judgment in Ashish Agarwal would apply to all cases where notices may have been issued during the period noticed above irrespective of whether the assessee had assailed such notices or not. Significantly, the impugned notice under Section 148A(b) of the Act neither alludes to nor takes into consideration the final order that had come to be passed upon culmination of the reas....
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....ncorrect to read those directions as warranting a reopening of concluded cases. An interpretation of the direction of the Supreme Court as suggested by the respondent, according to learned senior counsel, would also not sustain bearing in mind the scope of the Article 142 power as conferred upon the Supreme Court. Learned senior counsel drew our attention to the recent decision rendered by a Constitution Bench in High Court Bar Association, Allahabad vs. State of U.P & Ors 2024 SCC OnLine SC 207, and where the extent and scope of the Article 142 power was explained in the following terms: - "23. The directions issued in Asian Resurfacing are obviously issued in the exercise of jurisdiction of this Court under Article 142 of the Constitution, which confers jurisdiction on this Court to pass such a decree or make such order necessary for doing complete justice in any case or matter pending before it. In Asian Resurfacing, the first issue was, whether an order framing of charge in a case under the PC Act was in the nature of an interlocutory order. The second question was of the scope of powers of the High Court to stay proceedings of the trial under the PC Act while entertai....
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....d obviously have to be consistent with Article 19(1)(a). If any of the provisions of such a law were to contravene any of the fundamental rights guaranteed by Part III, they would be struck down as being unconstitutional. Similarly, there can be no doubt that if in respect of petitions under Article 32 a law is made by Parliament as contemplated by Article 145(1), and such a law, in substance, corresponds to the provisions of Order 25 Rule 1 or Order 41 Rule 10, it would be struck down on the ground that it purports to restrict the fundamental right guaranteed by Article 32. The position of an order made either under the rules framed by this Court or under the jurisdiction of this Court under Article 142(1) can be no different. If this aspect of the matter is borne in mind, there would be no difficulty in rejecting the Solicitor-General's argument based on Article 142(1). The powers of this Court are no doubt very wide and they are intended to be and will always be exercised in the interest of justice. But that is not to say that an order can be made by this Court which is inconsistent with the fundamental rights guaranteed by Part III of the Constitution. An order which this C....
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....ion and operates as a valuable weapon in the hands of the Court to prevent "clogging or obstruction of the stream of justice". It, however, needs to be remembered that the powers conferred on the Court by Article 142 being curative in nature cannot be construed as powers which authorise the Court to ignore the substantive rights of a litigant while dealing with a cause pending before it. This power cannot be used to "supplant" substantive law applicable to the case or cause under consideration of the Court. Article 142, even with the width of its amplitude, cannot be used to build a new edifice where none existed earlier, by ignoring express statutory provisions dealing with a subject and thereby to achieve something indirectly which cannot be achieved directly. Punishing a contemner advocate, while dealing with a contempt of court case by suspending his licence to practice, a power otherwise statutorily available only to the Bar Council of India, on the ground that the contemner is also an advocate, is, therefore, not permissible in exercise of the jurisdiction under Article 142. The construction of Article 142 must be functionally informed by the salutary purposes of the article,....
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....e Constitution of India, this Court can always issue procedural directions to the Courts for streamlining procedural aspects and ironing out the creases in the procedural laws to ensure expeditious and timely disposal of cases. This is because, while exercising the jurisdiction under Article 142, this Court may not be bound by procedural requirements of law. However, while doing so, this Court cannot affect the substantive rights of those litigants who are not parties to the case before it. The right to be heard before an adverse order is passed is not a matter of procedure but a substantive right. (iv) The power of this Court under Article 142 cannot be exercised to defeat the principles of natural justice, which are an integral part of our jurisprudence." 12. Mr. Vohra submitted that the Constitution Bench had categorically found that the Article 142 jurisdiction cannot possibly be countenanced as envisaging blanket orders being passed and which may result in innumerable interim orders lawfully passed by High Courts coming to be annulled by one slight of the pen. The Constitution Bench further took into consideration the deleterious impact of such an order when made w....
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.... judgment of the Supreme Court in Ashish Agarwal, though rendered on 04 May 2022, would clearly apply and the initiation of reassessment cannot be faulted. It is the aforenoted rival submissions which fall for our consideration. 15. We at the outset note that the fact that the reassessment proceedings initiated pursuant to the notice dated 31 March 2021 (stated to have been issued on 01 April 2021) had attained a closure consequent to a final order of assessment being drawn on 28 March 2022 is not disputed before us. The fact that this order came to be rendered undisputedly prior to the decision in Ashish Agarwal being pronounced also cannot possibly be questioned. The principal question which therefore arises is whether Ashish Agarwal is liable to be viewed as commanding the respondents to reopen even concluded proceedings. The aforesaid question would arise in the context of those cases where although notices may have been issued between 01 April 2021 to 30 June 2021, reassessment proceedings may themselves have come to an end with final orders being framed. Undoubtedly, in the facts of the present case, a final order of assessment came to be passed prior to judgment being ren....
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....at notwithstanding the challenge to the reassessment notices having been accepted, the same would not detract from the right of the respondents to draw proceedings afresh, if so permissible in law. 18. It was the impasse so created with innumerable reassessment actions coming to be annulled that compelled the Supreme Court to intervene and invoke its powers flowing from Article 142 of the Constitution. In the Ashish Agarwal batch, the Supreme Court while dealing with the aforesaid question firstly took note of the practice adopted by the respondents in terms of the procedure judicially crafted in GKN Driveshafts (India) Ltd vs. ITO (2003) 1 SCC 72. It is pertinent to note that it was by virtue of GKN Driveshafts that for the first time a pre-commencement opportunity of hearing avenue came to be created by way of a judicial declaration. Sections 147 to 151, as ultimately introduced in terms of Finance Act 2021, sought to confer a statutory basis and framework for the procedure formulated in GKN Driveshafts and laid in place salutary safeguards with respect to the rights of an assessee. This is evident from the following observations as rendered by the Supreme Court in Ashish Agar....
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....ew provisions substituted by the Finance Act, 2021 being remedial and benevolent in nature and substituted with a specific aim and object to protect the rights and interest of the assessee as well as and the same being in public interest, the respective High Courts have rightly held that the benefit of new provisions shall be made available even in respect of the proceedings relating to past assessment years, provided Section 148 notice has been issued on or after 1-4-2021. We are in complete agreement with the view taken by the various High Courts in holding so. 23. However, at the same time, the judgments of the several High Courts would result in no reassessment proceedings at all, even if the same are permissible under the Finance Act, 2021 and as per substituted Sections 147 to 151 of the IT Act. The Revenue cannot be made remediless and the object and purpose of reassessment proceedings cannot be frustrated. It is true that due to a bona fide mistake and in view of subsequent extension of time vide various notifications, the Revenue issued the impugned notices under Section 148 after the amendment was enforced w.e.f. 1-4-2021, under the unamended Section 148. In our ....
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....er following the due procedure as required under Section 148-A(b) in respect of each of the assessees concerned. 25.4. All the defences which may be available to the assessee under Section 149 and/or which may be available under the Finance Act, 2021 and in law and whatever rights are available to the Assessing Officer under the Finance Act, 2021 are kept open and/or shall continue to be available. 25.5. The present order shall substitute/modify respective judgments and orders passed by the respective High Courts quashing the similar notices issued under unamended Section 148 of the IT Act irrespective of whether they have been assailed before this Court or not." 20. The suggestions so mooted ultimately appear to have found acceptance across the board as would be evident from the following: - "26. There is a broad consensus on the aforesaid aspects amongst the learned ASG appearing on behalf of the Revenue and the learned Senior Advocates/learned counsel appearing on behalf of the respective assessees. We are also of the opinion that if the aforesaid order is passed, it will strike a balance between the rights of the Revenue as well as the respective a....
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....der Section 148 of the unamended Act from 1-4-2021 till date, including those which have been quashed by the High Courts. 28.3. Even otherwise as observed hereinabove holding any enquiry with the prior approval of specified authority is not mandatory but it is for the assessing officers concerned to hold any enquiry, if required. 28.4. The assessing officers shall thereafter pass orders in terms of Section 148-A(d) in respect of each of the assessees concerned; Thereafter after following the procedure as required under Section 148-A may issue notice under Section 148 (as substituted). 28.5. All defences which may be available to the assessees including those available under Section 149 of the IT Act and all rights and contentions which may be available to the assessees concerned and Revenue under the Finance Act, 2021 and in law shall continue to be available. 29. The present order shall be applicable PAN INDIA and all judgments and orders passed by the different High Courts on the issue and under which similar notices which were issued after 1-4-2021 issued under Section 148 of the Act are set aside and shall be governed by the present order and....
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....me to be rendered a quietus in the meanwhile. The judgment was primarily concerned with the validity of various notices which had been promulgated and proceedings drawn in accordance with the statutory procedure which stood in place prior to 01 April 2021. It also becomes pertinent to note that the decision rendered by our Court in Man Mohan Kohli perhaps constituted the solitary exception in the sense of having left a window open to the respondents to draw proceedings afresh. A majority of the High Courts', however, do not appear to have made such a provision or provide the Revenue with a right of recourse. The Supreme Court was thus faced with a peculiar and an unprecedented situation where the Revenue was rendered remediless to assess escaped income even though material may have merited such an action being pursued solely on account of a misinterpretation of the correct legal position. It was these factors which clearly appear to have weighed upon the Supreme Court to mould and sculpt a procedure which would strike a just balance between competing interests. 24. In order to carve out an equitable solution which would redress the deadlock, the Supreme Court invoked its powers ....
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....tices should have framed directions for those notices being construed and deemed to have been issued under Section 148A. Ashish Agarwal proceeded further to observe that the Revenue should have been "permitted to proceed further with the reassessment proceedings as per the substituted provisions......". Our view of the judgement being confined to proceedings at the stage of notice is further fortified from the Supreme Court providing in para 8 of the report that "The respective impugned Section 148 notices issued to the respective assessees shall be deemed to have been issued under section 148A of the Income Tax Act as substituted by Finance Act, 2021 and treated to be show cause notices in terms of Section 148A(b)." 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 c....