TaxTMI 
TaxTMI 
2024 (4) TMI 96
X X X X Extracts X X X X
X X X X Extracts X X X X
....endered 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 reassessment. 3. According to the petitioner, the j....
X X X X Extracts X X X X
X X X X Extracts X X X X
....indita 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 that the transactions stated above remains unexplained/undisclosed and calls fo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 aforementioned shares fully paid-up. This fact can also be verified from my Balance sheets as at 31.03.2013, 31.03.2014 31.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ipathi, 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 her original return of income on 27.03.2014 declaring total income of Rs. 4,83,099/-. As per the information available with the department it was noticed that the assessee has made substantial investment in shares of Nimit Bu....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 reassessment proceedings in the case of the writ petitioner. Aggrieved by the initiation of that action, the petitioner filed detailed objections. Those objections, however, came to be rejected in terms of an order dated 19 July 2022. The aforesaid order was followed by the issuance of a formal notice under Section 1....
X X X X Extracts X X X X
X X X X Extracts X X X X
....arned 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 entertaining a challenge to an order of framing charge. The question regarding the duration of the interim orders passed by the High Courts in various other proceedings did not specifically arise for consideration in the case of Asian Resurfacing. The provisions of Article 142 of the Constitution of India are meant to further the c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....emplated 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 Court can make in order to do complete justice between the parties, must not only be consistent with the fundamental rights guaranteed by the Constitution, but it cannot even be inconsistent with the substantive provisions of the relevant statutory laws. Therefore, we do not think it would be possible to hold that Article 142(1) confers u....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h 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, viz., to do complete justice between the parties. It cannot be otherwise. As already noticed in a case of contempt of court, the contemner and the court cannot be said to be litigating parties. 48. The Supreme Court in exercise of its jurisdiction under Article 142 has the power to make such order as is necessary for doing complete justice "between the part....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 without hearing parties who would be affected. Mr. Vohra sought to draw sustenance from the observations rendered by the Constitution Bench in High Court Bar Association where it was held that the powers conferred by Article 142 being curative cannot be exercised in ignorance of the substantive rights of litigants. 13. Our attention was also invited to the observations of the Constitution Bench when it observe....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 rendered by the Constitution Bench in Ashish Agarwal. We are thus called upon to answer whether the judgment in Ashish Agarwal mandated or even envisaged the reopening of this particular class of cases. 16. It becomes pertinent to note that the family of provisions dealing with reassessment underwent significant statutory amendments consequent to the promulgation of Finance Act, 2021. The provisions so recast saw the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....arwal 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 Agarwal: - "19. However, by way of Section 148-A, the procedure has now been streamlined and simplified. It provides that before issuing any notice under Section 148, the assessing officer shall: (i) conduct any enquiry, if required, with the approval of specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment; (ii) provide an opportunity of being heard....
X X X X Extracts X X X X
X X X X Extracts X X X X
....omplete 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 view the same ought not to have been issued under the unamended Act and ought to have been issued under the substituted provisions of Sections 147 to 151 of the IT Act as per the Finance Act, 2021. 24. There appears to be genuine non-application of the amendments as the officers of the Revenue may have been under a bona fide belief that the amendments may not yet have been enforced. Therefore, we are of the opinion that some leeway must be shown in that regard which the High Courts could ha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 assessees as because of a bona fide belief of the officers of the Revenue in issuing approximately 90,000 such notices, the Revenue may not suffer as ultimately it is the public exchequer which would suffer. 27. Therefore, we have proposed to pass the present order with a view to avoiding filing of further appeals before this Court and burden this Court with approximately 9000 appeals against the similar judgments and orders passed by the various High Courts, the particulars of some of which are referred to hereinabove. We have also proposed to pas....
X X X X Extracts X X X X
X X X X Extracts X X X X
....stituted). 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 shall stand modified to the aforesaid extent. The present order is passed in exercise of powers under Article 142 of the Constitution of India so as to avoid any further appeals by the Revenue on the very issue by challenging similar judgments and orders, with a view not to burden this Court with approximately 9000 appeals. We also observe that the present order shall also govern the pending writ petitions, pending before various the High Courts in which similar notices under Section 148 of the Act issued after 1-4-2021 are under challenge." 22. As is manifest from a reading of the aforesaid passages for....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he 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 conferred by Article 142 of the Constitution and ordained that all such notices would be treated as being under Section 148A(b) and for proceedings to be taken forward in accordance with law thereafter. The direction so framed thus enabled the assessee to question the assumption of jurisdiction under Section 148 and take advantage of the beneficial measures embodied in Section 148 A. The assessee thus derived a right to assail the initiation of reassessment proceedings on jurisdictional grounds by preferring objections which the AO was statutorily obliged to take into consideration before issuing notices under S....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ct 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 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. 26. Regard must also be had to the undisputed fact that the petitioner never questioned the validity of the original notices on grounds which were urged before the various High Courts and where assessees had questioned the invocation of the unamended provisions. The petitioner chose to contest the reassessment proceedings on merits. It is also admitted before us that the petitioner was also....