AI Drafter 
TaxTMI 
TaxTMI 
2025 (9) TMI 1785
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....the corresponding Assessment Years :- Table I: A. D.Tamil Selvi W.P. (MD) No. Assessment Year Impugned Assessment Order Date Impugned Penalty Notice u/s 271AAC 30938/2024 2016-2017 26.05.2023 20.12.2023 30939/2024 2018-2019 21.03.2024 21.03.2024 30940/2024 2017-2018 29.03.2022 29.03.2022 B. MJR Hospitality and Services Apartments W.P. (MD) No. Assessment Year Impugned Assessment Order Date Impugned Penalty Notice u/s 271AAC 5328/2025 2016-2017 31.03.2023 31.03.2023 5329/2025 2017-2018 31.03.2023 31.03.2023 5330/2025 2018-2019 31.03.2023 31.03.2023 3. The issue in these Writ Petitions pertains to Notices issued under Section 148 of the Act as it stood prior to 01.04.2021 and on account of the complication due to interpretations placed by the Hon'ble Supreme Court in Union of India Vs. Ashish Agarwal., (2023) 1 SCC 617 on the limitations under the new regime with effect from 01.04.2021 in Chapter XIV of the Act. 4. In five out of six these cases, Notices under Section 148 of the Act, as it stood prior to 01.04.2021 were issued. For the Petitioner in W.P. No. 30939 ....
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....n 148-A(a) is hereby dispensed with as a one- time measure vis-à-vis those notices which have been issued under 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 assessee 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 assessee including those available under Section 149 of the IT Act and all rights and contentions which may be available to the assessee concerned and Revenue under the Finance Act, 2021 and in law shall continue to be available." 9. The Court in Ashish Agarwal case referred to supra had held that the notices issued under Section 148 of the Act as in force till 31.03.2021 between April 1, 2021 and June 30, 2021 ....
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....ith an instruction of the Central Board of Direct Taxes (CBDT) dated 11.05.2022 in Instruction No. 1/2022. 15. The said instruction clarified that the decision would apply to all cases where reassessment notices had been issued, irrespective of whether such notices had been challenged. 16. Relevant portion of the instruction issued by the Central Board of Direct Taxes (CBDT) in Instruction No. 1/2022 dated 11.05.2022 reads as under: "8.1 The procedure required to be followed by the Jurisdictional Assessing Officer/Assessing Officer, in compliance with the order of the Hon'ble Supreme Court, is as under: ● The extended reassessment notices are deemed to be show cause notices under clause (b) of section 148A of the Act in accordance with the judgment of Hon'ble Supreme Court. Therefore, all requirement of new law prior to that show cause notice shall be deemed to have been complied with. ● The Assessing Officer shall exclude cases as per clarification in paragraph 7.1 above. ● Within 30 days i.e. by 2nd June 2022, the Assessing Officer shall provide to the assessee, in remaining cases, the information and material re....
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....on which such notices ought to have been issued, and that the new Section 149 of the Act must be applied at that point in time. 18. In Paragraph No. 2 of the aforesaid instruction, it was clarified as under :- "2. These extended reassessment notices wee issued by the Assessing Officers under the provision of section 148 of the Income Act, 1961 (hereinafter referred to as the "Act") following the procedure prescribed under various sections pertaining to reassessment namely sections 147 to 151, as they existed prior to their amendment by the Finance Act, 2021 (hereinafter referred to as "old law"). With effect from 1st April 2021, the old law has been substituted with new sections 147-151 (hereinafter referred to as the "new law"). " 19. The decision of the Hon'ble Supreme Court in Ashish Agarwal case referred to supra as which was implemented by CBDT vide Instruction No. 1/2022 dated 11.05.2022 was re-examined by a larger bench of the Hon'ble Supreme Court in Union of India vs. Rajeev Bansal., 2024 SCC Online SC 2693. The Hon'ble Supreme Court vide its Order dated 03.10.2024 in Rajeev Bansal case referred to supra, framed the following issues for considera....
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.... (g) The time during which the show-cause notices were deemed to be stayed is from the date of issuance of the deemed notice between April 1, 2021 and June 30, 2021 till the supply of relevant information and material by the Assessing Officers to the assessee in terms of the directions issued by this court in Union of India v. Ashish Agarwal [(2022) 444 ITR 1 (SC); (2023) 1 SCC 617.], and the period of two weeks allowed to the assessee to respond to the show-cause notices; and (h) The Assessing Officers were required to issue the reassessment notice under section 148 of the new regime within the time limit surviving under the Income-tax Act read with the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. All notices issued beyond the surviving period are time barred and liable to be set aside; 21. The four year limitation for issuance of Notice under Section 148 under the old regime was extended upto 30.06.2021 in view of the extension under Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) for the Assessment Year 2016-2017. The limitation would have otherwise expired one year before on 31.0....
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....ly of the relevant material and information to the assessee. 26. In Paragraph No. 99, the Hon'ble Supreme Court in Rajeev Bansal case referred to supra observed as under :- 99. In Union of India v. Ashish Agarwal [(2022) 444 ITR 1 (SC); (2023) 1 SCC 617.], this court created a legal fiction by deeming the section 148 notices issued under the old regime as show-cause notices under section 148A(b) of the new regime. The purpose of the legal fiction was to enable the Revenue "to proceed further with the reassessment proceedings as per the substituted provisions" of the Income-tax Act. Accordingly, all the reassessment notices issued under the old regime were deemed to always have been show-cause notices issued under section 148A(b) of the new regime. The fiction replaced section 148 notices with section 148A(b) notices with effect from the date when the notices under section 148 of the old regime were issued between April 1, 2021 and June 30, 2021, as the case may be. This ensured the continuance of the reassessment process initiated by the Revenue from April 1, 2021 to June 30, 2021 under the old regime. 27. As far as, limitation is concerned, the Hon'ble Supre....
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.... 98. A legal fiction is created for a definite purpose and it should be limited to the purpose for which it is enacted or applied. It is a well-established principle of interpretation that the courts must give full effect to a legal fiction by having due regard to the purpose for which the legal fiction is created. (State of Maharashtra v. Laljit Rajshi Shah [(2000) 2 SCC 699; 2000 SCC (Cri) 533.] ) The consequences that follow the creation of the legal fiction "have got to be worked out to their logical extent". (Bengal Immunity Company Ltd. v. State of Bihar [(1955) 6 STC 446 (SC); 1955 SCC OnLine SC 2.] ) The court has to assume all the facts and consequences that are incidental or inevitable corollaries to giving effect to the fiction. (Industrial Supplies Pvt. Ltd. v. Union of India [(1980) 4 SCC 341.] ... 101. Under section 148A(b), the Assessing Officer has to comply with two requirements : (i) issuance of a show- cause notice; and (ii) supply of all the relevant information which forms the basis of the show-cause notice. The supply of the relevant material and information allows the assessee to respond to the show-cause notice. The deemed notices were....
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....lowed to the assessee to respond to the show-cause notices. (b) Interplay of Union of India v. Ashish Agarwal [(2022) 444 ITR 1 (SC); (2023) 1 SCC 617.] with Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020." 29. In the above illustration, the Hon'ble Supreme Court in Rajeev Bansal case referred to supra observed the time limit for issuance of a notice under Section 148 of the new regime will end on August 18, 2022. 30. In Paragraph No.112, the Hon'ble Supreme Court in Rajeev Bhansal case referred to supra gave an illustration. Same is reproduced below :- "112. Let us take the instance of a notice issued on May 1, 2021 under the old regime for a relevant assessment year. Because of the legal fiction, the deemed show-cause notices will also come into effect from May 1, 2021. After accounting for all the exclusions, the Assessing Officer will have sixty- one days (days between May 1, 2021 and June 30, 2021) to issue a notice under section 148 of the new regime. This time starts ticking for the Assessing Officer after receiving the response of the assessee. In this instance, if the assessee submits the response on June ....
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....sment notices were validly issued according to the provisions of the new regime, the notices under section 148 of the new regime would have to be issued within the time limits extended by Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. As a corollary, the reassessment notices to be issued in pursuance of the deemed notices must also be within the time limit surviving under the Income-tax Act read with Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. This construction gives full effect to the legal fiction created in Union of India v. Ashish Agarwal [(2022) 444 ITR 1 (SC); (2023) 1 SCC 617.] and enables both the assessee and the Revenue to obtain the benefit of all consequences flowing from the fiction. (See State of A.P. v. A.P. Pensioners' Association [(2005) 13 SCC 161; 2006 SCC (L&S) 666. (This court observed that the "legal fiction undoubtedly is to be construed in such a manner so as to enable a person, for whose benefit such legal fiction has been created, to obtain all consequences flowing therefrom".)] ) 110. The effect of the creation of the legal fiction in Union of India v. Ashish Agarwal....
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....otices within the period prescribed under Section 149(1) of the new regime read with Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. ii. obtain the previous approval of the authority specified under Section 151. 34. Paragraph No.113 of the decision of the Hon'ble Supreme Court in Rajeev Bansal case referred to supra is reproduced below :- "113. In Union of India v. Ashish Agarwal [(2022) 444 ITR 1 (SC); (2023) 1 SCC 617.], this court allowed the assessees to avail of all the defences, including the defence of expiry of the time limit specified under section 149(1). In the instant appeals, the reassessment notices pertain to the assessment years 2013-2014, 2014-2015, 2015-2016, 2016-2017, and 2017-2018. To assume jurisdiction to issue notices under section 148 with respect to the relevant assessment years, an Assessing Officer has to : (i) issue the notices within the period prescribed under section 149(1) of the new regime read with Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020; and (ii) obtain the previous approval of the authority specified under section 151. A notice issued without ....
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.... period. Relevant paragraph of the aforesaid Judgment reads as under- *(Deliberately left black as it has been reproduced above) 17. Dealing with almost an identical situation pursuant to the decision of the Hon'ble Supreme Court in Union of India Vs. Rajeev Bansal, 2024 SCC OnLine SC 2693, the Delhi High Court quashed the notice dated 31.03.2021 issued to the assessee under Section 148 of the Act and the proceedings. Since the law laid down by the Hon'ble Supreme Court in Union of India Vs. Rajeev Bansal, 2024 SCC OnLine SC 2693 is a settled law, it is binding on this Court. I am therefore unable to take a contra view in the light of the aforesaid decision of the Hon'ble Supreme Court in Union of India Vs. Rajeev Bansal, 2024 SCC OnLine SC 2693. 18. Therefore, this Writ Petition deserves to be allowed and is accordingly allowed. No costs. Connected miscellaneous petitions are closed." 37. Thus, the Judgments of the High Courts rendered in Rajeev Bansal Vs. Union of India (2023) 453 ITR 153 (All); 2023 SCC OnLine All 87, (Writ Tax No.1086 of 2022 (Allahabad High Court)), Keenara Industries Pvt. Ltd. Vs. ITO (2023) 453 ITR 51 (Guj); 2023 SCC....
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....er submitted that Notice under Section 148 of the Act issued by the 1st Respondent under the new regime was beyond the period of limitation in view of surviving period concept propounded by the Hon'ble Supreme Court in Rajeev Bansal case referred to supra. 42. Therefore, it is submitted that the Notices are time barred and liable to be quashed. In this connection, the learned counsel for the Petitioner also relied on the decision of this Court in Thulasidass Prabavati Vs. ITO. 43. It is further submitted by the learned counsel for the Petitioner that once the initial Notice itself is without jurisdiction then all the consequential Notices and Orders flowing from it are all illegal and invalid. In this connection, the learned counsel for the Petitioner relied on the decision of the Hon'ble Supreme Court in Rajeev Bansal case referred to supra. 44. In support of his contentions, the Petitioner relied on the following decisions of the Hon'ble Supreme Court and High Courts: i. Chhotobhai Jethabhai Patel Vs. Industrial Court, Maharashtra., (1972) SCC 46 (16). ii. Superintendent of Taxes Vs. Onkarmal Nathmal Trust., (1976) 1 SCC 766 (28). i....
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..... Rajeev Bansal., (2024) 469 ITR 46 SC ii. Zile Singh Vs. State of Haryana., (2004) 8 SCC 1. iii. Allied Motors Vs. Commissioner of Income Tax Delhi., (1997) 3 SCC 472 iv. Commissioner of Income Tax Vs. Gold Coin Health Food Private Limited., (2008) 9 SCC 622 v. CIT Vs. Chhabil Das Agarwal., (2013) 357 ITR 357. vi. T.K.S. Builders Pvt. Ltd., Vs. ITO Ward 25(3) New Delhi., WPO No. 1968 of 2023 vii. Mark Studio India Private Limited Vs. Income Tax Officers, Non-Corporate Ward 10(6)., W.P. No. 25223 of 2024 viii. Sanghi Steel Udyog Private Limited Vs. Union of India., WPO No. 1549 of 2023 ix. Dhiraj Lakhotia Vs. Union of India., WP No. 1458 of 2024 DISCUSSION :- 51. The dispute in these Writ Petitions pertains to the Assessment Years 2016-2017 to 2018-2019. As mentioned above, the entire ecosystem for the assessment/reassessment under the Act was altered with effect from 01.04.2021 in view of the amendments made to the provisions of the Act. 52. Prior to the above amendments, a Notice under Section 148 of the Act could be issued in the circumstances specified therein, which had to ultimately culminate in ....
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....s power under Article 142 of the Constitution of India. 60. To understand the conclusion in Paragraph No. 114 of Rajeev Bansal case referred to supra of the Honb'ble Supreme Court, one has to first read the conclusion in Paragraph No. 114(f), wherein it was held that the directions in Ashish Agarwal case referred to supra will extend to all the Ninety Thousand reassessment notices issued under the old regime during the period 1 April 2021 and 30 June 2021. Ninety Thousand reassessment notices would include the notices issued to the respective Petitioners in these Writ Petitions as well. 61. Paragraph No. 114(f) of Rajeev Bansal case referred to supra, as extracted above also is read along with Paragraph No. 28.3 of Ashish Agarwal case referred to supra, wherein it was held that 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. Thereafter, no approval is required to issue Notice under Section 148A(b) of the Act as in force from 01.04.2021. 62. Thus, holding enquiry with the prior approval of specified authority is not ....
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....o supra further observed as follows :- 77. Parliament enacted TOLA to ensure that the interests of the Revenue are not defeated because the assessing officer could not comply with the pre-conditions due to the difficulties that arose during the COVID-19 pandemic. Section 3(1) of TOLA relaxes the time limit for compliance with actions that fall for completion from 20 March 2020 to 31 March 2021. TOLA will accordingly extend the time limit for the grant of sanction by the authority specified under Section 151. The test to determine whether TOLA will apply to Section 151 of the new regime is this: if the time limit of three years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under Section 151(i) has an extended time till 30 June 2021 to grant approval. In the case of Section 151 of the old regime, the test is: if the time limit of four years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under section 151(2) has time till 31 March 2021 to grant approval. The time limit for Section 151 of the old regime expires on 31 March 2021 because the new regime....
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....nion of India v. Ashish Agarwal [(2022) 444 ITR 1 (SC); (2023) 1 SCC 617.] directed the Assessing Officers to "pass orders in terms of section 148A(d) in respect of each of the assessee concerned". Further, it directed the Assessing Officers to issue a notice under section 148 of the new regime "after following the procedure as required under section 148A". Although this court waived off the requirement of obtaining prior approval under section 148A(a) and section 148A(b), it did not waive the requirement for section 148A(d) and section 148. Therefore, the Assessing Officer was required to obtain prior approval of the specified authority according to section 151 of the new regime before passing an order under section 148A(d) or issuing a notice under section 148. These notices ought to have been issued following the time limits specified under section 151 of the new regime read with the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, where applicable." 68. Thus, the proceedings up to the stage of issuance of an order under Section 148A(d) of the Act need not comply with the requirements of Section 151 of the Act under the new regime with effec....
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....148A of the Act Authority who sanctioned the order in the present batch of cases Within three years (i)Principal Commissioner/or (ii) Principal Director/or (iii) Commissioner/or (iv) Director Section 151 Specified authority for Section 148 and 148A of the Act Authority who sanctioned the order in the present batch of cases After three years (i) Principal Chief Commissioner/or Principal Commissioner (ii) Principal Director General/or (iii) Chief Commissioner/or (iv) Director General 74. Thus, in the case of an Assessee whose income has escaped assessment, where the Assessment Year would have fallen within the four years limitation under the old regime cannot be proceeded further unless an approval is obtained from the specified authority under Section 151(ii) of the Act. However, as per the proviso to Section 151 of the Act the period of three years for the purposes of clause (i) shall be computed after taking account the period of limitation as excluded by the third or fourth or fifth provisos or extended by the sixth proviso to sub-section (1) of Section 149 of the Act inserted vide Finance Act, 2023. 75. Th....
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.... stayed by an order or injunction of any court shall be excluded. 81. Section 149 of the Act which prescribes the limitation for issuance of a notice under Section 148 of the Act, as in force under the old regime till 31.03.2021 and as in force with effect from 01.04.2021, during the period in dispute are reproduced below :- Section 149 of IT Act, till 31.03.2021 Section 149 of IT Act, with effect from 01.04.2021 149. Time limit for notice .- 149. Time limit for notice. (1) No notice under section 148 shall be issued for the relevant assessment year,- (a) if four years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b) or clause (c); (b) if four years, but not more than six years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to one lakh rupees or more for that year; (c) if four years, but not more than sixteen years, have elapsed from the end of the relevant assessment year unless the income in relation to any asset (including financial interest in any entity) located outside India, chargeable to ta....
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....day of March, 2021: Provided also that for the purposes of computing the period of limitation as per this section, the time or extended time allowed to the assessee, as per show-cause notice issued under clause (b) of section 148A or the period during which the proceeding under section 148A is stayed by an order or injunction of any court, shall be excluded: Provided also that where immediately after the exclusion of the period referred to in the immediately preceding proviso, the period of limitation available to the Assessing Officer for passing an order under clause (d) of section 148A is less than seven days, such remaining period shall be extended to seven days and the period of limitation under this sub-section shall be deemed to be extended accordingly. Explanation.- For the purposes of clause (b) of this sub-section, "asset" shall include immovable property, being land or building or both, shares and securities, loans and advances, deposits in bank account. (2) The provisions of sub-section (1) as to the issue of notice shall be subject to the provisions of section 151. 82. Further, under the 4th Proviso to Section 149 of the Act the period of limitation avai....
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.... on 04.05.2022 in Union of India Vs. Ashish Agarwal referred to supra B. MJR Hospitality and Services Apartments W.P. No. 5328 of 2025 5329 of 2025 5330 of 2025 Assessment Year 2016-2017 2017-2018 2018-2019 Notice u/s 148 28.06.2021 28.06.2021 28.06.2021 Notice u/s 148A(b) 31.05.2022* 01.06.2022* 01.06.2022* Reply given by the Petitioner 16.06.2022 16.06.2022 16.06.2022 Order u/s 148A(d) 28.06.2022 28.06.2022 28.06.2022 MJR Hospitality and Services Apartments Notice u/s 148 29.07.2022 29.07.2022 29.07.2022 Date of Assessment Order 29.07.2022 29.07.2022 29.07.2022 Date of the Penalty Notice 31.03.2023 31.03.2023 31.03.2023 3 year limitation 31.03.2023 31.03.2023 31.03.2023 4 year limitation 31.03.2020 31.03.2021 31.03.2022 6 year limitation 31.03.2021 31.03.2022 31.03.2023 10 year limitation 31.03.2023 31.03.2024 31.03.2025 Assessment Year 31.03.2027 31.03.2028 31.03.2029 * Notices issued under Section 148A(b) after the decision of the Hon'ble Supreme Court in Union ....
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.... ratio of the Hon'ble Supreme Court in both Ashish Agarwal case referred to supra and Rajeev Bansal case referred to supra, the last date for issuance of notice under Section 148 of the Act would be in terms of Paragraph No.114(g) of the Rajeev Bansal case referred to supra. 94. Since the notice has been issued under Section 148 of the Act immediately after the order was passed by the Hon'ble Supreme Court in Rajeev Bansal case referred to supra within a period of 3 years after excluding the period in terms of Paragraph No.114(g) of Rajeev Bansal case referred to supra, it has to be held that notices are in time. 95. However, there are no clear discussion emanating in the impugned Assessment Orders as they have been passed prior to the decisions of the Hon'ble Supreme Court in Ashish Agarwal case referred to supra and Rajeev Bansal case referred to supra. Therefore, rest of the impugned Assessment Orders are also liable to be set aside and be remitted back to the Respondents to pass a fresh order. 96. In so far as Writ Petitions in W.P.Nos. 5328, 5329 and 5330 of 2025 of MJR Hospitality and Services Apartments is concerned, the Petitioner sought time on 15.06.2....