Key takeaways from the Supreme Court’s decision on Re-assessment Notices under Sections 148/148A

Описание: #TaxmannUpdates #SupremeCourt #Reassessment #Notice #FinanceAct

Key takeaways from the decision of the Supreme Court in Union of India v. Ashish Agarwal [2022] 138 taxmann.com 64 (SC) deeming notices under Section 148 as notice under Section 148A

• The attached video discusses the ratio emanating from the latest decision of Supreme Court in the case of UOI v. Ashish Agarwal, where the Hon’ble Apex Court has partly modified the decision of several High Courts across the country, which had quashed the notices issued under section 148 after 01.04.2021 on the ground that Revenue failed to follow the new procedure inter alia issuing Show-cause notices under section 148A of the Act, as was introduced by the Finance Act, 2021.

• The aforesaid decision involves two issues – (i) the exercise of power under Article 142 of the Constitution in an income tax matter, and (ii) interpretation of the decision on merits and implications of deeming notices issued under section 148 after 01.04.2021 as notices issued under section 148A(b) of the Act.

• In the attached video, the author has reserved his comments on exercise of power under Article 142 by the Supreme Court, however, has analysed the ratio of decision on merits and discussed its implications.

• It has been opined that, it would be a misnomer to understand the decision of the Supreme Court to be reversing the decision of several High Courts. On the contrary, it has been opined that the Supreme Court has affirmed the decision of High Court which had held that the Revenue had erred in not following the new procedure laid down by the Finance Act, 2021 while issuing notices under section 148 after 01.04.2021; the Supreme Court has upheld the ratio of the High Court decision that the new procedure was applicable retrospective by to earlier assessment year(s).

• It has been opined that the Supreme Court has only partly modified the decision of High Court to the extent that the High Court had given liberty to the Revenue to issue notices as per new procedure, in accordance with law, substituting the said finding with deeming such notices to be notices issued under section 148A through exercise of power under Article 142 of the Constitution.

• Considering that the Supreme Court has held that such new notices will have to be complied with the amended law as per Finance Act, 2021, and notices under section 148 to be issued in pursuance to such notices under section 148A, will have to meet the rigors of new amended law including the revised time limits prescribed under section 149 of the Act. Thus, fresh notices under section 148 to be issued in pursuance to following of the procedure under section 148A, where earlier notices under section 148 have been deemed as notices under section 148A, would in the author’s view be tested with the revised time limits prescribed under section 149 as prevalent after amendment of Finance Act, 2021. Considering 148 notices will be issued after May/June 2022, it could be taken that notices cannot now be issued up to assessment year 2014-15, as per revised time limits under section 149, which got time barred on 31.03.2021 and no fresh life granted to them by the Supreme Court in impugned decision.
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