ARJUN SAHU vs. ASSISTANT COMMISSIONER OF INCOME TAX AND ANOTHER

WTAX/3702/2025HC AllahabadUPHC01378577202507 October 20255 pages
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What did the High Court hold?

The High Court held that regardless of whether the amended Section 148-A statutorily mandated an opportunity, the precedential law established in GKN Driveshafts (India) Ltd v. Income Tax Officer (2003) 259 ITR 19 (SC) required the Assessing Authority to afford a minimal opportunity to the assessee to object to the initiation of re-assessment proceedings before they are undertaken. The Court found the revenue's objection to be hyper-technical and that the rule of law under Article 141 of the Constitution, as reinforced by the GKN Driveshafts judgment and the statutory principle in Section 148-A, mandates such an opportunity. The Court directed that the petitioners must file their returns by October 31, 2025. Thereafter, the Assessing Authority must provide the petitioners with the information relied upon within one week. The petitioners will then have two weeks to file objections, and the authority must pass a reasoned speaking order within two weeks of receiving objections. If re-assessment proceedings are initiated, the first date must be fixed with at least thirty days' advance notice. The Court noted that jurisdictional issues could be raised later if they survive.

What were the facts?

Four writ petitions were filed challenging re-assessment proceedings initiated against the petitioners, Arjun Sahu, Syed Quamer Abbas Zaidy, Shashi Kiran, and Nikhil Nirwal. The assessment years involved are 2023-2024 for Arjun Sahu, Syed Quamer Abbas Zaidy, and Nikhil Nirwal, and 2021-2022 for Shashi Kiran. The re-assessment notices were issued under Section 148 of the Income Tax Act, 1961, after the amendment to Section 148-A by the Finance Act No. 2 of 2024, effective from September 1, 2024. The petitioners contended that the mandatory obligation to grant them an opportunity under the amended Section 148-A before initiating re-assessment proceedings was not met. They also claimed there was no material indicating escaped income and that they were not confronted with adverse material.

What were the issues?

1. Whether the re-assessment notices issued under Section 148 of the Income Tax Act, 1961, are invalid for failure to provide the petitioners an opportunity of being heard under the amended Section 148-A, given that the amendments to Section 148-A by the Finance Act No. 2 of 2024 are effective from September 1, 2024? Assessee's Contention: The re-assessment notices were issued after the amendment to Section 148-A, making the opportunity to be heard mandatory. They argued that there was no material indicating escaped income and they were not confronted with adverse material, rendering the proceedings without jurisdiction. Revenue's Contention: The provisions of Section 148-A, as amended, do not apply to cases where searches were carried out before September 1, 2024. Therefore, the Assessing Authority is not obligated to provide an opportunity to object to the assumption of jurisdiction to re-assess. Petitioners will have ample opportunity to dispute the proposed assessment later.

Which sections of the Income-tax Act were involved?

Section 148,Section 148-A

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HIGH COURT OF JUDICATURE AT ALLAHABAD WRIT TAX No. - 3702 of 2025

Connected With: WRIT TAX No. - 3703 of 2025 And WRIT TAX No. - 3704 of 2025

WRIT TAX No. - 3705 of 2025

Versus Counsel for Petitioner(s) : Mayank Chandra, Surya Pratap Singh Counsel for Respondent(s) : Gaurav Mahajan, Krishna Agarawal, Shalini Goel Versus Counsel for Petitioner(s) : Mayank Chandra, Shriyanshi Upadhyay, Surya Pratap Singh Counsel for Respondent(s) : Dhananjay Awasthi, Gaurav Mahajan Versus Counsel for Petitioner(s) : Mayank Chandra, Surya Pratap Singh, Suyash Mehrotra Counsel for Respondent(s) : Dhananjay Awasthi, Gaurav Mahajan Versus Arjun Sahu .....Petitioner(s) Assistant Commissioner Of Income Tax And Another .....Respondent(s) Syed Quamer Abbas Zaidy .....Petitioner(s) Assistant Commissioner Of Income Tax And Another .....Respondent(s) Shashi Kiran .....Petitioner(s) Income Tax Officer And Another .....Respondent(s) Nikhil Nirwal .....Petitioner(s)

Court No. - 3 HON'BLE SAUMITRA DAYAL SINGH, J. HON'BLE INDRAJEET SHUKLA, J.

1.

Heard Shri Nitin Kanwar, learned counsel along with Shri Surya Pratap Singh, learned counsel for petitioners, Ms. Shalini Goel, learned counsel and Shri D

The order continues below.

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