M/S LOIL OVERSEAS FOOD LTD. vs. DEPUTY COMMISSIONER OF INCOME TAX AND ANR.

Facts

The petitioner, Loil Overseas Foods Limited, filed a writ petition challenging a notice dated 22.03.2021 issued under Section 148 of the Income Tax Act, 1961, for assessment year 2013-14. The challenge was based on the ground that the notice was not preceded by the procedure prescribed under Section 148A of the Act, which was introduced by the Finance Act, 2021. The respondents are the Deputy Commissioner of Income Tax, Ludhiana, and another. The judgment notes that the impugned notice was dispatched to the petitioner prior to 01.04.2021.

Held

The High Court held that notices issued under Section 148 of the Income Tax Act, 1961, and dispatched prior to 01.04.2021, were not required to be preceded by a notice under Section 148A. This is because Section 148A came into effect prospectively from 01.04.2021. Therefore, such notices would continue to be governed by the unamended provisions. The Court referred to the Supreme Court's decision in Union of India vs. Ashish Agarwal, which held that the new provisions of Section 148A would apply to notices issued on or after 1st April 2021. However, for notices issued prior to 01.04.2021, the Court found no justifiable reason to interfere with the impugned notice. The petitioner was granted liberty to file its written response to the notice, after which the Assessing Officer was to proceed with the assessment in accordance with law.

Key Issues

1. Whether a notice issued under Section 148 of the Income Tax Act, 1961, prior to 01.04.2021, is required to be preceded by the procedure prescribed under Section 148A of the Act, as introduced by the Finance Act, 2021? The petitioner argued that the notice under Section 148 was invalid as it did not comply with the newly introduced Section 148A. The revenue contended that since the notice was issued and dispatched before the effective date of Section 148A (01.04.2021), the unamended provisions would apply, and Section 148A was not retrospectively applicable to such notices. The judgment relies on the Supreme Court's decision in Union of India and ors. vs. Ashish Agarwal.