LUV KUSH PROJECTS LTD vs. INCOME TAX OFFICER,WAR NO 6(2) KOL

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WPA/7066/2022HC CalcuttaWBCHCA014901202228 April 2022Bench: HON'BLE JUSTICE MD. NIZAMUDDIN5 pages
AI SummaryRemanded

What did the High Court hold?

The High Court, following the Supreme Court's judgment in Union of India & Ors. v. Ashish Agarwal, held that the impugned notices issued under the unamended Section 148 of the Income Tax Act, 1961, which were the subject of the writ petitions, shall be deemed to have been issued under Section 148A of the Act, as substituted by the Finance Act, 2021. These notices are to be construed as show-cause notices in terms of Section 148A(b). The assessing officer is directed to provide the assessees with the information and material relied upon by the Revenue within thirty days, allowing the assessees two weeks thereafter to reply. The requirement of conducting an enquiry under Section 148A(a) is dispensed with as a one-time measure for notices issued from April 1, 2021, till date. The assessing officers shall then pass orders under Section 148A(d) and, thereafter, may issue notices under Section 148 as substituted. All defenses available to the assessees under Section 149 and other rights and contentions under the Finance Act, 2021, and in law remain available. This order is applicable pan-India and governs pending writ petitions.

What were the facts?

The petitioners, Luv Kush Projects Ltd. and others, filed multiple writ petitions (WPA Nos. 7066 of 2022, etc.) before the Calcutta High Court. These petitions challenged notices issued under Section 148 of the Income Tax Act, 1961, and subsequent proceedings under Section 147 of the old Act. The High Court had previously quashed these notices and proceedings, granting liberty to the assessing officers to proceed in accordance with law. The present proceedings are being considered in light of the Supreme Court's judgment dated May 4, 2022, in the case of Union of India & Ors. v. Ashish Agarwal.

What were the issues?

1. Whether the impugned notices issued under the unamended Section 148 of the Income Tax Act, 1961, which were subject to writ petitions before various High Courts, shall be deemed to have been issued under Section 148A of the Act as substituted by the Finance Act, 2021, and construed as show-cause notices in terms of Section 148A(b)? Assessee's Contention: The judgment does not record specific contentions from the assessee's side regarding the interpretation of the Supreme Court's ruling. The High Court is proceeding based on the Supreme Court's directions. Revenue's Contention: The revenue, represented by the Union of India, is implicitly seeking to have the proceedings continue in accordance with the Supreme Court's judgment, which provides a framework for dealing with such notices.

Which sections of the Income-tax Act were involved?

Section 148,Section 147,Section 148A,Section 149

AI-generated summary — verify with the full judgment below

17-05-2022 Item No.1-17, 19-22 ks IN THE HIGH COURT AT CALCUTTA Constitutional Writ Jurisdiction Appellate Side WPA No.7066 of 2022 Luv Kush Projects Ltd. -vs- Income Tax Officer, Ward No.6(2), Kolkata & Ors. with WPA No.7069 of 2022 with WPA No.7072 of 2022 with WPA No.7073 of 2022 with WPA No.7076 of 2022 With WPA No.7079 of 2022 With WPA No.7086 of 2022 With WPA No.7088 of 2022 With WPA No.7091 of 2022 With WPA No.7094 of 2022 With WPA No.7141 of 2022 With WPA No.7142 of 2022 With WPA No.7143 of 2022 With WPA No.7144 of 2022 With WPA No.7145 of 2022 With WPA No.7147 of 2022 With WPA No.7150 of 2022 With WPA No.7197 of 2022 With WPA No.7198 of 2022 With WPA No.7199 of 2022

2 With WPA No.7294 of 2022 Mr. Avra Mazumder, Sk. Md. Bilwal Hossain, Ms. Sudeshna Mazumder …for the petitioners. Mr. Om Narayan Rai, Mr. Soumen Bhattacharji, Mr. Aryak Dutta … For the Union of India. In compliance of my earlier orders, petitioners in these writ petitions have paid the costs and filed receipts, which are taken on record. Taking note of recent judgement of the Hon’ble Supreme Court dated May 4, 2022 in the case of Union of India & Ors. v. Ashish Agarwal in Civil Appeal No.3005 of 2022, it is clarified that by the earlier orders of this court, the impugned notices under section 148 of the Income Tax Act, 1961 and all proceedings under section 147 of the old Act, which were quashed with liberty to the assessing officer concerned to proceed in accordance with law, would now mean as per the law and guidelines laid down in the aforesaid judgement of the Hon’ble Supreme Court. Paragraphs 10, 11 and 12 of the aforesaid judgement of the Hon’ble Supreme Court, which, according to me, have much relevance, are quoted below:– “10. In view of the above and for the reasons stated above, the present Appeals are ALLOWED IN PART. The impugned common judgements and orders passed by the High Court of Judicature at Allahabad in W.T. No. 524/2021 and other allied tax appeals/petitions, is/are hereby modified and substituted as

3 under:– (i) The impugned section 148 notices issued to the respective assessees which were issued under unamended section 148 of the IT Act, which were the subject matter of writ petitions before the various respective High Courts shall be deemed to have been issued under section 148A of the IT Act as substituted by the Finance Act, 2021 and construed or treated to be show-cause notices in terms of section 148A(b). The assessing officer shall, within thirty days from today provide to the respective assessees information and material relied upon by the Revenue, so that the assessees can reply to the show-cause notices within two weeks thereafter; (ii) The requirement of conducting any enquiry, if required, with the prior approval of specified authority under section 148A(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 01.04.2021 till date, including those which have been quashed by the High Courts. Even otherwise as observed hereinabove holding any enquiry with the prior approval of specified authority is not mandatory but it is for the concerned Assessing Officers to hold any enquiry, if required; (iii) The assessing officers shall thereafter pass orders in terms of section 148A(d) in respect of each of the concerned assessees; Thereafter after following the procedure as required under section 148A may issue under section 148 (as substituted); (iv) 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 concerned assessees and Revenue under the Finance Act, 2021 and in law shall continue to be available. 11. The present order shall be applicable PAN INDIA and all judgments and orders passed by different High Courts on the issue and under which similar notices which were issued after 01.04.2021 issued under section 148 of the Act are set aside

4 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 present order shall also govern the pending writ petitions, pending before various High Courts in which similar notices under Section 148 of the Act issued after 01.04.2021 are under challenge. 12. The impugned common judgments and orders passed by the High Court of Allahabad and the similar judgments and orders passed by various High Courts, more particularly, the respective judgments and orders passed by the various High Courts particulars of which are mentioned hereinabove, shall stand modified/substituted to the aforesaid extent only.” Accordingly, the respondent-assessing authorities concerned will now proceed with those quashed notices and proceedings in accordance with the guideline and law laid down in the aforesaid judgment of the Hon’ble Supreme Court. [Md. Nizamuddin, J]

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