JAMAL MOHAMMED ARANHIKKAL vs. INCOME TAX OFFICER

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WP(C)/17655/2021HC KeralaKLHC01046675202108 July 2022Bench: HONOURABLE MR. JUSTICE GOPINATH P.9 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the writ petitions would stand disposed of in light of the Supreme Court's judgment in Union of India (UOI) and Ors. v. Ashish Agarwal. The Supreme Court had directed that notices issued under the unamended Section 148 of the Income Tax Act, which were the subject matter of writ petitions before various High Courts, shall be deemed to have been issued under the substituted Section 148 of the Finance Act, 2021, and construed as show-cause notices in terms of Section 148A(b). The Assessing Officer was directed to provide information and material relied upon by the Revenue within thirty days, allowing the Assessees two weeks to reply. The requirement of conducting an enquiry under Section 148A(a) was dispensed with as a one-time measure for notices issued under the unamended Act from April 1, 2021, till the date of the judgment. The Assessing Officers were to pass orders under Section 148A(d) and thereafter issue notices under the substituted Section 148, with all defenses and rights available to the Assessees and Revenue preserved. The operative direction was to treat the Section 148 notices as show-cause notices under Section 148A and complete proceedings as directed by the Supreme Court.

What were the facts?

The petitioners, Mansoor Venkitta Chakrathodi, Jamal Mohammed Aranhikkal, and Popular Paints, filed writ petitions before the High Court of Kerala challenging notices issued under Section 148 of the Income Tax Act. They contended that the amended procedure under Section 148A of the Income Tax Act, introduced by the Finance Act of 2021, should have been followed before initiating reassessment proceedings. The assessment years are not explicitly stated in the judgment. The petitions were filed against the Income Tax Officer, Ward 2, Tirur. The procedural history involves the issuance of Section 148 notices, which the petitioners challenged on procedural grounds, leading them to approach the High Court.

What were the issues?

1. Whether the notices issued under the unamended Section 148 of the Income Tax Act, prior to the Finance Act of 2021, are valid without following the procedure prescribed under Section 148A of the Act? (Question of law and mixed fact and law, concerning Section 148 and Section 148A of the Income Tax Act). Assessee's contention: The petitioners argued that the procedure under Section 148A had to be followed before initiating reassessment proceedings, as mandated by the Finance Act of 2021. Revenue's contention: The learned Standing Counsel for the Department did not dispute the position that the matter was covered by the Supreme Court's judgment in Union of India v. Ashish Agarwal and stated that the Supreme Court's judgment covers these matters.

Which sections of the Income-tax Act were involved?

Section 148,Section 148A,Section 149

AI-generated summary — verify with the full judgment below

Heard together (3 matters)

WP(C) NO. 26171 OF 2021
WP(C).17655/2021
WP(C) NO. 26860 OF 2021

Read from the judgment's own cause title. This page is filed under one of them.

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE GOPINATH P. FRIDAY, THE 8TH DAY OF JULY 2022 / 17TH ASHADHA, 1944 WP(C) NO. 26171 OF 2021 PETITIONER: MANSOOR VENKITTA CHAKRATHODI, AGED 51 YEARS VENKITTA CHAKRATHODI HOUSE, PADAPPARAMBA, VATTALOOR, MALAPPURAM, PIN- 676 507. BY ADVS. LATHA ANAND M.N.RADHAKRISHNA MENON S.VISHNU (ARIKKATTIL) RESPONDENT: INCOME TAX OFFICER, WARD 2, TIRUR, OFFICE OF THE INCOME TAX OFFICER, CHEMBRA, TIRUR, MALAPPURAM DISTRICT, PIN 680 001. BY ADV CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENT THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 08.07.2022, ALONG WITH WP(C).17655/2021, 26860/2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

WP(C)NO.26171 OF 2021 & conn.cases 2 IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE GOPINATH P. FRIDAY, THE 8TH DAY OF JULY 2022 / 17TH ASHADHA, 1944 WP(C) NO. 17655 OF 2021 PETITIONER: JAMAL MOHAMMED ARANHIKKAL AGED 58 YEARS NO.476, ARANHIKKAL HOUSE, PATHAPPIRIYAM EDAVANNA, MALAPPURAM-676123. BY ADVS. LATHA ANAND K.R.PRAMOTH KUMAR S.VISHNU (ARIKKATTIL) RADHAKRISHNA PILLAI B SIDHARTH P.S. ROHITH MOHAN RESPONDENT: INCOME TAX OFFICER WARD-2, TIRUR, OFFICE OF THE INCOME TAX OFFICER, CHEMBRA, TIRUR, MALAPPURAM DISTRICT, PIN-680001. BY ADV CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENT THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 08.07.2022, ALONG WITH WP(C).26171/2021 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

WP(C)NO.26171 OF 2021 & conn.cases 3 IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE GOPINATH P. FRIDAY, THE 8TH DAY OF JULY 2022 / 17TH ASHADHA, 1944 WP(C) NO. 26860 OF 2021 PETITIONER: POPULAR PAINTS CALICUT ROAD, PERINTHALMANNA, MALAPPURAM, PIN - 679 322, REPRESENTED BY ITS MANAGING PARTNER SRI.V.USMAN. BY ADVS. LATHA ANAND M.N.RADHAKRISHNA MENON S.VISHNU (ARIKKATTIL) B.RADHAKRISHNA PILLAI SIDHARTH P.S. ROHITH MOHAN ARJUN VARMA RESPONDENT: INCOME TAX OFFICER WARD-2, TIRUR, OFFICE OF THE INCOME TAX OFFICER, CHEMBRA, TIRUR, MALAPPURAM DISTRICT, PIN - 680 001. BY ADV CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENT THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 08.07.2022, ALONG WITH WP(C).26171/2021 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

WP(C)NO.26171 OF 2021 & conn.cases 4 JUDGMENT [WP(C) Nos.26171/2021, 17655/2021, 26860/2021] The petitioners in these cases were issued with notices under Section 148 of the Income Tax Act. The petitioners have approached this Court stating that after the amendment brought into Section 148 by the Finance Act of 2021, the procedure under Section 148A had to be followed before re-assessment proceedings were initiated by the Department. 2. Today, when the matter is taken up for consideration, it is the submission of the learned counsel appearing for the petitioners in these cases that the matter now stands covered by the judgment of the Supreme Court in Union of India (UOI) and Ors. v. Ashish Agarwal; (2022) 444 ITR 1 (SC), where it has been held as follows:- “10. In view of the above and for the reasons stated above, the present Appeals are ALLOWED IN PART. The impugned common judgments 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 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

WP(C)NO.26171 OF 2021 & conn.cases 5 have been issued under section 148 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 Assesees 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-a- 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 notice under section 148 (as substituted); All defences which may be available to the assesses 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.” 3. The learned Standing Counsel appearing for the Department does not dispute the above position and states that the judgment of the Supreme Court covers these matters also.

WP(C)NO.26171 OF 2021 & conn.cases 6

Accordingly, these writ petitions will stand disposed of directing that notices issued under Section 148 of the Income Tax to the petitioners shall be treated as show-cause notices under Section 148A of the Income Tax Act. Thereafter, the proceedings shall be completed in the manner directed by the Supreme Court in the judgment referred to above. Sd/- GOPINATH P. JUDGE ats

WP(C)NO.26171 OF 2021 & conn.cases 7 APPENDIX OF WP(C) 26171/2021 PETITIONER EXHIBITS EXHIBIT P1 TRUE COPY OF THE NOTICE DATED 30.06.2021, ISSUED UNDER SECTION 148 OF THE INCOME TAX ACT. EXHIBIT P2 TRUE COPY OF NOTICE DATED 10.11.2021 UNDER SECTION 142(1) OF THE INCOME TAX ACT. EXHIBIT P3 TRUE COPY OF THE ORDER DATED 03.06.2021 IN WRIT PETITION (L) NO. 11766 OF 2021 OF BOMBY HIGH COURT. EXHIBIT P4 TRUE COPY OF THE INTERIM ORDER DATED 02.09.2021 IN W.P.C NO. 17655 OF 2021. EXHIBIT P5 TRUE COPY OF INTERIM ORDER DATED 29.11.2021 IN W.P.C NO. 20476 OF 2021.

WP(C)NO.26171 OF 2021 & conn.cases 8 APPENDIX OF WP(C) 17655/2021 PETITIONER EXHIBITS Exhibit P1 TRUE COPY OF THE ASSESSMENT ORDER DATED 09.12.2019. Exhibit P2 TRUE COPY OF THE NOTICE DATED 25.06.2021 UNDER SECTION 148 OF THE ACT. Exhibit P3 TRUE COPY OF THE ORDER DATED 03.06.2021 IN WRIT PETITION (L) NO.11766 OF 2021. RESPONDENT EXHIBITS ANNEXURE R(a) MINISTRY OF FINANCE NOTIFICATIONS DATED 31.03.2021 ANNEXURE R(b) MINISTRY OF FINANCE NOTIFICATIONS DATED 27.04.2021 ANNEXURE R(c) JUDGMENT OF HIGH COURT OF CHATTISGARH IN WP(T) NO. 149 OF 2021 :PALAK KHATUJA v. UNION OF INDIA AND OTHER CONNECTED CASES, DATED 23.08.2021

WP(C)NO.26171 OF 2021 & conn.cases 9 APPENDIX OF WP(C) 26860/2021 PETITIONER EXHIBITS Exhibit P1 TRUE COPY OF THE NOTICE DATED 30/06/2021, ISSUED UNDER SECTION 148 OF THE INCOME TAX ACT. Exhibit P2 TRUE COPY OF NOTICE DATED 10/11/2021 UNDER SECTION 142(1) OF THE INCOME TAX ACT. Exhibit P3 TRUE COPY OF THE ORDER DATED 03/06/2021 IN WRIT PETITION (L) NO.11766 OF 2021 OF BOMBAY HIGH COURT. Exhibit P4 TRUE COPY OF THE INTERIM ORDER DATED 02/09/2021 IN WPC 17655 OF 2021. Exhibit P5 TRUE COPY OF INTERIM ORDER DATED 29/11/2021 IN WP(C) 20476 OF 2021.

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