MOHAMMED THRASSERI vs. INCOME TAX OFFICER

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WP(C)/27594/2021HC KeralaKLHC01068952202122 June 2022Bench: HONOURABLE MR. JUSTICE GOPINATH P.8 pages
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What did the High Court hold?

The High Court held that the writ petitions would stand disposed of in terms of the Supreme Court's judgment in Union of India v. Ashish Agarwal. The Supreme Court had ruled that notices issued under the unamended Section 148 of the Income Tax Act, which were the subject of writ petitions before various High Courts, shall be deemed to have been issued under the substituted Section 148 of 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 within thirty days, allowing the assessees two weeks to reply. The requirement of conducting an enquiry under Section 148A(a) is dispensed with as a one-time measure for notices issued under the unamended Act from April 1, 2021, to date. The Assessing Officers are then to pass orders under Section 148A(d) and thereafter issue notices under the substituted Section 148, preserving all defenses available to the assessees and the Revenue. The operative direction is that the proceedings shall be completed as directed by the Supreme Court.

What were the facts?

The petitioners, Mohammed Trasseri, Unnian Kutty, and M/s. Paint Shopee, filed writ petitions before the High Court of Kerala challenging notices issued to them under Section 148 of the Income Tax Act. They contended that the Finance Act of 2021 amended Section 148, introducing a mandatory procedure under Section 148A that had to be followed before initiating re-assessment proceedings. The assessment years are not explicitly stated in the judgment. The petitions were filed challenging the Section 148 notices issued by the respective Income Tax Officers.

What were the issues?

1. Whether the notices issued under the unamended Section 148 of the Income Tax Act, prior to the substitution by the Finance Act, 2021, are valid without following the procedure prescribed under Section 148A of the Act? Assessee's Contention: The petitioners argued that the amendment to Section 148 by the Finance Act, 2021, necessitated compliance with the procedure under Section 148A before issuing notices for re-assessment. They contended that the notices issued without adhering to this new procedure were invalid. Revenue's Contention: The Revenue, through its Standing Counsel, did not dispute the position taken by the petitioners and conceded that the matter was covered by the Supreme Court's judgment in Union of India v. Ashish Agarwal.

Which sections of the Income-tax Act were involved?

Section 148,Section 148A,Section 149

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Heard together (3 matters)

WP(C) NO. 27594 OF 2021
WP(C).27569/2021
WP(C) NO. 27529 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. WEDNESDAY, THE 22ND DAY OF JUNE 2022 / 1ST ASHADHA, 1944 WP(C) NO. 27594 OF 2021 PETITIONER: MOHAMMED THRASSERI AGED 54 YEARS RINOOS HARDWARE, DD MALAPPURAM, KERALA PIN 676 521 BY ADVS. LATHA ANAND M.N.RADHAKRISHNA MENON S.VISHNU (ARIKKATTIL) RESPONDENT: INCOME TAX OFFICER WARD 1(3), KOZHIKKODE, OFFICE OF THE INCOME TAX OFFICER, AAYAKAR BHAVAN, NORTH BLOCK, NEW ANNEXE BUILDING, MANANCHIRA, KOZHIKODE, KERALA 673 001 OTHER PRESENT: SRI. CHRISTOPHER ABHARAM (SC) THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 22.06.2022, ALONG WITH WP(C).27569/2021, 27529/2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

W.P.(C)No.27594/2021 & conn.cases 2 IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE GOPINATH P. WEDNESDAY, THE 22ND DAY OF JUNE 2022 / 1ST ASHADHA, 1944 WP(C) NO. 27569 OF 2021 PETITIONER: UNNIAN KUTTY AGED 66 YEARS KIZHAKKEKUNNUMMAL HOUSE, CHENGARA, IRIVETTY PO KAVANOOR, MALAPPURAM, PIN-673 639. BY ADVS. LATHA ANAND M.N.RADHAKRISHNA MENON RESPONDENT: INCOME TAX OFFICER WARD-1 & TPS, TIRUR, OFFICE OF THE INCOME TAX OFFICER, NO.20/1240, TARIFF BAZAR, TOWNHALL ROAD, TIRUR, KERALA, PIN-676 101. BY ADV CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENT THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 22.06.2022, ALONG WITH WP(C).27594/2021 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

W.P.(C)No.27594/2021 & conn.cases 3 IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE GOPINATH P. WEDNESDAY, THE 22ND DAY OF JUNE 2022 / 1ST ASHADHA, 1944 WP(C) NO. 27529 OF 2021 PETITIONER: M/S. PAINT SHOPEE, PANDIKKAD, MALAPPURAM, KERALA 676 521, REPRESENTED BY ITS MANAGING PARTNER, SRI. SHAMEER BABU. 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 680 001. BY ADV CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENT THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 22.06.2022, ALONG WITH WP(C).27594/2021 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

W.P.(C)No.27594/2021 & conn.cases 4 JUDGMENT [WP(C) Nos.27594/2021, 27569/2021, 27529/2021] 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 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.

W.P.(C)No.27594/2021 & conn.cases 5 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. 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 acd

W.P.(C)No.27594/2021 & conn.cases 6 APPENDIX OF WP(C) 27569/2021 PETITIONER EXHIBITS Exhibit P1 TRUE COPY OF THE NOTICE DATED 30.6.2021, 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 3.6.2021 IN WRIT PETITION (L) NO.11766 OF 2021 BOMBAY HIGH COURT. Exhibit P4 TRUE COPY OF THE INTERIM ORDER DATED 2.9.2021 IN WPC 17655 OF 2021. Exhibit P5 TRUE COPY OF INTERIM ORDER DATED 29.9.2021 IN WPC 20476 OF 2021.

W.P.(C)No.27594/2021 & conn.cases 7 APPENDIX OF WP(C) 27529/2021 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. 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 29/09/2021 IN WPC 20476 OF 2021.

W.P.(C)No.27594/2021 & conn.cases 8 APPENDIX OF WP(C) 27594/2021 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 11/08/2021 UNDER SECTION 142(1) OF THE INCOME TAX ACT. Exhibit P3 TRUE COPY OF THE ORDER DATED 3/6/2021 IN WRIT PETITION (L) NO.11766 OF 2021 BOMBAY HIGH COURT Exhibit P4 TRUE COPY OF THE INTERIM ORDER DATED 2/9/2021 IN WPC 17655 OF 2021 Exhibit P5 TRUE COPY OF INTERIM ORDER DATED 29/9/2021 IN WP(C) 20476 OF 2021

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