PRINCE PARAS NAHATA vs. INCOME TAX OFFICER WARD 1(1) THANE AND ORS

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WP/5701/2022HC BombayHCBM01018895202205 May 2022Author: HON'BLE SHRI JUSTICE K.R. SHRIRAM,HON'BLE SHRI JUSTICE N. R. BORKAR3 pages
AI SummaryRemanded

What did the High Court hold?

The High Court, following the directions of the Hon'ble Apex Court in Union of India & Ors. vs. Ashish Agarwal, held that the notice issued under Section 148 of the Income Tax Act, 1961, even if dated March 31, 2021, and digitally signed on April 8, 2021, shall be deemed to have been issued under Section 148A of the Act as substituted by the Finance Act, 2021. It is to be construed as a show-cause notice in terms of Section 148A(b). The Assessing Officer is directed to provide the information and material relied upon to the assessee within thirty days, allowing the assessee two weeks thereafter to reply. The requirement of conducting an enquiry under Section 148A(a) is dispensed with as a one-time measure. The Assessing Officer shall thereafter pass orders under Section 148A(d) and, if necessary, issue a notice under Section 148 as substituted. All defenses available to the assessee, including under Section 149, and rights of the Revenue remain preserved. Consequently, the assessment order and consequential orders/notices were quashed and set aside, with liberty to the Revenue to restart the process as directed by the Apex Court.

What were the facts?

The petitioner, Prince Paras Nahata, filed a writ petition challenging a notice issued under Section 148 of the Income Tax Act, 1961. The notice was dated March 31, 2021, but digitally signed on April 8, 2021, which the petitioner argued meant it was issued on the latter date. The Bombay High Court considered the directions issued by the Hon'ble Apex Court in Union of India & Ors. vs. Ashish Agarwal, which dealt with similar notices issued under the unamended Section 148 of the Act. The Apex Court's order aimed to provide a framework for dealing with such notices, including those that had been quashed by High Courts.

What were the issues?

1. Whether the notice issued under Section 148 of the Income Tax Act, 1961, dated March 31, 2021, and digitally signed on April 8, 2021, is to be considered as issued on March 31, 2021, or April 8, 2021, for the purpose of determining its validity under the amended provisions of the Act? Assessee's Contention: The assessee argued that the digital signature date of April 8, 2021, should be considered the effective date of issuance of the notice, implying it was issued after the relevant period for unamended Section 148 notices. Revenue's Contention: The revenue relied on the Apex Court's judgment in Union of India & Ors. vs. Ashish Agarwal, which provided a specific procedure for notices issued under the unamended Section 148.

Which sections of the Income-tax Act were involved?

Section 148,Section 148A,Section 149

AI-generated summary — verify with the full judgment below

1/3 971-WP-5701-2022.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO. 5701 OF 2022 Prince Paras Nahata

….Petitioner V/s. Income Tax Officer Ward 1(1), Thane and Ors. …Respondents ---- Mr. Satish Mody a/w Ms. Aasifa Khan for Petitioner. Mr. Suresh Kumar for Respondents. ---- CORAM : K.R. SHRIRAM & N. R. BORKAR, JJ.

DATED : 5th MAY, 2022 P.C. :

1.

In this case, though the notice issued under Section 148 of the Income Tax Act, 1961 (the Act) is dated 31st March, 2021 since it has been digitally signed only on 8th April, 2021, it would mean that the notice has been issued only on 8th April, 2021. 2. The Hon’ble Apex Court in the judgment of Union of India & the Hon’ble High Court Judicature at Allahabad in Writ Tax No.524 of 2021 and other Writ Tax Petitions. The order also covers the judgments passed by various other High Courts including this court in Tata Communications Transformation Services Limited V/s. Assistant Commissioner of Income Tax 14(1) & Ors.2

3.

The Hon’ble Apex Court has in paragraph no.10 passed the 1 Civil Appeal No. 3005/2022 dated 4th May, 2022. 2. Writ Petition No.1334 of 2021 dated 29th March, 2022. Purti Parab PURTI PRASAD PARAB PURTI PRASAD PARAB Date: 2022.05.10 12:12:25 +0530

2/3 971-WP-5701-2022.doc following directions :

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 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 notice under section 148 (as substituted); (iv) 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. Purti Parab

3/3 971-WP-5701-2022.doc

4.

In view of the above, petition stands disposed.

5.

Certainly, since all rights and contentions are kept open, the assessee may take such steps if aggrieved by any order passed by the Assessing Officer.

6.

In view of the above, the assessment order is quashed and set aside. So also the consequential orders/notices.

7.

Revenue may restart the process as directed by the Hon’ble Apex Court. (N. R. BORKAR, J.) (K.R. SHRIRAM, J.) Purti Parab

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