AGARWAL TRACOM PRIVATE LIMITED vs. UNION OF INDIA AND ORS.

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WPA/2039/2022HC CalcuttaWBCHCA004427202209 February 2022Bench: HON'BLE JUSTICE MD. NIZAMUDDIN5 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that in compliance with the Supreme Court's judgment in Union of India & Ors. V. Ashish Agarwal, the impugned notices under Section 148 of the Income Tax Act, 1961, and all proceedings under Section 147 of the old Act, which were previously quashed by this Court, would now be treated in accordance with the law and guidelines laid down by the Supreme Court. Specifically, the Court adopted the Supreme Court's directions: (i) the Section 148 notices issued under the unamended Act shall be deemed to have been issued under Section 148A and treated as show-cause notices; (ii) the requirement of an enquiry under Section 148A(a) is dispensed with as a one-time measure for notices issued under the unamended Section 148 from April 1, 2021, till the Supreme Court's judgment; (iii) assessing officers shall pass orders under Section 148A(d) and thereafter issue notices under Section 148 as substituted; and (iv) all defenses and rights available to assessees and the Revenue under the Finance Act, 2021, and law shall continue to be available. The Court directed the respondent-assessing authorities to proceed with the quashed notices and proceedings in line with the Supreme Court's order.

What were the facts?

The petitioners, DRS Estates Private Limited and others, had filed multiple writ petitions (W.P.O. Nos. 1905 of 2022 and others) before the Calcutta High Court challenging notices issued under Section 148 of the Income Tax Act, 1961, and subsequent proceedings under Section 147 of the old Act. These notices and proceedings had been previously quashed by the High Court with liberty to the assessing officer to proceed in accordance with law. The present proceedings are a consequence of the Supreme Court's judgment in Union of India & Ors. V. Ashish Agarwal, dated May 4, 2022. The High Court is now clarifying its earlier orders in light of the Supreme Court's directive.

What were the issues?

1. Whether the impugned notices under Section 148 of the Income Tax Act, 1961, issued under the unamended Act, which were quashed by the High Court, should be deemed to have been issued under Section 148A of the Act as substituted by the Finance Act, 2021, and treated as show-cause notices in terms of Section 148A(b)? - Assessee's Contention: Not explicitly recorded, but the filing of writ petitions implies a challenge to the validity of the notices and proceedings. - Revenue's Contention: Not explicitly recorded, but the Supreme Court's intervention suggests the revenue sought to regularize such notices. 2. Whether the requirement of conducting an enquiry under Section 148A(a) with prior approval of a specified authority is mandatory for notices issued under the unamended Section 148 from April 1, 2021, till the date of the Supreme Court's judgment, including those quashed by High Courts? - Assessee's Contention: Not explicitly recorded. - Revenue's Contention: Not explicitly recorded.

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

1 IN THE HIGH COURT AT CALCUTTA Constitutional Writ Jurisdiction Original Side Present :- Hon’ble Mr. Justice Md. Nizamuddin W.P.O. No. 1905 of 2022 DRS ESTATES PRIVATE LIMITED Vs. UNION OF INDIA AND ORS. With W.P.O. No. 1907 of 2022, W.P.O. No. 1927 of 2022, W.P.O. No. 1940 of 2022, W.P.O. No. 1945 of 2022, W.P.O. No. 2027 of 2022, W.P.O. No. 2028 of 2022, W.P.O. No. 2029 of 2022, W.P.O. No. 2030 of 2022, W.P.O. No. 2031 of 2022, W.P.O. No. 2032 of 2022, W.P.O. No. 2033 of 2022, W.P.O. No. 2034 of 2022, W.P.O. No. 2035 of 2022, W.P.O. No. 2036 of 2022, W.P.O. No. 2037 of 2022, W.P.O. No. 2038 of 2022, W.P.O. No. 2039 of 2022, W.P.O. No. 2040 of 2022, W.P.O. No. 2041 of 2022, W.P.O. No. 2042 of 2022, W.P.O. No. 2043 of 2022, W.P.O. No. 2044 of 2022, W.P.O. No. 2055 of 2022, W.P.O. No. 2057 of 2022, W.P.O. No. 2058 of 2022, W.P.O. No. 2059 of 2022, W.P.O. No. 2060 of 2022, W.P.O. No. 2061 of 2022, W.P.O. No. 2062 of 2022, W.P.O. No. 2063 of 2022, W.P.O. No. 2064 of 2022, W.P.O. No. 2066 of 2022, W.P.O. No. 2067 of 2022, W.P.O. No. 2068 of 2022, W.P.O. No. 2069 of 2022, W.P.O. No. 2070 of 2022, W.P.O. No. 2071 of 2022, W.P.O. No. 2072 of 2022, W.P.O. No. 2073 of 2022 For the Petitioners :- Mr. Chandrachur Chatterjee, Mr. Gopal Ram Sharma, Mr. A.K. Upadhyay, Mr. Avijit Ghoshal, Ms. Swapna Das, Mr. Siddharth Das, Mr. Brijesh Kumar Singh, Advocates

For the Respondents :- Ms. Smita Das De, Mr. Aryak Dutt, Mr. Prithu Dudhoria, Mr. Smarajit Roy Chowdhury, Advocates

2 Dated : 10th May, 2022

MD. NIZAMUDDIN, J. In compliance of my earlier orders, petitioner in these writ petitions have paid the costs and filed receipts, which are taken on record. Taking note of a judgment 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 under:- (i) The impugned section 148 notices issued to the respective assesses which were issued under

3 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 assesses information and material relied upon by the Revenue, so that the assesses 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

4 of the concerned asessees; 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 judgements 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 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 judgements 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.

5 12. The impugned common judgements and orders passed by the High Court of Allahabad and the similar judgements and orders passed by various High Courts, more particularly, the respective judgements 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 guidelines and law laid down as per aforesaid order of the Hon’ble Supreme Court. (Md. Nizamuddin, J.) TR/

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