MANSAMATA VYAAPAR PRIVATE LIMITED vs. UNION OF INDIA AND ORS.

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WPA/4399/2022HC CalcuttaWBCHCA009224202205 May 2022Bench: HON'BLE JUSTICE MD. NIZAMUDDIN4 pages
AI SummaryDismissed

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 Section 148 of the Income Tax Act, 1961, after March 31, 2021, under the unamended Act, 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 under Section 148A(b). The assessing officer is required 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 these notices. The assessing officers are to pass orders under Section 148A(d) and thereafter issue notices under Section 148 as substituted, following the prescribed procedure. All defenses available to the assessees, including those under Section 149, and rights of the revenue and assessees under the Finance Act, 2021, remain available. The judgment is applicable pan-India and modifies/substitutes similar judgments passed by various High Courts.

What were the facts?

The petitioners, Mansamata Vyaapar Private Limited and others, filed writ petitions before the Calcutta High Court challenging notices issued under Section 148 of the Income Tax Act, 1961. These notices were issued after March 31, 2021, under the unamended provisions of the Act. The High Court, in view of a Supreme Court judgment dated May 4, 2022, in the case of Union of India & Ors. v. Ashish Agarwal, dismissed these writ petitions. The interim orders granted in these matters were also vacated. The respondent-assessing officer was directed to proceed with the reassessment proceedings as per the Supreme Court's guidelines.

What were the issues?

1. Whether the impugned notices under Section 148 of the Income Tax Act, 1961, issued after March 31, 2021, under the unamended Act, are valid. The petitioners challenged these notices, likely arguing they were issued without adhering to the newly substituted provisions of Section 148A. The revenue contended that these notices should be treated in accordance with the Supreme Court's directions in the Ashish Agarwal case. The Supreme Court's judgment in Ashish Agarwal (Civil Appeal No. 3005 of 2022) addressed the validity of Section 148 notices issued after April 1, 2021, under the unamended Act, and the subsequent procedure to be followed. The High Court's decision hinges on the interpretation and application of this Supreme Court ruling.

Which sections of the Income-tax Act were involved?

Section 148,Section 148A,Section 149

AI-generated summary — verify with the full judgment below

05-05-2022 Item No.17-19 Subrata IN THE HIGH COURT AT CALCUTTA Constitutional Writ Jurisdiction Appellate Side WPA No.4399 of 2022 Mansamata Vyaapar Private Limited -vs- Union of India & Ors. with WPA No.5068 of 2022 and WPA No.5910 of 2022 Mr. Avra Mazumdar Sk. Md. Bilwal Hossain Mr. Binayak Gupta Mr. K. Ray Mr. Pramit Bag Mr. Bimalendu Das Mr. Shomrik Das Mr. A. K. Mishra Mr. Balaram Patra …for the petitioners Mr. Amit Sharma …for the respondents In view of judgement of the Hon’ble Supreme Court dated May 4, 2022 in the case of Union of India & Ors. v. Ashish Agarwal (Civil Appeal No.3005 of 2022), these writ petitions – WPA No.4399 of 2022, WPA No.5068 of 2022 and WPA No.5910 of 2022 – challenging the impugned notices under section 148 of the Income Tax Act, 1961, under the old Act, issued after 31st March 2021 are dismissed. The interim orders in the matters stand vacated. The relevant paragraphs 10, 11 and 12 of the aforesaid judgement of the Supreme Court 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

2 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 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

3 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 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 officer concerned shall proceed with the impugned reassessment proceedings as per the guidelines and law laid down in the aforesaid judgement of the Hon’ble Supreme Court. [Md. Nizamuddin, J]

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