TTI ENTERPRISE LIMITED vs. UNION OF INDIA AND ORS.

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WPO/2054/2022HC CalcuttaWBCHCO002965202227 April 2022Bench: HON'BLE JUSTICE MD. NIZAMUDDIN5 pages
AI SummaryRemanded

What did the High Court hold?

The Calcutta High Court held that 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 the Court, would now be deemed to have been issued under Section 148A of the Income Tax Act, 1961, as substituted by the Finance Act, 2021. These would be construed as show-cause notices in terms of Section 148A(b). The assessing officer is required to provide the assessees with the 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) with prior approval of a specified authority is dispensed with as a one-time measure for notices issued under the unamended Section 148 from April 1, 2021, to date. The assessing officers shall then pass orders under Section 148A(d) and, thereafter, may issue notices under Section 148 as substituted. All defenses available to the assessees, including those under Section 149, and all rights and contentions under the Finance Act, 2021, and in law, shall remain available. The Court directed the respondent-assessing authorities to proceed with the quashed notices and proceedings in accordance with the guidelines laid down by the Supreme Court.

What were the facts?

The petitioners, TTI Enterprise Limited, filed writ petitions (W.P.O. No. 2054 of 2022 and W.P.O. No. 2056 of 2022) before the Calcutta High Court. The petitions challenged notices issued under Section 148 of the Income Tax Act, 1961, and proceedings under Section 147 of the old Act, which had been previously quashed by the Court with liberty to the assessing officer to proceed in accordance with law. The Court, in its order dated May 17, 2022, referred to a Supreme Court judgment dated May 4, 2022, in Union of India & Ors. V. Ashish Agarwal, and clarified that the quashed notices and proceedings would now be governed by the law and guidelines laid down in the Supreme Court's decision. The assessing authorities were directed to proceed with the quashed notices and proceedings in accordance with the Supreme Court's guidelines.

What were the issues?

1. Whether the impugned notices under Section 148 of the Income Tax Act, 1961, and proceedings under Section 147 of the old Act, which were quashed by this Court, should now be treated and proceeded with in accordance with the law and guidelines laid down by the Hon'ble Supreme Court in its judgment dated May 4, 2022, in the case of Union of India & Ors. V. Ashish Agarwal. Assessee's Contention: The judgment does not record any specific contentions made by the petitioners. However, the fact that they filed writ petitions challenging the notices and proceedings indicates their opposition to them. Revenue's Contention: The judgment does not record any specific contentions made by the respondents (Union of India and Ors.). However, the reference to the Supreme Court's judgment and the subsequent direction to proceed implies the revenue's reliance on that judgment to regularize the previously quashed notices and proceedings.

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. 2054 of 2022 TTI ENTERPRISE LIMITED Vs. UNION OF INDIA AND ORS. With W.P.O. No. 2056 of 2022 For the Petitioners :- Mr. Swapna Das, Mr. Siddharth Das, Advocates

For the Respondents :- Mr. Prithu Dudhoria, Advocate Dated : 17th May, 2022

MD. NIZAMUDDIN, J. In compliance of my earlier orders, petitioners 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

2 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 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;

3 (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 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

4 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. 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

5 the guidelines and law laid down as per aforesaid order of the Hon’ble Supreme Court. (Md. Nizamuddin, J.) TR/

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