KUNAL UNDERTAKINGS LIMITED vs. Union of India AND ORS

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WPO/2081/2022HC CalcuttaWBCHCO003021202228 April 2022Bench: HON'BLE JUSTICE MD. NIZAMUDDIN2 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the case clearly falls under the amended provisions of the Act relating to proceedings under Section 147. It was observed that the issuance of a notice under Section 148A is mandatory before issuing any notice under Section 148 of the amended Act, a compliance that was not met in this instance. The Court considered that the notice, despite its date, was communicated after March 31, 2021, thus attracting the amended provisions. Relying on its previous decisions in Bagaria Properties and Investment Private Limited & Anr. v. Union of India & Ors. and Monoj Jain v. Union of India, the Court found the impugned notice under Section 148 and all subsequent proceedings to be unsustainable in law. Consequently, the notice and proceedings were quashed. However, the Court clarified that this quashing would not prevent the respondent-authority from issuing a fresh notice in accordance with the law in the future.

What were the facts?

The petitioner, Kunal Undertakings Limited, filed a writ petition challenging a notice issued under Section 148 of the Income Tax Act, 1961. The petitioner contended that the notice was barred by limitation and that the respondent income tax authority failed to comply with the mandatory procedural formalities prescribed under Section 148A of the Act, as amended by the Finance Act, 2021, which became effective from April 1, 2021. The respondent's advocate submitted that a final assessment order had already been passed. While the impugned notice bore the date March 31, 2021, it was uploaded for communication after March 31, 2021, making the latter date the effective date of issuance.

What were the issues?

1. Whether the notice issued under Section 148 of the Income Tax Act, 1961, is barred by limitation. (Question of law) 2. Whether the respondent-income tax authority complied with the statutory formalities under Section 148A of the Income Tax Act, 1961, before issuing the notice under Section 148, considering the amendments made by the Finance Act, 2021, applicable from April 1, 2021. (Question of mixed law and fact) Assessee's Contentions: - The notice under Section 148 is barred by limitation. - The respondent failed to observe the statutory formalities under Section 148A before issuing the Section 148 notice, as mandated by the Finance Act, 2021. Revenue's Contentions: - A final assessment order has already been passed. - The impugned notice, though dated March 31, 2021, was uploaded for communication after March 31, 2021, making the latter date the date of issuance.

Which sections of the Income-tax Act were involved?

Section 148,Section 148A,Section 147

AI-generated summary — verify with the full judgment below

OD-5 ORDER SHEET IN THE HIGH COURT AT CALCUTTA ORIGINAL SIDE WPO/2081/2022 KUNAL UNDERTAKINGS LIMITED VERSUS UNION OF INDIA AND ORS. BEFORE: The Hon'ble JUSTICE MD. NIZAMUDDIN Date : 28th April, 2022 Appearance: Mr. Brijesh Kumar Singh, Adv. … for the petitioner. Mr. Prithu Dudhoria, Adv. … for the UOI. The Court : Affidavit-in-opposition and supplementary affidavit filed by the parties be kept with the record. Heard learned advocates appearing for the respective parties. Petitioner in this writ petition is aggrieved by the issuance of impugned notice under section 148 of the Income Tax Act, 1961 on the grounds that the same is barred by limitation and that the respondent-income tax authority concerned, before issuing the impugned notices under section 148 of the 1961 Act, has not observed the statutory formalities under section 148A of the 1961 Act as prescribed by the Finance Act, 2021 which are applicable with effect from 1st April, 2021 before issuance of notices under section 148 of the 1961 Act on or after 1st April, 2021. Learned advocate for the respondent was asked as to whether final assessment order has already been passed or not in this case to which he submits that final assessment order has already been passed. He further submits on the basis of record that the impugned notice under section 148 of the 1961

2 Act, though it bears date and signature of the authority showing that it was signed on March 31, 2021, but it was actually uploaded for communication after 31st March, 2021 which has to be treated as date of issuance of the impugned notice. Considering these facts, I am of the considered view that this case clearly falls under the amended Act relating to proceedings under section 147 of the Act under which issuance of notice under section 148A of the Act is mandatory before issuing any notice under section 148 of the amended Act which has not been complied with in this case. Considering the above facts and circumstances of the case and in view of the order of this Court in the case of Bagaria Properties and Investment Private Limited & Anr. v. Union of India & Ors. reported in (2022) 134 taxman.com 196 (Calcutta) and also in the case of Monoj Jain v. Union of India reported in (2022) 134 taxman.com 173 (Calcutta), the impugned notice under section 148 of the Act and all subsequent proceedings are not sustainable in law and the same are quashed. However, quashing of the impugned notice and proceeding will not debar the respondent-authority concerned to issue any fresh notice in future in accordance with law. With the above observations, WPO No. 2081 of 2022 stands disposed of. (MD. NIZAMUDDIN, J.)

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