Background of this case law:
Ministry has amended section 148 of the Income Tax Act, wherein new procedure and time lines were defined under the Income Tax Act to conduct re-assessment proceedings.
The new procedure was made effective from 01.04.2021. However, Income Tax department had still issued notice u/s 148 after 01.04.2021 in the old procedure and it was challenged by many assessee in different High Courts. Summary of the same is as under:
After the above judgement’s by various High court’s the case finally went before Hon’ble Supreme court wherein the hon’ble court has issued the judgement in favor of Revenue and interpreted the implementation of this new provision of section 148 of the Act and how to deal with the notices issued after 01.04.2021 under old provisions.
To read the full judgement of Hon’ble Supreme court CLICK HERE: Supreme court Judgement on controversial issue of notice u/s 148 issued after 01.04.2021 passed in favor of Revenue | Detailed analysis of full judgement – Taxontips
After the above judgement CBDT had issued instructions to the Income Tax Department and guided as to how to issue notices for various years.
The detailed post on such instructions by CBDT are as under: Instructions issued by CBDT in response to judgement passed by Hon’ble Supreme court in case of notice issued u/s 148 after 01.04.2021 – Taxontips
The above instructions are the root cause of the below mentioned case of Punjab and Haryana High court wherein it has been challenged that Income tax department cannot issue notice u/s 148 after the order of Hon’ble Supreme court and same view was presented by our author CA Naman Maloo in both the posts mentioned above.
Now let’s discuss the interim order or interim stay provided by Hon’ble Punjab and Haryana High Court which is as under:
“Challenge in the instant petition is to notice dated 13.04.2021 (Annexure P-1) pertaining to assessment year 2013-2014; notice dated 17.05.2022 (Annexure P-8) – treating the earlier notice to be under Clause (b) of Section 148-A of the Act; order dated 28.07.2022 (Annexure P-18) passed under Section 148-A(d) of the Income Tax Act 1961 and all consequential proceedings thereto.
Learned Senior counsel would submit that as per ratio laid down by the Apex Court in the cases of Union of India & others Vs. Ashish Agarwal decided on 04.05.2022 all defences including the defence under Section 149 of the Act were available to the assessee even if the notice under Section 148 was treated as a notice under Section 148-A of the Act.
It is argued that the proceedings pertaining to assessment year 2013-2014 are time barred by virtue of the proviso to Section 149 of the Income Tax Act.
The proviso to Section 149 specifically provides that no notice under Section 148 shall be issued if such notice could not have been issued at that time on account of being beyond the time limit specified under the provisions of Sub Section (1) (b) of the Section as it stood immediately before the commencement of Finance Act 2021 as such in terms of proviso to Section 149 as amended w.e.f. 01.04.2021 since more than 06 years had elapsed from the end of assessment year 2013-2014 on 31.03.2020, the re-assessment notice for assessment year 2013-2014 could not be issued.
It is vehemently asserted that the initiation of proceedings by issuance of notice under Section 148 A (d) for assessment year 2013-2014 are wholly without jurisdiction and are time barred.
Further contended that the department is purportedly proceeding on the basis of CBDT instructions dated 11.05.2022 (Annexure P-7) which in turn proceed directly in the teeth of the dictum laid down by Hon’ble Supreme Court in Ashish Agarwal (supra) and on a clear misleading thereof. On such ground a challenge to such circular dated 11.05.2022 at Annexure P-7 has also been raised in the instant petition.
Notice of motion returnable for 13.12.2022.
Mr. Vaibhav Gupta, Junior Standing Counsel, accepts notice on behalf of respondents No.2 and 3 and waives service.
A complete copy of the writ paper-book already stands furnished.
Further proceedings in the matter shall be kept in abeyance till further orders.”
In the above judgement the court has accepted the initial plea of the petitioner i.e. assessee and has granted interim stay in case of assessee in relation to 148 proceedings initiated under new provision of Income Tax act after 01.04.2021 as per instructions of CBDT.
To read the full judgement of Punjab and Haryana High Court CLICK ME.
Guidance on above article by:
CA Naman Maloo (C.A., B.Com)
He is currently working as Partner – Direct Tax with a renowned firm in Jaipur having experience in dealing Assessments, Tax Audit, Tax planning for NRI, Business planning and consultation.
E-mail: firstname.lastname@example.org | LinkedIn: Naman Maloo
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