The Supreme Court ruled on Wednesday that reassessment notices issued on or after April 1, 2021, under the unamended Section 148 of the Income Tax Act will not be deemed invalid simply because they were issued under the old law.
While amending the relevant orders of various high courts that quashed the Section 148A reassessment notices issued after the cut-off date, the Supreme Court stated that these notices will be deemed as show-cause notices. Which were issued to the respective assessees under the new Section 148A of the Act.
A Bench led by Justice MR Shah rendered the decision in the case of Union of India vs Ashish Agarwal. In this group of 24 cases, the high courts ruled in favor of the assessees. Thus, quashing the several reassessment notices which were issued by the department. Under Section 148. On the grounds that they were illegal under the Finance Act of 2021.
Partially allowing the government’s appeals, the Supreme Court stated that 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 in relation to those notices issued under section 148 of the unamended Act from April 1, 2021 to date, including those quashed by the HCs.
“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 the Revenue under the Finance Act, 2021. And in law shall continue to be available”. The judgment stated.
Supreme Court makes the decision
The assessing officer must provide respective assessees with the information and material relied on by the Revenue within 30 days of today so that the latter can respond to the showcause notices within two weeks, the Supreme Court ruled.
Rakesh Nangia, chairman of Nangia Andersen India, welcomed the SC decision. Saying that while reversing/modifying the orders, the SC acknowledged that the HC orders on this issue were correct. Based on interpretation of statutory provisions. “However, the Supreme Court has also noted that while the legislature changed the law for reassessment for the benefit of taxpayers, the department cannot be left remediless due to a genuine mistake of extending time limits by extension notification and issuing such reassessment notices on/ after 01.04.2021 under old reassessment law, when new law had become applicable.”
Nangia went on to say that the Supreme Court struck a balance. Between the rights of the department and taxpayers. While taking care to avoid a loss to the public coffers. According to the tax expert, until now, the Supreme Court has refrained from exercising extraordinary constitutional power in tax matters. And has instead interpreted tax laws based on the statute book.