TMI Blog2024 (4) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... such notices and cannot possibly be read or construed as warranting the reopening of reassessment proceedings which had attained finality even though the same may have been commenced on the basis of notices issued post 01 April 2021. HELD THAT:- We are of the firm opinion that Ashish Agarwal neither intended nor mandated concluded assessments being reopened . The respondent clearly appears to have erred in proceedings along lines contrary to the above as would be evident from the reasons which follow. Firstly, Ashish Agarwal was principally concerned with judgments rendered by various High Courts striking down Section 148 notices holding that the respondents had erred in proceeding on the basis of the unamended family of provisions relating to reassessment. They had essentially held that it was the procedure constructed in terms of the amendments introduced by Finance Act, 2021 which would apply. None of those judgements were primarily concerned with concluded assessments. It is this indubitable position which constrained the Supreme Court to frame directions requiring those notices to be treated as being under Section 148A(b) and for the AO proceeding thereafter to frame an order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court being that its judgment would apply and govern irrespective of whether an appeal had been laid before it. We also bear in mind the pertinent observations rendered by the Constitution Bench in High Court Bar Association [ 2024 (3) TMI 63 - SC ORDER] when it held that a direction under Article 142 of the Constitution should not impact the substantive rights of those litigants who are not even parties to the lis - Thus we quash reassessment proceedings and impugned SCN issued u/s 148A(b), the order issued u/s 148A(d) as well as the notice referable to Section 148 - Decided in favour of assessee. - HON'BLE MR. JUSTICE YASHWANT VARMA AND HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV For the Petitioner Through: Mr. Ajay Vohra, Sr. Adv. with Mr. Sachit Jolly, Mr. Rishabh Malhotra, Mr. Devansh Jain, Advs. For the Respondents Through: Mr. Shubhendu Bhattacharya, Adv. JUDGMENT YASHWANT VARMA, J. 1. The writ petitioner impugns the Show Cause Notice [SCN] dated 30 May 2022 purported to have been issued under Section 148A(b) of the Income Tax Act, 1961 [Act] as well as the order dated 19 July 2022 in terms of which objections have come to be disposed of in terms of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es issued post 01 April 2021. 4. For the purposes of evaluating the challenge which stands raised, we deem it apposite to notice the following essential facts. The petitioner filed her Return of Income for AY 2013-14 on 27 March 2014 declaring an income of INR 4,83,099/-. The aforesaid return was duly assessed under Section 143(3) of the Act and a final assessment order was framed on 12 January 2016. The aforenoted order accepted the return as submitted. On 31 March 2021, however, the respondents issued a notice purporting to be under Section 148 of the Act alleging that income pertaining to AY 2013-14 had escaped assessment. The notice even though dated 31 March 2021, is stated to have been issued on 01 April 2021. The aforesaid notice was premised on the following reasoning and which constituted the foundation for the formation of opinion by the AO that income liable to tax had escaped assessment: - An information was received through Insight Portal . In this regard, it has been informed that a survey action was conducted on BDR Group on 13.12.2018. This group was engaged in purchase/sale/ construction of various properties. Several companies of BDR group have received huge funds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n taken forward by the respondents and a notice under Section 142(1) of the Act issued on 11 March 2022. The petitioner while responding to the aforesaid notice as also others which came to be issued in the interregnum submitted detailed responses on 14, 16 and 19 March 2022. 6. Close on the heels of the submission of the aforesaid letters, the petitioner was again placed on notice under Section 142(1) of the Act by virtue of a communication dated 21 March 2022. In response to the aforesaid, the petitioner submitted another detailed response dated 23 March 2022. In terms of the aforesaid letter, the petitioner furnished the following explanation: - I am in receipt of your Notice dated 21.03.2022 under Section 142(1) of the Income Tax Act, 1961. At the outset, I like to inform your good self that though my email id as well as mobile number have been updated on the Income Tax web portal against my PAN, I am not receiving notifications on my email or message on my phone with regard to issuance of Notices by the Income Tax Department. Even the aforesaid notice dated 21.03.2022 has been received by me from my father Mr. Aloke Kumar Sengupta on 21.03.2020 at about 10:00 PM, which my fath ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n issued another email dated 22.03.2022 to Mrs. Neelima Tripathi and Mr. Apoorv Tripathi and the said email has been sent on the email id of Mrs. Neelima Tripathi. Since I do not have the email id of Mr. Apoorv P. Tripathi, I have sent the said communication to him on his WhatsApp No. 9910523322. A copy of the said email dated 22.03.2022 is enclosed for ready reference of your good self. Since Mr. Apoorv Tripathi and his mother being his GPA Holder, Mrs. Neelima Tripathi have refused to cooperate and furnish the required confirmation, I respectfully request your good self to please send the required notice/communication directly to Mr. Apoorv P. Tripathi and his mother and GPA Holder Mrs. Neelima Tripathi and direct them to submit the required confirmation with regard to purchase of property situated at 18 Babar Lane, New Delhi and the manner of payment of sale-consideration for the same to me as well as to Mr. Rajiv Singh and Mis. Kishore Industries. I have already submitted to your good self the contact details of Mr. Apoorv P. Tripathi and Mrs. Neelima Tripathi which are once again given hereunder:- MR. APOORV P. TRlPATHI PAN : AACPT8785B (As mentioned under the photograph of Mr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res of Nimit Builders Pvt Ltd. In response, the assessee vide her reply dated 14.03.2022 has stated that she has purchased 4,25,000 partly paid-up shares of Rs. 10/-each of M/s Nimit Builders Pvt. Ltd at a share premium of Rs. 190/- per share (total Rs. 200/- per share). 4. Further, the stated that she has received her 1/4th share of Rs. 4,47,00,000/- towards sale proceeds of the property at 18, Babar Lane, Bengali Market, New Delhi. The assessee submitted that after deductions of cost of acquisition and other expenditure the capital gain stands at Rs. 3,29,05,500/-. The assessee has purchased another property at B-4 (Ground Floor), Defence Colony, New Delhi - 110024 for consideration of Rs. 3,32,80,000/- and claimed deduction of Rs. 3,29,05,500/- u/s 54 in A.Y. 2013-14 with regard to the LTCG of Rs. 3,29,05,500/-. 5. On verification of the submission of the assessee as also material available on record, the total income of the assessee is computed as under: Computation of Total Income Particulars Amount (in rupees) Income as per ITR filed on 31.05.2021 4,83,099/- Addition: NIL Assessed income 4,83,099/- 6. Assessed u/s 143(3) r.w.s.147 and 144B of the I.T. Act, 1961. Issue Demand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de by various High Courts. According to Mr. Vohra, as would be manifest from a reading of the decision in Ashish Agarwal, the Supreme Court while taking note of the challenge which stood raised to such notices before different High Courts, had essentially framed remedial measures in order to strike a balance between the right of the Revenue to undertake a reassessment and those of the assessees on the other. Those directions, according to Mr. Vohra, were predicated on the Supreme Court seeking to obviate the specter of being deluged with more than 9000 appeals that would have come to be instituted before it assailing judgments and orders rendered by various High Courts. It was in order to avoid the aforesaid that the Supreme Court invoked its plenary powers conferred by Article 142 of the Constitution and framed directions for the Section 148 notices issued between the period 01 April 2021 to 30 June 2021 being treated as notices referable to Section 148A(b) of the Act and consequential proceedings being taken in accordance with the amended statutory scheme. 11. According to Mr. Vohra, it would be wholly incorrect to read those directions as warranting a reopening of concluded case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4(3), and so, there can be no question of striking down an order passed by this Court under Article 142(1) on the ground that it is inconsistent with Article 32. It would be noticed that this argument proceeds on the basis that the order for security infringes the fundamental right guaranteed by Article 32 and it suggests that under Article 142(1) this Court has jurisdiction to pass such an order. In our opinion, the argument thus presented is misconceived. In this connection, it is necessary to appreciate the actual decision in the case of Sharma [(1959) 1 SCR 806 at 859-860] and its effect. The actual decision was that the rights claimable under the latter part of Article 194(3) were not subject to Article 19(1)(a), because the said rights had been expressly provided for by a constitutional provision viz. Article 194(3), and it would be impossible to hold that one part of the Constitution is inconsistent with another part. The position would, however, be entirely different if the State Legislature was to pass a law in regard to the privileges of its members. Such a law would obviously have to be consistent with Article 19(1)(a). If any of the provisions of such a law were to cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to those powers which are specifically conferred on the Court by various statutes though are not limited by those statutes. These powers also exist independent of the statutes with a view to do complete justice between the parties. These powers are of very wide amplitude and are in the nature of supplementary powers. This power exists as a separate and independent basis of jurisdiction apart from the statutes. It stands upon the foundation and the basis for its exercise may be put on a different and perhaps even wider footing, to prevent injustice in the process of litigation and to do complete justice between the parties. This plenary jurisdiction is, thus, the residual source of power which this Court may draw upon as necessary whenever it is just and equitable to do so and in particular to ensure the observance of the due process of law, to do complete justice between the parties, while administering justice according to law. There is no doubt that it is an indispensable adjunct to all other powers and is free from the restraint of jurisdiction and operates as a valuable weapon in the hands of the Court to prevent clogging or obstruction of the stream of justice . It, however, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any statutory provisions but at the same time these powers are not meant to be exercised when their exercise may come directly in conflict with what has been expressly provided for in a statute dealing expressly with the subject. (Emphasis added) 26. It is very difficult to exhaustively lay down the parameters for the exercise of powers under Article 142 of the Constitution of India due to the very nature of such powers. However, a few important parameters which are relevant to the issues involved in the reference are as follows: (i) The jurisdiction can be exercised to do complete justice between the parties before the Court. It cannot be exercised to nullify the benefits derived by a large number of litigants based on judicial orders validly passed in their favour who are not parties to the proceedings before this Court; (ii) Article 142 does not empower this Court to ignore the substantive rights of the litigants; and (iii) While exercising the jurisdiction under Article 142 of the Constitution of India, this Court can always issue procedural directions to the Courts for streamlining procedural aspects and ironing out the creases in the procedural laws to ensure expeditious and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Ashish Agarwal and reopen a concluded assessment. It was the submission of Mr. Vohra that once the reassessment proceedings culminated in the passing of a final assessment order on 28 March 2022, the respondents were rendered functus officio and could not have possibly reinvented the wheel and commenced proceedings afresh by issuance of fresh notices under Section 148A(b) of the Act. 14. Appearing for the respondents, Mr. Bhattacharya submitted that it has been the consistent understanding of the respondents that the judgment in Ashish Agarwal mandated them to reopen all cases in which notices may have been issued during the period 01 April 2021 to 30 June 2021. According to Mr. Bhattacharya, the judgment of the Supreme Court would apply to all cases irrespective of whether the assessee had chosen to assail a Section 148 notice or not. Learned counsel contended that notwithstanding the initial reassessment proceedings having come to an end on 28 March 2022, the judgment of the Supreme Court in Ashish Agarwal, though rendered on 04 May 2022, would clearly apply and the initiation of reassessment cannot be faulted. It is the aforenoted rival submissions which fall for our conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hish Agarwal that despite the substituted Sections 147 to 151 having been brought into force with effect from 01 April 2021, the respondents had issued as many as 90,000 reassessment notices under the unamended set of provisions. The aforesaid action was based upon the explanations contained in the notifications dated 31 March 2021 and 27 April 2021. It was these reassessment notices which came to be assailed before various High Courts. The High Courts in unison held that the reassessment notices issued under the unamended Sections 148 to 151 would not sustain once the substituted provisions had come to be placed in the statute by virtue of Finance Act, 2021. On the basis of the aforesaid, the respective High Courts proceeded to set aside those reassessment notices. While the High Court of Allahabad quashed the reassessment notices, our Court in its judgment rendered in Man Mohan Kohli, while quashing the individual reassessment had pertinently observed that notwithstanding the challenge to the reassessment notices having been accepted, the same would not detract from the right of the respondents to draw proceedings afresh, if so permissible in law. 18. It was the impasse so create ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any enquiry is required, the assessing officer can do so, however, with the prior approval of the specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment. 21. Substituted Section 149 is the provision governing the time-limit for issuance of notice under Section 148 of the IT Act. The substituted Section 149 of the IT Act has reduced the permissible time-limit for issuance of such a notice to three years and only in exceptional cases ten years. It also provides further additional safeguards which were absent under the earlier regime pre-Finance Act, 2021. 19. The Supreme Court, however, also took note of the unprecedented and anomalous situation which had come to prevail by virtue of the diverse judgments rendered by different High Courts. While dealing with this aspect, it observed: - 22. Thus, the new provisions substituted by the Finance Act, 2021 being remedial and benevolent in nature and substituted with a specific aim and object to protect the rights and interest of the assessee as well as and the same being in public interest, the respective High Courts have rightly held that the benefit of new provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deemed to have been issued under Section 148-A of the IT Act as substituted by the Finance Act, 2021 and treated to be show-cause notices in terms of Section 148-A(b). The respective assessing officers shall within thirty days from today provide to the assessees the information and material relied upon by the Revenue so that the assessees can reply to the notices within two weeks thereafter. 25.2. The requirement of conducting any enquiry with the prior approval of the specified authority under Section 148-A(a) be dispensed with as a one-time measure vis- -vis those notices which have been issued under Section 148 of the unamended Act from 1-4-2021 till date, including those which have been quashed by the High Courts. 25.3. The assessing officers shall thereafter pass an order in terms of Section 148-A(d) after following the due procedure as required under Section 148-A(b) in respect of each of the assessees concerned. 25.4. All the defences which may be available to the assessee under Section 149 and/or which may be available under the Finance Act, 2021 and in law and whatever rights are available to the Assessing Officer under the Finance Act, 2021 are kept open and/or shall cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich were the subject-matter of writ petitions before the various respective High Courts shall be deemed to have been issued under Section 148-A of the IT Act as substituted by the Finance Act, 2021 and construed or treated to be show-cause notices in terms of Section 148-A(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. 28.2. The requirement of conducting any enquiry, if required, with the prior approval of specified authority under Section 148-A(a) is hereby dispensed with as a one-time measure vis- -vis those notices which have been issued under Section 148 of the unamended Act from 1-4-2021 till date, including those which have been quashed by the High Courts. 28.3. Even otherwise as observed hereinabove holding any enquiry with the prior approval of specified authority is not mandatory but it is for the assessing officers concerned to hold any enquiry, if required. 28.4. The assessing officers shall thereafter pass orders in terms of Section 148-A(d) in respect of each of the assessees conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 148A and treated to be show cause notices referable to clause (b) thereof. 23. As we read the penultimate directions which came to be framed, the procedure laid out in Ashish Agarwal clearly stood confined to matters where although notices may have been issued, proceedings were yet to have attained finality. This clearly flows from the impugned notices being ordained to be treated as show cause notices under Section 148A(b) and the concomitant liberty being accorded to AOs to proceed further in accordance with Section 148A(d). As we read that decision, we find ourselves unable to construe those directions as either warranting or mandating a reopening of proceedings which had come to be rendered a quietus in the meanwhile. The judgment was primarily concerned with the validity of various notices which had been promulgated and proceedings drawn in accordance with the statutory procedure which stood in place prior to 01 April 2021. It also becomes pertinent to note that the decision rendered by our Court in Man Mohan Kohli perhaps constituted the solitary exception in the sense of having left a window open to the respondents to draw proceedings afresh. A majority of the Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pondents had erred in proceeding on the basis of the unamended family of provisions relating to reassessment. They had essentially held that it was the procedure constructed in terms of the amendments introduced by Finance Act, 2021 which would apply. None of those judgements were primarily concerned with concluded assessments. It is this indubitable position which constrained the Supreme Court to frame directions requiring those notices to be treated as being under Section 148A(b) and for the AO proceeding thereafter to frame an order as contemplated by Section 148A(d) of the Act. The Supreme Court significantly observed that the High Courts instead of quashing the impugned notices should have framed directions for those notices being construed and deemed to have been issued under Section 148A. Ashish Agarwal proceeded further to observe that the Revenue should have been permitted to proceed further with the reassessment proceedings as per the substituted provisions . Our view of the judgement being confined to proceedings at the stage of notice is further fortified from the Supreme Court providing in para 8 of the report that The respective impugned Section 148 notices issued to ..... 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