New Delhi: The Supreme Court on Wednesday said that reassessment notices, issued under the unamended Section 148 of the Income Tax Act, on or after April 1, 2021, will not be deemed to be invalid.
A bench of Justices M.R. Shah and B.V. Nagarathna said: “Instead of quashing and setting aside the reassessment notices issued under the unamended provision of IT Act, the High Courts ought to have passed an order construing the notices issued under unamended Act/unamended provision of the IT Act as those deemed to have been issued under section 148A of the IT Act as per the new provision section 148A.”
Various high courts had decided in favour of the assesses by quashing several reassessment notices issued by the department under Section 148, noting that the reassessment notices were bad in law in view of the amendment by the Finance Act, 2021.
The top court modified various high court orders, which quashed the reassessment notices issued under unamended Section 148 on or after April 1, 2021.
The bench added that the Revenue Department ought to have been permitted to proceed further with the reassessment proceedings as per the substituted provisions of Sections 147 to 151 of the IT Act as per the Finance Act, 2021, subject to compliance of all the procedural requirements.
“And the defences, which may be available to the assessee under the substituted provisions of sections 147 to 151 of the IT Act and which may be available under the Finance Act, 2021, and in law.”
The top court judgment is likely to ensure it is not over burdened with around 9,000 appeals by the Finance Ministry, as it used its powers under the Constitution’s Article 142 to avoid any further appeals by ministry. “Therefore, we have proposed to pass the present order with a view avoiding filing of further appeals before this court and burden this court with approximately 9,000 appeals against the similar judgments and orders passed by the various High Courts, the particulars of some of which are referred to hereinabove,” said the bench.
The top court judgment came on a clutch of appeals where various high courts had ruled in favour of the assesses.
“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).”