Taxpayer may avail appeal remedy against section 148A(d) order to save writ costs

Section 148A process

In the case of Union of India v. Ashish Agarwal [2022] 138 taxmann.com 64/286 Taxman 183/444 ITR 1 (SC)/AIR 2022 SC 2781 the Supreme Court disposed of around 9000 writ petitions wherein as many as 90000 notices u/s 148 of the unamended Income tax Act were issued by the revenue after April 1, 2021 and restored them to the assessing officer with a direction to follow the process under the amended Act as enumerated in section 148A before commencing reassessment. In the order it is stated as under:

“However, by way of section 148A, the procedure has now been streamlined and simplified. It provides that before issuing any notice under section 148, the Assessing Officer shall (i) conduct any enquiry, if required, with the approval of specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment ; (ii) provide an opportunity of being heard to the assessee, with the prior approval of specified authority ; (iii) consider the reply of the assessee furnished, if any, in response to the show- cause notice referred to in clause (b) ; and (iv) decide, on the basis of material available on record including reply of the assessee, as to whether or not it is a fit case to issue a notice under section 148 of the Income-tax Act and (v) the Assessing Officer is required to pass a specific order within the time stipulated.

Therefore, all safeguards are provided before notice under section 148 of the Income-tax Act is issued. At every stage, the prior approval of the specified authority is required, even for conducting the enquiry as per section 148A(a). Only in a case where, the Assessing Officer is of the opinion that before any notice is issued under section 148A(b) and an opportunity is to be given to the assessee, there is a requirement of conducting any enquiry, the Assessing Officer may do so and conduct any enquiry. Thus if the Assessing Officer is of the opinion that 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.

Substituted section 149 is the provision governing the time limit for issuance of notice under section 148 of the Income-tax Act. The substituted section 149 of the Income-tax 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 safe guards which were absent under the earlier regime pre-Finance Act, 2021.

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 shall be made available even in respect of the proceedings relating to past assessment years, provided section 148 notice has been issued on or after April 1, 2021. We are in complete agreement with the view taken by the various High Courts in holding so.”

Thus prior to reopening of a case the assessing officer under the amended Act is required by law to conduct an inquiry after affording opportunity to the taxpayer by seeking objections from the taxpayer. After considering reply/objections of the taxpayer and after further inquiry he is required to pass an order u/s the 148A(d) holding a case for reassessment of certain definite sum escaping assessment.

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