Landmark Supreme Court

judgment breathes life into

JONEJA & CO
90000 notices u/s 148 #

6 May 2022
Executive Summary
For Queries
Finance Act 2021 had substituted new
reassessment provisions w.e.f 1-4-2021. However
approx. 90000 notices were issued by Tax
Department after 1-4-2021 as per old law. The
Supreme Court (SC) has put to rest the
controversy around 148 Notices issued after 1-4-
CA YK Joneja 2021 under the pre-amended law. Various High
Courts had disposed off the writ petitions filed
T: 91-9811080242
against these notices as Bad in law. This
threatened reassessment proceedings in approx
90000 cases. The SC has laid down that the notice
issued under section 148 under the old law shall
be treated as a Show Cause notice under the
new law. Amen The SC by invoking Art 142 of the
Indian Constitution held that this decision to apply
PAN India.
CA Samrat Joneja
samrat@ykjoneja.com
Background & Facts of the Case
T: 91-9873680242 The Central govt. by the power vested under
section 3 of the Relaxation Act, 2020 issued
Notifications extending the time limit of issuing
notices under section 148 to 30.06.2021. The
explanations to the notifications mentioned that
the provisions as they existed prior to the
amendment by the Finance Act 2021 shall apply
to reassessment proceedings initiated
thereunder. On the other hand on 28th March
Adv. Virat Joneja 2021, Finance Act 2021 became effective which
inter alia made reformative changes to the
Virat@ykjoneja.com
scheme of reassessment under Section 147 to
T: 91-9873080242
Section 151 of the Income Tax Act 1961. As per
the amended provisions notice under section
148 could be issued only after complying with
requirements of Section 148A. Sec. 148A requires
1) seeking permission before initiating enquiry
# Union of India vs Ashish Agarwal against a taxpayer if required by the Tax officer
Tax Alert
….background & facts
2) provide an opportunity of being
heard to the assessee – show cause
notice (SCN) 3) consider the reply of
the assessee 4) decide on the basis of
material on reply furnished by the
assessee whether a fit case for issue of
148 Notice 5) AO to pass a specific
order under section 148A and provide
copy to the assessee.
Ignoring the provisions of Section
148A, the Income Tax Department
issued approximately 90000 income
tax notices after 1-4-2021 i.e even
after the date these provisions were
made effective by the Finance Act
2021. These reassessment notices
were the subject matter of writ
petitions before various High Courts (
Approx 9000 writ petitions were
pending) which held that notices
issued under the erstwhile sections 148
to 151 of the Act are bad in law as the
notices were to be governed by the
substituted sections 147 to 151 of the
Act. In the present case before the
Supreme court, the Allahabad High
Court also gave a similar judgment
quashing notice under section 148
Our Comments
Landmark decisions like these
instill our faith judiciary. The
Supreme Court has truly pulled
out a great judgment keeping
the interest of Nation and tax
payer both in balance.
Page 2
Ruling
The Landmark ruling by the Hon’ble Supreme
Court laid while giving a huge sigh of relief to
Income Tax department held as under:
 High Courts rightly held that benefit of new
reformative provisions needs to be given
to taxpayers who are served notice under
section 148 after 1-4-2021 and therefore
notices issued under pre-amended
provisions are bad in law. However, object
and purpose of reassessment cannot be
frustrated in about 90000 cases and
revenue cannot be made remediless
 It was a bonafide mistake for Revenue to
issue notice under pre-amended law
 Order passed by High Court is modified as
under
o Notice issued under section 148 –
deemed to be issued under section
148A(b) as show cause notice
Within 30 days from 4-5-22, the AO
to share material relied on by the
AO and within 2 weeks thereafter
assessee to reply
o Requirement of conducting enquiry
dispensed as one time relief
o AO shall pass order under section
148A(d) after passing the due
procedure
 In exercise of powers granted by Article
142 of the Constitution of India, the order
shall be made applicable in respect of the
similar judgments and orders passed by
various High Courts across the country i.e
present order to apply PAN India.
Tax Alert Page 3

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