Allahabad High Court: In a matter concerning the maintainability of proceedings under Section 148A(b) of the Income Tax Act, 1961 (‘IT Act’), initiated prior to 01-09-2024, the issue arises as to whether such proceedings would continue to be valid or would be saved after the enforcement of the Finance Act No. 02 of 2024, with effect from 01-09-2024, especially in view of Section 152 (4) of the Income tax Act, 1961, which has been inserted by the Finance Act No.2 of 2024, the division bench of Rajan Roy and Brij Raj Singh, JJ. after noting that the Revenue had conceded to the argument of the petitioner, quashed all the impugned orders and notices.
Background
In the present case, the department sought to initiate reassessment proceedings against the petitioner based on the information regarding ‘income having escaped assessment,’ which originated from an audit objection. Initially, the department issued a notice under Section 148A(b) of the IT Act, followed by an order under Section 148A(d) of the IT Act, and subsequently issued a reassessment notice under Section 148 of the IT Act. These notices were quashed and set aside by the High Court for not complying with the principles of natural justice. Following the quashing, the department reissued a notice under Section 148A(b) of the IT Act and proceeded to pass an order again under Section 148A(d) of the IT Act. However, before the order under Section 148A(d) of the IT Act could be passed, the Finance Act No. 02 of 2024 came into effect, repealing Sections 148A and 148 of the IT Act.
The petitioner approached the High Court challenging the proceedings and seeking quashing of reissued order and notices.
The petitioner’s contention was that only such cases where notice under Section 148 of the IT Act had been issued or an order under clause (d) of sub-section-148A had been issued prior to 01-09-2024 , the assessment, reassessment or recomputation in such case shall be governed as per the provisions of Sections 147 to 151, as they stood immediately before the commencement of Finance (No.2) Act, 2024 in view of Section 152.
Thus, as per the petitioner if the aforesaid eventualities are not satisfied then the earlier provisions be inoperative and will not apply and any action could be taken only under the substituted or new provisions which have come into effect from 01-09-2024.
Further, it was contended that as there is specific saving clause in the Finance (No.2) Act, 2024, the contention is that Section 6 of General Clause Act, 1897 will not apply because the intention in the specific saving clause contained under the Finance (No.2) Act, 2024 is different.
As in the case of the petitioner, the order for reassessment and the reassessment notice was issued on 02-09-2024, which is after the 01-09-2024, therefore, the amended provisions would apply and no order under Section148A(d) could have been passed by the respondent authorities.
By an Interim order dated 19-12-2024 , the High Court stayed the impugned proceedings, for the Revenue to respond to the question as to how the proceedings under Section 148A(b) initiated prior to 01-09-2024, if at all, would be saved after coming into force of the Finance (No.2) Act, 2024.
Analysis and Decision
The Court noted that the Revenue by the written instructions said that all notices impugned herein, which were issued under Section 148, 148A(b) and 148A(d), have wrongly been issued and the contention of the petitioner as recorded in the earlier order and as averred in the writ petition is correct, therefore, the same may be se-aside.
In view of the said written instructions, the Court quashed all the impugned orders/ notices.
The Court highlighted that if it is permissible to issue notice under any other provision of the Income Tax Act, 1961 or any other statute, then, the respondent authorities may proceed to do so, but, strictly in accordance with law.
[Ravish Rastogi v. Union of India, 2025 SCC OnLine All 1043, decided on 16-01-2025]
Advocates who appeared in this case:
Counsel for Petitioner : Aakash Prasad,Himanshu Singh
Counsel for Respondent : A.S.G.I.,Kushagra Dikshit
