Supreme Court: Stay on 90,000 notices under old provision: Supreme Court


Mumbai: About 90,000 reassessment notices issued by the Income Tax (IT) department after April 1, 2021 under the provisions of Section 148 have been valid. Supreme Court (SC).
The reassessment notice was challenged in over 9,000 writ petitions across India. The notices were quashed by most of the high courts in Allahabad, Bombay, Calcutta, Delhi and Rajasthan. This Chhattisgarh HC was an exception as it endorsed the issuance of Section 148 reassessment notice after April 1, 2021 under the old provisions. A bench of the Supreme Court comprising Justice MR Shah and Justice B.V. Nagarathna Orders passed by several high courts in favor of taxpayers have been reversed.
The IT department can now proceed with the revaluation process (open past cases). But asylum will be available to taxpayers under the amended law – such as the right to a hearing.
Section 148 of the IT Act empowers IT officers to reopen past tax assessments if they have a ‘reason to believe’ that certain incomes have escaped the assessment. The Finance Act, 2021 introduced Section 148A which streamlined the process and better protected the interests of the taxpayers.
But between April 1 and June 30, 2021, IT officials issued a reassessment notice under the old provision, which was challenged by taxpayers. Surprisingly, in Wednesday’s order, the SC used the provisions of Article 142 of the Indian Constitution in tax matters. This, in turn, results in far-reaching effects.
SC Advocate Deepak Joshi The SC stated that the notice issued for re-evaluation under section 148 without amendment after April 1, 2021 would be deemed to have been issued under the new arrangement under section 148A.
“Notices revoked by the high courts have been given a new lease of life, with one morning that the security under the new regime will be complied with. As a result, thousands of pending and already canceled cases will now be processed in accordance with these guidelines, “Joshi explains.
Dhruv Advisors Partner Ajay Roti Says, “This SC order will have a huge impact, given the number of reassessment notices that are now valid in a single proceeding. The revenue department has been directed to follow the new procedure and determine whether there are suitable cases for reopening.
“It is now hoped that the IT department will conduct an impartial inquiry and leave out notices that do not pass the tests prescribed by the new law. There is a short window of 30 days for this and this will be a stressful time for the tax department and the taxpayers, ”Roti added.

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