Telangana High CourtM/S. Vertex Ventures Health Care vs Union Of India And 2 Others on 9 June, 2022Author:Surepalli NandaBench:Surepalli NandaTHE HONOURABLE SRI JUSTICE UJJAL BHUYAN\n\n                              AND\n\n THE HONOURABLE MRS JUSTICE SUREPALLI NANDA\n\n  WRIT PETITION Nos.33919, 23470, 26873, 27937,\n 30420, 30446, 30899, 34944, 34949, 34954, 34974,\n 36190 & 36912 of 2021 and 4899, 6483, 6490, 6491,\n  6505, 6513, 6526, 6540, 6560, 6574, 6617, 6620,\n  6621, 6623, 6624, 6638, 6654, 6681, 6862, 7681,\n  7801, 7902, 7932, 7938, 8088, 8147, 8403, 8701,\n  8746, 9486, 11202, 11214, 11335, 11377, 11425,\n 11483, 11495, 11510, 11619, 11848, 11902, 11995,\n           12017, 12914 & 12978 of 2022\n\nCOMMON ORDER:(Per Hon'ble Sri Justice Ujjal Bhuyan)\n\n       Heard Mr. Srikrishna Koundanya, learned Senior\n\nCounsel for the petitioners along with Mr. A.V.A.Siva\n\nKartikeya, Mr. K.Raghavendra Rao, Mr. C.V.Narasimham,\n\nMr.    A.V.Raghu     Ram,     Mr.     Karthik   Pavan   Kumar,\n\nMr. C.P.Ramaswami, Mr. M.Naga Deepak, Mr. K.Vijay\n\nKumar, Ms. G.Sumathi, Mr. Gandham Durga Bose,\n\nMr. T.Archan Kumar, Mr. Dundu Manmohan & Mr. Dundu\n\nSashank Manmohan, learned counsel for the petitioners.\n\nWe     have   also    heard     Mr.     B.Narasimha     Sarma,\n\nMr. J.V.Prasad & Mr. A.Radha Krishna, learned Standing\n\nCounsel for Income Tax Department for the respondents as2UB,J & SN,J\n                                   W.P.No.33919 of 2021&batch\n\n\n\nwell as Mr. B.Mukherjee, learned counsel appearing on\n\nbehalf of Mr. N.Rajeshwar Rao, learned Assistant Solicitor\n\nGeneral of India appearing on behalf of Union of India.2.    In all the writ petitions in this bunch, challenge\n\nhas been made to the legality and validity of notices issued\n\nby the assessing officer underSection 148of the Income\n\nTax Act, 1961 (briefly referred to hereinafter as the 'Act').\n\nAll the notices are post 01.04.2021, but issued under the\n\nunamended provision ofSection 148of the Act.3.    By the aforesaid notices, assessing officer\n\nproposed to assess/re-assess income of the petitioners for\n\nthe respective assessment years on the ground that he has\n\nreasons to believe that income chargeable to tax had\n\nescaped assessment.4.    Contention of the petitioners is thatSection\n\n148Aof the Act has been inserted in the Act by way of\n\nrecent amendment and which has come into effect from\n\n01.04.2021. As perSection 148Aof the Act, the assessing3UB,J & SN,J\n                                   W.P.No.33919 of 2021&batch\n\n\n\nofficer is required to conduct an enquiry with the approval\n\nof the specified authority with respect to the information\n\nsuggesting that income chargeable to tax has escaped\n\nassessment prior to issuing any notice underSection 148of the Act. He is also required to provide an opportunity of\n\nhearing to the assessee and to consider a reply of the\n\nassessee. Thereafter, underSection 148A(d)of the Act, he\n\nhas to take a decision on the basis of the available\n\nmaterials including reply of the assessee as to whether it is\n\na fit case for reopening and only thereafter and if he is\n\nsatisfied that it is a fit case for reopening, then notice\n\nunderSection 148of the Act is required to be issued.5.    The impugned notices have been challenged in\n\nthe present batch of writ petitions on the ground that the\n\nprocedure laid down underSection 148Aof the Act has not\n\nbeen followed, which has rendered the impugned notices\n\nnull and void.6.    In all the writ petitions, notices were issued and\n\nthe impugned notices have been stayed.4UB,J & SN,J\n                                       W.P.No.33919 of 2021&batch7.     It may be mentioned that several High Courts\n\nhad passed judgments setting aside such notices including\n\nthe High Court of Judicature at Allahabad in Writ Tax\n\nNo.524/2021, against which Union of India filed Special\n\nLeave Petitions.      On leave being granted, Civil Appeal\n\nNo.3005/2022 (Union of India vs. Ashish Agarwal) along\n\nwith other connected Civil Appeals were heard by the\n\nSupreme Court and decided vide the judgment and order\n\ndated 04.05.2022, which has since been reported in 2022\n\nSCC Online SC 543. After analysing the provisions of the\n\nAct fromSections 147to151of the Act, more particularly\n\nthe provisions contained inSection 148Aof the Act,\n\nSupreme Court observed as follows:"7.   Thus, the new provisions substituted by theFinance    Act,   2021being   remedial    and\n            benevolent in nature and substituted with a\n            specific aim and object to protect the rights and\n            interest of the assessee as well as and the same\n            being in public interest, the respective High\n            Courts have rightly held that the benefit of new\n            provisions shall be made available even in\n            respect of the proceedings relating to past5UB,J & SN,J\n                                            W.P.No.33919 of 2021&batch\n\n\n\n             assessment years, providedsection 148notice\n             has been issued on or after 1st April, 2021. We\n             are in complete agreement with the view taken\n             by the various High Courts in holding so."8.     However, taking the view that judgments of the\n\nHigh Courts would result in no re-assessment proceedings\n\nat all, Supreme Court proposed to modify the judgments\n\nand orders passed by various High Courts in the following\n\nmanner:"8.   However, at the same time, the judgments of the\n            several   High   Courts    would        result   in   no\n            reassessment proceedings at all, even if the same\n            are permissible under theFinance Act, 2021and\n            as per substitutedsections 147to151of the IT\n            Act. The Revenue cannot be made remediless\n            and the object and purpose of reassessment\n            proceedings cannot be frustrated. It is true that\n            due to a bonafide mistake and in view of\n            subsequent   extension     of    time    vide    various\n            notifications, the Revenue issued the impugned\n            notices undersection 148after the amendment\n            was   enforced   w.e.f.   01.04.2021,       under     the\n            unamendedsection 148. In our view the same\n            ought not to have been issued under the\n            unamended Act and ought to have been issued\n            under the substituted provisions ofsections 147to151of the IT Act as per theFinance Act, 2021.6UB,J & SN,J\n                                W.P.No.33919 of 2021&batch\n\n\n\nThere appears to be genuine non-application of\nthe amendments as the officers of the Revenue\nmay have been under a bonafide belief that the\namendments may not yet have been enforced.\nTherefore, we are of the opinion that some\nleeway must be shown in that regard which the\nHigh Courts could have done so. Therefore,\ninstead of quashing and setting aside the\nreassessment        notices     issued     under    the\nunamended provision ofIT Act, the High Courts\nought to have passed an order construing the\nnotices      issued     under     unamended        Act/\nunamended provision of theIT Actas those\ndeemed to have been issued undersection 148Aof the IT Act as per the new provisionsection\n148Aand the Revenue ought to have been\npermitted      to     proceed    further    with    the\nreassessment proceedings as per the substituted\nprovisions ofsections 147to151of the IT Act as\nper theFinance Act, 2021, subject to compliance\nof all the procedural requirements and the\ndefences, which may be available to the assessee\nunder the substituted provisions ofsections 147to151of the IT Act and which may be available\nunder theFinance Act, 2021and in law.\nTherefore, we propose to modify the judgments\nand orders passed by the respective High Courts\nas under:-(i)   The respective impugnedsection 148notices issued to the respective assessees7UB,J & SN,J\n                               W.P.No.33919 of 2021&batch\n\n\n\n        shall be deemed to have been issued\n        undersection 148Aof the IT Act as\n        substituted by theFinance Act, 2021and\n        treated to be show-cause notices in terms\n        ofsection   148A(b).      The    respective\n        assessing officers shall within thirty days\n        from today provide to the assessees the\n        information and material relied upon by\n        the Revenue so that the assessees can\n        reply to the notices within two weeks\n        thereafter;(ii)    The    requirement    of   conducting       any\n        enquiry with the prior approval of the\n        specified authority undersection 148A(a)be dispensed with as a one-time measure\n        vis−à−vis those notices which have been\n        issued    underSection    148of   the\n        unamended Act from 01.04.2021 till date,\n        including those which have been quashed\n        by the High Courts;(iii)   The assessing officers shall thereafter\n        pass an order in terms ofsection 148A(d)after following the due procedure as\n        required undersection 148A(b)in respect\n        of each of the concerned assessees;(iv)    All the defences which may be available to\n        the assessee undersection 149and/or\n        which may be available under theFinance\n        Act, 2021and in law and whatever rights8UB,J & SN,J\n                                           W.P.No.33919 of 2021&batch\n\n\n\n                 are available to the Assessing Officer\n                 under theFinance Act, 2021are kept\n                 open and/or shall continue to be available\n                 and;(v)   The present order shall substitute/modify\n                 respective judgments and orders passed\n                 by the respective High Courts quashing\n                 the     similar       notices   issued    under\n                 unamendedsection 148of the IT Act\n                 irrespective of whether they have been\n                 assailed before this Court or not."9.     Finally, the Civil Appeals were allowed in part\n\nand judgments of the various High Courts have been\n\nmodified and substituted as under:"10. In view of the above and for the reasons stated\n           above, the present Appeals are ALLOWED IN\n           PART. The impugned common judgments and\n           orders passed by the High Court of Judicature at\n           Allahabad in W.T. No. 524/2021 and other allied\n           tax appeals/petitions, is/are hereby modified\n           and substituted as under:-(i)   The impugnedsection 148notices issued\n                 to the respective assessees which were\n                 issued under unamendedsection 148of\n                 the IT Act, which were the subject matter\n                 of    writ   petitions    before   the   various9UB,J & SN,J\n                                     W.P.No.33919 of 2021&batch\n\n\n\n        respective High Courts shall be deemed to\n        have been issued undersection 148Aof\n        the IT Act as substituted by theFinance\n        Act, 2021and construed or treated to be\n        show-cause notices in terms ofsection\n        148A(b). The assessing officer shall, within\n        thirty days from today provide to the\n        respective        assessees       information    and\n        material relied upon by the Revenue, so\n        that the assesees can reply to the show-cause notices within two weeks thereafter;(ii)    The   requirement           of    conducting     any\n        enquiry,     if    required,      with    the   prior\n        approval     of     specified     authority     undersection 148A(a)is hereby dispensed with\n        as a one-time measure vis-à-vis those\n        notices which have been issued undersection 148of the unamended Act from\n        01.04.2021         till   date,   including     those\n        which have been quashed by the High\n        Courts.Even          otherwise       as    observed\n        hereinabove holding any enquiry with the\n        prior approval of specified authority is not\n        mandatory but it is for the concerned\n        Assessing Officers to hold any enquiry, if\n        required;(iii)   The assessing officers shall thereafter\n        pass orders in terms ofsection 148A(d)in10UB,J & SN,J\n                                           W.P.No.33919 of 2021&batch\n\n\n\n                   respect   of     each   of     the   concerned\n                   assessees; Thereafter after following the\n                   procedure as required undersection 148Amay issue notice undersection 148(as\n                   substituted);(iv)    All defences which may be available to the\n                   assesses including those available undersection 149of the IT Act and all rights\n                   and contentions which may be available to\n                   the concerned assessees and Revenue\n                   under theFinance Act, 2021and in law\n                   shall continue to be available."10.    Supreme Court also clarified that its decision inAshish Agarwal(supra) rendered on 04.05.2022 was an\n\norder passed underArticle 142of the Constitution of India\n\nand would be binding in all cases where similar notices\n\nhave either been set aside by the High Courts or are\n\npending adjudication before the High Courts. It has been\n\nheld as follows:"11. The present order shall be applicable PAN INDIA\n           and all judgments and orders passed by different\n           High Courts on the issue and under which\n           similar    notices      which   were     issued   after\n           01.04.2021 issued undersection 148of the Act\n           are set aside and shall be governed by the11UB,J & SN,J\n                                      W.P.No.33919 of 2021&batch\n\n\n\n           present order and shall stand modified to the\n           aforesaid extent. The present order is passed in\n           exercise of powers underArticle 142of the\n           Constitution of India so as to avoid any further\n           appeals by the Revenue on the very issue by\n           challenging similar judgments and orders, with a\n           view not to burden this Court with approximately\n           9000 appeals. We also observe that present order\n           shall also govern the pending writ petitions,\n           pending before various High Courts in which\n           similar notices underSection 148of the Act\n           issued after 01.04.2021 are under challenge."11.   Mr. J.V.Prasad, learned Standing Counsel has\n\nplaced before us Instruction No.01/2022 dated 11.05.2022\n\nissued by the Central Board of Direct Taxes (CBDT) issuing\n\ninstructions   to    the     assessing      officers       regarding\n\nimplementation of the judgment of the Supreme Court in\n\nAshish Agarwal (supra) which we have duly taken note of.12.   That being the position, the present batch of\n\nwrit petitions would stand disposed of in terms of the\n\njudgment of the Supreme Court inAshish Agarwal(supra).\n\nHowever, there shall be no order as to costs.12UB,J & SN,J\n                                    W.P.No.33919 of 2021&batch13.   As    a   sequel,    miscellaneous    applications\n\npending, if any, in these Writ Petitions, shall stand closed.________________________\n                                          UJJAL BHUYAN,J\n\n\n                                    ________________________\n                                     SUREPALLI NANDA, J\n\nDate: 09.06.2022\nKL