Facts of the Case

The petitioner challenged the notice dated 1 June 2022 issued under Section 148A(b), the order dated 16 July 2022 passed under Section 148A(d), and the consequent notice dated 16 July 2022 under Section 148 of the Income Tax Act, 1961 for Assessment Year 2015–16.

Earlier, a notice under Section 148 had been issued on 31 March 2021 for the same assessment year, pursuant to which reassessment proceedings were conducted. An assessment order dated 31 March 2022 under Section 147 read with Section 144B was passed by the National Faceless Assessment Centre, making an addition of ₹6,54,78,799 on account of alleged accommodation entries through penny stock transactions.

The petitioner filed an appeal against the said order before the Commissioner of Income Tax (Appeals), which remained pending. Despite the concluded reassessment, fresh proceedings were initiated in June 2022 relying on the Supreme Court’s decision in Union of India v. Ashish Agarwal.

Issues Involved

  1. Whether reassessment proceedings can be reinitiated for the same assessment year after completion of reassessment under Section 147.
  2. Whether the Supreme Court’s decision in Ashish Agarwal authorizes reopening of concluded assessments.
  3. Validity of notices issued under Sections 148A(b), 148A(d), and 148 without new material.

Petitioner’s Arguments

The petitioner contended that the Assessing Officer became functus officio after passing the reassessment order dated 31 March 2022. Therefore, initiation of fresh proceedings for the same assessment year on identical grounds was without jurisdiction.

It was argued that the decision in Ashish Agarwal was limited to salvaging reassessment notices issued under the old law during the transition to the amended regime and did not permit reopening of completed proceedings.

Reliance was placed on judicial precedents, including a coordinate bench decision holding that the said judgment does not authorize reopening of assessments that have attained finality.

Respondent’s Arguments

The Revenue argued that the earlier notice dated 31 March 2021, digitally signed on 1 April 2021, fell within the category of notices deemed to be show-cause notices under Section 148A(b) pursuant to the Supreme Court’s ruling in Ashish Agarwal. Accordingly, fresh proceedings were initiated to comply with the new statutory framework.

It was also contended that the impugned order under Section 148A(d) was passed after obtaining approval from the competent authority and that discrepancies in the amount of escaped income were merely typographical errors.

 Court Order / Findings

  • The reassessment proceedings for the relevant assessment year had already culminated in a final order dated 31 March 2022.
  • The fresh proceedings were based on the same alleged escapement of income without any new material.
  • The Supreme Court’s judgment in Ashish Agarwal was intended to regularize reassessment notices issued under the old regime but did not mandate reopening of concluded assessments.
  • The Court relied on its earlier decision in Anindita Sengupta v. ACIT, holding that the judgment applies only where proceedings had not attained finality.
  • Once an assessment has been completed, the Revenue cannot restart the process merely by invoking the said judgment.

Important Clarification

The judgment clarifies that the Supreme Court’s ruling in Ashish Agarwal does not permit reopening of reassessment proceedings that have already been completed and attained finality. The decision applies only to cases where reassessment notices were issued but proceedings had not concluded.

The ruling reinforces the principle of finality in tax assessments and prevents multiple reassessment cycles for the same assessment year in the absence of new material.

Link to download the order -  https://www.mytaxexpert.co.in/uploads/1772177073_AKSHITAJINDALVsINCOMETAXOFFICERWARD541DELHIORS.pdf 

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