Facts of the Case

The petitioner challenged a Show Cause Notice dated 30 May 2022 issued under Section 148A(b) of the Income-tax Act, 1961, the order dated 19 July 2022 passed under Section 148A(d), and the consequential notice dated 20 July 2022 issued under Section 148 for Assessment Year 2013-14. These actions were taken on the Revenue’s understanding of the Supreme Court’s decision in Union of India v. Ashish Agarwal.

The petitioner had originally filed her return for AY 2013-14 declaring income of ₹4,83,099, which was assessed under Section 143(3) and accepted. A notice under Section 148 dated 31 March 2021 (stated to be issued on 01 April 2021) alleged escaped income relating to investments in shares. The petitioner explained that the investments were funded from sale proceeds of immovable property duly subjected to capital gains tax, and the reassessment proceedings culminated in a final assessment order dated 28 March 2022 accepting the explanation without any addition. Subsequently, fresh proceedings were initiated under Sections 148A(b) and 148 based on the interpretation of the Ashish Agarwal judgment.

Issues Involved

  1. Whether reassessment proceedings that had already concluded could be reopened by invoking the Supreme Court’s decision in Ashish Agarwal.
  2. Whether fresh notices under Sections 148A(b) and 148 could be issued after a final assessment order had been passed.
  3. Whether Article 142 directions of the Supreme Court authorized reopening of completed assessments.
  4. Whether the impugned notices were without jurisdiction.

Petitioner’s Arguments

  • The reassessment proceedings had already culminated in a final order on 28 March 2022, prior to the Ashish Agarwal decision.
  • The Supreme Court’s directions were intended only to regularize defective notices issued after 01 April 2021, not to reopen concluded proceedings.
  • The Revenue’s interpretation effectively rewound finalized proceedings without statutory authority.
  • Once a final assessment order was passed, the Assessing Officer became functus officio and could not initiate fresh proceedings on the same basis.

Respondent’s Arguments

  • The Ashish Agarwal judgment applied to all reassessment notices issued between 01 April 2021 and 30 June 2021 irrespective of the stage of proceedings.
  • The decision mandated treating such notices as show-cause notices under Section 148A(b) and proceeding under the amended law.
  • Therefore, fresh proceedings were valid notwithstanding the earlier assessment order.

Court Order / FINDINGS

  • The Ashish Agarwal decision was concerned with saving reassessment notices issued under the unamended provisions after 01 April 2021 and enabling proceedings to continue under the amended regime.
  • The directions were confined to cases where proceedings were pending and had not attained finality.
  • The judgment did not authorize reopening of reassessment proceedings that had already concluded with final orders.
  • Article 142 powers cannot be used to nullify substantive rights or reopen finalized matters, particularly where the assessee was not a party to earlier litigation.
  • The petitioner had accepted the original proceedings and contested them on merits; therefore, there was no justification to reopen them.

Important Clarification

  • The Supreme Court’s ruling in Ashish Agarwal does not mandate reopening of concluded reassessment proceedings.
  • Article 142 directions cannot override substantive statutory rights or invalidate finalized assessments.
  • Reassessment proceedings that have attained finality cannot be revived merely because the original notice fell within the specified period.
  • Revenue authorities must act within the confines of statutory jurisdiction and cannot “rewind the clock” after completion of proceedings.

Link to download the order –  https://www.mytaxexpert.co.in/uploads/1772263681_ANINDITASENGUPTAVsASSISTANTCOMMISSIONEROFINCOMETAXCIRCLE611NEWDELHIORS..pdf 

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