/2022 INSC 0349/
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 3005/2022
Union of India & Ors.             ..Appellant (S)
Versus
Ashish Agarwal                            ..Respondent (S)
With 
Civil Appeal No. 3006/2022
With 
Civil Appeal No. 3009/2022
With 
Civil Appeal No. 3007/2022
With 
Civil Appeal No. 3008/2022
With 
Civil Appeal No. 3010/2022
With 
Civil Appeal No. 3013/2022
With 
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Civil Appeal No. 3011/2022
With 
Civil Appeal No. 3012/2022
With 
Civil Appeal No. 3014/2022
With
Civil Appeal No. 3015/2022
With 
Civil Appeal No. 3016/2022
With 
Civil Appeal No. 3017/2022
With 
Civil Appeal No. 3019/2022
With 
Civil Appeal No. 3020/2022
With 
Civil Appeal No.                     /2022
(arising out of SLP(C) No. 6448/2022)
With 
Civil Appeal No.                     /2022
(arising out of SLP(C) No. 5381/2022)
With 
2

Civil Appeal No.                     /2022
(arising out of SLP(C) No. 5079/2022)
With 
Civil Appeal No.                     /2022
(arising out of SLP(C) No. 6092/2022)
With 
Civil Appeal No.                     /2022
(arising out of SLP(C) No. 6534/2022)
With 
Civil Appeal No.                     /2022
(arising out of SLP(C) No. 6158/2022)
With 
Civil Appeal No.                     /2022
(arising out of SLP(C) No. 6316/2022)
With 
Civil Appeal No.                     /2022
(arising out of SLP(C) No. 6281/2022)
With 
Civil Appeal No.                         /2022
(arising out of SLP(C) No. 6545/2022)
With 
Civil Appeal No.                     /2022
(arising out of SLP(C) No. 6038/2022)
J U D G M E N T 
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M. R. Shah, J.
Leave   granted   in   SLP   (C)   Nos.   6448/2022,   5381/2022,
5079/2022,   6092/2022,   6534/2022,   6158/2022,
6316/2022, 6281/2022, 6545/2022, 6038/2022.   
1. Feeling   aggrieved   and   dissatisfied   with   the   impugned
common judgment and order passed by the High Court of
Judicature   at   Allahabad   in   Writ   Tax   No.   524/2021   and
other allied writ tax petitions, by which the High Court has
allowed   the   said   writ   petitions   and   has   quashed   several
reassessment notices issued by the Revenue, issued under
section   148   of   the   Income   Tax   Act,   1961,   on   the   ground
that the same are bad in law in view of the amendment by
the Finance Act, 2021 which has amended Income Tax Act
by   introducing   new   provisions   i.e.   sections   147   to   151
w.e.f.   1 st
  April,   2021,   the   Revenue   has   preferred   the
present appeals. 
2. Similar judgments and orders are passed by various other
High   Courts   including   High   Court   of   Delhi;   High   Court   of
Rajasthan; High Court of Calcutta; High Court of Madras;
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High   Court   of   Bombay,   the   particulars   of   which   are   as
under: ­
Sl. No.  Particulars 
1. Ashok Kumar Agarwal Vs. UOI (Allahabad HC)
Judgment passed by the Hon’ble High Court of Allahabad
at Allahabad in Writ Tax No. 524/2021 dated 30.09.2021
  
2. Bpip   Infra   Pvt.   Ltd.   Vs.   Income   Tax   Officer   &   Others
(Rajasthan HC)
Judgment   in   S.B.   Civil   Writ   Petition   No.   13297/2021
passed by the Hon’ble High Court of Rajasthan at Jaipur
dated 25.11.2021 
3. Mon Mohan Kohli Vs. ACIT (Delhi HC)
Judgment   passed   by   the   Hon’ble   High   Court   of   Delhi   in
W.P.(C) No. 6176/2021 dated 15.12.2021
4. Bagaria   Properties   &   Investment   Pvt.   Ltd.   Vs.   UOI
(Calcutta HC)
Judgment   passed   by   the   Hon’ble   High   Court   of   Calcutta
in W.P.O No. 244/2021 dated 17.01.2022
5. Manoj Jain Vs. UOI (Calcutta HC)
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Judgment   passed   by   the   Hon’ble   High   Court   of   Calcutta
in W.P.A. No. 11950 of 2021 dated 17.01.2022 
6. Sudesh Taneja Vs. ITO (Rajasthan HC)
Judgment passed by the Hon’ble High Court of Rajasthan
in   D.B.   Civil   Writ   Petition   No.   969   of   2022   dated
27.01.2022
 
7. Vellore Institute of Technology Vs. CBDT (Madras HC)
Judgment passed by the Hon’ble High Court of Madras in
W.P. No. 15019/2021 dated 04.02.2022.   
8. Tata   Communications   Transformation   Services   Vs.   ACIT
(Bombay HC)
Judgment   passed   by   the   Hon’ble   High   Court   of   Bombay
in Writ Petition No. 1334 of 2021 dated 29.03.2022
At   this   stage,   it   is   required   to   be   noted   that
approximately   90,000   such   reassessment   notices   under
section 148 of the unamended Income Tax Act were issued
by   the   Revenue   after   01.04.2021,   which   were   the   subject
matter   of   more   than   9000   writ   petitions   before   various
High Courts across the country and by different judgments
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and orders, the particulars of which are as above, the High
Courts   have   taken   a   similar   view   and   have   set   aside   the
respective   reassessment   notices   issued   under   section   148
on similar grounds. 
2.1 The common judgment and order passed by the Allahabad
High   Court   is   the   subject   matter   of   the   present   appeals.
Shri N. Venkataraman, learned ASG, stated at the bar that
the Revenue is contemplating to prefer appeals against the
similar   judgments   and   orders   passed   by   various   High
Courts. However, as the issue is common and there will be
multiplicity of the proceedings and to lessen the burden of
this   Court   and   for   the   reasons   stated   hereinbelow,   as   we
propose   to   pass   an   order   in   exercise   of   powers   under
Article   142   of   the   Constitution   of   India   the   present   order
shall govern all the other judgments and orders passed by
various   High   Courts   on   the   similar   issue.   Hence,   we
observe that the Revenue need not file separate individual
appeals which may be more than 9000 in numbers. 
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2.2 In fact, we have heard Shri C.A. Sundaram, learned Senior
Advocate,   appearing   on   behalf   of   the   respective   assessee,
who were before the Delhi High Court also.            
3. While   appreciating   the   controversy,   a   few   facts   and   the
relevant   statutory   provisions   applicable   pre   01.04.2021
and post 01.04.2021 are required to be referred to. 
The   procedure   governing   initiation   of   reassessment
proceedings   prior   to   coming   into   force   of   the   Finance   Act,
2021 was governed by the following provisions: ­ 
“Income escaping assessment­ 
147.   If   the   Assessing   Officer   has   reason   to   believe   that   any
income   chargeable   to   tax   has   escaped   assessment   for   any
assessment   year,   he   may,   subject   to   the   provisions   of
sections   148   to   153,   assess   or   reassess   such   income   and
also   any   other  income   chargeable   to  tax   which   has   escaped
assessment   and   which   comes   to   his   notice   subsequently   in
the   course   of   the   proceedings   under   this   section,   or
recomputed   the   loss   or   the   depreciation   allowance   or   any
other allowance, as the case may be, for the assessment year
concerned   (hereafter   in   this   section   and   in   sections   148   to
153 referred to as the relevant assessment year):
Provided that where an assessment under sub­section (3) of
section   143   or   this   section   has   been   made   for   the   relevant
assessment year, no action shall be taken under this section
after   the   expiry   of   four   years   from   the   end   of   the   relevant
assessment   year,   unless   any   income   chargeable   to   tax   has
escaped   assessment   for   such   assessment   year   by   reason   of
the   failure   on   the   part   of   the   assessee   to   make   a   return
under   section   139   or   in   response   to   a   notice   issued   under
sub­section   (1)   of   section   142   or   section   148   or   to   disclose
8

fully   and   truly   all   material   facts   necessary   for   his
assessment, for that assessment year: 
Provided   further   that   nothing   contained   in   the   first   proviso
shall   apply   in   a   case   where   any   income   in   relation   to   any
asset   (including   financial   interest   in   any   entity)   located
outside India, chargeable to tax, has escaped assessment for
any assessment year: 
Provided   also   that   the   Assessing   Officer   may   assess   or
reassess   such   income,   other   than   the   income   involving
matters   which   are   the   subject   matters   of   any   appeal,
reference   or   revision,   which   is   chargeable   to   tax   and   has
escaped assessment. 
Explanation   1.—Production   before   the   Assessing   Officer   of
account   books   or   other   evidence   from   which   material
evidence   could   with   due   diligence   have   been   discovered   by
the   Assessing   Officer   will   not   necessarily   amount   to
disclosure within the meaning of the foregoing proviso. 
Explanation   2.—For   the   purposes   of   this   section,   the
following   shall   also   be   deemed   to   be   cases   where   income
chargeable to tax has escaped assessment, namely :—
(a)   where   no   return   of   income   has   been   furnished   by   the
assessee although his total income or the total income of any
other person in respect of which he is assessable under this
Act during the previous year exceeded the maximum amount
which is not chargeable to income­tax; 
(b)   where   a   return   of   income   has   been   furnished   by   the
assessee but no assessment has been made and it is noticed
by   the   Assessing   Officer   that   the   assessee   has   understated
the   income   or   has   claimed   excessive   loss,   deduction,
allowance or relief in the return; 
(ba)   where   the   assessee   has   failed   to   furnish   a   report   in
respect   of   any   international   transaction   which   he   was   so
required under section 92E; 
(c) where an assessment has been made, but— 
(i)   income   chargeable   to   tax   has   been   underassessed;
or 
(ii) such income has been assessed at too low a rate; or
(iii)   such   income   has   been   made   the   subject   of
excessive relief under this Act; or 
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(iv)   excessive   loss   or   depreciation   allowance   or   any
other allowance under this Act has been computed; 
(ca) where a return of income has not been furnished by the
assessee   or   a   return   of   income   has   been   furnished   by   him
and   on   the   basis   of   information   or   document   received   from
the prescribed income­tax authority, under sub­section (2) of
section   133C,   it   is   noticed   by   the  Assessing   Officer  that   the
income   of   the   assessee   exceeds   the   maximum   amount   not
chargeable   to   tax,   or   as   the   case   may   be,   the   assessee   has
understated   the   income   or   has   claimed   excessive   loss,
deduction, allowance or relief in the return; 
(d)   where   a   person   is   found   to   have   any   asset   (including
financial interest in any entity) located outside India.
Explanation   3.—For   the   purpose   of   assessment   or
reassessment   under   this   section,   the   Assessing   Officer   may
assess or reassess the income in respect of any issue, which
has escaped assessment, and such issue comes to his notice
subsequently   in   the   course   of   the   proceedings   under   this
section,   notwithstanding   that   the   reasons   for   such   issue
have   not   been  included   in   the  reasons   recorded   under   sub­
section (2) of section 148. 
Explanation   4.—For   the   removal   of   doubts,   it   is   hereby
clarified   that   the   provisions   of   this   section,   as   amended   by
the   Finance   Act,   2012,   shall   also   be   applicable   for   any
assessment year beginning on or before the 1st day of April,
2012.
Issue of notice where income has escaped assessment­
148.(1)   Before   making   the   assessment,   reassessment   or
recomputation under section 147, the Assessing Officer shall
serve   on   the   assessee   a   notice   requiring   him   to   furnish
within   such   period,   as   may   be   specified   in   the   notice,   a
return   of   his   income   or   the   income   of   any   other   person   in
respect   of   which   he   is   assessable   under   this   Act   during   the
previous year corresponding to the relevant assessment year,
in the prescribed form and verified in the prescribed manner
and   setting   forth   such   other   particulars   as   may   be
prescribed; and the provisions of this Act shall, so far as may
be,   apply   accordingly   as   if   such   return   were   a   return
required to be furnished under section 139: 
Provided that in a case— 
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(a)   where   a   return   has   been   furnished   during   the   period
commencing on the 1st day of October, 1991 and ending on
the   30th   day   of   September,   2005   in   response   to   a   notice
served under this section, and 
(b) subsequently a notice has been served under sub­section
(2) of section 143 after the expiry of twelve months specified
in   the   proviso   to   subsection   (2)   of   section   143,   as   it   stood
immediately   before   the   amendment   of   said   sub­section   by
the   Finance   Act,   2002   (20   of   2002)   but   before   the   expiry   of
the   time   limit   for   making   the   assessment,   re­assessment   or
recomputation as specified in sub­section (2) of section 153,
every   such  notice  referred  to in  this  clause  shall  be  deemed
to be a valid notice:
Provided further that in a case— 
(a)   where   a   return   has   been   furnished   during   the   period
commencing on the 1st day of October, 1991 and ending on
the   30th   day   of   September,   2005,   in   response   to   a   notice
served under this section, and 
(b) subsequently a notice has been served under clause (ii) of
sub­section   (2)   of   section   143   after   the   expiry   of   twelve
months   specified   in   the   proviso   to   clause   (ii)   of   sub­section
(2) of section 143, but  before the expiry  of the time limit for
making   the   assessment,   reassessment   or   recomputation   as
specified in sub­section (2) of section 153, every such notice
referred   to   in   this   clause   shall   be   deemed   to   be   a   valid
notice. 
Explanation.—For   the   removal   of   doubts,   it   is   hereby
declared   that   nothing   contained   in   the   first   proviso   or   the
second   proviso   shall   apply   to   any   return   which   has   been
furnished   on   or   after   the   1st   day   of   October,   2005   in
response to a notice served under this section. 
(2)   The   Assessing   Officer   shall,   before   issuing   any   notice
under this section, record his reasons for doing so.
Time limit for notice­ 
149.  (1) No notice  under  section 148 shall be issued for   the
relevant assessment year,— 
(a)   if   four   years   have   elapsed   from   the   end   of   the
relevant   assessment   year,   unless   the   case   falls   under
clause (b) or clause (c); 
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(b)   if   four   years,   but   not   more   than   six   years,   have
elapsed   from   the   end   of   the   relevant   assessment   year
unless   the   income   chargeable   to   tax   which   has
escaped assessment amounts to or is likely to amount
to one lakh rupees or more for that year; 
(c) if four years, but not more than sixteen years, have
elapsed   from   the   end   of   the   relevant   assessment   year
unless   the   income   in   relation   to   any   asset   (including
financial   interest   in   any   entity)   located   outside   India,
chargeable to tax, has escaped assessment. 
Explanation.—In   determining   income   chargeable   to   tax
which has escaped assessment for the purposes of this sub­
section, the provisions of Explanation 2 of section 147 shall
apply as they apply for the purposes of that section. 
(2) The provisions of sub­section (1) as to the issue of notice
shall be subject to the provisions of section 151. 
(3) If the person on whom a notice under section 148 is to be
served   is   a   person   treated   as   the   agent   of   a   nonresident
under   section   163   and   the   assessment,   reassessment   or
recomputation to be made in pursuance of the notice is to be
made   on   him   as   the   agent   of   such   non­resident,   the   notice
shall   not   be   issued   after   the   expiry   of   a   period   of   six   years
from the end of the relevant assessment year. 
Explanation.—For   the   removal   of   doubts,   it   is   hereby
clarified   that   the   provisions   of   sub­sections   (1)   and   (3),   as
amended  by   the   Finance  Act,  2012,  shall  also  be  applicable
for   any   assessment   year   beginning   on  or   before   the   1st   day
of April, 2012.
Sanction for issue of notice­ 
151.   (1)   No   notice   shall   be   issued   under   section   148   by   an
Assessing   Officer,   after   the   expiry   of   a   period   of   four   years
from   the   end   of   the   relevant   assessment   year,   unless   the
Principal   Chief   Commissioner   or   Chief   Commissioner   or
Principal Commissioner or Commissioner is satisfied, on the
reasons recorded by the Assessing Officer, that it is a fit case
for the issue of such notice. 
(2) In a case other than a case falling under sub­section (1),
no notice shall be issued under section 148 by an Assessing
Officer, who is below the rank of Joint Commissioner, unless
the Joint Commissioner is satisfied, on the reasons recorded
12

by such Assessing Officer, that it is a fit case for the issue of
such notice. 
(3)   For   the   purposes   of   sub­section   (1)   and   sub­section   (2),
the Principal Chief Commissioner or the Chief Commissioner
or   the   Principal   Commissioner   or   the   Commissioner   or   the
Joint   Commissioner,   as   the   case   may   be,   being   satisfied   on
the   reasons   recorded   by   the   Assessing   Officer   about   fitness
of a case for the issue of notice under section 148, need not
issue such notice himself.”
 
3.1 In pursuance to the  power  vested under  section 3 of the
Relaxation   Act,   2020,   the   Central   Government   issued
following   Notifications   inter­alia   extending   the   time   lines
prescribed   under   section   149   for   issuance   of
reassessment   notices   under   section   148   of   the   Income
Tax Act, 1961:
Date   of
Notificatio
n Original   limitation   for
issuance   of   notice
under   Section   148   of
the Act Extended
Limitation
31.03.2020 20.03.2020   to
29.06.2020 30.06.2020
24.06.2020 20.03.2020   to
31.12.2020 31.03.2021
31.03.2021 31.03.2021 30.04.2021
27.04.2021 30.04.2021 30.06.2021
The Explanations to the Notifications dated 31 st
 March,
2021   and   27 th
  April,   2021   issued   under   section   3   of   the
Relaxation   Act,   2020   also   stipulated   that   the   provisions,
as   they   existed   prior   to   the   amendment   by   the   Finance
13

Act,   2021,   shall   apply   to   the   reassessment   proceedings
initiated thereunder. 
3.2 The   Parliament   introduced   reformative   changes   to
Sections   147   to   151   of   the   Income   Tax   Act,   1961
governing   reassessment   proceedings   by   way   of   the
Finance   Act,   2021,   which   was   passed   on   28 th
  March,
2021.     The   substituted   sections   147   to   149   and   section
151   applicable   w.e.f.   01.04.2021,   passed   in   the   Finance
Act, 2021, are as under: ­ 
Income escaping assessment­ 
“147.   If   any   income   chargeable   to   tax,   in   the   case   of   an
assessee,  has  escaped  assessment   for   any   assessment   year,
the   Assessing   Officer   may,   subject   to   the   provisions   of
sections   148   to   153,   assess   or   reassess   such   income   or
recompute   the   loss   or   the   depreciation   allowance   or   any
other   allowance   or   deduction   for   such   assessment   year
(hereafter in this section and in sections 148 to 153 referred
to as the relevant assessment year). 
Explanation.—For   the   purposes   of   assessment   or
reassessment   or   recomputation   under   this   section,   the
Assessing   Officer   may   assess   or   reassess   the   income   in
respect   of   any   issue,   which   has   escaped   assessment,   and
such issue comes to his notice subsequently in the course of
the   proceedings   under   this   section,   irrespective   of   the   fact
that   the   provisions   of   section   148A   have   not   been   complied
with.”.
Issue of notice where income has escaped assessment­
148.   Before   making   the   assessment,   reassessment   or
recomputation   under   section   147,   and   subject   to   the
provisions  of  section  148A,  the  Assessing   Officer   shall serve
14

on   the   assessee   a   notice,   along   with   a   copy   of   the   order
passed,   if   required,   under   clause   (d)   of   section   148A,
requiring   him   to   furnish   within   such   period,   as   may   be
specified in such notice, a return of his income or the income
of   any   other   person   in   respect   of   which   he   is   assessable
under this Act during the previous year corresponding to the
relevant assessment year, in the prescribed form and verified
in   the   prescribed   manner   and   setting   forth   such   other
particulars as may  be prescribed; and the provisions of  this
Act   shall,   so   far   as   may   be,   apply   accordingly   as   if   such
return were a return required to be furnished under  section
139: 
Provided   that   no   notice   under   this   section   shall   be   issued
unless there is information with the Assessing Officer which
suggests   that   the   income   chargeable   to   tax   has   escaped
assessment   in   the   case   of   the   assessee   for   the   relevant
assessment   year   and   the   Assessing   Officer   has   obtained
prior approval of the specified authority to issue such notice.
Explanation 1.—For the purposes of this section and section
148A,   the   information   with   the   Assessing   Officer   which
suggests   that   the   income   chargeable   to   tax   has   escaped
assessment means,—
(i) any information flagged in the case of the assessee for the
relevant   assessment   year   in   accordance   with   the   risk
management   strategy   formulated   by   the   Board  from   time   to
time; 
(ii) any final objection raised by the Comptroller and Auditor­
General of India to the effect that the assessment in the case
of   the   assessee   for   the   relevant   assessment   year   has   not
been made in accordance with the provisions of this Act. 
Explanation 2.—For the purposes of this section, where,— 
(i)   a   search   is   initiated   under   section   132   or   books   of
account,   other   documents   or   any   assets   are   requisitioned
under section 132A, on or after the 1st day of April, 2021, in
the case of the assessee; or 
(ii)   a   survey   is   conducted   under   section   133A,   other   than
under  sub­section (2A) or sub­section (5) of that section, on
or   after   the   1st   day   of   April,   2021,   in   the   case   of   the
assessee; or 
15

(iii) the Assessing Officer is satisfied, with the prior approval
of   the   Principal   Commissioner   or   Commissioner,   that   any
money,   bullion,   jewellery   or   other   valuable   article   or   thing,
seized   or   requisitioned   under   section   132   or   under   section
132A   in   case   of   any   other   person   on   or   after   the   1st   day   of
April, 2021, belongs to the assessee; or 
(iv) the Assessing Officer is satisfied, with the prior approval
of Principal Commissioner or Commissioner, that any books
of   account   or   documents,   seized   or   requisitioned   under
section   132   or   section   132A   in   case   of   any   other   person   on
or after the 1st day of April, 2021, pertains or pertain to, or
any information contained therein, relate to, the assessee, 
the   Assessing   Officer   shall   be   deemed   to   have   information
which   suggests   that   the   income   chargeable   to   tax   has
escaped assessment in the case of the assessee for the three
assessment   years   immediately   preceding   the   assessment
year   relevant   to   the   previous   year   in   which   the   search   is
initiated or books of account, other documents or any assets
are   requisitioned   or   survey   is   conducted   in   the   case   of   the
assessee or money, bullion, jewellery or other valuable article
or   thing   or   books   of   account   or   documents   are   seized   or
requisitioned in case of any other person. 
Explanation   3.—For   the   purposes   of   this   section,   specified
authority means the specified authority referred to in section
151.”
Conducting   inquiry,   providing   opportunity   before   issue
of notice under section 148 ­
“148A. The Assessing Officer shall, before issuing any notice
under section 148,— 
(a)  conduct  any  enquiry,  if required, with  the  prior  approval
of specified authority, with respect to the information which
suggests   that   the   income   chargeable   to   tax   has   escaped
assessment; 
(b)   provide   an   opportunity   of   being   heard   to   the   assessee,
with   the   prior   approval   of   specified   authority,   by   serving
upon   him  a   notice   to  show   cause   within  such   time,  as  may
be specified in the notice, being not less than seven days and
but   not   exceeding   thirty   days   from   the   date   on   which   such
notice is issued, or such time, as may be extended by him on
the basis of an application in this behalf, as to why a notice
under   section   148   should   not   be   issued   on   the   basis   of
16

information   which   suggests   that   income   chargeable   to   tax
has   escaped   assessment   in   his   case   for   the   relevant
assessment year and results of enquiry conducted, if any, as
per clause (a); 
(c)   consider   the   reply   of   assessee   furnished,   if   any,   in
response to the show­cause notice referred to in clause (b); 
(d)   decide,   on   the   basis   of   material   available   on   record
including reply of the assessee, whether or not it is a fit case
to   issue   a   notice   under   section   148,   by   passing   an   order,
with   the   prior   approval   of   specified   authority,   within   one
month from the end of the month in which the reply referred
to in clause (c) is received by him, or where no such reply is
furnished,   within   one   month   from   the   end   of   the   month   in
which time or extended time allowed to furnish a reply as per
clause (b) expires: 
Provided that the provisions of this section shall not apply in
a case where,— 
(a) a search is initiated under section 132 or books of
account,   other   documents   or   any   assets   are
requisitioned   under   section   132A   in   the   case   of   the
assessee on or after the 1st day of April, 2021; or 
(b)   the   Assessing   Officer   is   satisfied,   with   the   prior
approval   of   the   Principal   Commissioner   or
Commissioner   that   any   money,   bullion,   jewellery   or
other   valuable   article   or   thing,   seized   in   a   search
under   section   132   or   requisitioned   under   section
132A,   in   the   case   of   any   other   person   on   or   after   the
1st day of April, 2021, belongs to the assessee; or 
(c)   the   Assessing   Officer   is   satisfied,   with   the   prior
approval   of   the   Principal   Commissioner   or
Commissioner   that   any   books   of   account   or
documents,   seized   in   a   search   under   section   132   or
requisitioned under section 132A, in case of any other
person on or after the 1st  day of April, 2021, pertains
or   pertain   to,   or   any   information   contained   therein,
relate to, the assessee. 
Explanation.—For   the   purposes   of   this   section,   specified
authority means the specified authority referred to in section
151.”
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Time limit for notice­ 
“149. (1) No notice under section 148 shall be issued for the
relevant assessment year,— 
(a)   if   three   years   have   elapsed   from   the   end   of   the   relevant
assessment year, unless the case falls under clause (b); 
(b) if three years, but not more than ten years, have elapsed
from   the   end   of   the   relevant   assessment   year   unless   the
Assessing   Officer   has  in  his  possession   books  of   account   or
other   documents   or   evidence   which   reveal   that   the   income
chargeable   to   tax,   represented   in   the   form   of   asset,   which
has escaped assessment amounts to or is likely to amount to
fifty lakh rupees or more for that year: 
Provided   that   no   notice   under   section   148   shall   be
issued at any time in a case for the relevant assessment year
beginning on or before 1st day of April, 2021, if such notice
could not have been issued at that time on account of being
beyond   the   time   limit   specified   under   the   provisions   of
clause   (b)   of   sub­section   (1)   of   this   section,   as   they   stood
immediately   before   the   commencement   of   the   Finance   Act,
2021: 
Provided further that the provisions of this sub­section
shall not apply in a case, where a notice under section 153A,
or   section   153C   read   with   section   153A,   is   required   to   be
issued in relation to a search initiated under section 132 or
books   of   account,   other   documents   or   any   assets
requisitioned  under  section 132A, on  or  before the 31st  day
of March, 2021: 
Provided   also   that   for   the   purposes   of   computing   the
period of limitation as per this section, the time or extended
time   allowed   to   the   assessee,   as   per   show­cause   notice
issued under clause (b) of section 148A or the period during
which   the   proceeding   under   section   148A   is   stayed   by   an
order or injunction of any court, shall be excluded: 
Provided   also   that   where   immediately   after   the
exclusion   of   the   period   referred   to   in   the   immediately
preceding   proviso,   the   period   of   limitation   available   to   the
Assessing   Officer   for   passing   an   order   under   clause   (d)   of
section 148A is less than seven days, such remaining period
shall be extended to seven days and the period of limitation
under   this   sub­section   shall   be   deemed   to   be   extended
accordingly. 
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Explanation.—For   the   purposes   of   clause   (b)   of   this
subsection,   “asset”   shall   include   immovable   property,   being
land   or   building   or   both,   shares   and   securities,   loans   and
advances, deposits in bank account.
(2) The provisions of sub­section (1) as to the issue of notice
shall be subject to the provisions of section 151.’
Sanction for issue of notice­ 
“151. Specified authority for the purposes of section 148 and
section 148A shall be— 
(i)   Principal   Commissioner   or   Principal   Director   or
Commissioner   or   Director,   if   three   years   or   less   than
three   years   have   elapsed   from   the   end   of   the   relevant
assessment year; 
(ii)   Principal   Chief   Commissioner   or   Principal   Director
General   or   where   there   is   no   Principal   Chief
Commissioner   or   Principal   Director   General,   Chief
Commissioner   or   Director   General,   if   more   than   three
years   have   elapsed   from   the   end   of   the   relevant
assessment year.” 
3.3 In sub­section (1) of section 151A of the Income Tax Act, in
the   opening   portion, after the words and figures “issuance
of notice under section 148”, the words, figures and letter
“or   conducting   of   enquiries   or   issuance   of   show­cause
notice   or   passing   of   order   under   section   148A”   are
inserted.
4. Despite the substituted sections 147 to 151 of the Income
Tax Act, 1961 by the Finance Act, 2021 coming into force
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on 1 st
  April, 2021, according to learned ASG, the Revenue
issued   approximately   90,000   reassessment   notices   to   the
respective   assessees   under   the   erstwhile   sections   148   to
151 thereof by relying on explanations in the Notifications
dated   31 st
  March,   2021   and   27 th
  April,   2021.   The   said
reassessment   notices   were   the   subject   matter   of   writ
petitions   before   the   various   High   Courts.   The   respective
High Courts have held that all the respective reassessment
notices   issued   under   the   erstwhile   sections   148   to   151   of
the   Income   Tax   Act,   1961,   are   bad   in   law   as   the
reassessment notices issued after 01.04.2021 are governed
by   the   substituted  sections   147   to   151  of   the   Income   Tax
Act,   1961,   substituted   by   the   Finance   Act,   2021.
Consequently, the respective High Courts have set aside all
the   reassessment   notices   issued   under   section   148   of   the
Income   Tax   Act,   1961   wherever   assailed.   The   common
judgment and order passed by the High Court of Allahabad
is the subject matter of the present appeals. However, the
High   Court   of   Delhi   in   its   common   judgment   and   order
dated   15.12.2021   while   quashing   the   respective
reassessment   notices   has   also   observed   that   if   the   law
20

permits   the   revenue   to   take   further   steps   in   the   matter
they shall be at liberty to do so.
5. We   have   heard   Shri   N.   Venkataraman,   learned   ASG
appearing   on   behalf   of   the   Revenue   and   Shri   C.A.
Sundaram   and   Shri   S.   Ganesh,   learned   Senior   Advocates
and   other   learned   counsel   appearing   on   behalf   of   the
respective assessee. 
6. It cannot be disputed that by substitution of sections 147
to   151   of   the   Income   Tax   Act   (IT   Act)   by   the   Finance   Act,
2021, radical and reformative changes are made governing
the   procedure   for   reassessment   proceedings.   Amended
sections 147 to 149 and section 151 of the IT Act prescribe
the   procedure   governing   initiation   of   reassessment
proceedings.   However,   for   several   reasons,   the   same   gave
rise   to   numerous   litigations   and   the   reopening   were
challenged   inter   alia,   on   the   grounds   such   as   (1)   no   valid
“reason   to   believe”   (2)   no   tangible/reliable
material/information in possession of the assessing officer
leading   to   formation   of   belief   that   income   has   escaped
assessment,   (3)   no   enquiry   being   conducted   by   the
21

assessing   officer   prior   to   the   issuance   of   notice;   and
reopening   is   based   on   change   of   opinion   of   the   assessing
officer and (4) lastly the mandatory procedure laid down by
this Court in the case of  GKN Driveshafts (India) Ltd. Vs.
Income   Tax   Officer   and   ors ;   (2003)   1   SCC   72,   has   not
been followed. 
6.1 Further   pre­Finance   Act,   2021,   the   reopening   was
permissible   for   a   maximum   period   up   to   six   years   and   in
some   cases   beyond   even   six   years   leading   to   uncertainty
for a considerable time. Therefore, Parliament thought it fit
to   amend   the   Income   Tax   Act   to   simplify   the   tax
administration,   ease   compliances   and   reduce   litigation.
Therefore,   with   a   view   to   achieve   the   said   object,   by   the
Finance   Act,   2021,   sections   147   to   149   and   section   151
have been substituted. 
6.2 Under the substituted provisions of the IT Act vide Finance
Act, 2021, no notice under section 148 of the IT Act can be
issued   without   following   the   procedure   prescribed   under
section   148A   of   the   IT   Act.   Along   with   the   notice   under
22

section   148   of   the   IT   Act,   the   assessing   officer   (AO)   is
required   to   serve   the   order   passed   under   section   148A   of
the   IT   Act.   section   148A   of   the   IT   Act   is   a   new   provision
which   is   in   the   nature   of   a   condition   precedent.
Introduction of section 148A of the IT Act can thus be said
to be a game changer with an aim to achieve the ultimate
object   of   simplifying   the   tax   administration,   ease
compliance and reduce litigation. 
6.3 But   prior   to   pre­Finance   Act,   2021,   while   reopening   an
assessment,   the   procedure   of   giving   the   reasons   for
reopening   and   an   opportunity   to   the   assessee   and   the
decision   of   the   objectives   were   required   to   be   followed   as
per   the   judgment   of   this   Court   in   the   case   of   GKN
Driveshafts (India) Ltd.  (supra). 
6.4 However,   by   way   of   section   148A,   the   procedure   has   now
been   streamlined   and   simplified.   It   provides   that   before
issuing any notice under section 148, the assessing officer
shall   (i)   conduct   any   enquiry,   if   required ,   with   the
approval   of   specified   authority,   with   respect   to   the
23

information which suggests that the income chargeable to
tax has escaped assessment; (ii) provide an opportunity of
being   heard   to   the   assessee,   with   the   prior   approval   of
specified   authority;   (iii)   consider   the   reply   of   the   assessee
furnished,   if   any,   in   response   to   the   show­cause   notice
referred   to   in   clause   (b);   and   (iv)   decide,   on   the   basis   of
material   available   on   record   including   reply   of   the
assessee,   as   to   whether   or   not   it   is   a   fit   case   to   issue   a
notice   under   section   148   of   the   IT   Act   and   (v)   the   AO   is
required to pass a specific order within the time stipulated.
6.5 Therefore,   all  safeguards  are  provided   before  notice  under
section 148 of the IT Act is issued. At every stage, the prior
approval   of   the   specified   authority   is   required,   even   for
conducting   the   enquiry   as   per   section   148A(a).   Only   in   a
case   where,   the   assessing   officer   is   of   the   opinion   that
before   any   notice   is   issued   under   section   148A(b)   and   an
opportunity   is   to   be   given   to   the   assessee,   there   is   a
requirement   of   conducting   any   enquiry,   the   assessing
officer   may   do   so   and   conduct   any   enquiry.   Thus   if   the
assessing   officer   is   of   the   opinion   that   any   enquiry   is
required, the assessing officer can do so, however, with the
24

prior   approval   of   the   specified   authority,   with   respect   to
the information which suggests that the income chargeable
to tax has escaped assessment. 
6.6 Substituted section 149 is the provision governing the time
limit for issuance of notice under section 148 of the IT Act.
The substituted section 149 of the IT Act has reduced the
permissible   time   limit   for   issuance   of   such   a   notice   to
three years and only in exceptional cases ten years. It also
provides   further   additional   safeguards   which   were   absent
under the earlier regime pre­Finance Act, 2021. 
7. Thus,   the   new   provisions   substituted   by   the   Finance   Act,
2021   being   remedial   and   benevolent   in   nature   and
substituted   with   a   specific   aim   and   object   to   protect   the
rights and interest of the assessee as well as and the same
being   in   public   interest,   the   respective   High   Courts   have
rightly   held   that   the   benefit   of   new   provisions   shall   be
made available even in  respect of the  proceedings relating
to past assessment years, provided section 148 notice has
been issued on or after 1 st
  April, 2021. We are in complete
25

agreement with the view taken by the various High Courts
in holding so. 
8. However,   at   the   same   time,   the   judgments   of   the   several
High  Courts  would  result  in no reassessment  proceedings
at all, even if the same are permissible under the Finance
Act,   2021   and   as   per   substituted   sections   147   to   151   of
the   IT   Act.     The   Revenue   cannot   be   made   remediless   and
the   object   and   purpose   of   reassessment   proceedings
cannot   be   frustrated.     It   is   true   that   due   to   a   bonafide
mistake   and   in   view   of   subsequent   extension   of   time   vide
various   notifications,   the   Revenue   issued   the   impugned
notices   under   section   148   after   the   amendment   was
enforced   w.e.f.   01.04.2021,   under   the   unamended   section
148.   In our view the same ought not to have been issued
under  the unamended Act and  ought to  have  been issued
under the substituted provisions of sections 147 to 151 of
the IT Act as per the Finance Act, 2021.  There appears to
be   genuine   non­application   of   the   amendments   as   the
officers   of   the   Revenue   may   have   been   under   a   bonafide
belief   that   the   amendments   may   not   yet   have   been
26

enforced.     Therefore,   we   are   of   the   opinion   that   some
leeway   must   be   shown   in   that   regard   which   the   High
Courts could have done so.  Therefore, instead of quashing
and   setting   aside   the   reassessment   notices   issued   under
the unamended provision of IT Act, the High Courts ought
to   have   passed   an   order   construing   the   notices   issued
under unamended Act/unamended provision of the IT Act
as   those   deemed   to   have   been  issued   under  section   148A
of the IT Act as per the new provision section 148A and the
Revenue   ought   to   have   been   permitted   to   proceed   further
with   the   reassessment   proceedings   as  per  the   substituted
provisions   of   sections   147   to   151   of   the   IT   Act   as   per   the
Finance   Act,   2021,   subject   to   compliance   of   all   the
procedural   requirements   and   the   defences,   which   may   be
available to the assessee under  the substituted provisions
of   sections   147   to   151   of   the   IT   Act   and   which   may   be
available   under   the   Finance   Act,   2021   and   in   law.
Therefore, we propose to modify the judgments and orders
passed by the respective High Courts as under: ­ 
27

(i) The respective impugned section 148 notices issued
to the respective assessees shall be deemed to have
been   issued   under   section   148A   of   the   IT   Act   as
substituted by the Finance Act, 2021 and treated to
be   show­cause   notices   in   terms   of   section   148A(b).
The   respective   assessing   officers   shall   within   thirty
days   from   today   provide   to   the   assessees   the
information   and   material   relied   upon   by   the
Revenue   so   that   the   assessees   can   reply   to   the
notices within two weeks thereafter;
(ii) The requirement of conducting any enquiry with the
prior   approval   of   the   specified   authority   under
section   148A(a)   be   dispensed   with   as   a   one­time
measure   vis­à­vis   those   notices   which   have   been
issued   under   Section   148   of   the   unamended   Act
from   01.04.2021   till   date,   including   those   which
have been quashed by the High Courts;
(iii) The assessing officers shall thereafter pass an order
in   terms   of   section   148A(d)   after   following   the   due
28

procedure   as   required   under   section   148A(b)   in
respect of each of the concerned assessees; 
(iv) All   the   defences   which   may   be   available   to   the
assessee   under   section   149   and/or   which   may   be
available   under   the   Finance   Act,   2021   and   in   law
and   whatever   rights   are   available   to   the   Assessing
Officer   under   the   Finance   Act,   2021   are   kept   open
and/or shall continue to be available and;
(v) The present order shall substitute/modify respective
judgments and orders passed by the respective High
Courts   quashing   the   similar   notices   issued   under
unamended section 148 of the IT Act irrespective of
whether they have been assailed before this Court or
not. 
9. There   is   a   broad   consensus   on   the   aforesaid   aspects
amongst   the   learned   ASG   appearing   on   behalf   of   the
Revenue   and   the   learned   Senior   Advocates/learned
counsel   appearing   on   behalf   of   the   respective   assessees.
29

We   are   also   of   the   opinion   that   if   the   aforesaid   order   is
passed,   it   will   strike   a   balance   between   the   rights   of   the
Revenue as well as the respective assesses as because of a
bonafide   belief   of   the   officers   of   the   Revenue   in   issuing
approximately   90000   such   notices,   the   Revenue   may   not
suffer as ultimately it is the public exchequer which would
suffer. 
Therefore, we have proposed to pass the present   order
with   a   view   avoiding   filing   of   further   appeals   before   this
Court   and   burden   this   Court   with   approximately   9000
appeals   against   the   similar   judgments   and   orders   passed
by   the   various   High   Courts,   the   particulars   of   some   of
which are referred  to  hereinabove. We have also  proposed
to pass the aforesaid order in exercise of our powers under
Article 142 of the Constitution of India by holding that the
present   order   shall   govern,   not   only   the   impugned
judgments   and   orders   passed   by   the   High   Court   of
Judicature at Allahabad, but shall also be made applicable
in   respect   of   the   similar   judgments   and   orders   passed   by
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various   High   Courts   across   the   country   and   therefore   the
present order shall be applicable to  PAN INDIA .      
10. In view of the above and for the reasons stated above, the
present   Appeals   are   ALLOWED   IN   PART.   The   impugned
common   judgments   and   orders   passed   by   the   High   Court
of   Judicature   at   Allahabad   in   W.T.   No.   524/2021   and
other   allied   tax   appeals/petitions,   is/are   hereby   modified
and substituted as under: ­ 
(i) The   impugned   section   148   notices   issued   to   the
respective   assessees   which   were   issued   under
unamended section 148 of the IT Act, which were the
subject   matter   of   writ   petitions   before   the   various
respective High Courts shall be deemed to have been
issued   under   section   148A   of   the   IT   Act   as
substituted   by   the   Finance   Act,   2021   and   construed
or   treated   to   be   show­cause   notices   in   terms   of
section   148A(b).   The   assessing   officer   shall,   within
thirty   days   from   today   provide   to   the   respective
assessees   information   and   material   relied   upon   by
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the   Revenue,   so   that   the   assesees   can   reply   to   the
show­cause notices within two weeks thereafter;
(ii) The   requirement   of   conducting   any   enquiry,   if
required,   with   the   prior   approval   of   specified
authority   under   section   148A(a)   is   hereby   dispensed
with   as   a   one­time   measure   vis­à­vis   those   notices
which   have   been   issued   under   section   148   of   the
unamended   Act   from   01.04.2021   till   date,   including
those which have been quashed by the High Courts.
Even   otherwise   as   observed   hereinabove   holding
any   enquiry   with   the   prior   approval   of   specified
authority is not mandatory but it is for the concerned
Assessing Officers to hold any enquiry, if required;
(iii) The   assessing  officers  shall   thereafter   pass  orders   in
terms   of   section   148A(d)   in   respect   of   each   of   the
concerned   assessees;   Thereafter   after   following   the
procedure as required under section 148A may issue
notice under section 148 (as substituted);
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(iv) All   defences   which   may   be   available   to   the   assesses
including  those available under section 149 of the IT
Act   and   all   rights   and   contentions   which   may   be
available   to   the   concerned   assessees   and   Revenue
under   the   Finance   Act,   2021   and   in   law   shall
continue to be available.
11. The   present   order   shall   be   applicable   PAN   INDIA   and   all
judgments   and  orders  passed  by  different  High  Courts  on
the   issue   and   under   which   similar   notices   which   were
issued   after   01.04.2021   issued   under   section   148   of   the
Act   are   set   aside   and   shall   be   governed   by   the   present
order and shall stand modified to the aforesaid extent. The
present order is passed in exercise of powers under Article
142 of the Constitution of India so as to avoid any further
appeals   by   the   Revenue   on   the   very   issue   by   challenging
similar   judgments   and   orders,   with   a   view   not   to   burden
this   Court   with   approximately   9000   appeals.     We   also
observe   that   present   order   shall   also   govern   the   pending
writ   petitions,   pending   before   various   High   Courts   in
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which similar notices under Section 148 of the Act issued
after 01.04.2021 are under challenge.
12. The   impugned   common   judgments   and   orders   passed   by
the   High   Court   of   Allahabad   and   the   similar   judgments
and   orders   passed   by   various   High   Courts,   more
particularly,   the   respective   judgments   and   orders   passed
by   the   various   High   Courts   particulars   of   which   are
mentioned   hereinabove,   shall   stand   modified/substituted
to the aforesaid extent only. 
All these appeals are accordingly  partly  allowed to the
aforesaid extent. 
In   the   facts   of   the   case,   there   shall   be   no   order   as   to
costs.     
…………………………………J.
                  (M. R. SHAH)
…………………………………J.
 (B.V. NAGARATHNA)
New Delhi, 
May 4, 2022.
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