On May 4, 2022 Supreme Court passed a judgement, in the case of Ashish Agarwal vs. Union of India, which became a landmark for all the wrong reasons.
A brief about this case law & facts surrounding it is given below:
- Finance Act 2021 amended the procedure for assessment or reassessment of income in the Act with effect from the 1st April, 2021. The said amendment modified inter alia, sections 147, 148 and 149 and also introduced new Section 148A in the Act.
- The old provisions shall be substituted by the new ones from April 1, 2021 onwards. As per the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, due date for issuing notice u/s 148 was extended to March 31, 2021. However, CBDT, by way of various notifications (March 31 and April 27, 2021) had extended the time limit of issuing the notice u/s 148 of the Act up to June 30, 2021 thus operating the old laws.
- As many as 90,000 notices were issued and around 9,000 writ petitions were filed amongst various High Courts challenging the notice issued as well as the CBDT notifications. The Learned Counsels of various High Courts quashed the validity of notices issued u/s 148 after April 1, 2021 as the new law had already been enforced and held it bad and ultra vires under the law. They put the validity of notifications issued by CBDT under abeyance and contended that notifications cannot override the Law passed in the Parliament.
- Revenue in the case of Ashish Agrawal and Others by the Allahabad High Court, preferred an appeal in the Supreme Court and challenged the ruling. When the matter landed in the Supreme Court, the Learned Counsels gave the ruling in favor of the Revenue. They validated the issuance of notice u/s 148 and deemed it to be issued under the newly introduced section 148A.
- The Supreme Court in its judgment pronounced that, “due to a bonafide mistake” the Revenue issued the reassessment notices under the unamended Section 148, and “There appears to be genuine non application of the amendments as the officers of the Revenue may have been under a bonafide belief that the amendments may not yet have been enforced.”
- The Learned Counsels of the Supreme Court invoked Art. 142 of the Constitution to opine the ruling but in doing so they clearly moved beyond the scope and ambit of the Article. Invoking Art 142 was the focal point of Supreme Court’s ruling.
- In our humble opinion the Hon Supreme Court surpassed its judicial powers by overriding the Law passed in the Parliament and favoring the notifications of the CBDT. Somewhere in protecting the interest of the Revenue, for which it invoked Article 142 of the Constitution, as stated above, it advertently or inadvertently violated the principle of Natural Justice. Instead of giving a balanced verdict which can be termed equitable for both the parties it increased unnecessary hassles for the tax payers.
- We also believe this statement of “bonafide mistake” is bound to be questioned on merits by the legal minds. It may as well be contested for its hilarity because as genuine as it may try to sound but it seems unbelievable and next to impossible that Revenue was unaware of the Amendments made by the Ministry of Finance who heads the CBDT and thus the Revenue itself. Moreover, the legal significance of ‘EFFECTIVE DATE’ as prescribed by the legislature (herein it is April 1, 2021) seems to have been simply wished away or grossly oversighted by the Hon Apex Court.
The road ahead seems dark at this moment as the Revenue has now been given power to issue the notices but we expect the Ministry of Finance to take corrective measures in this regards. One should not forget that the taxpayers play a part and an important one at that to keep the economy healthy and running.
Author: Barkha Bahety
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