Gujarat High Court
Nilkanth Concast Private Limited vs Joint Commissioner Of Income Tax (Osd) … on 10 March, 2025
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/SCA/13226/2024 ORDER DATED: 10/03/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 13226 of 2024
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NILKANTH CONCAST PRIVATE LIMITED
Versus
JOINT COMMISSIONER OF INCOME TAX (OSD) CIRCLE, GANDHIDHAM &
ORS.
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Appearance:
PARIMALSINH PARMAR(7296) for the Petitioner(s) No. 1
KARAN G SANGHANI(7945) for the Respondent(s) No. 1
NOTICE UNSERVED for the Respondent(s) No. 3
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR.JUSTICE D.N.RAY
Date : 10/03/2025
ORAL ORDER
(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)
1. Heard learned Senior Advocate Mr. Tushar
Hemani with learned advocate Mr.
Parimalsinh Parmar for the petitioner and
learned Senior Standing Counsel Mr. Karan
Sanghani for respondent No.1.
2. By this petition under Article 226 of the
Constitution of India, the petitioner has
prayed for the following reliefs:
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NEUTRAL CITATION
C/SCA/13226/2024 ORDER DATED: 10/03/2025
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“(a) quash and set aside the impugned
notice dated 3.03.2021 (At Annexure A
to this petition], the impugned
Assessment Order dated 29.03.2022
along with consequential demand notice
dated 29.03.2022 [At Annexure B
(Colly) to this petition] as well as
the impugned Rectification order dated
04.07.2024 along with consequential
demand notice dated 09.07.2024 [at
Annexure C (Colly) to this petition]
for the Assessment Year 2014-15;
(b) pending the admission, hearing and
final disposal of this petition, stay
the implementation and operation of
the impugned Assessment Order dated
29.03.2022 along with consequential
demand notice dated 29.03.2022 [at
Annexure B Colly) to this petition] as
well as the impugned rectification
order dated 04.07.2024 along with
consequential demand notice dated
09.07.2024 [at Annexure C (Colly) to
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NEUTRAL CITATION
C/SCA/13226/2024 ORDER DATED: 10/03/2025
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this petition] for the Assessment Year
2014-15;
(c) pending the admission, hearing and
final disposal of this petition,
direct the respondent authorities not
to take any coercive steps towards
recovery of demand as per the impugned
Assessment Order dated 29.03.2022
along with consequential demand notice
dated 29.03.2022 [at Annexure B
(Colly) to this petition] and the
impugned Rectification Order dated
04.07.2024 with consequential demand
notice dated 09.07.2024 [at Annexure C
(Colly) to this petition] for the
Assessment Year 2014-15;
3. Brief facts of the case are as under:
3.1 The petitioner filed return of
income for the assessment year 2014-15 on
21.01.2015 declaring total income at ‘Nil’
and book profit at Rs. 1,27,73,560/-.
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3.2 The case of the petitioner was
selected for scrutiny assessment and
assessment order dated 20.12.2016 was
passed under section 143(3) of the Income
Tax Act,1961 [for short ‘the Act’]
accepting the returned income.
3.3 Thereafter, notice dated 31.03.2021
was issued under section 148 of the Act to
reopen the assessment for the year under
consideration which according to the
petitioner, was served by Email dated
01.04.2021.
3.4 During the course of re-assessment
proceedings, various details were called
for by the Assessing Officer which were
duly furnished by the petitioner.
Thereafter, the assessment was framed
under section 147 read with section 144B
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NEUTRAL CITATION
C/SCA/13226/2024 ORDER DATED: 10/03/2025
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of the Act by order dated 29.03.2022
determining the total income at
Rs. 64,53,72,000/-.
3.5 Being aggrieved, the petitioner
preferred the appeal before the CIT(A) on
23.04.2022.
3.6 It is the case of the petitioner
that a controversy revolving around the
reopening was going on for the notices
issued under section 148 during the period
from 01.04.2021 to 30.06.2021 under the
Taxation and Other Laws [Relaxation and
Amendment of Certain Provisions] Act, 2020
[‘TOLA’ for short] by following the
provisions of section 147 and 148
applicable till 31.03.2021 despite the
fact that new regime for reopening of
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assessment was applicable with effect from
01.04.2021.
3.7 The Hon’ble Apex Court, by Judgment
dated 04.05.2022 passed in case of Union of
India vs. Ashish Agarwal reported in (2022)
444 ITR page 1 (SC) adjudicated the issue
as to the validity of such reopening
notices deemed to have been issued under
the new regime after 01.04.2021 as a valid
notice.
3.8 It appears that the respondent
pursuant to the aforesaid order passed by
the Apex Court again initiated
reassessment proceedings in case of the
petitioner for the year under
consideration by issuing notice under
section 148 of the Act and order dated
26.07.2022 was passed thereafter under
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NEUTRAL CITATION
C/SCA/13226/2024 ORDER DATED: 10/03/2025
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section 148A(d) of the Act holding that
there is escapement of income chargeable
to tax to the tune of Rs.64,53,72,000/- in
the hands of the petitioner.
3.9 It is the case of the petitioner
that once the notice under section 148 was
issued by the respondent for assessment
pursuant to the order passed by the
Hon’ble Apex Court in case of Ashish
Agarwal (supra), the earlier assessment
order dated 29.03.2022 passed under
section 147 read with section 144B of the
Act would become infructuous.
3.10 It also appears that the petitioner
challenged the action of reopening before
this Court by filing Special Civil
Application No. 19145 of 2022 which was
allowed by Judgement and Order dated
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07.02.2023 on the ground of limitation
while deciding the similar matter
following the lead matter being in case of
Keenara Industries Private Limited vs. ITO
reported in (2023) 453 51 (Guj).
3.11 The petitioner thereafter raised an
online grievance on 15.02.2023 requesting
the department to quash the earlier
assessment order. However, the said
grievance was closed on 16.03.2023 with a
remark that the petitioner has sought
quashing of the order passed by NaFAC
against which, the appeal is pending
before the first appellate authority and
therefore, it is not possible to quash the
order as the reassessment proceedings are
again initiated by the department in view
of the decision of the Hon’ble Apex Court
in case of Ashish Agarwal (supra). The
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NEUTRAL CITATION
C/SCA/13226/2024 ORDER DATED: 10/03/2025
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petitioner, therefore, by letter dated
25.03.2023 informed the respondent
authority about the decision passed by
this Court in case of Special Civil
Application No. 19145/2022 whereby, the
proceeding for the year under
consideration which were again initiated
by passing order under section 148A(d) of
the Act dated 26.07.2022 was quashed. It
is therefore, the case of the petitioner
that once the reassessment notice issued
under section 148 dated 26.07.2022 based
upon the order of the same date passed
under section 148A(d) is quashed and set
aside, the assessment order passed on
29.03.2022 would not survive and therefore,
both the assessment orders as well as
the appeal filed by the petitioner before
CIT(A) have become infructuous.
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NEUTRAL CITATION
C/SCA/13226/2024 ORDER DATED: 10/03/2025
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3.12 It appears that the respondent
issued recovery notices dated 20.07.2022,
06.11.2023, 22.12.2023 calling upon the
petitioner to pay outstanding demand of
Rs. 44,27,36,277/- raised for the year
under consideration consequent to the
assessment order dated 29.03.2022. The
petitioner raised objection online on
22.12.2023 categorically pointing out that
the respondent has already accepted in
order dated 26.07.2022 passed under
section 148A(d) of the Act that similar
proceedings under section 148 of the Act
had become infructuous and therefore, the
consequential demand in relation to such
earlier proceedings cannot be enforced.
3.13 The petitioner therefore requested
to await for the outcome of the order
passed by the first appellate authority.
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3.14 It appears that the petitioner has
also made submissions before the appellate
authority on 23.12.2023 to the effect that
the re-assessment notice dated 31.03.2021
was issued by the revenue in the month of
April, 2021 and therefore, the same would
reopen the assessment, would not be tenable
in the eye of law.
3.15 The respondent thereafter issued
notice on 17.01.2024 whereby the
petitioner was informed that since the
return of income is filed in response to
the notice under section 148 of the Act
issued on 31.03.2021 was furnished on
31.01.2022, the petitioner was liable to
pay interest under sections 234A and 234B
of the Act and the petitioner was called
upon to question as to why non-levy/short
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levy of interest under section 234A
quantified at Rs. 20,63,726/- and interest
under section 234B quantified at
Rs.16,09,172 should not be added back to
the computation of the tax liability.
4. The petitioner by letter dated 18.01.2022
filed reply to the aforesaid notice,
however, the respondent by order dated
04.07.2024 passed under section 154 of the
Act rejected the prayer made by the
petitioner holding that the petitioner is
liable for levy of interest under sections
234A and 234B of the Act and accordingly,
the amount payable by the petitioner for
the year under consideration was
quantified at Rs. 44,44,95,657/- and later
on demand notice dated 09.07.2024 was also
issued for the same.
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C/SCA/13226/2024 ORDER DATED: 10/03/2025
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5. The respondent thereafter issued recovery
notices dated 11.07.2024 and 25.07.2024
calling upon the petitioner to pay
outstanding demand including the interest
levied under sections 234A and 234B of the
Act quantified at Rs. 44,44,85,657/- by
virtue of the order passed under section
154 of the Act.
Being aggrieved, the petitioner has
preferred this petition with the aforesaid
prayers.
6. Learned Senior Advocate Mr. Tushar Hemani
for the petitioner submitted that relying
upon the order dated 17.05.2023 of the
Hon’ble Apex Court whereby the decision in
case of Keenara Industries (supra) was
stayed , the respondent authority have
again initiated the proceedings of re-
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NEUTRAL CITATION
C/SCA/13226/2024 ORDER DATED: 10/03/2025
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assessment by issuing notice dated
27.05.2023 under section 142(1) of the
Act.
6.1 Learned Senior Advocate Mr. Tushar
Hemani submitted that the show-cause
notice dated 27.05.2023 was issued after
this Court allowed Special Civil
Application No. 19145/2022 filed by the
petitioner whereby, the order under
section 148A(d) and notice under section
148 were quashed and set aside consequent
to the decision in case of Keenara
Industries Private Limited (supra) was
rendered in Special Civil Application No.
17321 of 2022.
6.2 It was therefore submitted that the
petitioner has preferred this petition as
the respondent was issuing the notices
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upon the petitioner to pay outstanding
demand raised for the year under
consideration consequent to passing of the
Assessment order dated 29.03.2022. It was
pointed out that such notice of demand are
issued in spite of the fact that the order
dated 29.03.2022 would not survive in view
of the subsequent order dated 26.07.2022
passed under section 148A(d) of the Act.
6.3 It was further submitted that after
filing of the petition, the Hon’ble Apex
Court has rendered the decision in case of
Union of India vs. Rajiv Bansal reported
in [2024] 167 taxmann.com 70 (SC) whereby,
the decision in case of Keenara Industries
Ltd (Supra) has been reversed. The Hon’ble
Apex Court has arrived at a following
conclusion in case of Rajiv Bansal
(supra)which reads as under:
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“114. In view of the above discussion, we
conclude that:
a. After 1 April 2021, the Income Tax
Act has to be read along with the
substituted provisions;
b. TOLA will continue to apply to the
Income Tax Act after 1 April 2021 if
any action or proceeding specified
under the substituted provisions of the
Income Tax Act falls for completion
between 20 March 2020 and 31 March
2021;
c. Section 3(1) of TOLA overrides
Section 149 of the Income Tax Act only
to the extent of relaxing the time
limit for issuance of a reassessment
notice under Section 148 ;
d. TOLA will extend the time limit for
the grant of sanction by the authority
specified under Section 151 . The test
to determine whether TOLA will apply to
Section 151 of the new regime is this:
if the time limit of three years from
the end of an assessment year fallsPage 16 of 21
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between 20 March 2020 and 31 March PART
G 2021, then the specified authority
under Section 151(i) has extended time
till 30 June 2021 to grant approval;
e. In the case of Section 151 of the old
regime, the test is: if the time limit
of four years from the end of an
assessment year falls between 20 March
2020 and 31 March 2021, then the
specified authority under Section 151(2)
has extended time till 31 March 2021 to
grant approval;
f. The directions in Ashish Agarwal
(supra) will extend to all the ninety
thousand reassessment notices issued
under the old regime during the period 1
April 2021 and 30 June 2021;
g. The time during which the show cause
notices were deemed to be stayed is from
the date of issuance of the deemed
notice between 1 April 2021 and 30 June
2021 till the supply of relevant
information and material by the
assessing officers to the assesses in
terms of the directions issued by this
Court in Ashish Agarwal (supra), and the
period of two weeks allowed to the
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assesses to respond to the show cause
notices; and
h. The assessing officers were required
to issue the reassessment notice under
Section 148 of the new regime within the
time limit surviving under the Income
Tax Act read with TOLA. All notices
issued beyond the surviving period are
time barred and liable to be set aside;”
6.4 It was submitted that in view of the above
decision, the effect of the assessment
order dated 29.03.2022 is required to be
considered as to whether the petitioner
would be liable for the demand raised in
the said order or not? It was submitted
that the order dated 29.03.2022 cannot be
implemented as the same has become
infructuous.
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7. On the other hand, Learned Advocate Mr.
Sanghani submitted that the respondent is
required to frame assessment as per the
decision in case of Rajeev Bansal(supra).
8. Be that as it may, the fact remains that
once the notice under section 148 dated
31.01.2021 was served upon the assessee on
01.04.2021, the same is issued and served
after 31.03.2021 i.e. during the period
from 01.04.2021 to 30.06.2021 as per TOLA.
9. Therefore, the assessment order passed
pursuant to the notice under section 148
dated 29.03.2022 would become infructuous
in view of the decision of Hon’ble Apex
Court in case of Ashish Agarwal (supra).
The respondent has thereafter issued
notice under section 148 of the Act
pursuant to the order dated 26.07.2022
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passed under section 148A(d) of the Act.
Therefore, the assessment order dated
29.03.2022 passed pursuant to the notice
dated 31.03.2021 shall not survive and
consequently, the appeal preferred by the
petitioner would also not survive as the
assessment order passed pursuant to the
notice dated 31.03.2021 would not be a
valid assessment order passed pursuant to
such notice and a fresh assessment order
will have to be passed as per the
reassessment notice issued under section
148 of the Act on 26.07.2022 in view of
the decision of the Apex Court in case of
Rajiv Bansal (supra).
10. In view of the foregoing reasons, the
petition succeeds and the impugned order
dated 29.03.2022 is declared as void and
non existent order in view of the
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subsequent notice issued by the respondent
under section 148 of the Act dated
26.07.2022. Consequently, recovery notice
and order passed under section 154 of the
Act would also not survive and the appeal
preferred by the petitioner is hereby
declared to have become infructuous.
11. However, it is clarified that the
respondent shall be at liberty to conclude
assessment proceedings as per the notice
dated 26.07.2022 issued under section 148
of the Act as per the decision in case of
Rajeev Bansal (supra).
12. The petition is accordingly disposed of as
no order as to costs. Notice is
discharged.
(BHARGAV D. KARIA, J)
(D.N.RAY,J)
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