Gujarat High Court

Century Tradeserve Limited vs Union Of India on 16 June, 2025

Author: Bhargav D. Karia

Bench: Bhargav D. Karia

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                             C/SCA/6396/2022                                       JUDGMENT DATED: 16/06/2025

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                                      IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

                                        R/SPECIAL CIVIL APPLICATION NO. 6396 of 2022


                       FOR APPROVAL AND SIGNATURE:

                       HONOURABLE MR. JUSTICE BHARGAV D. KARIA
                                     and
                       HONOURABLE MR. JUSTICE PRANAV TRIVEDI

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                                       Approved for Reporting             No    Yes
                                                                          ✔
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                                          CENTURY TRADESERVE LIMITED
                                                         Versus
                                               UNION OF INDIA & ORS.
                       ==================================================
                       Appearance:
                       MR B S SOPARKAR(6851) for the Petitioner(s) No. 1
                       MR.VARUN K.PATEL(3802) for the Respondent(s) No. 2
                       SERVED BY RPAD (N) for the Respondent(s) No. 1,3
                       ==================================================

                          CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
                                               and
                                HONOURABLE MR. JUSTICE PRANAV TRIVEDI

                       Date : 16/06/2025

                       ORAL JUDGMENT

(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)

1. Heard learned advocate Mr. B.S. Soparkar

for the petitioner and learned Senior Standing

Counsel Mr. Varun K. Patel for the respondent

no.2.

2. Having regard to the controversy

arising in the petition which is in narrow

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compass, with the consent of the learned

advocates for the respective parties, the matter

is taken up for hearing.

3. Rule returnable forthwith. Learned Senior

Standing Counsel Mr. Varun K. Patel waives

service of notice of rule on behalf of the

respondent.

4. By this petition under Article 226 of the

Constitution of India, the petitioner has prayed

for quashing and setting aside the notice dated

31.03.2021 issued under Section 148 of the

Income Tax Act, 1961 (for short "the Act") for

the Assessment Year 2013-14 as well as the

Assessment Order dated 30.03.2022 passed by the

respondent - Assessing Officer under Section

Section 147 read with Section 144B of the Act

during the pendency of this petition.

5. The brief facts of the case are as under:

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5.1. The petitioner filed Return of Income for

the Assessment Year 2013-14 declaring its gross

total income as 'NIL' on 28.09.2013. The

respondent has issued notice dated 31.03.2021

under Section 148 of the Act under the

provisions of the Taxation and Other Laws

(Relaxation and Amendment of Certain Provisions)

Act, 2020 (for short "the TOLA". It is the case

of the petitioner that neither the notice dated

31.03.2021 was uploaded on ITBA portal nor sent

to the petitioner through E-mail or speed post on

or before 31.03.2021, but the physical copy of

the notice was received by the petitioner on

06.04.2021. It is also the case of the petitioner

that the web portal does not bear the date of

issuance of the impugned notice and it only

refers to state that the notice was sent through

an E-mail, but in fact, no such E-mail was

received by the petitioner. It is also the case

of the petitioner that the speed post which was

dispatched by the respondent - Assessing Officer

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was bearing the date 04.04.2021 i.e. after

31.03.2021.

5.2. The petitioner filed the revised Return

of Income for the relevant Assessment Year on

27.04.2021 in response to the notice under

Section 148 of the Act. Thereafter, the reasons

for reopening was provided to the petitioner on

10.06.2021 without any annexures referred

therein. The petitioner therefore, preferred

Special Civil Application No. 10596 of 2021

challenging the impugned notice. During the

pendency of the petition, the petitioner was

supplied with the reasons recorded for reopening

and subsequently by order dated 18.01.2022, the

writ petition was disposed of requiring the

petitioner to submit objections against the

reasons for reopening. The petitioner filed

objections on 12.03.2022 and 19.03.2022 against

the reasons supplied for reopening.

5.3. The respondent no. 3 National Faceless

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Assessment Centre, disposed of the objections by

order dated 21.03.2022. The petitioner thereafter

preferred this petition on 27.03.2022. This Court

(Coram : Hon'ble Mr. Justice J.B. Pardiwala and

Hon'ble Ms.Justice Nisha M. Thakore) passed the

following order on 29.03.2022

"We have heard Mr. S.N. Soparkar, the learned Senior Counsel assisted by Mr. B.S. Soparkar, the learned counsel appearing for the writ applicant.

Issue Notice to the respondents, returnable on 05.07.2022.

Let there be ad-interim order in terms of paragraph 9(c)."

5.4. The petitioner also informed the

respondent on the web portal that this Court had

granted the stay of the further proceedings of

the impugned notice by the interim order passed

on 29.03.2022 as reflected on page '59/B' along

with letter at page '59/C'. The respondent

Assessing Officer however passed the impugned

assessment order dated 30.03.2022 taking into

consideration the fact that the petitioner did

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not provide the copy of the order passed by this

Court and made an addition of Rs.6,29,55,000/-.

6. Learned advocate Mr. B.S. Soparkar

appearing for the petitioner submitted that the

impugned notice dated 31.03.2021 is issued after

01.04.2021 and therefore, as per the new regime,

the respondents were supposed to issue the notice

under Section 148A(b) of the Act by providing an

opportunity to the petitioner to file its reply

and thereafter pass an order under Section

148A(d) of the Act as per the direction issued

by the Hon'ble Apex Court in case of Union of

India v. Ashish Agarwal reported in 444 ITR 1

and thereafter the respondents were required

to follow the directions of the Hon'ble Apex

Court in case of Union of India and Ors. v.

Rajeev Bansal reported in [2024] 469 ITR 46.

It was submitted that admittedly the

respondent Assessing Officer has not followed

directions issued in the aforesaid two

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decisions and as such the impugned notice has

to be treated as time barred notice.

6.1. Learned advocate Mr. Soparkar referred

to and relied upon paragraph '11' of the

decision of the Hon'ble Apex Court in the

case of Ashish Agarwal (supra) to point out

that the Hon'ble Apex Court has categorically

stated that all the pending writ petitions

would be governed by the direction issued by

the Hon'ble Apex Court under Article 142 of

the Constitution of India and therefore, the

stay granted by this Court would be subject

to directions issued by the Hon'ble Apex

Court.

7. On the other hand, learned Senior

Standing Counsel Mr. Varun K. Patel appearing

for the respondent referred to and relied

upon the further affidavit-in-reply of the

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respondent no. 2 tendered during the course

of hearing to point out that delivery status

column in ITBA system for impugned notice

under Section 148 of the Act dated 31.03.2021

is blank. He has referred to the copy of the

screenshot of the ITBA portal showing the

delivery status column. It was submitted that

ticket was raised with the ITBA help being

ticket no. 2907005, inter alia seeking the

details of time and date of delivery of the

notice under Section 148 of the Act dated

31.03.2021 as well as the notice under

Section 143(2)of the Act dated 18.06.2021.

However, it was informed by the ITBA help-

desk that due to unavailability of assesse's

E-mail ID at the time of generation of the

document, E-mail was not delivered. However,

the document was shared with the assessee on

e-filing portal on 03.04.2021, as far as

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notice under Section 148 of the Act is

concerned and with regard to the notice under

Section 143(2)of the Act is concerned on

30.06.2021. Therefore, it was submitted that

the notice was sent through speed post on

04.04.2021 which was received by the

petitioner on 06.04.2021. Learned Senior

Standing Counsel Mr. Patel therefore, fairly

submitted that the respondent authorities

have not followed the directions issued by

Hon'ble Apex Court in case of Ashish Agarwal

(supra) by not issuing the notice under

Section 148A(b)of the Act followed by the

order under Section 148A(d) of the Act.

8. Having heard the learned advocates for

the respective parties the following facts

are not in dispute :

(i) That the impugned notice dated 31.03.2021

is issued under the provisions of the TOLA

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for Assessment Year 2013-14.

(ii) The notice dated 31.03.2021 was not

issued on the same date, but the notice was

issued to the petitioner by speed post on

04.04.2021.

(iii) The further affidavit of the respondent

no. 2 clearly states that the notice was

uploaded on the e-filing portal of the

petitioner on 03.04.2021. Therefore,

admittedly the notice cannot be said to have

been issued on 31.03.2021.

(iv) As the notice is issued after

01.04.2021, the provisions of the new regime

would be applicable to such notices and as

such, the decisions of the Hon'ble Apex Court

in case of Ashish Agarwal (supra) as well as

in case of Rajeev Bansal (supra) would have

to be adhered to.

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9. Considering the above undisputed facts,

it would be germane to refer to the relevant

portion of the decision of Hon'ble Apex Court

in the case of Ashish Agarwal (supra):

"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 which similar notices under Section 148 of the Act issued after 01.04.2021 are under challenge."

10. The Hon'ble Apex Court in case of

Rajeev Bansal (supra) has further extended

and explained the decision of Ashish Agarwal

(supra) by making it applicable to all the

pending notices which have been covered by

the provision of Section 149 of the new

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regime under the Act so as to find out

whether such notice would be considered

within the period of limitation or not.

11. The Hon'ble Apex Court in case of

Rajeev Bansal (supra) has held as under :-

"98. A legal fiction is created for a definite purpose and it should be limited to the purpose for which it is enacted or applied. It is a well- established principle of interpretation that the courts must give full effect to a legal fiction by having due regard to the purpose for which the legal fiction is created.157 The consequences that follow the creation of the legal fiction "have got to be worked out to their logical extent."158 The court has to assume all the facts and consequences that are incidental or inevitable corollaries to giving effect to the fiction.

101. Under Section 148A(b), the assessing officer has to comply with two requirements: (i) issuance of a show cause notice; and (ii) supply of all the relevant information which forms the basis of the show cause notice. The supply of the relevant material and information allows the assessee to (1992) 3 SCC 1 PART F respond to the show cause notice. The deemed notices were effectively incomplete because the other requirement of supplying the relevant material or information to the assesses was not fulfilled. The second requirement could only have been fulfilled by the Revenue by an actual supply of the relevant material or information that formed the basis of the deemed notice.

105. A direction issued by this Court in the exercise of its jurisdiction under Article 142 is an order of a court. The third proviso to Section 149 of the new regime provides that the period during which the proceedings under Section 148A

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are stayed by an order or injunction of any court shall be excluded for computation of limitation. During the period from the date of issuance of the deemed notice under Section 148A(b) and the date of the decision of this Court in Ashish Agarwal (supra), the assessing officers were deemed to have been prohibited from passing a reassessment order. Resultantly, the show cause notices were deemed to have been stayed by order of this Court from the date of their issuance (somewhere from 1 April 2021 till 30 June 2021) till the date of decision in Ashish Agarwal (supra), that is, 4 May 2022.

106. In Ashish Agarwal (supra), this Court directed the assessing officers to provide relevant information and materials relied upon by the Revenue to the assesses within thirty days from the date of the judgment. A show cause notice is effectively issued in terms of Section 148A(b) only if it is supplied along with the relevant information and material by the assessing officer. Due to the legal fiction, the assessing officers were deemed to have been inhibited from acting in pursuance of the Section 148A(b) notice till the relevant material was supplied to the assesses. Therefore, the show cause notices were deemed to have been stayed until the assessing officers provided the relevant information or material to the assesses in terms of the direction issued in Ashish Agarwal (supra). To summarize, the combined effect of the legal fiction and the directions issued by this Court in Ashish Agarwal (supra) is that the show cause notices that were deemed to have been issued during the period between 1 April 2021 and 30 June 2021 were stayed till the date of supply of the relevant information and material by the assessing officer to the assessee. After the supply of the relevant material and information to the assessee, time begins to run for the assesses to respond to the show cause notices.

107. The third proviso to Section 149 allows the exclusion of time allowed for the assesses to respond to the show cause notice under Section 149A(b) to compute the period of limitation. The third proviso excludes "the time or extended time allowed to the assessee." Resultantly, the entire

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time allowed to the assessee to respond to the show cause notice has to be excluded for computing the period of limitation. In Ashish Agarwal (supra), this Court provided two weeks to the assesses to reply to the show cause notices. This period of two weeks is also liable to be excluded from the computation of limitation given the third proviso to Section 149. Hence, the total time that is excluded for computation of limitation for the deemed notices is: (i) the time during which the show cause notices were effectively stayed, that is, from the date of issuance of the deemed notice between 1 April 2021 and 30 June 2021 till the supply of relevant information or material by the assessing officers to the assesses in terms of the directions in Ashish Agarwal (supra); and (ii) two weeks allowed to the assesses to respond to the show cause notices.

109. If this Court had not created the legal fiction and the original reassessment notices were validly issued according to the provisions of the new regime, the notices under Section 148 of the new regime would have to be issued within the time limits extended by TOLA. As a corollary, the reassessment notices to be issued in pursuance of the deemed notices must also be within the time 163 East End Dwellings Co. Ltd. v. Finsbury Borough Council, [1952] AC 109. [Lord Asquith, in his concurring opinion, observed: "If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it."] PART F Page 108 of 112 limit surviving under the Income Tax Act read with TOLA. This construction gives full effect to the legal fiction created in Ashish Agarwal (supra) and enables both the assesses and the Revenue to obtain the benefit of all consequences flowing from the fiction.164

112. Let us take the instance of a notice issued on 1 May 2021 under the old regime for a relevant assessment year. Because of the legal fiction, the deemed show cause notices will also come into effect from 1 May 2021. After accounting for all

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the exclusions, the assessing officer will have sixty-one days [days between 1 May 2021 and 30 June 2021] to issue a notice under Section 148 of the new regime. This time starts ticking for the assessing officer after receiving the response of the assessee. In this instance, if the assessee submits the response on 18 June 2022, the assessing officer will have sixty-one days from 18 June 2022 to issue a reassessment notice under Section 148 of the new regime. Thus, in this illustration, the time limit for issuance of a notice under Section 148 of the new regime will end on 18 August 2022.

113. In Ashish Agarwal (supra), this Court allowed the assesses to avail all the defences, including the defence of expiry of the time limit specified under Section 149(1). In the instant appeals, the reassessment notices pertain to the assessment years 2013-2014, 2014-2015, 2015-2016, 2016-2017, and 2017-2018. To assume jurisdiction to issue notices under Section 148 with respect to the relevant assessment years, an assessing officer has to: (i) issue the notices within the period prescribed under Section 149(1) of the new regime read with TOLA; and (ii) obtain the previous approval of the authority specified under Section

151. A notice issued without complying with the preconditions is invalid as it affects the jurisdiction of the assessing officer. Therefore, the reassessment notices issued under Section 148 of the new regime, which are in pursuance of the deemed notices, ought to be issued within the time limit surviving under the Income Tax Act read with TOLA. A reassessment notice issued beyond the surviving time limit will be timebarred.

G. Conclusions

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

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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 falls between 20 March 2020 and 31 March PART G Page 111 of 112 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 assesses to respond to the show cause notices; and

h. The assessing officers were required to issue the reassessment notice under Section

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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;"

12. In view of the above directions of the

Hon'ble Apex Court we have to examine as to

whether the notice issued after 31.03.2021 though

bearing the date of 31.03.2021 could be governed

by the decision of the Hon'ble Apex Court or not.

Admittedly, the respondent has not issued any

notice under Section 148A(b)of the Act within the

30 days from the date of the decision of the

Hon'ble Apex Court in case of Ashish Agarwal

(supra) that is 04.05.2022 and therefore, the

question of considering the deemed notice under

Section 148B of the Act would not arise in the

facts of the case and as such, the impugned

notice dated 31.03.2021 would be a time barred

notice as per the decision of the Hon'ble Apex

Court in the case of Rajeev Bansal(supra) more

particularly, as referred to in paragraph 113 of

the said decisions having extracted herein-above.