The Delhi High Court ruled that the Supreme Court's decision in Union of India vs. Ashish Agarwal does not apply to taxpayers who did not challenge reopening notices under Section 148 of the Income Tax Act. The judgment is specific to concluded assessments, and reopening those assessments contradicts the intent of the Ashish Agarwal ruling.
Facts of the Case
In this case, the reassessment action was based on information gathered from a 2019 survey conducted at the premises of Genpact India Private Limited. The Income Tax Department alleged that remittances made to foreign entities by the petitioner constituted "royalty" or "fees for technical services," falling under Section 195, requiring tax deduction at source. Additionally, share transfers by the petitioner were seen as a ploy to avoid tax obligations.
The taxpayer did not challenge the original Section 148 reopening notice, meaning the provisions of the Ashish Agarwal case, which dealt with reassessment notices issued under unamended provisions before April 1, 2021, did not apply. The case centered on whether the reassessment could be continued or reinvented in the absence of a challenge to the original notice.
Court's Observations
The court noted that the Ashish Agarwal case served as a curative measure for those who had successfully challenged the reassessment notices. However, in the present case, no legal proceedings had been initiated by the taxpayer, and no invalidity was declared in the original reopening notice. The court emphasized that the Ashish Agarwal judgment should not be interpreted as allowing reassessment in cases where no challenge to the reopening notice was filed.
The court quashed all proceedings initiated under Sections 148, 148A(b), and 148A(d), and upheld the taxpayer's writ petition, effectively nullifying the reassessment action.
The ruling reinforces that the Ashish Agarwal judgment applies only to cases where reassessment notices were legally challenged and struck down. Taxpayers who did not challenge their reassessment notices cannot invoke the protections offered by the judgment. The Delhi High Court's decision provides clarity on the scope of applicability of the Ashish Agarwal case in reassessment matters.
0 Comments
Thank you for your response. It will help us to improve in the future.