Section 148 Controversy put to Rest – 90000 cases given new life by Hon’ble Supreme Court


Section 148 Controversy put to Rest – 90000 cases given new life by Hon’ble Supreme Court


With 7 High Court already decided the issue in favour of Assessee, the Supreme court invoked article 142 and resolved the controversy over section 148 Notices in favour of the Revenue. The implications is going to be much wider and is a standing order for all the 90000 cases where section 148 was issued by the AO.


One may note that the ruling applies not only to the 9000 cases pending before the courts or decided, but it applies to all 90000 cases where the proceedings were initiated.


The ruling by the Hon’ble Supreme court involved significant revenue to the government. In this case an out of the box order is passed by the Hon’ble Apex Court which needs to be read purposefully.


What made Hon’ble Supreme Court to overrule High Courts ruling. Here are some of the key observation must be noted before arriving at the conclusion:

  1. The Revenue cannot be made remediless and the object and purpose of reassessment proceedings cannot be frustrated.
  2. 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.
  3. In our view the same ought not to have been issued under the unamended Act. (Should have been issued as per new procedure)
  4. 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. Therefore, we are of the opinion tha leeway must be shown in that regard.


As a result of the above pronouncements, the following impact would be there:

  1. All notices issued after 01.04.21 under old 148 provisions, will be treated to be SCN u/s 148A(b). *But AO shall provide requisite material evidence to assessee within 30days from today, assessee shall have 2 weeks time to respond*
  2. Consequently, requirement of enquiry u/s 148A(a) dispensed with for those notices only.
  3. Section 148A(d) order would still be required to be passed as per amended law.
  4. The judgement is applicable PAN INDIA and hence all orders of HCs or others on this matter stands modified in accordance with this SC Judgement.

Here is the operative part of the landmark order passed by Hon’ble Supreme Court, in the Case of Ashish Agarwal & others Vs Union of India & other while deciding the case No 3005/2022.


  1. 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 therespective 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 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);(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.

The copy of the order is as under:SC in Ashish Agrawal Vs UOI (2)