What happened to the thousands of s.148 notices issued under the old rules after the law changed in 2021?
Reported as treating those notices as s.148A(b) show-cause notices instead of quashing them, with directions on how they were to proceed.
Decided by the Supreme Court (M.R. Shah J and B.V. Nagarathna J) on 2022-05-04, reported as (2022) 444 ITR 1 (SC); 138 taxmann.com 64; 286 Taxman 183; Civil Appeal Nos. 3005 to 3017 and 3019-3020 of 2022. It bears on section 147, section 148, section 148A, section 149, section 151, section TOLA 2020 s.3, section Constitution Art. 142 of the Income Tax Act 1961, in Reassessment & Reopening matters.
Unavoidable in any reassessment spanning the 2021 amendment. It is frequently cited BY the department, not against it — read it before relying on it.
Binding on every court and authority in India.
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After the Finance Act 2021 substituted ss.147 to 151 with effect from 1 April 2021, the Revenue issued roughly 90,000 reassessment notices under the old, unamended s.148 after that date. Over 9,000 writ petitions followed. The Allahabad High Court quashed the notices by a common judgment, and the High Courts of Delhi, Rajasthan, Calcutta, Madras and Bombay passed similar judgments. The Union appealed.
The Court agreed with the High Courts that the substituted ss.147 to 151 govern any s.148 notice issued on or after 1 April 2021, and that the benefit of the new provisions is available even for past assessment years (para 7). But rather than let roughly 90,000 notices fall, it modified the High Court orders under Article 142 and directed (para 8): the impugned s.148 notices are deemed to have been issued under s.148A as substituted and are to be treated as show-cause notices under s.148A(b); the Assessing Officers must supply the assessees the information and material relied on within thirty days, with two weeks for a reply; the requirement of an enquiry with prior approval under s.148A(a) is dispensed with as a one-time measure for notices issued under the unamended s.148 from 1 April 2021, including those quashed by the High Courts; the officers must then pass orders under s.148A(d) after following s.148A(b); all defences available to the assessee under s.149, under the Finance Act 2021 and in law are kept open, as are the officer's rights; and the order substitutes and modifies the High Court judgments quashing similar notices whether or not they were appealed. The order applies pan-India (para 11).
The Court accepted that the Finance Act 2021 made radical and reformative changes, that s.148A is a condition precedent to any s.148 notice, and that the new scheme — enquiry only with prior approval, a show-cause notice, consideration of the reply, a reasoned order within a fixed time, and a reduced ten-year outer limit under the substituted s.149 — was enacted to simplify administration and reduce litigation (paras 6.2 to 6.6). Being remedial and benevolent and enacted to protect the assessee, those provisions applied to notices issued on or after 1 April 2021 even for past years, so the High Courts were right (para 7). But quashing the notices outright would leave the revenue remediless in cases where reassessment was permissible under the new regime, and the officers had acted under a bona fide belief, induced by the extension notifications of 31 March and 27 April 2021, that the amendments were not yet in force. Some leeway was therefore due, and the High Courts could themselves have granted it by construing the notices as issued under s.148A rather than quashing them (para 8). To avoid more than 9,000 separate appeals and to bind High Courts that had ruled the same way, the Court acted under Article 142 (paras 2.1 and 11), recording that there was a broad consensus among counsel on both sides for this course (para 9).
The respective impugned section 148 notices issued to the respective assessees shall be deemed to have been issued under section 148A of the IT Act as substituted by the Finance Act, 2021 and treated to be show-cause notices in terms of section 148A(b).
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Handle my notice → Ask a CA on WhatsAppReported as treating those notices as s.148A(b) show-cause notices instead of quashing them, with directions on how they were to proceed. This was decided by the Supreme Court (M.R. Shah J and B.V. Nagarathna J) and bears on section 147, section 148, section 148A, section 149, section 151, section TOLA 2020 s.3, section Constitution Art. 142 of the Income Tax Act 1961. It is reported as (2022) 444 ITR 1 (SC); 138 taxmann.com 64; 286 Taxman 183; Civil Appeal Nos. 3005 to 3017 and 3019-3020 of 2022. Unavoidable in any reassessment spanning the 2021 amendment. It is frequently cited BY the department, not against it — read it before relying on it. If it applies to you, the first step is this: Check the date the original notice was issued against the amendment date.
After the Finance Act 2021 substituted ss.147 to 151 with effect from 1 April 2021, the Revenue issued roughly 90,000 reassessment notices under the old, unamended s.148 after that date. Over 9,000 writ petitions followed. The Allahabad High Court quashed the notices by a common judgment, and the High Courts of Delhi, Rajasthan, Calcutta, Madras and Bombay passed similar judgments. The Union appealed. The matter was decided on 2022-05-04 by the Supreme Court (M.R. Shah J and B.V. Nagarathna J). On those facts the Supreme Court held as follows. The Court agreed with the High Courts that the substituted ss.147 to 151 govern any s.148 notice issued on or after 1 April 2021, and that the benefit of the new provisions is available even for past assessment years (para 7). But rather than let roughly 90,000 notices fall, it modified the High Court orders under Article 142 and directed (para 8): the impugned s.148 notices are deemed to have been issued under s.148A as substituted and are to be treated as show-cause notices under s.148A(b); the Assessing Officers must supply the assessees the information and material relied on within thirty days, with two weeks for a reply; the requirement of an enquiry with prior approval under s.148A(a) is dispensed with as a one-time measure for notices issued under the unamended s.148 from 1 April 2021, including those quashed by the High Courts; the officers must then pass orders under s.148A(d) after following s.148A(b); all defences available to the assessee under s.149, under the Finance Act 2021 and in law are kept open, as are the officer's rights; and the order substitutes and modifies the High Court judgments quashing similar notices whether or not they were appealed. The order applies pan-India (para 11).
The Court accepted that the Finance Act 2021 made radical and reformative changes, that s.148A is a condition precedent to any s.148 notice, and that the new scheme — enquiry only with prior approval, a show-cause notice, consideration of the reply, a reasoned order within a fixed time, and a reduced ten-year outer limit under the substituted s.149 — was enacted to simplify administration and reduce litigation (paras 6.2 to 6.6). Being remedial and benevolent and enacted to protect the assessee, those provisions applied to notices issued on or after 1 April 2021 even for past years, so the High Courts were right (para 7). But quashing the notices outright would leave the revenue remediless in cases where reassessment was permissible under the new regime, and the officers had acted under a bona fide belief, induced by the extension notifications of 31 March and 27 April 2021, that the amendments were not yet in force. Some leeway was therefore due, and the High Courts could themselves have granted it by construing the notices as issued under s.148A rather than quashing them (para 8). To avoid more than 9,000 separate appeals and to bind High Courts that had ruled the same way, the Court acted under Article 142 (paras 2.1 and 11), recording that there was a broad consensus among counsel on both sides for this course (para 9). In the words reproduced by the source cited on this page: "The respective impugned section 148 notices issued to the respective assessees shall be deemed to have been issued under section 148A of the IT Act as substituted by the Finance Act, 2021 and treated to be show-cause notices in terms of section 148A(b)." The decision followed or applied Affirms and modifies Ashok Kumar Agarwal v. Union of India [2021] 131 taxmann.com 22 (All.)(HC).
It was decided by the Supreme Court on 2022-05-04 and is reported as (2022) 444 ITR 1 (SC); 138 taxmann.com 64; 286 Taxman 183; Civil Appeal Nos. 3005 to 3017 and 3019-3020 of 2022. Binding on every court and authority in India. A Supreme Court decision binds every assessing officer, every Commissioner (Appeals), every bench of the Income Tax Appellate Tribunal and every High Court in India. An officer who declines to follow it is acting contrary to law, and that refusal is itself a ground of appeal. On section 147, section 148, section 148A, section 149, section 151, section TOLA 2020 s.3, section Constitution Art. 142, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the department, and it appears in this library for that reason — you need to know what the Assessing Officer will cite against you. The Court agreed with the High Courts that the substituted ss.147 to 151 govern any s.148 notice issued on or after 1 April 2021, and that the benefit of the new provisions is available even for past assessment years (para 7). But rather than let roughly 90,000 notices fall, it modified the High Court orders under Article 142 and directed (para 8): the impugned s.148 notices are deemed to have been issued under s.148A as substituted and are to be treated as show-cause notices under s.148A(b); the Assessing Officers must supply the assessees the information and material relied on within thirty days, with two weeks for a reply; the requirement of an enquiry with prior approval under s.148A(a) is dispensed with as a one-time measure for notices issued under the unamended s.148 from 1 April 2021, including those quashed by the High Courts; the officers must then pass orders under s.148A(d) after following s.148A(b); all defences available to the assessee under s.149, under the Finance Act 2021 and in law are kept open, as are the officer's rights; and the order substitutes and modifies the High Court judgments quashing similar notices whether or not they were appealed. The order applies pan-India (para 11). It arises in Reassessment & Reopening matters, on section 147, section 148, section 148A, section 149, section 151, section TOLA 2020 s.3, section Constitution Art. 142 of the Income Tax Act 1961, and was decided by M.R. Shah J and B.V. Nagarathna J. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Check whether the follow-on procedure the Court directed was actually complied with. Check the later High Court decisions on how far this applies to parties who did not litigate.
Still good law. Confirmed and extended rather than doubted by Union of India v. Rajeev Bansal [2024] 167 taxmann.com 70 (SC), decided 3 October 2024, which held the directions apply to all the roughly ninety thousand old-regime notices issued between 1 April and 30 June 2021, not merely those before the High Courts, and clarified that while this order dispensed with approval for the enquiry and show-cause stage it did not waive the prior approval required for the order under s.148A(d) holding it a fit case to issue a notice. Work from Rajeev Bansal's surviving-time computation rather than from this order alone. Note also that s.147A, inserted by the Finance Act 2026 with retrospective effect from 1 April 2021, has removed the jurisdictional-Assessing-Officer-versus-faceless ground that ran alongside these matters. That finding was checked against a published source, which is linked on this page, on 2026-08-25. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
Read this order with Union of India v. Rajeev Bansal [2024] 167 taxmann.com 70 (SC), which decides the limitation question left open here. On its own terms the order is not confined to assessees who had litigated: direction (v) at para 8 substitutes and modifies the High Court judgments quashing similar notices 'irrespective of whether they have been assailed before this Court or not', and para 11 says the order applies pan-India. The relief is a modification of the High Court orders, not an approval of the old regime — the Court agreed with the High Courts that notices issued on or after 1 April 2021 had to follow the substituted provisions, and preserved every defence under s.149. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The Court agreed with the High Courts that the substituted ss.147 to 151 govern any s.148 notice issued on or after 1 April 2021, and that the benefit of the new provisions is available even for past assessment years (para 7). But rather than let roughly 90,000 notices fall, it modified the High Court orders under Article 142 and directed (para 8): the impugned s.148 notices are deemed to have been issued under s.148A as substituted and are to be treated as show-cause notices under s.148A(b); the Assessing Officers must supply the assessees the information and material relied on within thirty days, with two weeks for a reply; the requirement of an enquiry with prior approval under s.148A(a) is dispensed with as a one-time measure for notices issued under the unamended s.148 from 1 April 2021, including those quashed by the High Courts; the officers must then pass orders under s.148A(d) after following s.148A(b); all defences available to the assessee under s.149, under the Finance Act 2021 and in law are kept open, as are the officer's rights; and the order substitutes and modifies the High Court judgments quashing similar notices whether or not they were appealed. The order applies pan-India (para 11).
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
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