2022 (1) TMI 1284 - HC - Income Tax

Reopening of assessment u/s 147 - scope of mandatory procedure prescribed u/s 148A - relation between Relaxation Act, 2020 and Finance Act, 2021 - enhanced/reduced time limit specified in Section 149 - initiation of reassessment proceedings prior to coming into force of the Finance Act, 2021 - substitution made by the Finance Act, 2021 - legality and validity of only the Explanations to the two Notifications, being Notification No.20/2021 dated 31st March, 2021 and Notification No.38/2021 dated 27th April, 2021, issued by Central Government in exercise of powers vested under Section 3(1) of Relaxation Act, 2020 - HELD THAT - As the impugned notices in the present matters have been issued post 31st March, 2021 without following the procedure prescribed in the substituted Sections 147 to 151 w.e.f. 01st April, 2021, the present matters are covered by the judgment passed by this Court in the case of Mon Mohan Kohli vs. Assistant Commissioner of Income Tax Anr. 2021 (12) TMI 664 - DELHI HIGH COURT . Explanations A(a)(ii)/A(b) to the Notifications dated 31st March, 2021 and 27 th April, 2021 are declared to be ultra vires the Relaxation Act, 2020 and are therefore bad in law and null and void Consequently, the impugned reassessment notices issued under Section 148 of the Income Tax Act, 1961 are quashed and the present writ petitions are allowed. If the law permits the respondents/revenue to take further steps in the matter, they shall be at liberty to do so.

Summary

Issues:
Challenges to reassessment notices issued post 31st March, 2021 without following prescribed procedures under Sections 147 to 151 of the Income Tax Act, 1961.

Analysis:

1. The judgment highlighted that the impugned notices in the present matters were issued post 31st March, 2021 without adhering to the prescribed procedures under the substituted Sections 147 to 151 effective from 1st April, 2021. The Court referred to a previous case, Mon Mohan Kohli vs. Assistant Commissioner of Income Tax, where it was concluded that reassessment notices post 31st March, 2021 must comply with the new provisions introduced by the Finance Act, 2021.

2. The Court reiterated the conclusion from the Mon Mohan Kohli case, emphasizing that the new provisions introduced by the Finance Act, 2021 altered the procedure for reassessment notices issued after 31st March, 2021. It clarified that the power of reassessment existing before 31st March, 2021 continued until the extended period of 30th June, 2021, but the procedure changed from 1st April, 2021 onwards.

3. The judgment declared Explanations A(a)(ii)/A(b) to the Notifications dated 31st March, 2021 and 27th April, 2021 as ultra vires the Relaxation Act, 2020, rendering them invalid in law. Consequently, the impugned reassessment notices issued under Section 148 of the Income Tax Act, 1961 were quashed, and the writ petitions were allowed. The respondents/revenue were granted liberty to take further steps in accordance with the law, with the petitioners having the right to pursue remedies if necessary.

In summary, the judgment addressed the challenges to reassessment notices issued post 31st March, 2021 without following the prescribed procedures under the Income Tax Act, 1961. It emphasized the need for compliance with the new provisions introduced by the Finance Act, 2021 from 1st April, 2021 onwards, leading to the quashing of the impugned reassessment notices and declaring certain explanations as invalid under the Relaxation Act, 2020.