2022 (1) TMI 1291 - HC - Income Tax

Reopening of assessment u/s 147 - reopening beyond period of 4 years - mandation to get prior approval of the Commissioner of Income Tax - HELD THAT - This Court had an occasion in similar circumstances to quash an identical notice under Section 148 of the IT Act by its order 2019 (12) TMI 829 - ORISSA HIGH COURT . Notice issued u/s 148 which has been challenged as been stated that the notices had been issued after obtaining necessary satisfaction of the Jt. CIT Range-I Cuttack whereas the Officer authorized to record the necessary satisfaction had to be the Chief Commissioner of Income Tax / Commissioner of Income Tax. As in each of the above cases the impugned notice under Section 148 of the IT Act is hereby quashed.

Summary

Issues involved:
Challenges to notice issued by Income Tax Department under Section 148 of the Income Tax Act, 1961 before the amendment by Finance Act of 2021; Notices issued prior to 1st April, 2021; Notices beyond four years from the relevant assessment year; Stand of Revenue on time limits extension; Quashing of notices under Section 148 of IT Act.

Analysis:

In this judgment by the Orissa High Court, multiple cases were considered where challenges were raised against notices issued by the Income Tax Department under Section 148 of the Income Tax Act, 1961. It was highlighted that these notices were issued before the amendment by the Finance Act of 2021, specifically before 1st April, 2021. The significant point emphasized was that the relevant assessment year in each case exceeded four years from the date of reopening, making them time-barred as per the first proviso to Section 147 of the IT Act.

The Revenue's argument that time limits were extended due to notifications issued by the Central Government under the Taxation and other laws (Relaxation and Amendment of Certain Provisions) Act, 2020 was deemed invalid by the Court. This was because the notifications were aimed at addressing situations arising from the amendment by the Finance Act, 2021 effective from 1st April, 2021, whereas the notices in question were issued prior to this date, rendering the extension inapplicable.

The Court referred to a previous order where a similar notice under Section 148 of the IT Act was quashed due to lack of necessary approval from the Commissioner of Income Tax for reopening assessments beyond four years. It was noted that the officer authorized to record satisfaction for issuing notices was incorrectly mentioned, further supporting the decision to quash the impugned notices in the present cases.

Consequently, the Orissa High Court ruled to quash the notices issued under Section 148 of the IT Act in all the cases under consideration. The writ petitions were allowed, and no costs were imposed on the parties. Additionally, due to the ongoing COVID-19 restrictions, the parties were permitted to utilize a printout of the order from the High Court's website as a certified copy, subject to specific attestation guidelines provided by the Court.