2022 (3) TMI 1477 - HC - Income Tax

Reopening of assessment u/s 147 - Scope of Section 148A as newly inserted - Comparison between old and new provisions for reassessment - Individual identity of Section 148 as prevailing prior to amendment - applicability of the newly inserted provisions of Section 148A and the amendments brought inter alia w.e.f. 1.4.2021 - identity of Section 148 as prevailing prior to amendment and insertion of section 148A - Whether after introduction of new provisions for reassessment of income by virtue of the Finance Act, 2021 with effect from 01.04.2021, substituting the then existing provisions, would the substituted provisions survive and could be used for issuing notices for reassessment for the past period? - HELD THAT - As relying on SUDESH TANEJA WIFE OF SHRI CP TANEJA 2022 (1) TMI 1212 - RAJASTHAN HIGH COURT no notice under Section 148 would be issued for the past assessment years by resorting to the larger period of limitation prescribed in newly substituted clause (b) of Section 149(1). This would indicate that the notice that would be issued after 01.04.2021 would be in terms of the substituted Section 149(1) but without breaching the upper time limit provided in the original Section 149(1) which stood substituted. Under no circumstances the extended period available in clause (b) of sub-section (1) of Section 149 which we may recall now stands at 10 years instead of 6 years previously available with the revenue, can be pressed in service for reopening assessments for the past period. This flows from the plain meaning of the first proviso to sub-section (1) of Section 149. In plain terms a notice which had become time barred prior to 01.04.2021 as per the then prevailing provisions, would not be revived by virtue of the application of Section 149(1)(b) effective from 01.04.2021. All the notices issued in the present cases are after 01.04.2021 and have been issued without following the procedure contained in Section 148A of the Act and are therefore invalid. By virtue of notifications dated 31.03.2021 and 01.04.2021 issued by CBDT substitution of reassessment provisions framed under the Finance Act, 2021 were not deferred nor could they have been deferred. The date of such amendments coming into effect remained 01.04.2021. In the result we find that the notices impugned in the respective petitions are invalid and bad in law. The same are quashed and set aside. The learned Single Judge committed no error in quashing these notices. All the writ petitions are allowed. Appeals of the revenue are dismissed.

Summary

Issues Involved:
1. Applicability of substituted reassessment provisions under the Finance Act, 2021 for past assessment years.
2. Legality and validity of CBDT circulars dated 31.03.2021 and 27.04.2021.

Detailed Analysis:

1. Applicability of Substituted Reassessment Provisions:
The petitioner challenged the notice issued by the Assessing Officer under Section 148 of the Income Tax Act, 1961, for reopening assessments for various years. The notice was issued after 01.04.2021 but pertained to periods before this date. The core issue was whether the new reassessment provisions introduced by the Finance Act, 2021, effective from 01.04.2021, could be used for issuing notices for past years.

The court referred to a previous judgment in "Sudesh Tanesh Vs. Income Tax Officer" where it was determined that the original provisions were repealed upon substitution and had no existence post-01.04.2021. The court emphasized that the new scheme of reassessment under the Finance Act, 2021, introduced significant changes, including revised time limits for issuing notices and new procedures under Section 148A. The court found no legislative intent indicating that the past provisions would continue to apply after substitution. Consequently, all notices issued after 01.04.2021 had to comply with the new provisions. The court concluded that notices issued without following the new procedures were invalid.

2. Legality and Validity of CBDT Circulars:
The second issue was the legality of the explanations in the CBDT circulars dated 31.03.2021 and 27.04.2021, which attempted to clarify that the old provisions of Section 148 would apply for notices issued for periods before the Finance Act, 2021.

The court reiterated the principle that subordinate legislation must conform to the statute under which it is made. It held that the CBDT exceeded its jurisdiction by issuing explanations that effectively altered the statutory provisions. The court declared these explanations unconstitutional and invalid, noting that subordinate legislation cannot amend the parent Act.

The court also reviewed similar judgments from other High Courts and found consistency in the view that the new provisions under the Finance Act, 2021, apply to all notices issued after 01.04.2021.

Conclusion:
The court agreed with the judgment in "Sudesh Tanesh Vs. Income Tax Officer" and found the impugned notice invalid and bad in law. The writ petition was allowed, and the directions from the Sudesh Tanesh case were applied to the present case. All pending applications were disposed of accordingly.