2021 (11) TMI 1128 - HC - Income Tax

Reopening of assessment u/s 147 - applicability of the provisions of sections 148 and 148 A - the new provisions which have been inserted by Finance Act 2021 with effect from 01.04.2021 - According to the petitioner, the Financial Act has substituted the provision of section 147 with effect from 01.04.2021 and the time limit has been set to issue the notice under section 148 which is extended by Notification No.20 of 2021 and 38 of 2021, there cannot be two parallel provisions applicable simultaneously - validity of Notification No.20 of 21 issued by the CBDT by purportedly exercising the powers conferred by section 3 (1) of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. HELD THAT - We have heard the learned advocate, Mr.Sudhir Mehta for the petitioner. It is urged fervently that even the Revenue Authorities could not have extended the operation of repealed provision of section 148 beyond 31.03.2021 under the guise of a clarificatory explanation in the notifications. Issue NOTICE to the respondents, returnable on 22.11.2021. Pleadings be completed and office of learned Additional Solicitor General shall be served through e-mail as well as speed post.As the petitioner has made out a prima facie case, ad-interim order in terms of paragraph 17(e) till the returnable date.

Summary

Issues:
Challenge to the constitutional validity and vires of Explanation in Notification No.20/2021 and Notification No.38/2021 under Article 226 of the Constitution of India. Questioning the applicability of sections 148 and 148A of the Income Tax Act post insertion by Finance Act 2021.

Analysis:
The petitioner has filed a petition challenging the constitutional validity and vires of the Explanation contained in Notification No.20/2021 and Notification No.38/2021, which extend the time limit for issuance of Notice under Section 148 of the Income Tax Act, 1961. The petitioner also challenges a consequential notice seeking to reopen the Income Tax Assessment for the assessment year 2015-2016. Additionally, the petitioner questions the applicability of the new provisions inserted by the Finance Act 2021, namely sections 148 and 148A of the Income Tax Act.

The petitioner argues that the Finance Act 2021 has substituted the provision of section 147 with effect from 01.04.2021, and the time limit for issuing the notice under section 148 has been extended by the aforementioned notifications. The petitioner contends that having two parallel provisions applicable simultaneously is not permissible. The validity of the notice and Notification No.20 of 2021 issued by the CBDT is challenged, citing the purported exercise of powers conferred by section 3(1) of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020.

During the hearing, the advocate for the petitioner argued that even the Revenue Authorities could not have extended the operation of the repealed provision of section 148 beyond 31.03.2021 under the guise of a clarificatory explanation in the notifications. Consequently, the Court issued notice to the respondents, returnable on 22.11.2021, with directions for completion of pleadings. An ad-interim order was granted in favor of the petitioner until the returnable date. The case was also tagged with Special Civil Applications No.12621 of 2021 for further proceedings.