2021 (12) TMI 1411 - HC - Income Tax

Reopening of assessment - applicability of the provisions of sections 148 and 148 A of the Income Tax Act, 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 - Issue NOTICE to the respondents, returnable on 03.01.2022. 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 7(d) till the returnable date. Direct service is permitted. Service be effected directly by the petitioner through speed post. Soft copy shall be served upon the offices of the learned senior advocate, Mr.Manish Bhatt and learned Additional Solicitor General of India.

Summary

Issues involved:
1. Challenge to the constitutional validity and vires of Notifications extending time limits under the Income Tax Act.
2. Questioning the applicability of new provisions inserted by the Finance Act 2021.
3. Conflict between old and new provisions under the Income Tax Act.

Analysis:
1. The petitioner challenged the constitutional validity and vires of Notifications No.20/2021 and No.38/2021, which extended the time limit for issuance of notices under Section 148 of the Income Tax Act. The petitioner also contested a notice issued under Section 148 seeking to reopen the Income Tax Assessment for the assessment year 2015-2016 based on these notifications. The petitioner argued against the parallel applicability of old and new provisions, highlighting the substitution of Section 147 by the Finance Act 2021 and the extended time limit under the notifications.

2. Additionally, the petitioner questioned the applicability of Sections 148 and 148A of the Income Tax Act, the new provisions inserted by the Finance Act 2021. The petitioner contended that the extension of time limits through the notifications created a conflict between the old and new provisions, raising concerns about the validity of the notice issued under Section 148 based on the extended time limits.

3. The petitioner's counsel argued that the Revenue Authorities could not extend the operation of the repealed provision of Section 148 beyond 31.03.2021 using clarificatory explanations in the notifications. The petitioner sought relief from the court, presenting a prima facie case to challenge the notifications and the notice issued under Section 148. The court issued notice to the respondents, directing completion of pleadings and service through email and speed post, while granting an ad-interim order in favor of the petitioner until the next hearing date.