2021 (9) TMI 1481 - HC - Income Tax

Applicability of the provisions of sections 148 and 148 A - constitutional validity and vires of the Explanation contained in Notification No.20/2021 dated 31.03.2021 as well as Notification No.38/2021 dated 27.04.2021, which extend, for the purpose of issuance of Notice under Section 148 , the time limit specified in Section 149 or sanction u/s 151 of the Act from 31.03.2021 to 30.04.2021 and from 30.04.2021 to 30.06.2021 respectively - HELD THAT - 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. The validity of the notice is challenged so also 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. We have heard the learned senior advocate, Shri Tushar P. Hemani with learned advocates, Ms.Vaibhavi Parikh and Mr.Parimalsinh Parmar 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 It is urged fervently that even the Revenue Authorities could not have extended the operation of repealed provision of section 148 beyond 31.03.2021 under the guise of a clarificatory explanation in the notifications.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 05.10.2021. Pleadings be completed and office of learned Additional Solicitor General shall be served through e-mail.

Summary

Issues involved:
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 148 A of the Income Tax Act inserted by Finance Act 2021.
Validity of notice issued under Section 148 seeking to reopen Income Tax Assessment for the assessment year 2014-2015.
Interplay between provisions of Section 147 and the extended time limit for issuing notices under Section 148.

Analysis:

The petitioner filed a petition challenging the constitutional validity and vires of the Explanation in Notification No.20/2021 and Notification No.38/2021 under Article 226 of the Constitution of India. These notifications extended the time limit specified in Section 149 or sanction under Section 151 of the Income Tax Act, 1961. The petitioner also contested the notice dated 21.04.2021 issued under Section 148 seeking to reopen the Income Tax Assessment for the assessment year 2014-2015 by drawing authority from the aforementioned notifications. The petitioner argued that the provisions of sections 148 and 148 A of the Income Tax Act, inserted by the Finance Act 2021, cannot run parallel to the extended time limits set by the notifications.

The petitioner further contended that the Finance Act 2021 substituted Section 147 with effect from 01.04.2021, setting a new time limit for issuing notices under Section 148. The petitioner raised concerns about the simultaneous applicability of two sets of provisions and challenged the validity of the notice issued under Section 148 as well as Notification No.20 of 2021 issued by the CBDT. The petitioner argued that the Revenue Authorities could not have extended the operation of the repealed provision of Section 148 beyond 31.03.2021 through clarificatory explanations in the notifications.

After hearing the arguments presented by the petitioner's counsel, the Court issued a notice to the respondents returnable on 05.10.2021. The Court directed that pleadings be completed, and the office of the learned Additional Solicitor General be served through e-mail. Considering that the petitioner established a prima facie case, the Court passed an ad-interim order until the returnable date. The matter was also tagged with Special Civil Applications No.12621 of 2021 for further proceedings and consideration.