2021 (8) TMI 197 - HC - Income Tax

Reopening of assessment u/s 147 - Assessment time barred - applicability of the newly inserted provisions of Section 148A and the amendments brought inter alia in Section 149 - HELD THAT - Notices u/s 148 of the Act stood expired and, therefore, any action u/s 148 would have been time barred by virtue of the proviso to Section 149(1) of the Act. They submit that by virtue of introduction of Section 3(1) of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, the time limit for taking action u/s 148 has been extended till 30th June, 2021. According to them, the impugned notifications only provide that as the time limit for issuing notice under Section 148A of the Act has been extended by deemed fiction, the procedure to be followed till 30th June, 2021 would be the old procedure mentioned under the Act. In support of their submission, they also rely upon Section 6 of the General Clauses Act, 1897. This Court is of the prima facie view that the impugned notification is contrary to settled principle of statutory interpretation, namely, that any action taken post the amendment of a procedural section would have to abide by the new procedures stipulated in the amended Act. This Court is of the prima facie view that by virtue of a notification, which is a delegated legislation, the date for implementation of statutory provision, as stipulated in the Act, cannot be varied or changed. Following the interim orders passed by the learned predecessor Division Bench in Mon Mohan Kohli vs. Assistant Commissioner of Income Tax Anr. , 2021 (8) TMI 196 - DELHI HIGH COURT as well as similar interim order passed by the Bombay High Court, this Court directs that there shall be a stay of the operation of the impugned notices.

Summary

Issues: Challenge to notices under section 148 of the Income Tax Act, 1961 and the validity of notifications issued by the Central Board of Direct Taxes.

Analysis:

The petitioners challenged the notices dated 09th June, 2021, 30th June, 2020, and 28th June, 2020, along with notifications issued by the Central Board of Direct Taxes. They argued that the notices were invalid as they were issued without prior notice under section 148A of the Act. The petitioners contended that the notices were issued under pre-amended provisions that were no longer in force, emphasizing that post-April 1, 2021, the amendments should apply to all notices under Section 148. They also challenged the notifications issued by the Respondent-2, stating that they were ultra vires the Act as they clarified the application of pre-amended sections post-April 1, 2021, which, according to the petitioners, exceeded the Central Government's authority under the Taxation and Other Laws Act, 2020.

The respondents argued that the time limit for issuing notices under Section 148 had expired in the present cases, and any action under Section 148 would have been time-barred. They claimed that the time limit had been extended till June 30, 2021, under the Taxation and Other Laws Act, 2020, and therefore, the old procedures under the Act applied until that date. They relied on Section 6 of the General Clauses Act, 1897, to support their position.

After hearing both parties, the Court held that the impugned notification contradicted the principle that post-amendment, actions should follow the new procedures. The Court also noted that a notification, as delegated legislation, could not alter the implementation date of a statutory provision. Citing previous interim orders, the Court granted a stay on the operation of the challenged notices dated 09th June, 2021, 30th June, 2020, and 28th June, 2020, in the respective cases. The Court directed the filing of counter-affidavits and set the next hearing for 28th September, 2021, with instructions for uploading the order on the website and sharing it with the counsel via email.