2021 (9) TMI 250 - HC - Income Tax

Reopening of assessment u/s 147 - 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 - Covid lockdown in India - identity of Section 148 as prevailing prior to amendment and insertion of section 148A - grievance of the petitioner that the notice of like nature could have been issued till the cut off date 30.03.2021 as subsequent thereto the new Section 148A intervened before issuance of notice directly under Section 148 - HELD THAT - The notification is made by the Ministry of Finance, Central Government considering the fact of lock down all over India, it can be always be assumed that the deferment of the application of section 148A was done in a control way. It is settled proposition that any modification of the Executives implies certain amount of discretion and to be exercised with the aid of the legislative policy of the Act and cannot travel beyond it and run counter to it or certainly change the essential features, the identity, structure or the policy of the Act. Therefore, this legislative delegation which is exercised by the Central Government by notification to uphold the mechanism as prevailed prior to March, 2021 is not in conflict with any Act and notification by executive i.e. Ministry of Finance would be the part of legislative function. Under the circumstances by the notifications the operation of Section 148 of the Income Tax Act was extended, thereby deferment of Section 148A was done. It was done by the Ministry of Finance by way of conditional legislation in the peculiar circumstances which arose during the pandemic and lock down and Central Government can not be said to have encroached upon turf of Parliament. Notification would show that it was issued in exercise of power conferred under the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 and time for issuance of notice under Section 148, the end date was initially extended uptill on 30th day of April 2021 and subsequently again by notification dated 27th April, 2021 the time limit of 30th day of April 2021 was further extended up till 30th day of June, 2021. By effect of such notification, the individual identity of Section 148, which was prevailing prior to amendment and insertion of section 148A was insulated and saved uptill 30.06.2021. The pandemic and lock down prevailed all over India. The people could not file their return or comply with the various mandate of Income Tax Act. Considering such situation for the benefit of the assessee and to facilitate the individual to come out of woods the time limit framed under Income Tax Act was extended - As the provisions of Section 148 which was prevailing prior to the amendment of Finance Act, 2021 was also extended. Here in this case, the power to issue notice under Section 148 which was prior to the amendment was also saved and the time was extended. In a result, the notice issued on 30.06.2021 (Annexure P-1) would also be saved - no interference is required to be made in the said issuance of notice and accordingly the petitions are dismissed.

Summary

Issues Involved:
1. Validity of the notice issued under Section 148 of the Income Tax Act, 1961.
2. Applicability and procedural compliance of Section 148A of the Income Tax Act, 1961.
3. Impact of notifications issued by the Ministry of Finance extending the time limits during the COVID-19 pandemic.

Issue-wise Detailed Analysis:

1. Validity of the Notice Issued Under Section 148 of the Income Tax Act, 1961:
The petitioner challenged the notice dated 30.06.2021 issued under Section 148 of the Income Tax Act, 1961, arguing that it was illegal as it did not comply with the newly inserted Section 148A, effective from 01st April 2021. The petitioner contended that the notice was issued without conducting an enquiry or providing an opportunity for a hearing as mandated by Section 148A.

2. Applicability and Procedural Compliance of Section 148A of the Income Tax Act, 1961:
The petitioner argued that the notice under Section 148 was invalid as it did not follow the procedure outlined in Section 148A, which requires an enquiry and an opportunity for a hearing before issuing such a notice. The petitioner emphasized that the Finance Act, 2021, which introduced Section 148A, came into force on 1st April 2021, and thus, the notice issued on 30.06.2021 should have complied with this new provision.

3. Impact of Notifications Issued by the Ministry of Finance Extending the Time Limits During the COVID-19 Pandemic:
The respondents countered that due to the COVID-19 pandemic and the resultant lockdown, the Ministry of Finance issued notifications extending the application of the old provisions of Section 148 until 30th June 2021. These notifications were issued under the Taxation & Other Laws (Relaxation & Amendment of Certain Provisions) Act, 2020, which allowed the Central Government to extend time limits for various actions under the Income Tax Act. The court examined the notifications dated 31.03.2021 and 27.04.2021, which extended the time limit for issuing notices under Section 148 until 30th June 2021, thereby deferring the application of Section 148A.

Conclusion:
The court held that the notifications issued by the Ministry of Finance were valid and constituted a conditional legislation, allowing the extension of the old provisions of Section 148 until 30th June 2021. The court concluded that the notice issued on 30.06.2021 under Section 148 was valid and did not require compliance with Section 148A, as its application was deferred by the notifications. Consequently, the petition was dismissed, and the notice under Section 148 was upheld as legal and valid.