2021 (9) TMI 251 - 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. Legality 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. Validity of the Ministry of Finance notifications extending the operation of Section 148.

Detailed Analysis:

1. Legality of the Notice Issued Under Section 148 of the Income Tax Act, 1961:
The petitions challenged the notice dated 30.06.2021 issued under Section 148 of the Income Tax Act, 1961. The petitioners contended that the notice was issued without following the procedure laid down under the newly inserted Section 148A, which came into effect on 01st April 2021. The petitioners argued that the notice was illegal and contrary to the provisions of Section 148A, as it did not provide an opportunity of hearing before issuance.

2. Applicability and Procedural Compliance of Section 148A of the Income Tax Act, 1961:
The petitioners submitted that Section 148A, introduced by the Finance Act, 2021, mandated that before issuing a notice under Section 148, the Assessing Officer must conduct an inquiry and provide an opportunity of hearing to the assessee. They argued that since the notice was issued on 30.06.2021, after the enactment of Section 148A, it should have complied with the new procedural requirements. The respondents, however, contended that due to the pandemic and lockdown, the Ministry of Finance extended the application of the old provisions of Section 148 up to 30th June 2021, making the notice valid and legal.

3. Validity of the Ministry of Finance Notifications Extending the Operation of Section 148:
The court examined the notifications issued by the Ministry of Finance on 31.03.2021 and 27.04.2021, which extended the application of the old provisions of Section 148 until 30th June 2021. The court noted that the Taxation & Others Laws (Relaxation & Amendment of Certain Provisions) Act, 2020, allowed the Central Government to extend time limits specified under the Income Tax Act due to the pandemic. The notifications were issued under this delegated power, and the court found that the delegation was a practical necessity for administrative efficiency and did not amount to an abdication of legislative power.

The court further referenced the principle laid down in A.K. Roy v. Union of India, where the Supreme Court upheld the delegation of power to the Executive to bring provisions of a constitutional amendment into force. Applying this principle, the court concluded that the delegation to the Ministry of Finance to extend the operation of Section 148 was valid and did not conflict with the Finance Act, 2021.

Conclusion:
The court held that the notifications extending the application of the old provisions of Section 148 until 30th June 2021 were valid. Consequently, the notice issued on 30.06.2021 under Section 148 was within the extended time limit and was legally valid. The petitions were dismissed, and no interference was required in the issuance of the notice.