2021 (12) TMI 991 - HC - Income Tax

Reopening of assessment u/s 147 - operation of Section 148A - Effect of COVID pandemic and lock down - Extension of provisions of Section 148 which was prevailing prior to the amendment of Finance Act, 2021 - whether notice issued to the petitioner on 30.03.2021 under Section 148 without following the procedure under Section 148A without giving an opportunity of hearing would be illegal and contrary to the provisions of Section 148A and it cannot be sustained? - application of old provisions of Section 148 of the Income Tax Act was extended initially uptill 30th April, 2021 and thereafter was further extended uptill 30th day of June, 2021 - HELD THAT - 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. Notifications would show that they were 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 returns or comply with the various mandates 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. Likewise certain right which was reserved in favour of the Income Tax Department was also preserved and was extended at parity. Consequently 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 30.03.2021 (Annexure P-1) would also be saved. Therefore, no interference is required to be made in the said issuance of notice and accordingly the petition is dismissed.

Summary

Issues Involved:
1. Validity of the notice issued under Section 148 of the Income Tax Act, 1961.
2. Applicability and interpretation of Section 148A of the Income Tax Act, 1961.
3. Impact of the Finance Act, 2021 and subsequent notifications on the issuance of notice under Section 148.
4. Delegation of legislative power to the Ministry of Finance.

Detailed Analysis:

1. Validity of the Notice Issued under Section 148 of the Income Tax Act, 1961:
The petitioner challenged the notice dated 30.03.2021 issued under Section 148 of the Income Tax Act, 1961, arguing that it was invalid due to the introduction of Section 148A, which mandates a prior enquiry and opportunity of hearing before issuing such notice. The petitioner contended that since Section 148A came into effect on 01.04.2021, the notice issued on 30.03.2021 without following the new procedure was illegal.

2. Applicability and Interpretation of Section 148A of the Income Tax Act, 1961:
Section 148A, introduced by the Finance Act, 2021, requires the Assessing Officer to conduct an enquiry and provide an opportunity of hearing before issuing a notice under Section 148. The petitioner argued that the notice issued on 30.03.2021 should have complied with Section 148A, which came into force on 01.04.2021. However, the court examined the notifications issued by the Ministry of Finance, which extended the applicability of the old provisions of Section 148 until 30.06.2021 due to the COVID-19 pandemic.

3. Impact of the Finance Act, 2021 and Subsequent Notifications on the Issuance of Notice under Section 148:
The court analyzed the notifications dated 31.03.2021 and 27.04.2021, which extended the time limit for issuing notices under Section 148 until 30.06.2021. These notifications were issued under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, considering the pandemic and lockdown. The court held that the notifications effectively insulated and saved the old provisions of Section 148, allowing notices to be issued under the pre-amendment regime until 30.06.2021.

4. Delegation of Legislative Power to the Ministry of Finance:
The court addressed the issue of whether the delegation of power to the Ministry of Finance to extend the applicability of the old provisions of Section 148 constituted excessive delegation of legislative power. Citing the Supreme Court's decision in A.K. Roy v. Union of India, the court held that such delegation was a practical necessity and did not amount to abdication of power. The delegation was considered a sound basis for administrative efficiency and did not conflict with the legislative policy of the Act.

Conclusion:
The court concluded that the notifications issued by the Ministry of Finance were valid and extended the applicability of the old provisions of Section 148 until 30.06.2021. Consequently, the notice issued on 30.03.2021 under Section 148 was deemed valid and legal. The petition was dismissed, and no interference was made in the issuance of the notice.