2022 (2) TMI 925 - HC - Income Tax

Reopening of assessment u/s 147 - Scope of Section 148A as newly inserted - Comparison between old and new provisions for reassessment - 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 - identity of Section 148 as prevailing prior to amendment and insertion of section 148A - petitioner submitted that for the assessment period prior to 01.04.2021 notices issued after 2021 without following the procedure as provided under the substituted provisions for reassessment under the Income Tax Act, 1961 by the Finance Act, 2021 - HELD THAT - As decided in SUDESH TANEJA WIFE OF SHRI CP TANEJA case 2022 (1) TMI 1212 - RAJASTHAN HIGH COURT Under no circumstances the extended period available in clause (b) of sub-section (1) of Section 149 which we may recall now stands at 10 years instead of 6 years previously available with the revenue, can be pressed in service for reopening assessments for the past period. This flows from the plain meaning of the first proviso to sub-section (1) of Section 149. In plain terms a notice which had become time barred prior to 01.04.2021 as per the then prevailing provisions, would not be revived by virtue of the application of Section 149(1)(b) effective from 01.04.2021. All the notices issued in the present cases are after 01.04.2021 and have been issued without following the procedure contained in Section 148A of the Act and are therefore invalid. Also by virtue of notifications dated 31.03.2021 and 01.04.2021 issued by CBDT substitution of reassessment provisions framed under the Finance Act, 2021 were not deferred nor could they have been deferred. The date of such amendments coming into effect remained 01.04.2021. In the result we find that the notices impugned in the respective petitions are invalid and bad in law. The same are quashed and set aside. The learned Single Judge committed no error in quashing these notices. All the writ petitions are allowed. Appeals of the revenue are dismissed.

Summary

Issues:
Challenge to reassessment notice dated 20.04.2021 for assessment year 2016-2017 due to non-compliance with substituted provisions under the Income Tax Act, 1961 by the Finance Act, 2021.

Analysis:

The petitioner challenged a reassessment notice issued by the assessing officer for the assessment year 2016-2017, arguing that post-01.04.2021, notices issued without following the new reassessment provisions are invalid. Referring to a recent Division Bench judgment, it was highlighted that the substituted provisions repeal the original provisions entirely. The new scheme under the Finance Act, 2021 introduced significant changes in reassessment procedures, including revised time limits and the necessity for the Assessing Officer to conduct inquiries before issuing a notice. The judgment emphasized that there is no indication that the new scheme applies only post-01.04.2021. Notably, the time limits for issuing notices under Section 148 were modified, with the first proviso to Section 149(1) clarifying that notices for past assessment years must adhere to the new provisions, even if issued after 01.04.2021.

In a detailed analysis, the judgment cited similar views held by Division Benches of other High Courts, emphasizing that the new provisions under the Finance Act, 2021 must be applied for notices issued post-01.04.2021. The judgment disagreed with a contrary view taken by the Chhattisgarh High Court, which suggested that notifications deferred the application of the new provisions. However, the Rajasthan High Court held that the amendments came into effect on 01.04.2021, and the notifications did not defer the substitution of reassessment provisions. Consequently, the impugned notices were deemed invalid and quashed, affirming the decision of the learned Single Judge in this regard.

In conclusion, the High Court ruled that the reassessment notices were invalid and set them aside. The judgment highlighted the importance of applying the new reassessment provisions introduced by the Finance Act, 2021 to notices issued after 01.04.2021, emphasizing the need for compliance with the revised procedures outlined in the Act.