2022 (3) TMI 1351 - 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 - Whether after introduction of new provisions for reassessment of income by virtue of the Finance Act 2021 with effect from 01.04.2021 substituting the then existing provisions would the substituted provisions survive and could be used for issuing notices for reassessment for the past period? - HELD THAT - As relying on SUDESH TANEJA WIFE OF SHRI CP TANEJA 2022 (1) TMI 1212 - RAJASTHAN HIGH COURT no indication of surviving the past provisions after the substitution and in fact an active indication to the contrary inescapable conclusion that we must arrive at is that for any action of issuance of notice under Section 148 after 01.04.2021 the newly introduced provisions under the Finance Act 2021 would apply. Mere extension of time limits for issuing notice under section 148 would not change this position that obtains in law. 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. If the plain meaning of the statutory provision and its interpretation is clear by adopting a position different in an explanation and describing it to be clarificatory the subordinate legislature cannot be permitted to amend the provisions of the parent Act. Accordingly these explanations are unconstitutional and declared as invalid. We are unable to persuade ourselves to accept this analysis of the situation. In our understanding 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 Involved:
1. Legality of notices issued under Section 148 of the Income Tax Act, 1961 after 01.04.2021 for reopening assessments of past years.
2. Validity of the explanations in the CBDT circulars dated 31.03.2021 and 27.04.2021.

Detailed Analysis:

1. Legality of Notices Issued Under Section 148 Post 01.04.2021:
The primary issue was whether the new reassessment provisions introduced by the Finance Act, 2021, effective from 01.04.2021, could be applied to issue notices for reassessment of past years. The court referenced a previous judgment in "Sudesh Taneja Vs. Income Tax Officer" which concluded that the original provisions, upon substitution, stood repealed and had no existence after the introduction of the new provisions. The court emphasized that the new reassessment scheme under Section 148A required the Assessing Officer to conduct an enquiry before issuing a notice. The absence of any legislative intent to apply the new scheme only post-01.04.2021 meant that all notices issued after this date had to comply with the new provisions. Consequently, notices issued without following Section 148A were deemed invalid.

2. Validity of CBDT Circulars Dated 31.03.2021 and 27.04.2021:
The court examined whether the explanations in the CBDT circulars, which purported to clarify that the old provisions of Section 148 would apply until 30.06.2021, were valid. It was determined that these explanations exceeded the jurisdiction of the CBDT as they attempted to alter the statutory provisions, which is beyond the scope of delegated legislation. The court held that the subordinate legislation (CBDT circulars) could not amend the parent Act's provisions and declared these explanations unconstitutional and invalid.

Conclusion:
The court found that the notices issued under Section 148 after 01.04.2021 without following the new procedures were invalid. The learned Single Judge's decision to quash these notices was upheld. All writ petitions were allowed, and the special appeals filed by the Income Tax Authorities were dismissed. The court directed the Registry to place a copy of the order in other connected petitions/appeals.