2022 (5) TMI 60 - 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 notice under Section 148 would be issued for the past assessment years by resorting to the larger period of limitation prescribed in newly substituted clause (b) of Section 149(1). This would indicate that the notice that would be issued after 01.04.2021 would be in terms of the substituted Section 149(1) but without breaching the upper time limit provided in the original Section 149(1) which stood substituted. 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. 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 notice of re-assessment for the assessment year 2013-14 based on recent judgment regarding provisions of reassessment under the Finance Act, 2021. Validity of notifications issued by CBDT in relation to the Relaxation Act, 2020 and their impact on the reassessment provisions.

Analysis:
The petitioner contested the notice of re-assessment for the assessment year 2013-14, citing a recent Division Bench judgment in a similar case. The judgment highlighted the significant changes brought about by the Finance Act, 2021 in reassessment provisions, emphasizing the altered time limits and procedures under Section 148A. It clarified that the new scheme of reassessment applies to notices issued after 01.04.2021, invalidating any notices not complying with the amended provisions. The judgment scrutinized the role of the first proviso to Section 149(1) in restricting the application of extended time limits for issuing notices under Section 148, emphasizing the necessity of adherence to the revised statutory framework post-01.04.2021.

The judgment delved into the constitutional principles surrounding delegated legislation and the presumption of constitutionality. It referenced legal precedents to establish the grounds on which subordinate legislation can be challenged, including being manifestly arbitrary or inconsistent with the parent Act. The analysis scrutinized the notifications issued by CBDT under the Relaxation Act, 2020, noting that explanations exceeding the delegated powers were unconstitutional and invalid. It emphasized that subordinate legislation cannot alter the statutory provisions and must operate within the boundaries set by the parent Act.

The judgment acknowledged divergent views from other High Courts but aligned with the interpretations of Allahabad and Delhi High Courts, declaring the impugned notices as invalid and quashing them. It rejected the argument that notifications deferred the application of reassessment provisions, asserting that the amendments introduced by the Finance Act, 2021 came into effect on 01.04.2021. Consequently, the notices in question were deemed unlawful and set aside, affirming the correctness of the Single Judge's decision in nullifying the notices. The judgment concluded by dismissing the revenue's appeals and disposing of pending applications accordingly, without the need for separate reasons.

In conclusion, the judgment meticulously analyzed the statutory amendments introduced by the Finance Act, 2021 and scrutinized the validity of notifications issued by CBDT under the Relaxation Act, 2020. It underscored the importance of adherence to the revised reassessment provisions post-01.04.2021 and emphasized the limitations of subordinate legislation in altering statutory frameworks. The decision aligned with previous judicial interpretations, ultimately quashing the impugned notices and upholding the Single Judge's ruling.