2022 (6) TMI 27 - HC - Income Tax

Reopening of assessment u/s 147 - extension of period of limitation from 6 years to 10 years - 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 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. Examination of the validity of notifications issued by CBDT in relation to the Relaxation Act, 2020 and their impact on the reassessment provisions.

Analysis:
The petitioner challenged the notice of re-assessment for the assessment year 2013-14, contending that the issues raised were covered by a recent Division Bench judgment. The judgment highlighted the significant changes in the provisions of reassessment under the Finance Act, 2021. It emphasized that the new scheme of reassessment introduced elaborate procedures under Section 148A, emphasizing the need for the Assessing Officer to conduct an inquiry before issuing a notice under Section 148. The judgment clarified that the new provisions were not limited to post-01.04.2021 assessments and applied to all notices issued after this date. It specifically addressed the extension of time limits for issuing notices under Section 148 and the implications of the first proviso to Section 149(1) in relation to the time limits for reassessment.

The judgment further examined the validity of notifications issued by the CBDT in relation to the Relaxation Act, 2020. It emphasized the presumption of constitutionality of statutes and delegated legislation, highlighting that subordinate legislation could be challenged on various grounds, including being manifestly arbitrary. The judgment referenced previous cases to underscore the limitations of subordinate legislation compared to legislation passed by the Parliament or State Legislature. It concluded that the explanations provided in the notifications by the CBDT exceeded its jurisdiction as a subordinate legislature and were declared unconstitutional and invalid.

The judgment also discussed the differing views of various High Courts on the validity of the impugned notices based on the notifications issued by the CBDT. While acknowledging the contrary view taken by a Single Judge of the Chhattisgarh High Court, the judgment disagreed with the analysis and interpretation presented, emphasizing that the amendments to reassessment provisions introduced by the Finance Act, 2021 were not deferred by the notifications. Consequently, the notices challenged in the petitions were deemed invalid and quashed, affirming the decision of the learned Single Judge in this regard.

In conclusion, the judgment upheld the invalidity of the impugned notices and dismissed the appeals of the revenue, affirming the decision to quash the notices. The petitions were allowed, and pending applications were disposed of accordingly, without the need for separate reasons.