2021 (9) TMI 165 - HC - Income Tax

Reopening of assessment u/s 147 - 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 - identity of Section 148 as prevailing prior to amendment and insertion of section 148A - grievance of the petitioner that the notice of like nature could have been issued till the cut off date 30.03.2021 as subsequent thereto the new Section 148A intervened before issuance of notice directly under Section 148 - HELD THAT - The notification is made by the Ministry of Finance, Central Government considering the fact of lock down all over India, it can be always be assumed that the deferment of the application of section 148A was done in a control way. It is settled proposition that any modification of the Executives implies certain amount of discretion and to be exercised with the aid of the legislative policy of the Act and cannot travel beyond it and run counter to it or certainly change the essential features, the identity, structure or the policy of the Act. Therefore, this legislative delegation which is exercised by the Central Government by notification to uphold the mechanism as prevailed prior to March, 2021 is not in conflict with any Act and notification by executive i.e. Ministry of Finance would be the part of legislative function. 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. Notification would show that it was 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 return or comply with the various mandate 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 - As 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 30.06.2021 (Annexure P-1) would also be saved.

Summary

Issues Involved:
1. Validity of notice issued under Section 148 of the Income Tax Act, 1961 post-amendment.
2. Applicability and interpretation of Section 148A of the Income Tax Act, 1961.
3. Impact of notifications issued by the Ministry of Finance extending the operation of old provisions of Section 148.

Issue-wise Detailed Analysis:

1. Validity of Notice Issued Under Section 148 of the Income Tax Act, 1961 Post-Amendment:

The petitioner challenged the notice dated 30.06.2021 issued under Section 148 of the Income Tax Act, 1961, arguing that the notice was invalid as it did not comply with the newly inserted Section 148A, which came into effect on 01.04.2021. The petitioner contended that the notice was issued without following the mandatory procedure prescribed under Section 148A, which includes conducting an enquiry, providing an opportunity of being heard, and obtaining prior approval from the specified authority.

2. Applicability and Interpretation of Section 148A of the Income Tax Act, 1961:

The petitioner argued that the amended Finance Act, 2021, which introduced Section 148A, required that before issuing a notice under Section 148, the Assessing Officer must conduct an enquiry and provide an opportunity of hearing to the assessee. The petitioner claimed that since the notice was issued on 30.06.2021, after the new provisions came into effect on 01.04.2021, the notice was illegal and contrary to the provisions of Section 148A.

3. Impact of Notifications Issued by the Ministry of Finance Extending the Operation of Old Provisions of Section 148:

The respondents contended that due to the pandemic and lockdown, the Ministry of Finance issued notifications extending the applicability of the old provisions of Section 148. These notifications extended the operation of the old Section 148 provisions initially until 30.04.2021 and subsequently until 30.06.2021. The respondents argued that the notice issued on 30.06.2021 was valid as it fell within the extended time frame allowed by the notifications.

Judgment Analysis:

The court examined the documents and found that the notice under Section 148 was issued for the Assessment Year 2013-14 on 30.06.2021. The court noted that the Finance Act, 2021, which introduced Section 148A, was notified on 28.03.2021 and came into force on 01.04.2021. The court referred to the notifications dated 31.03.2021 and 27.04.2021, which extended the operation of the old provisions of Section 148 due to the pandemic.

The court observed that the Taxation & Other Laws (Relaxation & Amendment of Certain Provisions) Act, 2020, allowed the Central Government to extend the time limits specified under the Income Tax Act due to the pandemic. The notifications extended the end date for issuing notices under Section 148 to 30.06.2021, thereby insulating and saving the old provisions of Section 148 until that date.

The court held that the delegation of power to the Ministry of Finance to extend the time limits was a practical necessity and did not amount to an abdication of power. The court cited the principle laid down in A.K. Roy v. Union of India, where the Supreme Court upheld the delegation of power to the Executive to bring provisions into force.

The court concluded that the notifications issued by the Ministry of Finance were valid and extended the operation of the old provisions of Section 148 until 30.06.2021. Therefore, the notice issued on 30.06.2021 was valid and did not require interference. Consequently, the petition was dismissed.

Conclusion:
The court dismissed the petition, upholding the validity of the notice issued under Section 148 on 30.06.2021. The court found that the notifications extending the operation of the old provisions of Section 148 were valid and that the notice was issued within the extended time frame. The court held that the delegation of power to the Ministry of Finance to extend the time limits was justified and did not conflict with the legislative intent.