2021 (9) TMI 658 - HC - Income Tax

Reopening of assessment u/s 147 - time for issuance of notice under Section 148 - 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 - effect of Covid lockdown in India - HELD THAT - Notification 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. Likewise certain right which was reserved in favour of the Income Tax Department was also preserved and was extended at parity. Consequently 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 28.06.2021 (Annexure P-1) would also be saved. Therefore, no interference is required to be made in the said issuance of notice and accordingly the petitions are dismissed.

Summary

Issues Involved:
1. Validity of the notice issued under Section 148 of the Income Tax Act, 1961, dated 28.06.2021.
2. Applicability of the amended Section 148A of the Income Tax Act, 1961, effective from 01.04.2021.
3. Impact of notifications issued by the Ministry of Finance extending the time limit for issuance of notices under Section 148.

Issue-wise Detailed Analysis:

1. Validity of the Notice Issued under Section 148 of the Income Tax Act, 1961, dated 28.06.2021:
The petitioners challenged the notice dated 28.06.2021 issued under Section 148 of the Income Tax Act, 1961, arguing that it was issued without following the procedure mandated by the newly inserted Section 148A, which came into effect from 01.04.2021. The petitioners contended that the notice was illegal as it did not provide an opportunity for a hearing, which is a requirement under Section 148A.

2. Applicability of the Amended Section 148A of the Income Tax Act, 1961, Effective from 01.04.2021:
The court examined whether the notice issued on 28.06.2021 was valid in light of the new Section 148A, which requires an enquiry and an opportunity for the assessee to be heard before issuing a notice under Section 148. The petitioners argued that since the new provision came into effect on 01.04.2021, any notice issued after this date should comply with Section 148A.

3. Impact of Notifications Issued by the Ministry of Finance Extending the Time Limit for Issuance of Notices under Section 148:
The respondents argued that due to the COVID-19 pandemic and subsequent lockdowns, the Ministry of Finance issued notifications extending the application of the old provisions of Section 148 until 30.06.2021. The court considered the notifications dated 31.03.2021 and 27.04.2021, which extended the time limit for issuing notices under Section 148 to 30.06.2021. The court noted that these notifications were issued under the Taxation & Other Laws (Relaxation & Amendment of Certain Provisions) Act, 2020, which allowed for such extensions due to the pandemic.

Judgment Analysis:
The court recognized the practical necessity for the Ministry of Finance to extend the time limits due to the pandemic. It held that the delegation of power to the Ministry of Finance to extend the time limits did not constitute an abdication of legislative power but was a conditional legislation aimed at ensuring administrative efficiency. The court referenced the Supreme Court's decision in A.K. Roy v. Union of India, which upheld similar delegations of power as not amounting to excessive delegation.

The court concluded that the notifications extending the time limit for issuing notices under Section 148 were valid and that the notice dated 28.06.2021 was legally issued within the extended time frame. Therefore, the court dismissed the petitions, holding that the notice issued on 28.06.2021 was valid and did not require interference.

Conclusion:
The court upheld the validity of the notice issued under Section 148 of the Income Tax Act, 1961, dated 28.06.2021, and dismissed the petitions. The court found that the notifications issued by the Ministry of Finance extending the time limits for issuing such notices were valid and did not conflict with the legislative intent of the Finance Act, 2021. The court emphasized the practical necessity and administrative efficiency of such extensions in light of the COVID-19 pandemic.