2021 (9) TMI 785 - 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 w.e.f. 1.4.2021 - Covid lockdown in India - 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 u/s 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 - 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 notices issued under Section 148 of the Income Tax Act, 1961.
2. Applicability of Section 148A of the Income Tax Act, 1961.
3. Impact of the Finance Act, 2021 on the issuance of notices.
4. Effect of Ministry of Finance notifications extending the application of old provisions of Section 148.

Issue-wise Detailed Analysis:

1. Validity of the notices issued under Section 148 of the Income Tax Act, 1961:
The petitioner challenged the notices dated 25.06.2021 and 09.06.2021 issued under Section 148 of the Income Tax Act, 1961. The petitioner argued that these notices were invalid as they were issued without following the procedure prescribed under the newly inserted Section 148A, which came into effect on 01st April 2021. The petitioner contended that the Assessing Officer failed to conduct an enquiry and provide an opportunity of hearing as mandated by Section 148A.

2. Applicability of Section 148A of the Income Tax Act, 1961:
The petitioner asserted that the new Section 148A, introduced by the Finance Act, 2021, required the Assessing Officer to conduct an enquiry and provide an opportunity of hearing before issuing any notice under Section 148. Since the notices were issued on 25.06.2021 and 09.06.2021, after the new provision came into effect, the petitioner argued that the notices were illegal and contrary to the provisions of Section 148A.

3. Impact of the Finance Act, 2021 on the issuance of notices:
The Finance Act, 2021, which was notified on 28th March 2021, brought into effect Section 148A from 01st April 2021. The petitioner contended that any notice under Section 148 issued after this date should comply with the new procedural requirements of Section 148A. The respondents, however, argued that due to the pandemic and subsequent lockdown, the Ministry of Finance had issued notifications extending the application of the old provisions of Section 148 until 30th June 2021.

4. Effect of Ministry of Finance notifications extending the application of old provisions of Section 148:
The respondents argued that the Ministry of Finance, exercising its power under the Finance Act, issued notifications extending the application of the old provisions of Section 148 until 30th June 2021. These notifications were issued to address the challenges posed by the pandemic, which had disrupted normal office operations and compliance activities. The court found that the notifications dated 31.03.2021 and 27.04.2021 extended the time limit for issuing notices under the old Section 148 until 30th June 2021. The court held that these notifications were valid and constituted a sound basis for administrative efficiency, ensuring the smooth functioning of the Act during the pandemic.

Conclusion:
The court concluded that the notices issued on 25.06.2021 and 09.06.2021 under Section 148 of the Income Tax Act were valid and legal. The extension of the application of the old provisions of Section 148 until 30th June 2021 by the Ministry of Finance was upheld as a valid exercise of delegated legislative power. Consequently, the petition challenging the validity of the notices was dismissed.