2021 (9) TMI 940 - 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 notice 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 and subsequent notifications on the issuance of notice under Section 148.

Detailed Analysis:

1. Validity of Notice Issued under Section 148 of the Income Tax Act, 1961:

The petitioner challenged the notices dated 25.06.2021 and 30.06.2021 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 outlined in Section 148A, which came into effect on 01.04.2021. The petitioner contended that the Assessing Officer was required to conduct an enquiry and provide an opportunity for a hearing before issuing the notice, as mandated by Section 148A.

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

The petitioner asserted that the amended Finance Act, 2021, which introduced Section 148A, required the Assessing Officer to conduct an enquiry with the prior approval of the specified authority and issue a detailed show cause notice before issuing a notice under Section 148. Since the notices in question were issued after the effective date of the amendment (01.04.2021), the petitioner argued that they were illegal and contrary to the provisions of Section 148A.

3. Impact of the Finance Act, 2021 and Subsequent Notifications on the Issuance of Notice under Section 148:

The respondents argued that due to the pandemic and lockdown, the Ministry of Finance had issued notifications extending the applicability of the old provisions of Section 148. These notifications extended the time limits for issuing notices under Section 148 until 30.06.2021. The respondents contended that the notices issued on 25.06.2021 and 30.06.2021 were within the extended time limits and were therefore valid and legal.

The court examined the relevant notifications issued by the Ministry of Finance, which extended the time limits for issuing notices under Section 148 due to the pandemic. The notifications dated 31.03.2021 and 27.04.2021 extended the applicability of the old provisions of Section 148 until 30.06.2021. The court noted that these extensions were made under the Taxation & Others Laws (Relaxation & Amendment of Certain Provisions) Act, 2020, which allowed the Central Government to extend time limits specified under the Income Tax Act.

The court held that the notifications issued by the Ministry of Finance were a form of conditional legislation, which allowed the executive to extend the applicability of the old provisions of Section 148 in light of the pandemic. The court found that this delegation of power to the Ministry of Finance was valid and did not amount to an abdication of legislative power. The court concluded that the notices issued on 25.06.2021 and 30.06.2021 were within the extended time limits and were therefore valid.

Conclusion:

The court dismissed the petition, holding that the notices issued under Section 148 on 25.06.2021 and 30.06.2021 were valid and legal, as they were issued within the extended time limits provided by the notifications issued by the Ministry of Finance. The court found that the extension of time limits was a valid exercise of delegated legislative power in response to the pandemic and lockdown.