2022 (2) TMI 289 - HC - Income Tax

Validity of assessment u/s 147 - scope of section 148A - petitioners aggrieved by the issuance of impugned notices u/s 148 as same are barred by limitation and Income Tax Authority before issuing the impugned notices have not observed the statutory formalities u/s 148 A as prescribed by the Finance Act, 2021 which are applicable with effect from 1st April, 2021 before issuance of notices under Section 148 of the Act on or after 1st April, 2021 - HELD THAT - The issues involved in these Writ Petitions are covered by the decision of the Division Bench of the Allahabad High Court in the case of 'Ashok Kumar Agarwal -vs- Union of India 2021 (10) TMI 517 - ALLAHABAD HIGH COURT decided in favour of assessees. Also BPIP INFRA PRIVATE LIMITED AND OTHERS VERSUS INCOME TAX OFFICER, WARD 4 (1) , JAIPUR AND OTHERS 2021 (12) TMI 207 - RAJASTHAN HIGH COURT and MON MOHAN KOHLI VERSUS ASSISTANT COMMISSIONER OF INCOME TAX ANR. 2021 (12) TMI 664 - DELHI HIGH COURT Explanations A(a)(ii)/A(b) to the Notifications dated 31st March, 2021 and 27th April, 2021 are declared to be ultra vires the Relaxation Act, 2020 and are therefore bad in law and null and void. All the impugned notices under Section 148 of the Income Tax Act are quashed with liberty to the Assessing Officers concerned to initiate fresh re- assessment proceedings in accordance with the relevant provisions of the Act as amended by Finance Act, 2021 and after making compliance of the formalities as required by the law. In addition, the impugned notice under Section 148 is also dismissed on the ground that the same has been issued in the name of non-existing company and the noticee has been amalgamated long before issuance of the impugned notice and this fact was officially intimated to the respondent Income Tax Authorities which is part of record and the learned Advocate appearing for the respondent Income Tax Authorities does not deny this fact. - Decided in favour of assessee.

Summary

Issues:
- Validity of notices under Section 148 of the Income Tax Act, 1961 post 31st March, 2021.
- Compliance with statutory formalities under Section 148 A of the Income Tax Act.
- Declaration of certain explanations in Notifications as ultra vires the parent legislation.
- Quashing of impugned re-assessment notices.
- Dismissal of notice issued in the name of a non-existing company.

Analysis:

The judgment by the High Court of Calcutta addressed various legal issues arising from a group of Writ Petitions challenging the validity of re-assessment notices issued post 31st March, 2021 under Section 148 of the Income Tax Act, 1961. The petitioners contended that the notices were time-barred and that the Income Tax Authority failed to comply with the statutory formalities under Section 148 A of the Income Tax Act as mandated by the Finance Act, 2021, effective from 1st April, 2021. The petitioners sought relief by quashing the impugned notices and declaring certain explanations in Notifications extending the applicability of specific sections of the Act as ultra vires the parent legislation, the Relaxation Act, 2020.

The Court noted that all Writ Petitions raised purely legal issues seeking the quashing of re-assessment notices and a declaration regarding the validity of certain explanations in Notifications. The counsels for both parties jointly referred to decisions by other High Courts in similar cases, including the Allahabad High Court, Rajasthan High Court, and Delhi High Court, which were in favor of the assessees/petitioners. Citing a previous judgment by the Calcutta High Court, the Court disposed of all Writ Petitions by allowing them. The Court declared the explanations in the Notifications as ultra vires the Relaxation Act, 2020, rendering them invalid. Consequently, all impugned notices under Section 148 of the Income Tax Act were quashed, granting Assessing Officers the liberty to initiate fresh re-assessment proceedings in compliance with the amended provisions of the Act post the Finance Act, 2021.

Additionally, the Court dismissed an impugned notice issued in the name of a non-existing company, as the noticee had been amalgamated before the notice was issued, a fact officially communicated to the Income Tax Authorities and undisputed by the respondent's counsel. The Court ordered the provision of urgent certified copies of the order to the parties upon completion of necessary formalities, concluding the judgment on a comprehensive note addressing the legal and factual intricacies involved in the case.