2022 (2) TMI 1148 - HC - Income Tax

Validity of reopening of assessment u/s 147 - Scope of Section 148A as newly inserted - As argued notices are issued to a dead person and assessment period prior to 01.04.2021 notices issued after 2021 without following the procedure as provided under the substituted provisions for reassessment under the Income Tax Act, 1961 by the Finance Act, 2021 - Comparison between old and new provisions for reassessment - 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 HELD THAT - In a recent Division Bench judgment of this Court in a similar circumstances has quashed the reassessment notice. In case of Sudesh Taneja Vs. ITO 2022 (1) TMI 1212 - RAJASTHAN HIGH COURT held that under no circumstances the extended period available in clause (b) of sub-section (1) of Section 149 which we may recall now stands at 10 years instead of 6 years previously available with the revenue, can be pressed in service for reopening assessments for the past period. This flows from the plain meaning of the first proviso to sub-section (1) of Section 149. In plain terms a notice which had become time barred prior to 01.04.2021 as per the then prevailing provisions, would not be revived by virtue of the application of Section 149(1)(b) effective from 01.04.2021. All the notices issued in the present cases are after 01.04.2021 and have been issued without following the procedure contained in Section 148A of the Act and are therefore invalid. By virtue of notifications dated 31.03.2021 and 01.04.2021 issued by CBDT substitution of reassessment provisions framed under the Finance Act, 2021 were not deferred nor could they have been deferred. The date of such amendments coming into effect remained 01.04.2021. In the result we find that the notices impugned in the respective petitions are invalid and bad in law. The same are quashed and set aside. The learned Single Judge committed no error in quashing these notices. All the writ petitions are allowed. Appeals of the revenue are dismissed.

Summary

Issues:
Challenge to reassessment notice issued for the assessment year 2017-2018 to a deceased person and for the period prior to 01.04.2021 without following the new provisions introduced by the Finance Act, 2021.

Analysis:

1. Reassessment Notice to a Dead Person:
The petitioner challenged a reassessment notice dated 22.04.2021 issued by the assessing officer for the assessment year 2017-2018, arguing that the notices were issued to a deceased person. The petitioner's counsel contended that the notices issued after 2021 to a deceased person were invalid. The Division Bench referred to a previous judgment where similar circumstances led to the quashing of a reassessment notice. The court emphasized that the new scheme of reassessment under the Finance Act, 2021 introduced significant changes, including revised time limits for issuing notices and detailed procedures under Section 148A of the Income Tax Act. The court held that the new provisions of reassessment should apply to notices issued after 01.04.2021, and any notices issued without following the new procedures were considered invalid.

2. Reassessment for the Period Prior to 01.04.2021:
The petitioner also challenged the reassessment notice for the period prior to 01.04.2021, arguing that the notices issued after 2021 did not adhere to the new provisions introduced by the Finance Act, 2021. The court analyzed the provisions under Section 149 of the Income Tax Act, highlighting the changes brought about by the new scheme of reassessment. The court noted that the extended time limits for issuing notices under Section 148 did not alter the requirement to follow the new procedures introduced by the Finance Act, 2021. The court emphasized that the substituted provisions of reassessment should be applied to notices issued after 01.04.2021, and any notices issued without following the new procedures were deemed invalid. The court referred to judgments by other High Courts supporting the view that notices issued without adhering to the new provisions were invalid.

3. Dissenting View from Chhattisgarh High Court:
The court acknowledged a dissenting view from the Chhattisgarh High Court regarding the validity of notices issued after 01.04.2021. The Chhattisgarh High Court had a different interpretation based on notifications issued by the CBDT, suggesting that the application of Section 148 was deferred. However, the Division Bench of the Rajasthan High Court disagreed with this analysis, stating that the amendments introduced by the Finance Act, 2021 came into effect on 01.04.2021, and the reassessment provisions were not deferred. The court concluded that the notices challenged in the petitions were invalid and quashed them, upholding the decision of the learned Single Judge.

In conclusion, the Rajasthan High Court, in a judgment delivered by a Division Bench, quashed the reassessment notices challenged by the petitioner for being issued to a deceased person and for the period prior to 01.04.2021 without following the new provisions introduced by the Finance Act, 2021. The court emphasized the need to adhere to the revised procedures and time limits for issuing reassessment notices, as outlined in the amended provisions of the Income Tax Act. The court also addressed a dissenting view from another High Court, ultimately upholding the decision to quash the impugned notices.