2022 (3) TMI 177 - HC - Income Tax

Validity of reopening of assessment u/s 147 - re-assessment notice issued under the erstwhile section147/148 after 1.4.2001 without following the mandate of new section 148A - Notice as barred by limitation - enforcement of the Enabling Act and the Finance Act, 2021 - scope of provisions of Section 148 read with Section 148A as substituted by Finance Act, 2021 - scope of provisions of Section 148 read with Section 148A as substituted by Finance Act, 2021 - substituting the provisions of the Act by means of the Finance Act, 2021 with effect from 01.04.2021, the old provisions were omitted from the statute book and replaced by fresh provisions with effect from 01.04.2021 - time limitation existing under the Act had been extended under the Ordinance - relaxation of limitation granted on account of general hardship existing upon the spread of pandemic COVID -19 - HELD THAT - In view of judgments and orders of this Court in the case of Manoj Jain 2022 (1) TMI 741 - CALCUTTA HIGH COURT . AND BAGARIA PROPERTIES AND INVESTMENT PVT. LTD. 2022 (1) TMI 742 - CALCUTTA 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.

Summary

Issues:
Challenging impugned notices under Section 148 of the Income Tax Act issued post 31st March, 2021; Declaration regarding the extension of applicability of certain provisions beyond 31st March, 2021 as ultra vires the parent legislation.

Analysis:
The High Court of Calcutta addressed the common legal issues presented in multiple Writ Petitions where the petitioners contested the validity of re-assessment notices issued by the Income Tax Authority post 31st March, 2021 under Section 148 of the Income Tax Act. The crux of the matter revolved around the contention that the statutory formalities under Section 148 A of the Income Tax Act, as mandated by the Finance Act, 2021 effective from 1st April, 2021, were not adhered to by the Income Tax Authority before issuing the impugned notices. The petitioners sought relief by challenging the validity of the re-assessment notices and declaring certain explanations to the notifications dated 31st March, 2021 and 27th April, 2021 as ultra vires the parent legislation, the Relaxation Act, 2020.

The Court acknowledged that the issues raised in the present Writ Petitions were purely legal in nature, with the petitioners seeking the quashing of the impugned re-assessment notices and a declaration regarding the extension of certain provisions beyond 31st March, 2021. The counsels for both parties jointly referred to relevant judgments by other High Courts, including the Division Bench of the Allahabad High Court, the Rajasthan High Court, and the Delhi High Court, which favored the assessees/petitioners in similar cases.

Relying on its own previous judgments dated 17th January, 2022 in specific cases, the High Court of Calcutta disposed of all the writ petitions by allowing them. The Court declared the explanations to the notifications dated 31st March, 2021 and 27th April, 2021 as ultra vires the Relaxation Act, 2020, rendering them invalid. Consequently, all impugned notices under Section 148 of the Income Tax Act were quashed. However, the Assessing Officers were granted liberty to initiate fresh re-assessment proceedings in compliance with the relevant provisions of the Act as amended by the Finance Act, 2021 and in adherence to the required formalities as per the law.

In conclusion, the Court's judgment provided clarity on the legal issues raised in the Writ Petitions, ensuring adherence to statutory formalities and upholding the validity of re-assessment proceedings under the Income Tax Act post 31st March, 2021 in accordance with the applicable legislation.