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2022 (3) TMI 254 - HC - Income TaxReopening of assessment u/s 147 - Scope of Section 148A as newly inserted - 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 - Whether after introduction of new provisions for reassessment of income by virtue of the Finance Act 2021 with effect from 01.04.2021 substituting the then existing provisions would the substituted provisions survive and could be used for issuing notices for reassessment for the past period? - HELD THAT - As decided in SUDESH TANEJA WIFE OF SHRI CP TANEJA 2022 (1) TMI 1212 - RAJASTHAN HIGH COURT the first proviso to Section 149(1) provides that no notice under Section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 01.04.2021 if such notice could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause (b) of sub-section (1) of Section 149 as they stood immediately before the commencement of the Finance Act 2021. As per this proviso thus no notice under Section 148 would be issued for the past assessment years by resorting to the larger period of limitation prescribed in newly substituted clause (b) of Section 149(1). This would indicate that the notice that would be issued after 01.04.2021 would be in terms of the substituted Section 149(1) but without breaching the upper time limit provided in the original Section 149(1) which stood substituted. This aspect has also been highlighted in the memorandum explaining the proposed provisions in the Finance Bill. If according to the revenue for past period provisions of section 149 before amendment were applicable this first proviso to section 149(1) was wholly unnecessary. Looked from both angles namely no indication of surviving the past provisions after the substitution and in fact an active indication to the contrary inescapable conclusion that we must arrive at is that for any action of issuance of notice under Section 148 after 01.04.2021 the newly introduced provisions under the Finance Act 2021 would apply. Mere extension of time limits for issuing notice under section 148 would not change this position that obtains in law. 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. Whether the explanations contained in the CBDT circulars dated 31.03.2021 and 27.04.2021 are legal and valid? - Subordinate legislation does not enjoy same level of immunity as the law framed by the Parliament or the State Legislature. The law framed by the Parliament or the State Legislature can be challenged only on the grounds of being beyond the legislative competence or being contrary to the fundamental rights or any other constitutional provisions. Third ground of challenge which is now recognized in the judgment in case of Shayara Bano Vs Union of India 2017 (9) TMI 1302 - SUPREME COURT is of legislation being manifestly arbitrary. A subordinate legislation can be challenged on all these grounds as well as on the grounds that it does not conform to the statute under which it is made or that it is inconsistent with the provisions of the Act or it is contrary to some of the statutes applicable on the subject matter. In our understanding 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. 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.
Issues:
Challenge to reassessment notice dated 08.09.2021 for the assessment year 2017-18 based on the application of old provisions of the Income Tax Act, 1961 instead of the new provisions under Section 148A inserted with effect from 01.04.2021. Analysis: The judgment highlighted the significant departure made by the new scheme of reassessment under the Finance Act, 2021, emphasizing changes in time limits for issuing reassessment notices and the concept of income escaping assessment. It was noted that the new provisions under Section 148A enable detailed inquiry before issuing notices, emphasizing that all notices issued after 01.04.2021 must adhere to the new scheme. The judgment clarified that the extended time limits under Section 149(1)(b) cannot be used to reopen assessments for past periods, as indicated by the first proviso to Section 149(1). The court concluded that all notices issued post-01.04.2021 without following the procedure in Section 148A are invalid, thereby quashing the impugned reassessment notice challenged by the petitioner. The judgment also addressed the question of whether explanations in notifications issued by the CBDT could save the situation for the revenue. It discussed the presumption of constitutionality of statutes and subordinate legislation, emphasizing that subordinate legislation can be challenged on various grounds, including being manifestly arbitrary. The court analyzed the Relaxation Act, 2020 and the notifications by the CBDT, concluding that the explanations provided in the notifications exceeded the jurisdiction of subordinate legislation and were declared unconstitutional and invalid. The judgment referenced similar views taken by other High Courts and held that the impugned notices in the petitions were invalid and quashed them, affirming the decision of the learned Single Judge in quashing the notices. In conclusion, the judgment declared the impugned notice challenged in the petition as invalid and quashed it, disposing of the petition accordingly. The court's detailed analysis focused on the application of new reassessment provisions, the limitations on reopening assessments for past periods, and the invalidity of notices issued without following the prescribed procedures, providing a comprehensive legal interpretation of the issues involved in the case.
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