2022 (5) TMI 115 - HC - Income Tax

Reopening 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 - identity of Section 148 as prevailing prior to amendment and insertion of section 148A - 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 relying on SUDESH TANEJA WIFE OF SHRI CP TANEJA 2022 (1) TMI 1212 - RAJASTHAN HIGH COURT 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. 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 notice of re-assessment for the assessment year 2014-15 based on recent judgment regarding provisions of reassessment under the Finance Act, 2021. Validity of notifications issued by the CBDT in relation to the time limits for issuing notices under Section 148.

Analysis:
The petitioner challenged a notice of re-assessment for the assessment year 2014-15, citing a recent judgment by a Division Bench that highlighted significant changes in reassessment provisions under the Finance Act, 2021. The judgment emphasized the altered time limits and procedures for issuing notices for reassessment, indicating that the new scheme applies to notices issued after 01.04.2021. It clarified that the extended time limits under certain clauses of Section 149 cannot be utilized to reopen assessments for past periods, emphasizing the need to adhere to the revised provisions under the Finance Act, 2021. The judgment concluded that notices issued post-01.04.2021 without following the procedure outlined in Section 148A of the Act are invalid, thus quashing such notices.

Regarding the validity of notifications issued by the CBDT, the judgment scrutinized the Relaxation Act, 2020 and the subsequent notifications that aimed to explain the application of time limits for issuing notices under Section 148. The judgment emphasized that the CBDT's explanations, provided through the notifications dated 31.03.2021 and 27.04.2021, exceeded its jurisdiction as subordinate legislation. It highlighted that the subordinate legislature cannot alter the statutory provisions through explanations and declared these explanations unconstitutional and invalid. The judgment referenced similar views taken by Division Benches of other High Courts and affirmed the invalidity of the impugned notices, aligning with the trend observed in prior judgments.

In summary, the judgment upheld the petitioner's challenge to the notice of re-assessment based on the revised provisions of the Finance Act, 2021 and the invalidity of notifications issued by the CBDT that exceeded its delegated powers. It aligned with the interpretation that the new reassessment provisions apply to notices issued after 01.04.2021 and emphasized the need to adhere to the revised statutory framework. The judgment quashed the impugned notices and dismissed the revenue's appeals, affirming the earlier decision to invalidate the notices issued without following the prescribed procedures.