2022 (5) TMI 231 - 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 assessment year 2015-16 based on recent judgment on reassessment provisions under Finance Act, 2021.

Analysis:
The petitioner challenged a notice of re-assessment for the assessment year 2015-16, citing a recent Division Bench judgment in a similar case. The judgment highlighted the changes brought by the Finance Act, 2021 to the reassessment provisions. It emphasized that the new scheme of reassessment under Section 148A enables the Assessing Officer to make inquiries based on material suggesting income escaping assessment. The judgment clarified that the new provisions apply to notices issued after 01.04.2021, and extended time limits for issuing notices under Section 148 do not revive time-barred notices for past periods. The judgment scrutinized the first proviso to Section 149(1) and concluded that all notices issued post 01.04.2021 must adhere to the new provisions, invalidating notices not following the procedure under Section 148A.

The judgment further analyzed the validity of explanations provided in notifications issued by the CBDT on 31.03.2021 and 27.04.2021. It discussed the presumption of constitutionality of statutes and subordinate legislations, emphasizing that subordinate legislation can be challenged on various grounds, including being manifestly arbitrary. The judgment cited precedents to support the view that subordinate legislation must conform to the parent Act's provisions and cannot exceed delegated powers. It concluded that the explanations in the CBDT notifications, attempting to alter statutory provisions, were unconstitutional and invalid.

The judgment referenced similar views taken by Division Benches of other High Courts and emphasized the necessity of subordinate legislation aligning with the parent Act. It disagreed with a contrary view taken by a Single Judge of another High Court, asserting that notifications did not defer the application of reassessment provisions introduced by the Finance Act, 2021. Ultimately, the judgment declared the impugned notices invalid and quashed them, affirming the decision of the learned Single Judge. The appeals of the revenue were dismissed, and all writ petitions were allowed, with pending applications disposed of accordingly.