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TMI Blog2021 (12) TMI 664X X X X Extracts X X X X X X X X Extracts X X X X ..... cability of the provisions of Section 148, Section 149 and Section 151 of the Act, as the case may be, as they stood as on the 31st day of March, 2021, before the commencement of the Finance Act, 2021 to the period beyond 31st March, 2021 - whether the Government/Executive can make or change law of the land by way of Explanations to Notifications without specific Authority from the Legislature to do so and whether the Government/Executive can impede the implementation of law made by the Legislature - HELD THAT:- By virtue of Section 1(2)(a) of the Finance Act, 2021, the substituted Sections 147, 148, 149 and 151 of the Income Tax Act, 1961 pertaining to reopening of assessments came into force on 1st April, 2021. The significance of the expression shall in Section 1(2)(a) of the Finance Act, 2021 cannot be lost sight of. This is in contrast to the language under Section 1(2)(b) which states that Sections 108 to 123 of the Finance Act, 2021 shall come into force on such date, as the Central Government may, by Notification in the Official Gazette, appoint. The Memorandum to the Finance Bill, 2021, too, clarifies that its Sections 2 to 88 which included the substituted Sections ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elevant to the controversy at hand, as the person to whom the power is entrusted in either situation can do nothing beyond the limits which circumscribe the power. Subordinate legislation cannot be contrary to the parent statute. With the coming into force of the Finance Act, 2021 w.e.f. 1st April, 2021, there has been no curtailing or taking away the power of the Revenue. It has merely changed the procedure of issuing notice. Consequently, the power as per Hohfeld s theory that existed prior to 31st March, 2021 continues to exist even thereafter. Ignorance of legislative intent of Finance Act - It is pertinent to mention that the Legislature had even prior to Finance Act, 2021 enhanced/reduced time limit specified in Section 149 of the Income Tax Act, 1961, by way of Finance Acts, 1961, 1989, 2001, 2012 and pertinently such enhancement/reduction to the time limit was made effective from different dates of the relevant financial year - In the present cases to ignore the legislative intent of Finance Act, 2021 would neither be legal nor reasonable. Retrospective operation - It is a cardinal principle of construction that every statute is prima facie prospective, unles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Explanation in Notification No. 20 dated 31st March, 2021 extended the applicability of old procedure of reassessment beyond 31st March, 2021 - As per Sections 153A and 153C, the provisions of these two sections will not apply where search/survey is done after 1st April, 2021. Department contends that the erstwhile law continues to apply from 1st April, 2021 to 30th June, 2021. The erstwhile law on reopening did not cover search/survey cases. Consequently, for the search/survey done from 1st April to 30th June, there can neither be an assessment under sections 153A/153C or under 147, which cannot be the case. Further, Sections 148, 148A and 149 specifically cover cases where search/survey is done after 1st April, 2021. If department s interpretation is accepted, this specific date in all three Sections will have to be changed and read as 1st July, 2021, which cannot be done. Moreover, as the new provisions seek to bring uniformity between regular reassessments and search/survey cases, it follows that the cut off date for initiation of reassessment proceedings even for regular reassessment is 1st April, 2021. Covid -19 effect - When Finance Minister moved the Finance Bill, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the pre-condition prescribed by Section 3 of Relaxation Act, 2020 has selectively chosen and picked up two terms viz. such action stand extended to put forward an interpretation which could not have been contemplated by the Legislature at the time of enactment of the said provision, namely, that notices under Section 148 will relate back and be governed by old law. In the opinion of this Court, the submission of the Revenue is completely flawed, as the same is contrary to basic principles of interpretations, which prohibits selectively choosing/ignoring words from the statutory language. It is settled law that when the words of a statute are clear and unambiguous, it is not permissible for the Court to read words into the statute. Relaxation Act, 2020 received the President s assent on 29th September, 2020, whereas the Finance Act, 2021 received the assent on 31st March, 2021. Consequently, it cannot be contended that any provision of the Relaxation Act, 2020, much less of any Notification issued thereunder, should be so construed as amending or modifying or excluding the applicability of the yet to be enacted Finance Act, 2021. Not mentioning substituted section 147 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... new law is done under the old law, a specific sub-Section (2) was inserted in Section 144 to provide that the provisions of this Section as they stood immediately before their amendment by the Direct Tax Laws (Amendment) Act, 1987, shall apply to and in relation to any assessment for the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year. Overriding of special Act - It is equally well-settled law that a special Act overrides a general Act. But this principle has no application whatsoever in the present case because Relaxation Act, 2021 and the Finance Act, 2021 operate in their distinct and separate spheres. Consequently, the question whether one prevails over and supersedes the other does not arise at all. Equality principles under Article 14 of the Constitution - The argument of the Respondents that Relaxation Act, 2020, promotes the equality principles under Article 14 of the Constitution and that if Petitioner s arguments are accepted, it would lead to unreasonable classification with those assessees who could not be issued notices earlier is untenable in law. If this is taken to the logical end, then any amendment in the procedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (12) TMI 207 - RAJASTHAN HIGH COURT] The argument of the respondents that the substitution made by the Finance Act, 2021 is not applicable to past Assessment Years, as it is substantial in nature is contradicted by Respondents own Circular 549 of 1989 and its own submission that from 1st July, 2021, the substitution made by the Finance Act, 2021 will be applicable. Revenue cannot rely on Covid-19 for contending that the new provisions Sections 147 to 151 of the Income Tax Act, 1961 should not operate during the period 1st April, 2021 to 30th June, 2021 as Parliament was fully aware of Covid-19 Pandemic when it passed the Finance Act, 2021. Also, the arguments of the respondents qua non-obstante clause in Section 3(1) of the Relaxation Act, legal fiction and stop the clock provision are contrary to facts and untenable in law. Consequently, this Court is of the view that the Executive/Respondents/Revenue cannot use the administrative power to issue Notifications under Section 3(1) of the Relaxation Act, 2020 to undermine the expression of Parliamentary supremacy in the form of an Act of Parliament, namely, the Finance Act, 2021. This Court is also of the opinion that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Inder Paul Bansal and Mr. Vivek Bansal. Adv. Mr. Suresh Chandra Sati, Advocate. Mr.Sushil Tekriwal Dr. Mamta Tekriwal, Advs. Mr. Piyush Singhal, Mr. Risabh Sharma, Advs. Mr. Rajiv Kumar Virmani, Mr. Abhinav Agrawal, Mr. Rishi Vohar, Ms. Swati Bhardwaj, Advs. Mr.Rishabh Ostwal, Adv. Mr. Rano Jain with Mr. Venketesh Chaurasia, Advs. Mr.Sourav Vig and Mr.Tushar Gupta, Advs. Mr. Virender Mehta Adv. Mr. Manish Paliwal, Mr. Vikas Kumar, Mr. Vishal Aggarwal, Advs. Mr.Anish Sarna, Adv. Mr. Pankaj Gupta and Ms. Rimpy Gupta, Advs. Mr. Harshit Batra and Mr. Ritesh Bajaj, Advs. Mr. A.K. Babbar, Mr. V.K. Sabharwal, Mr. Surendra Kumar, Mr. B.K. Tripathi, Advs. Ms. Vanita Bhargava, Mr. Ajay Bhargava, Ms. Shweta Kabra, Ms. Prerna Singh, Advs. Ms. Rashmi Chopra, Advocate Mr. Kishore Kunal, Mr. Manish Rastogi, Mr. Parth and Mr. Sumit Khadaria, Advs. Mr. Amol Sinha, Mr. Anshum Jain, Mr. Ashvini Kumar, Advs. Mr. Ashvini Kumar, Mr. Rahul Kochar, Mr. Kshitiz Garg, Mr. Abhinav Arya, Advs. Ms. Shreya Jain Mr. Gaurav Tanwar, Advs. Mr. Pulkit Deora with Mr. Arnav Vidyarthi, Advs. Sh. Pankaj Jain, Sr. Advocate with Mr. Gaurav Mittal, Ms. Divya Suri and Mr. Sachin Bhardwaj, Advs Mr. Bhupinder Jit Kumar, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Diksha Singh Dhakre, Advocates. Mr. K.R. Manjani Mr.Tarun Aswani, Advs. Mr. Vishal Kalra, Mr. S.S. Tomar and Mr. Ankit Sahni, Advs. Mr. Rajeev Sharma, Adv. Mr. Kapil Goel and Mr.Sandeep Goel, Advocates Mr. Rohit Bansal, Adv. Mr. Amit Kaushik, Adv. Mr. Vikas Arora, Ms. Radhika Arora and Mr. Mohit Dagar, Advocates Mr. Satyen Sethi Mr. Arta Trana Panda, Advs. Mr. Rupesh Kumar with Ms. Neelam Sharma, Mr. Pankhuri Shrivastava, Mr. Pravesh Bahuguna, Mr. Alekshendra Sharma, Advs. Mr. Sougat Sinha Mr. Manoj Kumar, Advs. Mr. Hemant Singh, Mridul Chakravarty, Mr. Tushar Srivastava, Ms. Shruti Gupta, Lavanya Panwar, Advs. Dr. Shashwat Bajpai with Mr Vishal Aggarwal, Advs. Mr. Rakesh Jain, Adv. Mr. Pragyan Pradip Sharma and Ms. Gurnoor Kaur, Advs. Ms. Surbhi Chandra, Adv. Mr. Kanishk Agarwal with Mr. Mayank Patni, Ms. Nidhi Bhuwania Advs. Mr. Rajiv K. Garg and Mr. Ashish Garg, Advs. Mr. R. K. Handoo, Mr. Garvit Solanki, Advs. Mr. Deepak Chopra with Mr. Harpreet Singh Ajmani, Mr. Rashi Khanna, Ms. Priya Tandon and Mr. Manasvine Bajpai, Advs. Mr. Shekhar Gupta, Adv. Mr. Mani Bhadra Jain, Adv. Mr. Vishnu Langwat with Ms. Nidhi Tomar Mr. Vinay Pal, Advs. Mr. Vaibhav Sharma, Adv. Ms. Ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Ms. Shruti Shivkumar, Advs. Mr. Ashwani Kumar Sharma, CGSC. Mr.Sushil Kumar Pandey, Adv. with Mr. Rahul Mourya, Ms. Sweety Singh Chauhan Ms. Anjum Kaur, Advs. Mr. Jitesh Vikram Srivastava, Mr. Prajesh Vikram Srivastava, Adv. Ms. Aakanksha Kaul, Mr. Manek Singh, Mr. Aman Sahani, Advs. Mr. Ajay Digpaul, Adv. Mr. Vivekanand Mishra, Senior Panel Counsel UOI. Mr. Ruchir Mishra and Mr. Mukesh Kumar Tiwari, Advs. Mr. Shankar Kumar Jha, Adv. Mr. Manoj Kumar Tyagi, Adv. Mr. Chiranjiv Kumar, Adv. Mr. Tanveer Ahmed Ansari, Adv. Mr. Pradeep Kumar Sharma, Adv. Mr. Siddharth Khatana, Adv. Ms. Leena Tuteja, Adv. Mr. T. P.Singh, Adv. Mr. Bhagvan Swarup Shukla (CGSC) with Mr. Sarvan Kumar, Advs. Mr. Dev P Bhardwaj, CGSC with Ms. Anubha Bhardwaj, Adv. Mr. Satyendra Kumar, Adv. Mr. Satya Ranjan Swain, Senior Panel Counsel, Mr. Kautilya Birat, Adv. Mr. Farman Ali, Senior Panel Counsel and Mr.Athar Raza Farooquei, Adv. Mr. Sushil Kumar Pandey, Senior Panel Counsel for respondent No.1/UOI. Mr. Aman Malik, Senior Panel Counsel. Mr. Jivesh Tiwari, Adv. for UOI. Mr. Manisha Agrawal Narain, Mr. Rakshita Goyal, Mr. Aditya Deshwal, Advs. Ms. Suman Chauhan, Adv. Mr. Rishabh Sahu, Adv. Mr. Gigi C George, Ad ..... 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X X X X Extracts X X X X X X X X Extracts X X X X ..... 691/2021, 7692/2021, 7693/2021, 7694/2021, 7695/2021, 7696/2021, 7697/2021, 7698/2021, 7699/2021, 7730/2021, 7731/2021, 7732/2021, 7733/2021, 7734/2021, 7735/2021, 7736/2021, 7737/2021, 7738/2021, 7754/2021, 7763/2021, 7770/2021, 7771/2021, 7772/2021, 7773/2021, 7774/2021, 7775/2021, 7776/2021, 7777/2021, 7783/2021, 7786/2021, 7787/2021, 7789/2021, 7790/2021, 7791/2021, 7792/2021, 7793/2021, 7796/2021, 7797/2021, 7798/2021, 7801/2021, 7804/2021, 7808/2021, 7816/2021, 7821/2021, 7822/2021, 7862/2021, 7863/2021, 7864/2021, 7865/2021, 7866/2021, 7867/2021, 7868/2021, 7870/2021, 7871/2021, 7872/2021, 7873/2021, 7875/2021, 7876/2021, 7878/2021, 7879/2021, 7880/2021, 7889/2021, 7893/2021, 7894/2021, 7897/2021, 7898/2021, 7899/2021, 7901/2021, 7902/2021, 7903/2021, 7904/2021, 7908/2021, 7911/2021, 7912/2021, 7913/2021, 7914/2021, 7918/2021, 7919/2021, 7920/2021, 7921/2021, 7924/2021, 7925/2021, 7927/2021, 7929/2021, 7935/2021, 7938/2021, 7945/2021, 7946/2021, 7949/2021, 7950/2021, 7952/2021, 7953/2021, 7968/2021, 7969/2021, 7979/2021, 7986/2021, 7994/2021, 7995/2021, 7996/2021, 7998/2021, 7999/2021, 8005/2021, 8007/2021, 8009/2021, 8011/2021, 8012/2021, 8013/2021, 8016/2021, 8017/2021, 80 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /2021, 8590/2021, 8591/2021, 8593/2021, 8594/2021, 8595/2021, 8596/2021, 8600/2021, 8604/2021, 8607/2021, 8608/2021, 8616/2021, 8619/2021, 8622/2021, 8627/2021, 8629/2021, 8631/2021, 8633/2021, 8634/2021, 8636/2021, 8637/2021, 8638/2021, 8639/2021, 8641/2021, 8642/2021, 8644/2021, 8646/2021, 8647/2021, 8648/2021, 8660/2021, 8661/2021, 8662/2021, 8667/2021, 8668/2021, 8671/2021, 8688/2021, 8690/2021, 8693/2021, 8694/2021, 8695/2021, 8698/2021, 8699/2021, 8700/2021, 8701/2021, 8702/2021, 8705/2021, 8706/2021, 8707/2021, 8717/2021, 8721/2021, 8722/2021, 8723/2021, 8725/2021, 8727/2021, 8728/2021, 8734/2021, 8739/2021, 8741/2021, 8747/2021, 8752/2021, 8754/2021, 8755/2021, 8756/2021, 8757/2021, 8758/2021, 8760/2021, 8761/2021, 8763/2021, 8764/2021, 8766/2021, 8774/2021, 8776/2021, 8786/2021, 8788/2021, 8789/2021, 8795/2021, 8806/2021, 8810/2021, 8811/2021, 8813/2021, 8816/2021, 8818/2021, 8819/2021, 8822/2021, 8823/2021, 8824/2021, 8825/2021, 8827/2021, 8828/2021, 8829/2021, 8831/2021, 8836/2021, 8838/2021, 8846/2021, 8847/2021, 8849/2021, 8850/2021, 8851/2021, 8852/2021, 8854/2021, 8855/2021, 8856/2021, 8857/2021, 8858/2021, 8859/2021, 8860/2021, 8863/2021, 8864/2021, 8872/2021, 8874/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21, 9517/2021, 9519/2021, 9520/2021, 9521/2021, 9524/2021, 9526/2021, 9527/2021, 9528/2021, 9532/2021, 9533/2021, 9534/2021, 9535/2021, 9536/2021, 9538/2021, 9542/2021, 9543/2021, 9544/2021, 9545/2021, 9546/2021, 9547/2021, 9548/2021, 9549/2021, 9550/2021, 9551/2021, 9552/2021, 9553/2021, 9554/2021, 9555/2021, 9557/2021, 9567/2021, 9569/2021, 9571/2021, 9572/2021, 9573/2021, 9599/2021, 9600/2021, 9601/2021, 9602/2021, 9603/2021, 9604/2021, 9605/2021, 9606/2021, 9607/2021, 9609/2021, 9610/2021, 9612/2021, 9613/2021, 9615/2021, 9616/2021, 9617/2021, 9618/2021, 9619/2021, 9620/2021, 9621/2021, 9623/2021, 9624/2021, 9625/2021, 9629/2021, 9632/2021, 9634/2021, 9635/2021, 9636/2021, 9641/2021, 9642/2021, 9647/2021, 9648/2021, 9649/2021, 9650/2021, 9652/2021, 9654/2021, 9655/2021, 9656/2021, 9658/2021, 9660/2021, 9663/2021, 9664/2021, 9665/2021, 9668/2021, 9669/2021, 9672/2021, 9673/2021, 9674/2021, 9675/2021, 9676/2021, 9677/2021, 9678/2021, 9679/2021, 9680/2021, 9682/2021, 9686/2021, 9689/2021, 9696/2021, 9720/2021, 9722/2021, 9726/2021, 9727/2021, 9728/2021, 9729/2021, 9731/2021, 9732/2021, 9733/2021, 9736/2021, 9737/2021, 9738/2021, 9739/2021, 9741/2021, 9742/2021, 9757/2021, 9758/202 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21, 10700/2021, 10702/2021, 10704/2021, 10706/2021, 10734/2021, 10735/2021, 10739/2021, 10741/2021, 10744/2021, 10748/2021, 10752/2021, 10756/2021, 10757/2021, 10761/2021, 10764/2021, 10766/2021, 10767/2021, 10783/2021, 10799/2021, 10802/2021, 10803/2021, 10811/2021, 10819/2021, 10820/2021, 10827/2021, 10829/2021, 10841/2021, 10843/2021 JUDGMENT MANMOHAN, J: 1. Various issues arise for consideration in the present batch of one thousand three hundred and forty six (1346) writ petitions, yet in essence, the questions of law that arise for consideration are whether the Government/Executive can make or change law of the land by way of Explanations to Notifications without specific Authority from the Legislature to do so and whether the Government/Executive can impede the implementation of law made by the Legislature. 2. It is pertinent to mention that in the present batch of matters, the petitioners-assessees have sought quashing of the re-assessment Notices issued post 31st March, 2021 by the Respondents-Revenue under Section 148 of the Income Tax Act, 1961. The petitioners-assessees also seek a declaration declaring Explanations A(a)(ii)/A(b) to the Notificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her than the income involving matters which are the subject matters of any appeal, reference or revision, which is chargeable to tax and has escaped assessment. Explanation 1.- Production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso. Explanation 2.- For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely :- (a) where no return of income has been furnished by the assessee although his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax; (b) where a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the Assessing Officer that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return; (ba) where the assessee has fail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139: Provided that in a case- (a) where a return has been furnished during the period commencing on the 1st day of October, 1991 and ending on the 30th day of September, 2005 in response to a notice served under this section, and (b) subsequently a notice has been served under sub-section (2) of section 143 after the expiry of twelve months specified in the proviso to subsection (2) of section 143, as it stood immediately before the amendment of said sub-section by the Finance Act, 2002 (20 of 2002) but before the expiry of the time limit for making the assessment, re-assessment or recomputation as specified in sub-section (2) of section 153, every such notice referred to in this clause shall be deemed to be a valid notice: Provided further that in a case- (a) where a return has been furnished during the period commencing on the 1st day of October, 1991 and ending on the 30th day of September, 2005, in response to a notice served under this section, and (b) subsequently a notice has been served under-clause (ii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of sub-sections (1) and (3), as amended by the Finance Act, 2012, shall also be applicable for any assessment year beginning on or before the 1st day of April, 2012. Sanction for issue of notice. 151. (1) No notice shall be issued under section 148 by an Assessing Officer, after the expiry of a period of four years from the end of the relevant assessment year, unless the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner is satisfied, on the reasons recorded by the Assessing Officer, that it is a fit case for the issue of such notice. (2) In a case other than a case falling under sub-section (1), no notice shall be issued under section 148 by an Assessing Officer, who is below the rank of Joint Commissioner, unless the Joint Commissioner is satisfied, on the reasons recorded by such Assessing Officer, that it is a fit case for the issue of such notice. (3) For the purposes of sub-section (1) and sub-section (2), the Principal Chief Commissioner or the Chief Commissioner or the Principal Commissioner or the Commissioner or the Joint Commissioner, as the case may be, being satisfied on the reasons recorded by the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ck Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (22 of 2015); (vii) Chapter VIII of the Finance Act, 2016; (28 of 2016) or (viii) the Direct Tax Vivad se Vishwas Act, 2020 (3 of 2020); (b) notification means the notification published in the Official Gazette. (2) The words and expressions used herein and not defined, but defined in the specified Act, the Central Excise Act, 1944 (1 of 1944), the Customs Act, 1962 (52 of 1962), the Customs Tariff Act, 1975 (51 of 1975) or the Finance Act, 1994 (32 of 1994), as the case may be, shall have the meaning respectively assigned to them in that Act. CHAPTER II RELAXATION OF CERTAIN PROVISIONS OF SPECIFIED ACT Relaxation of certain provision of specified Act 3. (1) Where, anytime limit has been specified in, or prescribed or notified under, the specified Act which falls during the period from the 20th day of March, 2020 to the 29th day of June, 2020 or such other date after the 29th day of June, 2020 as the Central Government may, by notification, specify in this behalf, for the completion or compliance of such action as- (a) completion of any proceeding or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Relaxation Act, 2020 enabled the Central Government to issue Notifications for further relaxing the time limits/limitations prescribed in the Specified Acts . The Statement of Objects and Reasons as well as the relevant portion of the Relaxation Act, 2020 are reproduced herein below:- STATEMENT OF OBJECTS AND REASONS The outbreak of Novel Corona Virus (COVID-19) pandemic across many countries of the world, including India, has caused immense loss to lives of people and given rise to unprecedented humanitarian and economic crisis in the country. Due to vagaries of pandemic, a national lockdown was imposed which had to be further extended. Due to very rapid spread of pandemic, social distancing had to be ensured immediately to prevent society at large from its disastrous consequences. This necessitated ease of compliance under certain tax and other laws. 2. As Parliament was not in session and in view of the urgency, the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (Ord. 2 of 2020) was promulgated on the 31st day of March, 2020 which, inter alia, relaxed certain provisions of the specified Acts relating to direct taxes, indirect taxes a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020. 9. The Bill seeks to achieve the aforesaid objectives. NEW DELHI; The 11th September, 2020. NIRMALA SITHARAMAN THE TAXATION AND OTHER LAWS (RELAXATION AND AMENDMENT OF CERTAIN PROVISIONS) ACT, 2020 NO. 38 OF 2020 [29th September, 2020.] AN ACT to provide for relaxation and amendment of provisions of certain Acts and for matters connected therewith or incidental thereto. BE it enacted by Parliament in the Seventy-first Year of the Republic of India as follows:- CHAPTER I PRELIMINARY 1. (1) This Act may be called the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. (2) Save as otherwise provided, it shall be deemed to have come into force on the 31st day of March, 2020. 2. (1) In this Act, unless the context otherwise requires,- (a) notification means the notification published in the Official Gazette; (b) specified Act means- (i) the Wealth-tax Act, 1957; (ii) the Income-tax Act, 1961; (iii) the Prohibition of Benami Property Transactions Act, 1988; (iv) Chapter VII o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 2005, has been issued on or before the 31st day of March, 2020, and where completion or compliance of such action has not been made within such time, then, the time-limit for completion or compliance of such action shall, notwithstanding anything contained in the specified Act, stand extended to the 31st day of March, 2021, or such other date after the 31st day of March, 2021, as the Central Government may, by notification, specify in this behalf: Provided that the Central Government may specify different dates for completion or compliance of different actions: xxxx xxxx xxxx xxxx 10. (1) If any difficulty arises in giving effect to the provisions of this Act, the Central Government may, by order, not inconsistent with the provisions of this Act, remove the difficulty: Provided that no such order shall be made after the expiry of a period of two years from the end of the month in which this Act has received the assent of the President. (2) Every order made under this section shall be laid before each House of Parliament. 11. (1) The Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 is hereby repealed. (2) Notwithstand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 31st December, 2020, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (ii), vide number S.O. 4805(E), dated the 31st December, 2020, the Central Government hereby specifies that,- (A) where the specified Act is the Income-tax Act, 1961 (43 of 1961) (hereinafter referred to as the Income-tax Act) and, - (a) the completion of any action referred to in clause (a) of subsection (1) of section 3 of the Act relates to passing of an order under sub-section (13) of section 144C or issuance of notice under section 148 as per time-limit specified in section 149 or sanction under section 151 of the Income-tax Act, - (i) the 31st day of March, 2021 shall be the end date of the period during which the time-limit, specified in, or prescribed or notified under, the Income-tax Act falls for the completion of such action; and (ii) the 30th day of April, 2021 shall be the end date to which the time-limit for the completion of such action shall stand extended. Explanation .- For the removal of doubts, it is hereby clarified that for the purposes of issuance of notice under section 148 as per time-limit specified in section 149 or sanct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2(E) dated the 31st March, 2021, respectively (hereinafter referred to as the said notifications), the Central Government hereby specifies for the purpose of sub-section (1) of section 3 of the said Act that, - (A) where the specified Act is the Income-tax Act, 1961 (43 of 1961) (hereinafter referred to as the Income-tax Act) and, - (a) the completion of any action, referred to in clause (a) of sub-section (1) of section 3 of the said Act, relates to passing of any order for assessment or reassessment under the Income-tax Act, and the time limit for completion of such action under section 153 or section 153B thereof, expires on the 30th day of April, 2021 due to its extension by the said notifications, such time limit shall further stand extended to the 30th day of June, 2021; (b) the completion of any action, referred to in clause (a) of sub-section (1) of section 3 of the said Act, relates to passing of an order under sub-section (13) of section 144C of the Income-tax Act or issuance of notice under section 148 as per time-limit specified in section 149 or sanction under section 151 of the Income-tax Act, and the time limit for completion of such action expires on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther steps to simplify the tax administration, ease compliance, and reduce litigation. Annex to Part B of Budget Speech Direct Tax Proposals Sl.No. Proposals Proposed Amendments in brief 1. xxx xxx 2. Reduction in Time Limits In order to reduce compliance burden, the time-limit for reopening of assessment is being reduced to 3 years from the current 6 years from the end of the relevant assessment year. Reopening up to 10 years is proposed to be allowed only if there is evidence of undisclosed income of ₹50 lakh or more for a year. Further, it is proposed to completely remove discretion in re-opening and henceforth reopening shall be made only in cases flagged by system on the basis of data analytics, objection of C AG and in search/survey cases. Further, in order to bring certainty in income tax proceedings at the earliest, it is also proposed to reduce the time limits for general assessment or processing of income tax return by three months and also for filing of re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of search related cases. The Bill proposes a completely new procedure of assessment of such cases. It is expected that the new system would result in less litigation and would provide ease of doing business to taxpayers as there is a reduction in time limit by which a notice for assessment or reassessment or re-computation can be issued. The salient features of new procedure are as under:- (i) The provisions of section 153A and section 153C, of the Act are proposed to be made applicable to only search initiated under section 132 of the Act or books of accounts, other documents or any assets requisitioned under section 132A of the Act, on or before 31st March 2021. (ii) Assessments or reassessments or in re-computation in cases where search is initiated under section 132 or requisition is made under 132A, after 31st March 2021, shall be under the new procedure. (iii) Section 147 proposes to allow the Assessing Officer to assess or reassess or re-compute any income escaping assessment for any assessment year (called relevant assessment year). (iii) Before such assessment or reassessment or recomputation, a notice is required to be issued under section 148 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation for issuance of notice under section148 of the Act is proposed to be provided in section 149 of the Act and is as below: in normal cases, no notice shall be issued if three years have elapsed from the end of the relevant assessment year. Notice beyond the period of three years from the end of the relevant assessment year can be taken only in a few specific cases. in specific cases where the Assessing Officer has in his possession evidence which reveal that the income escaping assessment, represented in the form of asset, amounts to or is likely to amount to fifty lakh rupees or more, notice can be issued beyond the period of three year but not beyond the period of ten years from the end of the relevant assessment year; Another restriction has been provided that the notice under section 148 of the Act cannot be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April, 2021, if such notice could not have been issued at that time on account of being beyond the time limit prescribed under the provisions of clause (b), as they stood immediately before the proposed amendment. Since the assessment or reassessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year, the Assessing officer may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for such assessment year. This amendment will take effect from 1st April, 2021. Clause 36 of the Bill seeks to amend section 148 of the Income-tax Act relating to issue of notice where income has escaped assessment. It is proposed to substitute the said section so as to provide that before making the assessment, reassessment or recomputation under section 147, and subject to the provisions of section 148A, the Assessing Officer shall serve on the assessee a notice along with a copy of order passed under clause (d) of section 148A, requiring him to furnish within such period, as may be specified in such notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e three assessment years immediately preceding the assessment year relevant to the previous year in which the search is initiated or books of account, other documents or any assets are requisitioned or survey is conducted or money, bullion, jewellery or other valuable article or thing or books of account or documents are seized or requisitioned in case of any other person. The proposed Explanation 3 provides that the specified authority shall mean the specified authority referred to in section 151. This amendment will take effect from 1st April, 2021. Clause 37 of the Bill seeks to insert a new section 148A in the Income-tax Act relating to Conducting inquiry, providing opportunity before issue of notice under section 148. It is proposed to insert a new section 148A, which seeks to provide that the Assessing Officer shall, before issuing any notice under section 148, - (a) conduct any enquiry, if required, with the prior approval of specified authority, with respect to the information which suggests that income chargeable to tax has escaped assessment; (b) provide an opportunity of being heard to the assessee, with the prior approval of specified author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bill seeks to amend section 149 of the Incometax Act relating to time limit for notice. It is proposed to substitute the said section so as to provide that no notice under section 148 shall be issued for the relevant assessment year (a) if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b); (b) if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of accounts or other documents or evidence which reveal that the income chargeable to tax, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more for that year. Provided that no notice under section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April, 2021, if such notice could not have been issued at that time on account of being beyond the time limit prescribed under the provisions of clause (b), as they stood immediately before the commencement of the Finance Act, 2021. Further, the provisions of this section shall not appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2021-2022. BE it enacted by Parliament in the Seventy-second Year of the Republic of India as follows: CHAPTER I PRELIMINARY 1. (1) This Act may be called the Finance Act, 2021. (2) Save as otherwise provided in this Act, (a) sections 2 to 88 shall come into force on the 1st day of April, 2021; (b) sections 108 to 123 shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint. xxxx xxxx xxxx xxxx 40. For section 147 of the Income-tax Act, the following section shall be substituted, namely:- 147. If any income chargeable to tax, in the case of an assessee, has escaped assessment for any assessment year, the Assessing Officer may, subject to the provisions of sections 148 to 153, assess or reassess such income or recompute the loss or the depreciation allowance or any other allowance or deduction for such assessment year (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year). Explanation .-For the purposes of assessment or reassessment or recomputation under this section, the Assessing Officer may assess or reasse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l, 2021, in the case of the assessee; or (ii) a survey is conducted under section 133A, other than under sub-section (2A) or sub-section (5) of that section, on or after the 1st day of April, 2021, in the case of the assessee; or (iii) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner, that any money, bullion, jewellery or other valuable article or thing, seized or requisitioned under section 132 or under section 132A in case of any other person on or after the 1st day of April, 2021, belongs to the assessee; or (iv) the Assessing Officer is satisfied, with the prior approval of Principal Commissioner or Commissioner, that any books of account or documents, seized or requisitioned under section 132 or section 132A in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information contained therein, relate to, the assessee, the Assessing Officer shall be deemed to have information which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the three assessment years immediately preceding the assessment year relevant to the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... April, 2021; or (b) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any money, bullion, jewellery or other valuable article or thing, seized in a search under section 132 or requisitioned under section 132A, in the case of any other person on or after the 1st day of April, 2021, belongs to the assessee; or (c) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any books of account or documents, seized in a search under section 132 or requisitioned under section 132A, in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information contained therein, relate to, the assessee. Explanation .-For the purposes of this section, specified authority means the specified authority referred to in section 151. 43. For section 149 of the Income-tax Act, the following section shall be substituted, namely: 149. (1) No notice under section 148 shall be issued for the relevant assessment year,- (a) if three years have elapsed from the end of the relevant assessment year, unless the case falls unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 151. Specified authority for the purposes of section 148 and section 148A shall be,- (i) Principal Commissioner or Principal Director or Commissioner or Director, if three years or less than three years have elapsed from the end of the relevant assessment year; (ii) Principal Chief Commissioner or Principal Director-General or where there is no Principal Chief Commissioner or Principal Director General, Chief Commissioner or Director General, if more than three years have elapsed from the end of the relevant assessment year. 45. In section 151A of the Income-tax Act, in sub-section (1), in the opening portion, after the words and figures issuance of notice under section 148 , the words, figures and letter or conducting of enquiries or issuance of show-cause notice or passing of order under section 148A shall be inserted. 9. As, despite the substituted Sections 147 to 151 of the Income Tax Act, 1961 coming into force on 1st April, 2021, the respondents issued reassessment notices to the petitioners-assessees under the erstwhile Sections 148 to 151 of the Income Tax Act, 1961 relying on Explanations in the Notifications dated 31st March, 2021 and 27th Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... They submit that by virtue of introduction of Section 3(1) of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, the time limit for taking action under Section 148 has been extended till 30th June, 2021. Consequently, according to them, the impugned notifications only provide that as the time limit for issuing notice under Section 148A of the Act has been extended by deemed fiction, the procedure to be followed till 30th June, 2021 would be the old procedure mentioned under the Act. In support of their submission, they also rely upon Section 6 of the General Clauses Act, 1897. Having heard learned counsel for the parties, this Court is of the prima facie view that the impugned notification is contrary to settled principle of statutory interpretation, namely, that any action taken post the amendment of a procedural section would have to abide by the new procedures stipulated in the amended Act. Further, this Court is of the prima facie view that by virtue of a notification, which is a delegated legislation, the date for implementation of statutory provision, as stipulated in the Act, cannot be varied or changed. This Court is also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich was brought into force by a Notification dated 27-1-2004. Substitution, as stated above, results in repeal of the old provision and replacement by a new provision. Applying these tests to the facts of the present case, we find that the Electricity (Amendment) Act, 2003 (57 of 2003) was brought into force by Notification dated 27-1-2004. That, notification was issued under Section 1(2) of the Electricity (Amendment) Act, 2003 (57 of 2003). If one reads Section 1(2) of the Electricity (Amendment) Act, 2003 (57 of 2003) with Notification dated 27-1-2004 issued under Section 1(2) of the amended Act, 2003, it becomes clear that on coming into force of the Electricity (Amendment) Act, 2003 (57 of 2003) all provisions amended by it also came into force. Hence, there was no requirement for a further notification under Section 1(3), consequently, Section 121 in its amended form came into force with effect from 27-1-2004. 13. Learned counsel for petitioners pointed out that as per clause (a) of the new Section 149, reassessment proceedings could be initiated within three years from the end of relevant Assessment Year and as per clause (b), the reassessment proceedings, in exception ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trude into the field occupied by the Legislature. 17. Learned counsel for petitioners also submitted that the impugned Notifications were subservient to the substituted Sections 147 to 151 by the Finance Act, 2021 and the Notifications to the extent they contradicted Section 149 were deemed to have been impliedly repealed by operation of the Finance Act, 2021. In support of their submission, they relied upon the Judgment passed by this Court in Fibre Boards (P.) Ltd., Bangalore vs. Commissioner of Income-tax, Bangalore: (2015) 376 ITR 596 (SC), wherein it has been held as under: 13. Repeal by implication has been dealt with by at least two judgments of this Court. In State of Orissa v. M.A. Tulloch Co. [1964] 4 SCR 461, this Court considered the question as to whether the expression repeal in Section 6 of the General Clauses Act would be of sufficient amplitude to cover cases of implied repeal. This Court stated: The next question is whether the application of that principle could or ought to be limited to cases where a particular form of words is used to indicate that the earlier law has been repealed. The entire theory underlying implied repeals is that ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the repealed Sections 148, 149 151 of the Income Tax Act, 1961 would be applicable. According to them, the following points were apparent on face of the said Notifications:- a. The Notifications were in excess of the enabling powers prescribed under Section 3 of Relaxation Act 2020, as Relaxation Act 2020 did not delegate the power to legislate on provisions to be followed for initiation of reassessment proceedings; and b. The Notifications were ultra vires the provisions of Sections 147, 148, 148A, 149 151 of the Income Tax Act, 1961, as amended by the Finance Act, 2021, as the said provisions had been substituted /inserted with effect from 1st April, 2021, effectively repealing old provisions that existed prior thereto. 19. Learned counsel for petitioners submitted that the impugned Explanations had attempted to revive and keep in existence two different schemes governing the initiation of reassessment proceedings, which were substantially different from each other and thus could not co-exist at the same time. 20. Learned counsel for the petitioners submitted that the impugned reassessment notices issued between 1st April, 2021 and 30th June, 2021 had be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on on-ground analysis of Covid-19 situation. 24. They stated that the arguments advanced by the petitioners were in complete ignorance of the background of once-in-hundred years emergency called Global Covid-19 pandemic and the fact that all the three organs of the State and also the world at large were unanimous in their perception of the threat to human life which was continuing with severe intensity [second wave] at the time when the impugned Notifications were issued. They pointed out that the Supreme Court by way of a series of orders in Cognizance of Limitation extended limitation and Legislature by promulgating Relaxation ordinance in March, 2020 and conversion of Relaxation Ordinance into Relaxation Act, 2020 had extended dates for compliance and issuance of notices. They submitted that management of Covid-19 was akin to a war-time emergency measure and therefore had to be construed more liberally in favour of the State than peace time legislations. They stated that in State of Bombay vs. Virkumar Gulabchand Shah, AIR 1952 SC 335 , the Supreme Court had held as under:- 16. It is also perhaps relevant to note that the term which was under consideration in those ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation exist, the question does not arise as to whether in leaving the task of determining the condition to an outside authority, the legislature acted beyond the scope of its powers B. I.T.C. Bhadrachalam Paperboards Anr. (supra) 24. We may in this connection refer to the decision of the Supreme Court of United States in Field v. Clark [143 US 649 : 36 L Ed 294 (1892)]. The Tariff Act of 1890 empowered the President to suspend the operation of the Act, permitting free import of certain products within United States, on being satisfied that the duties imposed upon such products were reciprocally unequal and unreasonable. It was submitted that the said power transfers the legislative and treaty-making power to the President and, hence, unlawful. The attack was repelled holding that the President was a mere agent of the Congress to ascertain and declare the contingency upon which the will of the Congress was to take effect.... 26. What is, however, relevant is that the power to bring anAct into force as well as the power to grant exemption are both treated, without a doubt, as belonging to the category of conditional legislation. Very often the legislature ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onferred by Section 3(1) of Relaxation Act, 2020 upon the Central Government to fix the terminal dates were under challenge. They emphasized that the Central Government was conferred with the power to fix two terminal dates or outer time limits under Section 3(1) the expiry date by which compliance was required to be made under the specified Act but could not be made and the extended date by which such compliance could be made. 28. They submitted that a legal fiction must be taken to its logical conclusion with all its natural corollaries and consequences. Therefore, according to them, the expressions such action under the specified Act and extension used in Relaxation Act, 2020 meant that the power to issue notice under Section 148 [as it existed prior to the coming into force of the Finance Act, 2021] was available to the Revenue by way of the fiction in Relaxation Act, 2020, which extended the time limit for completion or compliance of such action which would have otherwise expired between 20th March, 2020 and 31st March, 2021. In support of their submission, they relied upon the judgment passed by the Supreme Court in M. Venugopal vs. Divisional Manager, Life Insur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claring any of them as a useless lumber. 31. In the alternative, they further submitted that if there was a conflict between the two statutes, Relaxation Act, 2020 would override the Finance Act, 2021, not only on ground of being a special Act but also for the reason that Section 3(1) of Relaxation Act contains a non-obstante clause giving the enacting part of Section 3(1) an overriding effect over the Income Tax Act, 1961. In support of their submission, they relied upon the judgment passed by the Supreme Court in Union of India Ors. vs. Exide Industries Limited Anr., (2020) 5 SCC 274, wherein it has been held as under:- 21. Section 43-B bears heading certain deductions to be only on actual payment . It opens with a non obstante clause. As per settled principles of interpretation, a non obstante clause assumes an overriding character against any other provision of general application. It declares that within the sphere allotted to it by Parliament, it shall not be controlled or overridden by any other provision unless specifically provided for. Out of the allowable deductions, the legislature consciously earmarked certain deductions from time to time and included ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... treated more favourably and unequally than those set of assessees in whose favour notices stood issued prior to March, 2020, for escapement of income for the same set of assessment years. 35. In the alternative, they submitted that Section 3(1) of Relaxation Act, 2020 is a stop-the-clock provision somewhat similar to the U.S. legal doctrine known as Tolling which allows for the pausing or delaying of the running of the period of time set forth by a statute containing limitation. In support of their submission, they relied upon the judgment passed by the Supreme Court of United States in Carlos CHARDON etc. et al. vs. Juan Fumero SOTO, et al., 1983 SCC OnLine US Sc 135 : 462 US 650 (1983), wherein it has been held as under:- 1. Petitioners, Puerto Rican educational officials, demoted respondents from nontenured supervisory positions to teaching or lower-level administrative posts in the public school system because of respondents' political affiliations. Shortly before Puerto Rico's one-year statute of limitations would have expired, a class action was filed against petitioners on respondents' behalf under 42 U.S.C. 1983. Subsequently class certificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide. And, as the discussion above plainly demonstrates, American Pipe concluded that Rule 23 contains a tolling rule that suspends (but does nothing more) the running of limitations periods during the pendency of class actions. [The Court correctly recognizes that Board of Regents v. Tomanio, 446 U.S. 478, 100 S.Ct. 1790, 64 L.Ed.2d 440 (1980), is distinguishable. That case did not involve a class action, and, thus the Court had no occasion to consider whether Rule 23 creates a federal tolling rule, or the character of that rule. Thus, there was a void . . . in federal statutory law, id., at 483, 100 S.Ct., at 1794, and state aw was called upon to fill the void. Owing to American Pipe and its interpretation of Rule 23, there is no comparable void in this case, and federal law is therefore applicable.] 36. Without prejudice and in the alternative to all of the above, they submitted that even Section 6 of the General Clauses Act, 1897 would allow notices to be issued and proceedings to be instituted, since by operation of Section 3(1) of Relaxation Act, 2020, a right had accrued in favour of the Revenue to re-open the assessment within an extended time period in such cases w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e impugned Notifications issued under Relaxation Act, 2020 deferred the operation of Section 148A of the Income Tax Act, 1961 was a startling conclusion, apart from repeated references in the said judgments to the Covid-19 pandemic. 39. Learned counsel for the petitioners pointed out that the Division Bench of Allahabad High Court had taken a diametrically opposite view in its judgment dated 30th September, 2021 passed in Writ Tax No. 524/2021 titled Ashok Kumar Agarwal Vs. Union of India through its Revenue Secretary North Block. In the said judgment, the Allahabad High Court has upheld the submission of the petitioner-assessee that Section 148 notices issued after 1st April, 2021, which did not comply with post 31st March, 2021 provisions of the Income Tax Act, 1961, were illegal, bad in law as well as null and void. 40. They re-emphasised that the Relaxation Act, 2020 and the Notifications issued thereunder only extended the time limits for initiating re-assessment, but did not otherwise touch or affect the applicable provisions which mandatorily had to be complied with in respect of such reassessment. SUR-REJOINDER 41. In sur-rejoinder, learned counsel for the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay v Shanabhai, (1987) 166 ITR 163 (SC); CIT v Rameshwar Prasad, (1991) 188 ITR 291 (All HC); Dr. Onkar Dutt Sharma v CIT, (1967) 65 ITR 359 (All HC)]. 44. This Court is of the view that had the intention of the Legislature been to keep the erstwhile provisions alive, it would have introduced the new provisions with effect from 1st July, 2021, which has not been done. Accordingly, the notices relating to any assessment year issued under Section 148 on or after 1st April, 2021 have to comply with the provisions of Sections 147, 148, 148A, 149 and 151 of the Income Tax Act, 1961 as specifically substituted by the Finance Act, 2021 with effect from 1st April, 2021. 45. Consequently, this Court is of the opinion that as the Legislature has permitted re-assessment to be made in this manner only, it can be done in this manner, or not at all 1 . SECTION 3(1) OF RELAXATION ACT EMPOWERS THE GOVERNMENT/EXECUTIVE TO EXTEND ONLY THE TIME LINES. CONSEQUENTLY, THE GOVERNMENT/EXECUTIVE CAN NEITHER MAKE OR CHANGE LAW OF THE LAND NOR CAN IT IMPEDE THE IMPLEMENTATION OF LAW MADE BY THE PARLIAMENT. 46. Upon perusal of Section 3(1) of Relaxation Act, 2020, this Court is of the view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plementation of law made by the Legislature. THE IMPUGNED EXPLANATIONS IN THE NOTIFICATIONS DATED 31ST MARCH, 2021 AND 27TH APRIL, 2021 ARE ULTRA VIRES THE PARENT STATUTE I.E. THE RELAXATION ACT. THIS COURT IS RESPECTFULLY NOT IN AGREEMENT WITH THE VIEW OF THE CHHATTISGARH HIGH COURT IN PALAK KHATUJA (SUPRA), BUT WITH THE VIEWS EXPRESSED BY THE ALLAHABAD HIGH COURT IN ASHOK KUMAR AGARWAL (SUPRA) AND RAJASTHAN HIGH COURT IN BPIP INFRA PRIVATE LIMITED VS. INCOME TAX OFFICER, WARD 4(1), S.B. CIVIL WRIT PETITION 13297/2021 49. Further, the impugned Explanation is not only beyond the power delegated to the Government, but also in conflict with the provisions of the Income Tax Act, 1961 which had specifically made the new reassessment scheme applicable from 1st April, 2021. It is settled law that the delegation of authority must be express. There is no scope for any implied delegation of authority. The delegated authority must act strictly within the parameters of the authority delegated to it. The delegated authority cannot override the Act either by exceeding the authority or by making provisions inconsistent with the Act. The distinction between conditional legislation or de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 2001, 2012 and pertinently such enhancement/reduction to the time limit was made effective from different dates of the relevant financial year. A tabular chart showing previous changes to time limits under Section 149 is reproduced hereinbelow:- Amendments to Section 149 of the Income Tax Act, 1961 Amending Act Permissible Time limit (from the end of assessment year) for issuance of notice under Section 148 Effective Date of coming into force Income Tax Act, 1961 -8 years -16 years -4 years 01.04.1962 Direct Tax Amendment Act, 1987 -4 years -7years -10 years (All the substituted) provisions were 01.04.1989 Finance Act, 2001 -4 years -6 years (All the substituted) provisions were 01.06.2001 Finance Act, 2012 -4 years -6 years -16 years (16 years condition has been newly inserted, rest were undisturbed) 01.07.2012 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings on the date of institution/filing. No person can have a vested right in the procedure. Therefore, the procedural law on the date when it was enforced is applied. Bennion Statutory interpretation (1st addition page 446 para 191) has elucidated:- Because a change made by the legislator in procedural provisions is expected to be for the general benefit of litigants and others, it is presumed that it applies to pending as well as future proceedings. 12. Law of limitation does not create any right in favour of a person or define or create any cause of action, but simply prescribes that the remedy can be exercised or availed of by or within the period stated and not thereafter. Subsequently, the right continues to exist but cannot be enforced. The liability to tax under the Act is created by the charging Section read with the computation provisions. The assessment proceedings crystallize the said liability so that it can be enforced and the tax if short paid or unpaid can be collected. If this difference between liability to tax and the procedure prescribed under the Act for computation of the liability (i.e. the procedure of assessment), is kept in mind, there wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriods of limitation, the expiry of which grant prescriptive title to defaulting tax-payers It may be said that an assessment once made is final and conclusive except for the provisions of Sections 34 and 35 but it is quite a different matter to say that a vested right arises in the assessee. On the expiry of the period the assessments, if any, may also become final and conclusive but only so long as the law is not altered retrospectively. Under the scheme of the Income Tax Act a liability to pay tax is incurred when according to the Finance Act in force the amount of income, profits or gains is above the exempted. That liability to the State is independent of any consideration of time and, in the absence of any provision restricting action by a time limit, it can be enforced at any time. What the law does is to prevent harassment of assessees to the end of time by prescribing a limit of time for its own officers to take action. This limit of time is binding upon the officers, but the liability under the charging section can only be said to be unenforceable after the expiry of the period under the law as it stands. In other words, though the liability to pay tax remains it cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cedure applies to pending as well as future proceedings. 11 RATIONALE BEHIND THE PRINCIPLE THAT CHANGE IN PROCEDURAL LAW OPERATES RETROSPECTIVELY 57. In stating the principle that a change in the law of procedure operates retrospectively and unlike the law relating to vested right is not only prospective 12 , the Supreme Court has quoted with approval the reason of the rule as expressed in MAXWELL.[MAXWELL: Interpretation of Statutes, 11th Edition, p. 216]. No person has a vested right in any course of procedure. He has only the right of prosecution or defence in the manner prescribed for the time being by or for the Court in which the case is pending, and if, by an Act of Parliament the mode of procedure is altered, he has no other right than to proceed according to the altered mode . In the opinion of this Court, this is because a procedural change is expected to improve matters for everyone concerned (or at least to improve matters for some, without inflicting detriment on anyone else who uses ordinary care, vigilance and promptness). FOR DETERMINING WHETHER THE AMENDMENT IS A PROCEDURAL OR A SUBSTANTIVE LAW ONE WILL HAVE TO EXAMINE THE INTENT, PURPOSE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d: (a) without recording any valid reason to believe , (b) in absence of any tangible/reliable material/information in possession the Assessing Officer leading to formation of belief that income has escaped assessment, (c) without any enquiry being conducted by the Assessing Officer prior to the issuance of notice, (d) without following the mandatory procedure laid down by the Supreme Court in the case of GKN Driversafts (India) Ltd. Vs. ITO (supra) etc. Further, since reopening was permissible maximum up to six years and in some cases up to sixteen years, there was continuing uncertainty for a considerable long time. 63. The Legislature, being conscious of the shortcomings in the unamended Sections 147 to 151 of the Income Tax Act, 1961, which were relaxed by the aforesaid provisions of the Relaxation Act and the Notifications issued thereunder, introduced reformative changes to the said Sections governing the procedure for reassessment proceedings by way of the Finance Act, 2021 passed on 28th March, 2021. 64. The reformative substitutions carried out by the Finance Act, 2021 with effect from 1st April, 2021 can be summarized as under:- a. Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee years and to increase the threshold amount of income having escaped assessment to ₹ 50 lakhs for invoking extended time limit of ten years is to reduce litigation and compliance burden, remove discretion, impart certainty and promote ease of doing business. 66. This Court is of the opinion that the new provisions are remedial and benevolent provisions which are meant and intended to protect the rights and interests of assessees as well as promote public interest. In Imperial Tobacco Ltd v. Attorney General [1979] QB 555 at 581, Omrod LJ said, The object of all procedural rules is to enable justice to be done between the parties consistently with the public interest . If the procedural rules are defective, the legal apparatus works less efficiently and the public interest suffers. If legislation is introduced to remedy the defective rule and no one suffers thereby, it is sensible to apply it to pending proceedings. 67. Consequently, this Court is of the view that the Finance Act, 2021 introduces a new regime regarding the procedure to be complied with in respect of the re-opening of an Income-tax assessment and accordingly, the benefit of the new provisions must ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, 1987 and 1989, discussed in the preceding paragraphs, which came into force with effect from 1st April, 1989, will be retrospective in the sense that these will apply to all matters which were pending on 1st April, 1989 and had not become closed or dead on this date. 7.14 Thus, from 1st April, 1989 onwards, any action for opening or re-opening an assessment for the assessment year 1988-89 and earlier assessment years will have to be taken in accordance with the amended provisions. The following examples will clarify the position:- (i) No notice under section 148 can now be issued for the assessment years 1973-74 to 1978-79 even if the escaped income is ₹ 50,000 or more in each year, although under the old provisions this could have been done with Board s approval. (ii) Notice under section 148 can now be issued for any of the assessment years 1979-80 to 1981-82 if the following conditions are ful-filled:- (#) In a scrutiny case [i.e., where an assessment order had been passed under section 143(3) or 147], if the escaped income is ₹ 1 lakh or more in each year and approval of the Chief Commissioner or Commissioner has been obtained. (c) In a non- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b. for example: For A.Y. s 2015-16 to 2017-18 [with limitation upto March, 22 to 24], in case of two identically placed taxpayers (say A B) with information of having asset above ₹ 50 lakh, Assessing Officer shall have absolute discretion to choose either the old or the new mechanism; c. doctrine of election normally confers two separate alternative statutory powers/remedies (like Sections 154, 147, 263) for same/similar cause, but same provision (Section 147) with two opposite procedure for same cause can never be envisaged and shall necessarily lead to manifest arbitrariness and conflict. 75. Also, the new scheme of reassessment provides for a uniform manner of reassessment of two categories of cases, namely, regular reassessments and search/survey cases. Insofar as search/survey cases are concerned, the provisions are clear that the new scheme is to apply where the proceedings are initiated after 1st April, 2021 as Explanation 2 to Section 148 states that the Assessing Officer will be deemed to have information for the purposes of Section 148/148A when search/survey is initiated on or after 1st April, 2021 and the first proviso to Section 148A state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TIME LIMITS. IT DOES NOT EXCLUDE THE APPLICABILITY OF PROVISIONS SUBSTITUTED BY FINANCE ACT, 2021. 77. It is settled law that the non-obstante clause in a statute has to be given a contextual interpretation and cannot be interpreted in a way which defeats or extends the object and purpose of the enactment. In Nawal Singh vs. State of U.P. Anr. 2003(8) SCC 117 14 , the Supreme Court has held that the non-obstante clause has to be construed strictly and has an overriding effect over the other statutes only to the limited extent that it expressly so provides. In other words, the remaining parts of the other statutes are left untouched by the non-obstante clause. 78. In the present case, the ambit of the non-obstante clause in Section 3(1) of Relaxation Act, 2020 is expressly confined to and supersedes the time limits only for the completion or compliance of actions which are laid down in the specified Acts and Relaxation Act, 2020 only provides that these time limits shall stand extended as provided. The intent and purpose behind enactment of Section 3 of Relaxation Act, 2020 is relaxation of statutory timelines in various provisions of the specified Acts and thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 148 will relate back and be governed by old law. In the opinion of this Court, the submission of the Revenue is completely flawed, as the same is contrary to basic principles of interpretations, which prohibits selectively choosing/ignoring words from the statutory language. 81. It is settled law that when the words of a statute are clear and unambiguous, it is not permissible for the Court to read words into the statute 15 . In fact, the principle of interpretation of taxing statutes was best enunciated by Rowlatt J. in his classic statement in Cape Brandy Syndicate v I.R.C. (1 KB 64, 71), In a taxing statute one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can look fairly at the language used. 82. The Judiciary cannot transgress into the domain of policy making by re-writing a statute, however strong the temptations maybe 16 . The Supreme Court in A.V Fernandez vs. State of Kerala (AIR 1957 SC 657) has held, In construing fiscal statutes and in determining the liability of a subject to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , as wrongly contended by the learned counsel for the Respondents. For achieving that result, clear and unequivocal language was required in the Relaxation Act, 2020 which is missing. In fact, there is no provision in Relaxation Act, 2020 laying down that if the action is taken within the extended time limit, it would be deemed to have been taken before the expiry of the original (un-extended) time limit. THE ESSENTIAL CONDITION FOR A PROVISION TO BE TERMED AS STOP THE CLOCK PROVISION IS ABSENT INASMUCH AS THE TIME DURING WHICH SUCH CLOCK IS STOPPED HAS NOT BEEN STIPULATED TO BE EXCLUDED. 86. Section 3 of the Relaxation Act, 2020 is not a stop the clock provision, as it only relaxes the time limit, so as to facilitate the cases in which the Revenue/assessee has not been able to take the specified action within the statutory timelines. The essential condition for a provision to be termed as stop the clock provision is that the time during which such clock is stopped, such period has to be excluded. In the present instance, time limit is extended, not excluded or stopped. IT CANNOT BE THAT A FICTION IS CREATED OR CLOCK STOPPED ONLY FOR REASSESSMENT AND NOT FOR AS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the assessments for years before coming into force of the new law is done under the old law, a specific sub-Section (2) was inserted in Section 144 to provide that the provisions of this Section as they stood immediately before their amendment by the Direct Tax Laws (Amendment) Act, 1987, shall apply to and in relation to any assessment for the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year. THE PRINCIPLE THAT A SPECIAL ACT OVERRIDES A GENERAL ACT HAS NO APPLICATION TO THE PRESENT CASE BECAUSE RELAXATION ACT AND THE FINANCE ACT OPERATE IN DISTINCT AND SEPARATE SPHERES. 91. It is equally well-settled law that a special Act overrides a general Act. But this principle has no application whatsoever in the present case because Relaxation Act, 2021 and the Finance Act, 2021 operate in their distinct and separate spheres. Consequently, the question whether one prevails over and supersedes the other does not arise at all. THE ARGUMENT OF THE RESPONDENTS THAT RELAXATION ACT PROMOTES THE EQUALITY PRINCIPLES UNDER ARTICLE 14 OF THE CONSTITUTION IS UNTENABLE IN LAW. 92. The argument of the Respondents that Relaxation Act, 2020, pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that as the Legislature has introduced the new provisions, Sections 147 to 151 of the Income Tax Act, 1961 by way of the Finance Act, 2021 with effect from 1st April, 2021 and as the said Section 147 is not even mentioned in the impugned Explanations, the reassessment notices relating to any Assessment Year issued under Section 148 after 31st March, 2021 had to comply with the substituted Sections. 98. It is clarified that the power of reassessment that existed prior to 31st March, 2021 continued to exist till the extended period i.e. till 30th June, 2021; however, the Finance Act, 2021 has merely changed the procedure to be followed prior to issuance of notice with effect from 1st April, 2021. 99. This Court is of the opinion that Section 3(1) of Relaxation Act empowers the Government/Executive to extend only the time limits and it does not delegate the power to legislate on provisions to be followed for initiation of reassessment proceedings. In fact, the Relaxation Act does not give power to Government to extend the erstwhile Sections 147 to 151 beyond 31st March, 2021 and/or defer the operation of substituted provisions enacted by the Finance Act, 2021. Consequently, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ual operation. RELIEF: 104. Keeping in view the aforesaid conclusions, 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. 105. Consequently, the impugned reassessment notices issued under Section 148 of the Income Tax Act, 1961 are quashed and the present writ petitions are allowed. If the law permits the respondents/revenue to take further steps in the matter, they shall be at liberty to do so. Needless to state that if and when such steps are taken and if the petitioners have a grievance, they shall be at liberty to take their remedies in accordance with law. -------------------- Notes:- 1. This Court in Principal Commissioner of Income Tax-4 Vs. Headstrong Services India (P.) Ltd., [2021] 125 taxman.com 262 (Del), has held, It is further settled law that when a power is given to do certain thing in a certain way, the thing must be done in that way or not at all and other methods of performance are forbidden. [See: Taylor Vs. Taylor,1875) 1 Ch.D.426; Nazir Ahmad Vs. King Emperor, AIR 1936 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at in force in the assessment year unless otherwise provided expressly or by necessary implication. The above rule applies to the charging section and other substantive provisions such as a provision imposing penalty and does not apply to machinery or procedural provisions of a taxing Act which are generally retrospective and apply even to pending proceedings. 12. Anant Gopal Sheorey v. State of Bombay, 1959 SCR 919; Union of India v. Sukumar Pyne, 1966 (2) SCR 34; Tikaram Sons v. Commr. of Sales Tax, U.P., (1968) 3 SCR 512; State of Madras v. Lateef Hamid Co. (1971) 3 SCC 560; Balumal Jamnadas Batra v. State of Maharashtra, (1975) 4 SCC 645; Rai Bahadur Seth Sriram Durgaprasad v. Director of Enforcement, (1987) 3 SCC 27; Gurbachan Singh v. Satpal Singh, (1990) 1 SCC 445. 13. M.D. Frozen Foods Exports Private Limited and Others Vs. Hero Fincorp Limited, (2017) 16 SCC 741. 14. 2003(8) SCC 117. In this case, the Supreme Court held, However, we would refer to the decision in A.G. Varadarajulu v. State of T.N. [(1998) 4 SCC 231] which was relied upon by the learned Senior Counsel Mr Dwivedi, wherein (in para 16) this Court held as under: (SCC p. 236) 16. It ..... X X X X Extracts X X X X X X X X Extracts X X X X
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