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TMI Blog2022 (10) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... tend the time limit within which the said actions are to be taken. The conditions prescribed for issue of notice under Section 48 of the 1961 Act cannot be waived. The explanation below clause (A) in the notifications dated 30.03.2021 and 27.04.2021, is clearly beyond the authority delegated to the Central Government under the 2020 Act to issue notifications extending time limit for various actions and compliances. By means of aforesaid explanation, the Central Government has extended the operation of Section 148, 149 and 151 prior to its amendment by Finance Act, 2021 and has sought to revive the non-existent provisions which is clearly beyond its authority. Therefore, the explanation contained in notification dated 30.03.2021 and 27.04.2021 is liable to be struck down as ultra vires 2020 Act. In the instant case, the validity of notice has to be adjudged on the basis of law as existing on the date of notice. The mandatory conditions specified in Section 148A of the Act have not been complied with before issuance of impugned notice and the same has been issued in violation of mandate contained in Section 148 and 148-A of the Act. Therefore the issue with regard to validity of n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17 on 30.07.2016 and declared a total income of Rs.7,84,730/-. The petitioner thereafter received notices dated 30.06.2021 under Section 148 of the 1961 Act for the assessment year 2016-17. 3. Section 147 of the 1961 Act as it stood prior to 01.04.2021 authorized the issuance of a notice under Section 148, if the Assessing officer had reason to believe that income had escaped assessment. The existence of expression reason to believe was sufficient to sustain a notice under Section 148 of the Act and it was necessary for any final determination to be made regarding escapement of income at that stage. 4. However, vide Finance Act, 2021, which came into force with effect from 01.04.2021, major changes were made in the provisions relating to reopening of assessment under Sections 147, 148, 148A, 149 151 of 1961 Act. Amended Section 148 provides that before making assessment, reassessment or re-computation under Section 147 of the Act and subject to the provisions of Section 148A of the 1961 Act, the Assessing Officer has to serve on the assessee a notice along with a copy of the order passed if required under clause (d) of Section 148A of the Act requiring him to furnish th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e (b) expires: Provided that the provisions of this section shall not apply in a case where,- (a) a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A in the case of the assessee on or after the 1st day of 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.] 6. Thus, before issuing n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hree years have lapsed from the end of relevant assessment year, the specified authority for the purposes of Section 148, 148A of the Act would be Principal Chief Commissioner or other Officers referred to in the provision. 9. Thus, on careful scrutiny of existing and substituted provisions, it is evident that major changes have been introduced. It is evident that for issuance of notice under Section 148 of the 1961 Act, fresh time lines have been prescribed. Under amended Section 147, the time limit is prescribed as 3 years unless income chargeable to tax, which has escaped assessment, amounts to or is likely to amount Rs.50 Lakhs or more in which time limits for issuance of notice under Section 148 is 10 years from the end of relevant assessment year. The requirement of assessing officer having reason to believe as referred to in Section 147 of the Act has been dispensed with and proviso to Section 148 of the Act provides that no notice for re assessment could be issued unless there is information with the assessing officer which suggest that income chargeable to tax has escaped assessment. 10. In view of outbreak of Covid-19 pandemic, a nation wide lockdown was imposed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 At 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 sanction under section 151 of the Income-tax Act, under this subclause, the provisions of section 148, section 149 and section 151 of the Income-tax 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, shall apply. (b) the compliance of any action referred to in clause (b) of sub-section (1) of section 3 of the said Act relates to intimation of Aadhaar number to the prescribed authority under sub-section (2) of section 139AA of the Income-tax Act, the time limit for compliance of such action shall stand extended to the 30th day of June, 2021. (B) where the specified Act is the Chapter VII ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 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 30 th 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 subsection (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 the 30 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tifications dated 31.03.2021 and 27.04.2021 only grant an extension of time and cannot possibly be construe to amend or modify any of the procedural requirements in respect of re assessment of income laid down under Sections 147, 148 and 148A of the Act. The impugned notice is therefore are liable to be quashed. 14. On the other hand, learned counsel for the revenue submitted that Section 3(1) of the 2020 Act creates a legal fiction and the expression such action used in Section 3(1) relates back to the provision as it existed at the time of completion or compliance of such action. It is further submitted that the legal fiction must be given full effect and must be taken to its logical conclusion. It is contended that expression such action means the power to issue notice under Section 148 of the 1961 Act prior to coming into force of 2020 Act, which was available to the revenue, extended the time limit for compliance of such action. It is also argued that notices issued between 01.04.2021 and 30.06.2021, are deemed to have been issued within the time limit as envisaged under Section 149 of the Act, as it existed prior to its amendment. 15. It is also argued that Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ER OF INCOME TAX AIR 1980 SC 251 AND COMMISSIONER OF INCOME TAX Vs. SARKAR BUILDERS (2015) 7 SCC 579). (ii) When the statute vests certain power in an authority to be exercised in a particular manner, the said authority is required to exercise such power only in the manner provided therein. (See: COMMISSIONER OF INCOME TAX, CHANDIGARH Vs. PEARL MECHANICAL ENGINEERING AND FOUNDRY WORKS PVT. (2004) 4 SCC 597 AND THE GOA FOUNDATION Vs. SESA STERLITE LTD. AND ORS. (2018) 4 SCC 218. 17. On commencement of Finance Act, 2021 w.e.f. 01.04.2021, the 2020 Act was already in force. Even then, Parliament made the amended provisions of Section 147 to 151 of the Act effective from 01.04.2021. The said provisions have been substituted. It is well settled in law that substitution of a provision results in repeal of the earlier provision and its replacement by the new provision. Substitution thus combines repeal and fresh enactment. [SEE: STATE OF RAJASTHAN VS MANGILAL PINDWAL AIR 1996 SC 2181 AND ZILE SINGH VS STATE OF HARYANA AND OTHER (2004) 8 SCC 1]. Therefore, the amended provision of Section 148A of the Act would apply in respect of notices issued with effect from 01.04.2021 and ers ..... X X X X Extracts X X X X X X X X Extracts X X X X
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