Reassessment notices issued under section 148 not valid, A.O. ought to observe formalities prescribed under section 148A
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Case Details: |
Manoj Jain & Ors. vs. Union of India |
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Appeal No.: |
WPA No. 11950 of 2021 |
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Order pronounced by: |
Calcutta High Court |
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Date of Order: |
17-01-2022 |
Brief Facts:
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The petitioners are aggrieved by the issuance of notices under section 148 of the Income Tax Act, 1961 on the ground that the same are barred by limitation and the respondent Income Tax Authority concerned have not observed the statutory formalities under section 148A of the Act as prescribed by the Finance Act, 2021 which are applicable w.e.f. 1st April 2021 before issuance of notices under section 148 of the Act on or after 1st April 2021. |
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All the counsels for the petitioners jointly submitted that the issues involved in these writ petitions are covered by the decision of the Division Bench of the Allahabad High Court in the matter of Ashok Kumar Agarwal vs. Union of India (Writ Tax No.524/2021) decided in favor of petitioners holding as below: “Having heard learned counsel for the parties and having perused the record, we find that the thrust of the submissions advanced by learned counsel for the petitioners is: (i) By substituting the provisions of the Act by means of the Finance Act, 2021, the old provisions were omitted from the statute book and replaced by fresh provisions w.e.f. 01-04-2021. Relying on the principle- substitution omits and thus obliterates the pe-existing provisions, it has been further submitted, in absence of any saving clause shown to exist wither under the Ordinance or the Enabling Act or the Finance Act, 2021, there exists no presumption in favor of the old provision continuing to operate for any purpose, beyond 31-03-2021.” |
Observations from the decision of Allahabad High Court:
- Upon the Finance Act, 2021 enforced w.e.f. 01-04-2021 without any saving of the provisions substituted, there is no room to reach a conclusion as to conflict of laws. It was for the assessing authority to act according to the law as existed on or after 01-04-2021.
- If the rule of limitation permitted, it could initiate, reassessment proceedings in accordance with the new law, after making adequate compliance of the same. That not done, the reassessment proceedings initiated against the petitioners are without jurisdiction.
- In as much as the Finance Act, 2021 does not enable the Central Government to issue any notification to reactivate the pre-existing law, the exercise made by the delegate/ Central Government would be dehors any statutory basis.
- Also, no presumption exists that by Notification issued under the Enabling Act, the operation of the pre-existing provision of the Act had been extended and thereby provisions of Section 148A of the Act (introduced by Finance Act, 2021) and other provisions had been deferred.
- Following the aforesaid decision, the Rajasthan High Court took a similar view in the case of BPIP Infra Private Limited vs, ITO (S.B. Civil Writ Petition No. 13297/2021) & the Delhi High Court in the case of Man Moha Kohli vs. ACIT (W.P. (C) 6176 of 2021) quashing noticed issued u/s 148 of the Act
Ruling:
- This court agrees with the view of the Allahabad High Court and Rajasthan High Court in Ashok Kumar Agarwal (supra) and BPIP Infra Private Limited (supra). If the Legislature has permitted reassessment to be made in a particular manner, it can only be in this manner, or not at all.
- Revenue cannot reply 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.
- This court is of the view that the Respondents/ Revenue cannot use the administrative power to issue notifications u/s 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 the Respondents/ Revenue cannot frustrate the purpose of substituted statutory provisions like sections 147 to 151 of the Income Tax Act, 1961 in the present instance, by emptying it of content or impeding or postponing their effectual operation.
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. Consequently, the impugned reassessment notices issued u/s 148 of the Act 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.
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