The reason for challenge to the Explanations is in reference to the reassessment notices issued to the petitioners under Section 148 of the Act of 1961 on or after 1.4.2021 applying the provision as it stood prior to the amendment brought in Sections 147 to 151 by the Finance Act, 2021, which has come into effect from 1.4.2021.
The petitioners have been served with the notices under Section 148 of the Act of 1961 for reassessment by applying the procedure as it stood under Section 147 to 151 of the Act of 1961 prior to 1.4.2021. The challenge to the reassessment notices has been made precisely on the ground that after the amendment under Sections 147 to 151 of the Act of 1961, the notices under Section 148 of the Act of 1961 could not have been given applying the repealed provisions as it could not be saved by the Notifications under challenge and even by the the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA Act) and, therefore, the reassessment notices under Section 148 of the Act of 1961 deserve to be set aside.
It is submitted that, by the TOLA Act, 2020, the period of limitation was extended obtaining the situation arising out of Covid-19 pandemic during the intervening period, but the amended provisions have come into effect from 1.4.2021 and, therefore, the procedure contemplated under the amended provision for issuance of reassessment notices ought to have been followed by the respondents, as the TOLA Act, 2020 cannot save the provisions so amended by the Finance Act, 2021.
Court also discussed the old and new provisions of section 148, 148A, 149, 150 and section 151 of the Income Tax Act.
The main issue for our consideration is as to whether the relaxations granted by TOLA Act, 2020 extending the period of limitation can result in application of the repealed provisions after 1.4.2021 and as to whether the Explanations A(a)(ii)/A(b) to the Notification No.20, dated 31.3.2021 and Notification No.38, dated 27.4.2021 save the unamended provisions.
After this the Relaxation act, was discussed and whether such relaxation Act extends the date for issuing notice or not.
Challenge to the reassessment notices under Section 148 and Explanations A(a)(ii)/A(b) to the Notification No.20, dated 31.3.2021 and Notification No.38, dated 27.4.2021 was addressed firstly by the Chhattisgarh High Court in the case of Palak Khatuja v. Union of India, [2021] 438 ITR 622. The same issue was thereupon decided by the Allahabad High Court in the case of Ashok Kumar Agarwal v. Union of India, [2021] 131 taxmann.com (Allahabad); the Rajasthan High Court in the case of BPIP Infra Private Limited v. Income Tax Officer [CWP No.13297 of 2021, dated 25.11.2021]; the Delhi High Court in the case of Mon Mohan Kohli v. Assistant Commissioner of Income Tax [W.P.(C) No.6176 of 2021, dated 15.12.2021]; and, the Calcutta High Court in the case of Bagaria Properties and Investment Pvt. Ltd v. Union of India [W.P.O.No.253 of 2021, dated 17.1.2022].
Considering the fact that the judgments of different High Courts have pan-India effect and finding no reason otherwise to take a divergent view, the prayer made is to apply the view expressed by the Allahabad High Court, apart from other High Courts, for acceptance of the challenge to the reassessment notices issued under Section 148 of the Act of 1961 and the Notifications dated 31.3.2021 and 27.4.2021.
Learned counsel for the petitioners submit that the detailed judgment on the issue has been given by the Allahabad High Court, followed by the Delhi High Court and other High Courts. Thus, the prayer is to apply the ratio propounded by those High Courts for challenge to the reassessment notices under Section 148 of the Act of 1961 and even the Explanations A(a)(ii)/A(b) to the Notification No.20, dated 31.3.2021 and Notification No.38, dated 27.4.2021 by analyzing the provisions of TOLA Act, 2020. It is under the circumstance that the Delhi High Court had even taken into consideration the argument of “legal fiction” made before it. The prayer is, accordingly, to either examine the matter afresh or apply the ratio laid down by the various High Courts on the issue.
Learned Additional Solicitor General submitted that the issue of “legal fiction” has not been properly decided by the Delhi High Court and, therefore, the argument in reference to it needs to be appreciated afresh. It is, however, admitted that if the argument in reference to legal fiction is not accepted, the ratio propounded by the Allahabad High Court may be applicable to the facts of this case. The prayer was, however, to give liberty to the assessing authorities to initiate reassessment proceedings in accordance with the provisions of the Act of 1961, as amended by the Finance Act, 2021, after making all compliances as required by law. The prayer aforesaid has been made in reference to the assessment years where the limitation still exists for reassessment pursuant to Section 148 of the Act of 1961, as amended, apart from other provisions.
The only issue for our consideration is as to whether the prayer made by learned Additional Solicitor General to allow the respective assessing authorities to initiate the assessment proceedings afresh in accordance with the provisions of the Act of 1961, as amended by the Finance Act, 2021, after making compliances as required by law, is to be given.
We find that the Allahabad High Court while delivering the judgment on the issue had given liberty to the revenue for initiation of reassessment proceedings in accordance with the provisions of the Act, as amended by the Finance Act, 2021, after making all compliances as required by law. Thus, the prayer made by the learned Additional Solicitor General otherwise exists in the judgment of the Allahabad High Court.
To fortify our conclusion, we refer to the relevant paragraphs of the judgments delivered by the Allahabad High Court and the Delhi High Court.
In view of the ratio propounded by the Allahabad and Delhi High Courts on the subject, the reassessment notices under Section 148 of the Act of 1961 served on the petitioners on or after 1.4.2021 are set aside having been issued in reference to the unamended provisions and the Explanations are to be read as applicable to reassessment proceedings if initiated on or prior to 31.3.2021, but it would be with liberty to the assessing authorities to initiate reassessment proceedings in accordance with the provisions of the Act of 1961, as amended by the Finance Act, 2021, after making all the compliances as required by law, if limitation for it survives.
With the aforesaid observations, all the writ petitions are disposed of. There shall be no order as to costs. Consequently, the connected miscellaneous petitions are closed.
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Read earlier High Court order:
- Allahabad High court Order
- Rajasthan High Court Order
- Delhi High Court Order
- Rajasthan High court Division bench Order
- Calcutta High Court Order
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