Madras High Court
Vellore Institute Of Technology vs Central Board Of Direct Taxes on 4 February, 2022
W.P.No.15019 of 2021 etc., batch
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 04.02.2022
CORAM :
THE HON'BLE MR.MUNISHWAR NATH BHANDARI,
ACTING CHIEF JUSTICE
AND
THE HON'BLE MR.JUSTICE P.D.AUDIKESAVALU
W.P.Nos.15019, 15024, 15559, 15564, 15567, 15954, 15960, 15964,
15969, 15971, 15975, 15976, 16258, 16262, 16274, 16277, 16311,
16317, 16517, 16523, 16566, 16567, 16577, 16580, 16635, 16637,
16674, 16674, 16873, 16877, 17068, 17069, 17073, 17258, 17321,
17329, 17341, 17345, 17333, 17336, 17595, 17603, 17608, 17612,
17626, 18227, 18228, 18231, 18233, 18236, 18372, 18460, 18466,
18613, 18622, 18615, 18619, 18623, 18658, 18666, 18669, 18781,
18785, 19035, 19040, 19045, 19162, 19170, 19368, 16444, 16795,
19501, 19505, 19525, 19530, 19736, 19740, 19744, 19746, 20085,
20089, 20257, 20262, 20350, 20352, 20420, 20424, 20912, 20916,
21847, 21851, 22492, 22496, 22500, 22503, 22650, 22654, 22701,
22702, 22812, 22816, 24148, 24150, 24152, 24154, 24191, 24196,
24508, 24513, 25232, 25236, 25239, 25242, 25238, 25240, 25249,
25258, 25268, 25269, 25273, 25277, 25286, 25290, 25293, 25296,
25299, 25917, 25926, 26205, 26208, 26220, 26223, 26227, 26231,
26229, 26283, 26286, 26830, 26838, 26840, 26985, 27030, 27033,
27079, 27082, 27244, 27249, 27253, 27245, 27250, 27246, 27247,
27344, 27348, 27373, 27374, 27409, 27772, 27776, 27781, 27787,
27794, 27863, 27867, 27932, 27937, 28025, 28030, 28034, 28028,
28033, 28040, 28031, 28037, 28038, 28043, 28045, 28079, 28083,
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W.P.No.15019 of 2021 etc., batch
28088, 28360, 28366, 28369, 28379, 28373, 23343 and 23345 of
2021,
W.P.Nos.160, 163, 400, 603, 670, 672, 728, 729, 1058
and 1062 of 2022,
W.P.(MD)Nos. 12919, 12927, 12928, 13813 to 13817, 13731, 13980
to 13985, 14258, 17371, 17372, 17669 to 17672, 17928 to 17931,
20909, 20910, 22454 and 22455 of 2021
and
W.M.P.Nos. 15902, 15904, 15908, 15909, 22047, 16478, 16606,
16485, 16609, 16611, 16490, 16614, 22043, 16854, 16858, 16862,
16863, 16868, 16870, 16873, 16875, 16876, 16877, 16879, 16880,
16883, 16885, 23781, 23789, 23787, 23784, 23786, 17197, 17202,
17203, 17219, 17221, 17227, 17228, 17282, 17283, 17286, 17287,
17479, 17481, 17489, 17492, 23821, 17539, 17542, 17543, 22046,
17555, 17559, 17561, 17630, 17631, 17632, 22980, 17659, 17660,
17854, 17855, 17856, 22981, 18103, 18104, 18105, 18108, 18110,
18112, 18271, 18272, 18341, 18342, 18347, 18350, 18366, 18369,
18373, 18374, 18354, 18355, 18360, 18363, 18723, 18730, 18731,
18735, 18738, 18741, 18745, 18767, 18769, 19458, 19460, 19462,
19464, 19465, 19466, 19467, 19468, 19471, 19472, 23768, 23771,
23772, 23773, 19580, 19582, 19695, 19701, 19693, 19699, 22982,
19851, 19855, 19859, 19850, 19854, 19858, 19860, 19861, 23806,
19900, 19901, 19906, 19907, 19911, 19912, 25561, 20071, 20078,
20079, 20299, 20301, 20303, 20308, 20311, 20466, 20467, 20471,
20473, 21985, 17411, 17413, 17767, 17771, 20660, 20662, 20795,
20797, 23820, 20811, 20812, 20814, 21008, 21011, 21012, 21014,
21020, 21021, 21024, 21028, 25299, 25616, 21349, 21353, 21358,
21360, 21512, 21519, 21521, 27311, 21594, 21596, 21598, 27227,
21686, 21690, 21692, 22187, 22189, 22190, 23024, 23025, 23028,
23029, 23714, 23717, 23718, 23720, 23722, 23725, 26255, 25962,
23892, 23895, 23929, 23930, 23931, 24038, 24041, 25469, 25471,
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25472, 25474,
25476, 25477, 25523, 25525, 25527, 25820, 25821,
25822, 26607,
26609, 26613, 26616, 26618, 26619, 26624, 26625,
26615, 26617,
26620, 26621, 26634, 26638, 26639, 26643, 26645,
26646, 26650,
26655, 26656, 26661, 26662, 26678, 26679, 26684,
26685, 26688,
26689, 26695, 26696, 26698, 26699, 27388, 27391,
27397, 27400,
27660, 27662, 27664, 27665, 27666, 27676, 27678,
27679, 27681,
27685, 27682, 27683, 27686, 27730, 27731, 27734,
27735, 27736,
28276, 28287, 28289, 28292, 28293, 28420, 28423,
28482, 28484,
28485, 28544, 28552, 28554, 28760, 28766, 28768,
28772, 28773,
28759, 28761, 28767, 28769, 28758, 28762, 28763,
28856, 28859,
28860, 28889, 28891, 28930, 28931, 29340, 29345,
29346, 29348,
29350, 29355, 29360, 29363, 29497, 29501, 29504,
29597, 29598,
29602, 29603, 29606, 29608, 29599, 29600, 29605,
29607, 29615,
29617, 29604, 29610, 29611, 29613, 29614, 29618,
29619, 29621,
29623, 29644, 29649, 29654, 29656, 29658, 29659,
29937, 29942,
29944, 29949, 29950, 29956, 29959, 29960, 24623,
24625, 24626 and 23819 of 2021,
W.M.P.Nos.1045, 1058, 1178, 1728, 1735, 187, 192, 193, 458, 655,
656, 718, 719, 720, 798, 799, 800, 1120, 1124 and 1129 of 2022,
W.M.P.(MD)Nos.9993, 9994, 9995, 10020, 10025, 10016, 10024,
10784, 10936, 10785, 10937, 10781, 10790, 10791, 10782, 10783,
10657, 10780, 10788, 10787, 10656, 10934, 10935, 10938, 10940,
10941, 10942, 10943, 10945, 10946, 11193, 11194, 14252, 14256,
14253, 18987, 18988 and 18989 of 2021
W.P.No.15019 of 2021:-
Vellore Institute of Technology,
Represented by its Chairman and Managing Trustee,
Mr. G.Viswanathan,
No. 54, Thennanaran Street,
Vellore – 632 001. ... Petitioner
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W.P.No.15019 of 2021 etc., batch
-vs-
1. Central Board of Direct Taxes,
Ministry of Finance,
Department of Revenue,
North Block,
New Delhi – 110 001.
2. The Assistant Commissioner of Income Tax (Exemptions)
Income Tax Department,
Annexe Building, III Floor,
No. 121, Mahatma Gandhi Road,
Nungambakkam,
Chennai – 600 024. ... Respondents
Prayer: Petition filed under Article 226 of the Constitution of India
praying for a Writ of Declaration declaring the Explanation to Clause
A(a) of the Notification No. 20/2021/F. No. 370142.35.2020-TPL dated
31.03.2021 issued by the First Respondent as unconstitutional, illegal
and ultra vires the Constitution of India, the Taxation and Other Laws
(Relaxation and Amendment of Certain Provisoins) Act, 2020 and the
Income Tax Act, 1961.
For the Petitioner : Mr. S.Ganesh, Senior Counsel
assisted by
Mr. Suhrith Parthasarathy
For the Respondent 1 : Mr. R.Sankaranarayanan,
Assistant Solicitor General of India
assisted by
Mrs. Hemamuralikrishnan,
Senior Standing Counsel
For the Respondent 2 : Mr. A.P.Srinivas,
Senior Standing Counsel
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W.P.No.15019 of 2021 etc., batch
COMMON ORDER
(Order of the court was made by
the Hon'ble Acting Chief Justice)
By this batch of writ petitions a challenge is made to the
Explanations A(a)(ii)/A(b) to the Notification No.20, dated 31.3.2021
and Notification No.38, dated 27.4.2021, inasmuch as they extend the
applicability of the provisions of Sections 148, 149 and 151 of the
Income Tax Act, 1961 (for brevity, "the Act of 1961") as it stood as on
31.3.2021, to the period beyond 31.3.2021. A challenge to the
reassessment notices issued under Section 148 of the Act of 1961 has
also been made referring to the amendment made in Sections 147 to
151 of the Act of 1961 with effect from 1.4.2021 by the Finance Act,
2021.
2. A challenge to Explanations A(a)(ii)/A(b) to the Notification
No.20, dated 31.3.2021 and Notification No.38, dated 27.4.2021 has
been made by referring to the unamended provisions of Sections 147
to 151 of the Act of 1961, as existed till 31.3.2021; the amended
provisions of Sections 147 to 151, which came into effect from
1.4.2021; and, the Taxation and Other Laws (Relaxation and
Amendment of Certain Provisions) Act, 2020 (for brevity, "the TOLA
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Act, 2020").
3. 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 TOLA Act,
2020 and, therefore, the reassessment notices under Section 148 of
the Act of 1961 deserve to be set aside.
4. It is submitted that, by the TOLA Act, 2020, the period of
limitation was extended obtaining the situation arising out of Covid-19
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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.
5. To analyze the issue in reference to the argument, it would be
appropriate to refer to the unamended and amended provisions of
Sections 147 to 151 of the Act of 1961 hereunder:
UNAMENDED PROVISIONS AS THEY STOOD TILL
31.3.2021:
"147. Income escaping assessment. If the
Assessing Officer has reason to believe that any
income chargeable to tax has escaped assessment for
any assessment year, he 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 recomputed the loss
or the depreciation allowance or any other allowance,
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W.P.No.15019 of 2021 etc., batch
as the case may be, for the assessment year
concerned (hereafter in this section and in sections 148
to 153 referred to as the relevant assessment year):
Provided that where an assessment under sub-section
(3) of section 143 or this section has been made for
the relevant assessment year, no action shall be taken
under this section after the expiry of four years from
the end of the relevant assessment year, unless any
income chargeable to tax has escaped assessment for
such assessment year by reason of the failure on the
part of the assessee to make a return under section
139 or in response to a notice issued under sub-section
(1) of section 142 or section 148 or to disclose fully
and truly all material facts necessary for his
assessment, for that assessment year:
Provided further that nothing contained in the first
proviso shall apply in a case where any income in
relation to any asset (including financial interest in any
entity) located outside India, chargeable to tax, has
escaped assessment for any assessment year:
Provided also that the Assessing Officer may assess
or reassess such income, other than the income
involving matters which are the subject matters of any
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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
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excessive loss, deduction, allowance or relief in
the return;
(ba) where the assessee has failed to furnish a
report in respect of any international
transaction which he was so required under
section 92E;
(c) where an assessment has been made, but-
(i) income chargeable to tax has been
under assessed; or
(ii) such income has been assessed at
too low a rate; or
(iii) such income has been made the
subject of excessive relief under this Act;
or
(iv) excessive loss or depreciation
allowance or any other allowance under
this Act has been computed;
(ca) where a return of income has not been
furnished by the assessee or a return of
income has been furnished by him and on the
basis of information or document received
from the prescribed income-tax authority,
under subsection (2) of section 133C, it is
noticed by the Assessing Officer that the
income of the assessee exceeds the maximum
amount not chargeable to tax, or as the case
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may be, the assessee has understated the
income or has claimed excessive loss,
deduction, allowance or relief in the return;
(d) where a person is found to have any asset
(including financial interest in any entity)
located outside India.
Explanation 3.-For the purpose of assessment or
reassessment under this section, the Assessing Officer
may assess or reassess the income in respect of any
issue, which has escaped assessment, and such issue
comes to his notice subsequently in the course of the
proceedings under this section, notwithstanding that
the reasons for such issue have not been included in
the reasons recorded under sub-section (2) of section
148.
Explanation 4.-For the removal of doubts, it is hereby
clarified that the provisions of this section, 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.
148. Issue of notice where income has escaped
assessment
(1) Before making the assessment, reassessment or
recomputation under section 147, the Assessing Officer
shall serve on the assessee a notice requiring him to
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furnish within such period, as may be specified in the
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 year, in the prescribed form and
verified in the prescribed manner and setting forth
such other particulars as may be prescribed; and 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 sub-section (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)
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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) of subsection (2) of section
143 after the expiry of twelve months specified
in the proviso to clause (ii) of sub-section (2)
of section 143, but before the expiry of the
time limit for making the assessment,
reassessment 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.
Explanation.- For the removal of doubts, it is hereby
declared that nothing contained in the first proviso or
the second proviso shall apply to any return which has
been furnished on or after the 1st day of October,
2005 in response to a notice served under this section.
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(2) The Assessing Officer shall, before issuing any
notice under this section, record his reasons for doing
so.
149. Time limit for notice. (1) No notice under
section 148 shall be issued for the relevant assessment
year,-
(a) if four years have elapsed from the end of
the relevant assessment year, unless the case
falls under clause (b) or clause (c);
(b) if four years, but not more than six years,
have elapsed from the end of the relevant
assessment year unless the income chargeable
to tax which has escaped assessment amounts
to or is likely to amount to one lakh rupees or
more for that year;
(c) if four years, but not more than sixteen
years, have elapsed from the end of the
relevant assessment year unless the income in
relation to any asset (including financial
interest in any entity) located outside India,
chargeable to tax, has escaped assessment.
Explanation.-In determining income chargeable to tax
which has escaped assessment for the purposes of this
sub-section, the provisions of Explanation 2 of section
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147 shall apply as they apply for the purposes of that
section.
(2) The provisions of sub-section (1) as to the issue of
notice shall be subject to the provisions of section 151.
(3) If the person on whom a notice under section 148
is to be served is a person treated as the agent of a
nonresident under section 163 and the assessment,
reassessment or recomputation to be made in
pursuance of the notice is to be made on him as the
agent of such non-resident, the notice shall not be
issued after the expiry of a period of six years from the
end of the relevant assessment year.
Explanation.- For the removal of doubts, it is hereby
clarified that the provisions 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.
150. Provision for cases where assessment is in
pursuance of an order on appeal, etc.
(1) Notwithstanding anything contained in section 149,
the notice under section 148 may be issued at any time
for the purpose of making an assessment or
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reassessment or recomputation in consequence of or to
give effect to any finding or direction contained in an
order passed by any authority in any proceeding under
this Act by way of appeal, reference or revision or by a
Court in any proceeding under any other law.
(2) The provisions of sub-section (1) shall not apply in
any case where any such assessment, reassessment or
recomputation as is referred to in that sub-section
relates to an assessment year in respect of which an
assessment, reassessment or recomputation could not
have been made at the time the order which was the
subject-matter of the appeal, reference or revision, as
the case may be, was made by reason of any other
provision limiting the time within which any action for
assessment, reassessment or recomputation may be
taken.
151. Sanction for issue of notice. (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.
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(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
Assessing Officer about fitness of a case for the issue
of notice under section 148, need not issue such notice
himself.”
AMENDED PROVISIONS APPLICABLE ON AND
FROM 1.4.2021:
147. Income escaping assessment. 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
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year (hereafter in this section and in sections 148 to
153 referred to as the relevant assessment year).
Explanation.—For the purpose of assessment or
reassessment or recomputation under this section, the
Assessing Officer may assess or reassess the income in
respect of any issue, which has escaped assessment,
and such issue comes to his notice subsequently in the
course of the proceedings under this section,
irrespective of the fact that the provisions of section
148A have not been complied with.
148. Issue of notice where income has escaped
assessment. 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 the order passed, if required, 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 year, in the prescribed form and verified in
the prescribed manner and setting forth such other
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particulars as may be prescribed; and 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 no notice under this section shall be
issued unless there is information with the Assessing
Officer which suggests that the income chargeable to
tax has escaped assessment in the case of the
assessee for the relevant assessment year and the
Assessing Officer has obtained prior approval of the
specified authority to issue such notice.
Explanation 1.—For the purposes of this section and
section 148A, the information with the Assessing
Officer which suggests that the income chargeable to
tax has escaped assessment means,—
(i) any information flagged in the case of the
assessee for the relevant assessment year in
accordance with the risk management strategy
formulated by the Board from time to time;
(ii) any final objection raised by the
Comptroller and Auditor General of India to the
effect that the assessment in the case of the
assessee for the relevant assessment year has
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not been made in accordance with the
provisions of this Act.
Explanation 2.—For the purposes of this section,
where,—
(i) a search is initiated under section 132 or
books of account, other documents or any
assets are requisitioned under section 132A,
on or after the 1st day of April, 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
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
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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 previous
year in which the search is initiated or books of
account, other documents or any assets are
requisitioned or survey is conducted in the case of the
assessee 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.
Explanation 3.—For the purposes of this section,
specified authority means the specified authority
referred to in section 151.
148A. Conducting inquiry, providing opportunity
before issue of notice under section 148.
The Assessing Officer shall, before issuing any notice
under section 148,—
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(a) conduct any enquiry, if required, with the prior
approval of specified authority, with respect to the
information which suggests that the income chargeable
to tax has escaped assessment;
(b) provide an opportunity of being heard to the
assessee, with the prior approval of specified authority,
by serving upon him a notice to show cause within
such time, as may be specified in the notice, being not
less than seven days and but not exceeding thirty days
from the date on which such notice is issued, or such
time, as may be extended by him on the basis of an
application in this behalf, as to why a notice under
section 148 should not be issued on the basis of
information which suggests that income chargeable to
tax has escaped assessment in his case for the
relevant assessment year and results of enquiry
conducted, if any, as per clause (a);
(c) consider the reply of assessee furnished, if any, in
response to the show-cause notice referred to in clause
(b);
(d) decide, on the basis of material available on record
including reply of the assessee, whether or not it is a fit
case to issue a notice under section 148, by passing an
order, with the prior approval of specified authority,
within one month from the end of the month in which
the reply referred to in clause (c) is received by him, or
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where no such reply is furnished, within one month
from the end of the month in which time or extended
time allowed to furnish a reply as per clause (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.
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Explanation.—For the purposes of this section,
specified authority means the specified authority
referred to in section 151.
149. Time limit for notice.
(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 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 account 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
specified under the provisions of clause (b) of sub-
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section (1) of this section, as they stood immediately
before the commencement of the Finance Act, 2021:
Provided further that the provisions of this sub-
section shall not apply in a case, where a notice under
section 153A, or section 153C read with section 153A,
is required to be issued in relation to a search initiated
under section 132 or books of account, other
documents or any assets requisitioned under section
132A, on or before the 31st day of March, 2021:
Provided also that for the purposes of computing the
period of limitation as per this section, the time or
extended time allowed to the assessee, as per show-
cause notice issued under clause (b) of section 148A or
the period during which the proceeding under section
148A is stayed by an order or injunction of any court,
shall be excluded:
Provided also that where immediately after the
exclusion of the period referred to in the immediately
preceding proviso, the period of limitation available to
the Assessing Officer for passing an order under clause
(d) of section 148A is less than seven days, such
remaining period shall be extended to seven days and
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the period of limitation under this sub-section shall be
deemed to be extended accordingly.
Explanation.—For the purposes of clause (b) of this
sub-section, "asset" shall include immovable property,
being land or building or both, shares and securities,
loans and advances, deposits in bank account.
(2) The provisions of sub-section (1) as to the issue of
notice shall be subject to the provisions of section 151.
150. Provision for cases where assessment is in
pursuance of an order on appeal, etc.
(1) Notwithstanding anything contained in section 149,
the notice under section 148 may be issued at any time
for the purpose of making an assessment or
reassessment or recomputation in consequence of or to
give effect to any finding or direction contained in an
order passed by any authority in any proceeding under
this Act by way of appeal, reference or revision or by a
Court in any proceeding under any other law.
(2) The provisions of sub-section (1) shall not apply in
any case where any such assessment, reassessment or
recomputation as is referred to in that sub-section
relates to an assessment year in respect of which an
assessment, reassessment or recomputation could not
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have been made at the time the order which was the
subject-matter of the appeal, reference or revision, as
the case may be, was made by reason of any other
provision limiting the time within which any action for
assessment, reassessment or recomputation may be
taken.
151. Sanction for issue of notice.
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."
6. By the amended provisions with effect from 1.4.2021, not
only the procedure in reference to Section 147 of the Act of 1961 was
simplified, but there is addition of Section 148-A of the Act for
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compliance before issuance of reassessment notice under Section 148
of the Act of 1961.
7. 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.
8. For considering the aforesaid issue, we also quote the relevant
provisions of the TOLA Act of 2020, apart from the Notification No.20,
dated 31.3.2021; and, the Notification No.38, dated 27.4.2021, under
challenge:
"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:—
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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 of the Finance (No. 2) Act,
2004;
(v) Chapter VII of the Finance Act, 2013;
(vi) the Black Money (Undisclosed Foreign
Income and Assets) and Imposition of Tax Act,
2015;
(vii) Chapter VIII of the Finance Act, 2016; or
(viii) the Direct Tax Vivadse Vishwas Act,
2020.
(2) The words and expressions used herein and not
defined, but defined in the specified Act, the Central
Excise Act,1944, the Customs Act, 1962, the Customs
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Tariff Act, 1975 or the Finance Act,1994, as the case
may be, shall have the same meaning respectively
assigned to them in that Act.
CHAPTER II
RELAXATION OF CERTAIN PROVISIONS OF
SPECIFIED ACT
3. (1) Where, any time-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 31st day of December, 2020, or such other
date after the 31st day of December, 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 passing of any
order or issuance of any notice, intimation, notification,
sanction or approval, or such other action, by whatever
name called, by any authority, commission or tribunal,
by whatever name called, under the provisions of the
specified Act; or
(b) filing of any appeal, reply or application or
furnishing of any report, document, return or
statement or such other record, by whatever name
called, under the provisions of the specified Act; or
(c) in case where the specified Act is the Income-tax
Act, 1961,-
(i) making of investment, deposit, payment,
acquisition, purchase, construction or such other
action, by whatever name called, for the purposes of
claiming any deduction, exemption or allowance under
the provisions contained in-
(I) sections 54 to 54GB, or under any
provisions of Chapter VI-A under the heading
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“B.-Deductions in respect of certain payments”
thereof; or
(II) such other provisions of that Act, subject
to fulfilment of such conditions, as the Central
Government may, by notification, specify; or
(ii) beginning of manufacture or production of articles
or things or providing any services referred to in
section 10AA of that Act, in a case where the letter of
approval, required to be issued in accordance with the
provisions of the Special Economic Zones 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:
.......
10. Power to remove difficulties.-
(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.
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(2) Every order made under this section shall be laid
before each House of Parliament.
11. Repeal and Savings.-
(1) The Taxation and Other Laws (Relaxation of Certain
Provisions) Ordinance, 2020 is hereby repealed.
(2) Notwithstanding such repeal, anything done, any
notification issued or any action taken under the said
Ordinance, shall be deemed to have been done, issued
or taken under the corresponding provisions of this
Act."
“NOTIFICATION S.O.1432(E) [NO.20/2021/F.
NO. 3 70142/35/2020-TPL], DATED 31-3-2021
In exercise of the powers conferred by subsection (1)
of section 3 of the Taxation and Other Laws (Relaxation
and Amendment of Certain Provisions) Act, 2020 (38 of
2020) (hereinafter referred to as the said Act), and in
partial modification of the notification of the
Government of India in the Ministry of Finance,
(Department of Revenue) No. 93/2020 dated the 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,-
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(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 sanction under section 151 of the Income-tax
Act, under this sub-clause, the provisions of section
148, section 149 and section 151 of the Income-tax
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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 subsection (1) of section 3 of the said Act relates
to intimation of Aadhaar number to the prescribed
authority under subsection (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 VIII of the
Finance Act, 2016 (28 of 2016) (hereinafter referred to
as the Finance Act) and the completion of any action
referred to in clause (a) of sub-section (1) of section 3
of the said Act relates to sending an intimation under
subsection (1) of section 168 of the Finance 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 Finance 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."
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"NOTIFICATION S.O.1703 (E) [NO.38/2021/F.
NO. 370142/35/2020-TPL], DATED 27-4-2021
In exercise of the powers conferred by sub-section (1)
of section 3 of the Taxation and Other Laws (Relaxation
and Amendment of Certain Provisions) Act, 2020 (38 of
2020) (hereinafter referred to as the said Act), and in
partial modification of the notifications of the
Government of India in the Ministry of Finance,
(Department of Revenue) No. 93/2020 dated the 31st
December, 2020, No. 10/2021 dated the 27th
February, 2021 and No. 20/2021 dated the 31st March,
2021, published in the Gazette of India, Extraordinary,
Part-II, Section 3, Subsection (ii), vide number S.O.
4805(E), dated the 31st December, 2020, vide number
S.O. 966(E) dated the 27th February, 2021 and vide
number S.O. 1432(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
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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 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.
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 sub-clause, the provisions of section
148, section 149 and section 151 of the Income-tax
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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) where the specified Act is the Chapter VIII of the
Finance Act, 2016 (28 of 2016) (hereinafter referred to
as the Finance Act) and the completion of any action,
referred to in clause (a) of sub-section (1) of section 3
of the said Act, relates to sending an intimation under
subsection (1) of section 168 of the Finance Act, and
the time limit for completion of such action 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.”
9. 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.
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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.
10. 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
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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.
11. 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.
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12. The arguments in reference to legal fiction were heard, but
after arguing at length, learned Additional Solicitor General could not
press the argument aforesaid having been decided by the Delhi High
Court after considering the issue threadbare. Accordingly, we find that
a serious contest does not exist regarding the applicability of the ratio
propounded by the Allahabad High Court, followed by other High
Courts in regard to the challenge to the Explanations A(a)(ii)/A(b) to
the Notification No.20, dated 31.3.2021 and Notification No.38, dated
27.4.2021; and the reassessment notices under Section 148 of the Act
of 1961 issued on or after 1.4.2021.
13. 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.
14. A serious contest to the prayer aforesaid was made by
learned counsel for the petitioners. It is submitted that if law allows
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issuance of notice under Section 148 of the Act of 1961 afresh, then
no liberty is required to be given, rather the assessing authority would
be within its competence to initiate proceedings as per the amended
provisions pursuant to the Finance Act, 2021. It is also submitted that
the liberty, if granted, may be misused by the assessing authorities to
harass the assessees without any reason. Referring to the last
paragraph in the judgment delivered by the Allahabad High Court,
learned counsel submit that a liberty of the nature prayed by the
respondents was given without a rider or clarification that a fresh
notice under Section 148 of the Act of 1961 should be issued only in
the cases where limitation still subsists and otherwise the judgment of
the Allahabad High Court has been challenged by the Revenue before
the Apex Court without exercising the powers pursuant to the liberty
given therein. It is further submitted that if liberty, as prayed, for
causing fresh reassessment notices under Section 148 of the Act of
1961, pursuant to the amended provision, is given, the petitioners
would be subjected to discrimination when compared to those whose
matters were taken before the Apex Court in view of the challenge to
the judgment of the Allahabad High Court without causing a fresh
notice under Section 148 of the Act of 1961, as amended.
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15. We have considered the submissions made by learned
counsel for the petitioners and also the prayer of the learned
Additional Solicitor General.
16. 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.
17. In view of the above and, even otherwise, when according to
the petitioners themselves, if the limitation for issuance of notice under
Section 148 of the Act of 1961 for reassessment pursuant to the
amended provisions under the Finance Act, 2021 survives, the
assessing authority would be competent to initiate the proceedings, we
do not find any reason to deny the prayer made by learned Additional
Solicitor General, because what exists impliedly can be given
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expressly. Therefore, while accepting the challenge to the
reassessment notices under Section 148 of the Act of 1961, we hold
that the Explanations A(a)(ii)/A(b) to the Notification No.20, dated
31.3.2021 and Notification No.38, dated 27.4.2021 must be read as
applicable to the reassessment proceedings as on 31.3.2021 in view of
the judgments of the different High Courts and we would grant liberty
to the assessing authorities as prayed by learned Additional Solicitor
General.
18. To fortify our conclusion, we refer to the relevant paragraphs
of the judgments delivered by the Allahabad High Court and the Delhi
High Court hereunder:
(A) In Ashok Kumar Agarwal v. Union of India, supra, while
considering a challenge to the reassessment proceedings under
Section 148 of the Act of 1961 on the ground that the proceedings
have been initiated after 1.4.2021, in the light of the notifications
dated 30.3.2021 and 27.4.2021, the Allahabad High Court held as
under:
"65. Therefore, other things apart, undeniably, on 1st
April, 2021, by virtue of plain/un-excepted effect of
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Section 1(2)(a) of the Finance Act, 2021, the
provisions of Sections 147, 148, 149, 151 as those
provisions existed up to 31st March, 2021, stood
substituted, along with a new provision enacted by way
of Section 148A of that Act. In absence of any
saving clause, to save the pre-existing (and now
substituted) provisions, the Revenue authorities
could only initiate reassessment proceeding on or
after 1st April, 2021, in accordance with the
substituted law and not the pre-existing laws.
66. It is equally true that the Enabling Act that was
pre-existing, had been enforced prior to enforcement
of the Finance Act, 2021. It confronted the Act as
amended by Finance Act, 2021, as it came into
existence on 1st April, 2021. In the Enabling Act and
the Finance Act, 2021, there is absence, both of any
express provision in itself or to delegate the function to
save applicability of the provisions of Sections 147,
148, 149 or 151 of the Act, as they existed upto 31st
March, 2021. Plainly, the Enabling Act is an
enactment to extend timelines only.
Consequently, it flows from the above 1st April,
2021 onwards, all references to issuance of
notice contained in the Enabling Act must be read
as reference to the substituted provisions only.
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Equally there is no difficulty in applying the pre-
existing provisions to pending proceedings.
Looked in that manner, the laws are harmonized.
67. It may also be not forgotten, a reassessment
proceeding is not just another proceeding
emanating from a simple show cause notice.
Both, under the pre-existing law as also under
the law enforced from 1st April, 2021, that
proceeding must arise only upon jurisdiction
being validly assumed by the assessing authority.
Till such time jurisdiction is validly assumed by
assessing authority-evidenced by issuance of the
jurisdictional notice under Section 148, no
reassessment proceeding may ever be said to be
pending before the assessing authority. The
admission of the Revenue authorities that all
reassessment notices involved in this batch of
writ petitions had been issued after the
enforcement date 1st April, 2021, is tell-tale and
critical. As a fact, no jurisdiction had been
assumed by the assessing authority against any
of the petitioners, under the un-amended law.
Hence, no time extension could ever be made
under Section 3(1) of the Enabling Act, read with
the notifications issued thereunder.
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68. The submission of the learned Additional Solicitor
General of India that the provision of Section 3(1) of
the Enabling Act gave an overriding effect to that Act
and therefore saved the provisions as existed under
the un-amended law, also cannot be accepted. That
saving could arise only if jurisdiction had been validly
assumed before the date 1st April, 2021. In the first
place Section 3(1) of the Enabling Act does not speak
of saving any provision of law. It only speaks of saving
or protecting certain proceedings from being hit by the
rule of limitation. That provision also does not speak of
saving any proceeding from any law that may be
enacted by the Parliament, in future. For both reasons,
the submission advanced by learned Addl. Solicitor
General of India is unacceptable.
69. Even otherwise the word 'notwithstanding' creating
the non obstante clause, does not govern the entire
scope of Section 3(1) of the Enabling Act. It is confined
to and may be employed only with reference to the
second part of Section 3(1) of the Enabling Act i.e. to
protect proceedings already under way. There is
nothing in the language of that provision to admit a
wider or sweeping application to be given to that clause
to serve a purpose not contemplated under that
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provision and the enactment, wherein it appears.
70. The upshot of the above reasoning is, the Enabling
Act only protected certain proceedings that may have
become time barred on 20th March, 2021, upto the
date 30th June, 2021. Correspondingly, by delegated
legislation incorporated by the Central Government, it
may extend that time limit. That time-limit alone stood
extended upto 30 June, 2021. We also note, the
learned Additional Solicitor General of India may not be
entirely correct in stating that no extension of time was
granted beyond 3oth June, 2021. Vide Notification No.
3814 dated 17th Sept., 2021, issued under Section 3
of the Enabling Act, further extension of time has been
granted till 31st March, 2022. In absence of any
specific delegation made, to allow the delegate of
the Parliament, to indefinitely extend such
limitation, would be to allow the validity of an
enacted law i.e. the Finance Act, 2021 to be
defeated by a purely colourable exercise of
power, by the delegate of the Parliament.
71. Here, it may also be clarified, Section 3(1) of the
Enabling Act does not itself speak of reassessment
proceeding or of Section 147 or Section 148 of the Act
as it existed prior to 1st April, 2021. It only provides a
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general relaxation of limitation granted on account of
general hardship existing upon the spread of pandemic
COVID-19. After enforcement of the Finance Act, 2021,
it applies to the substituted provisions and not the pre-
existing provisions.
72. Reference to reassessment proceedings with
respect to pre-existing and now substituted provisions
of Sections 147 and 148 of the Act has been introduced
only by the later Notifications issued under the Act.
Therefore, the validity of those provisions is also
required to be examined. We have concluded as above,
that the provisions of Sections 147, 148, 148A, 149,
150 and 151 substituted the old/pre-existing provisions
of the Act w.e.f. 1st April, 2021. We have further
concluded, in absence of any proceeding of
reassessment having been initiated prior to the
date 1st April, 2021, it is the amended law-alone
that would apply. We do not see how the
delegate i.e. Central Government or the CBDT
could have issued the Notifications, plainly to
over reach the principal legislation. Unless
harmonized as above, those notifications would
remain invalid.
73. Unless specifically enabled under any law and
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unless that burden had been discharged by the
respondents, we are unable to accept the further
submission advanced by the learned Additional Solicitor
General of India that practicality dictates that the
reassessment proceedings be protected. Practicality, if
any, may lead to legislation. Once the matter reaches
Court, it is the legislation and its language, and the
interpretation offered to that language as may
primarily be decisive to govern the outcome of the
proceeding. To read practicality into enacted law is
dangerous. Also, it would involve legislation by the
Court, an idea and exercise we carefully tread away
from.
74. Similarly, the mischief rule has limited application
in the present case. Only in case of any doubt existing
as to which of the two interpretations may apply or to
clear a doubt as to the true interpretation of a
provision, the Court may look at the mischief rule to
find the correct law. However, where plain legislative
action exists, as in the present case (where-under the
Parliament has substituted the old provisions regarding
reassessment with new provisions w.e.f. 1st April,
2021), the mischief rule has no application.
75. As we see there is no conflict in the application and
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enforcement of the Enabling Act and the Finance Act,
2021. Juxtaposed, if the Finance Act, 2021 had not
made the substitution to the reassessment procedure,
the Revenue authorities would have been within their
rights to claim extension of time, under the Enabling
Act. However, upon that sweeping amendment
made the Parliament, by necessary implication or
implied force, it limited the applicability of the
Enabling Act and the power to grant time
extensions thereunder, to only such
reassessment proceedings as had been initiated
till 31st March, 2021. Consequently, the
impugned Notifications have no applicability to
the reassessment proceedings initiated from 1st
April, 2021 onwards.
76. Upon the Finance Act, 2021 enforced w.e.f.
1st April, 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 and after 1st April, 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
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proceedings initiated against the petitioners are
without jurisdiction.
77. Insofar as the decision of the Supreme Court in the
case of Ramesh Kymal vs. Siemens Gamesa Renewable
Power (P.) Ltd. (supra) is concerned, we opine, the
same is wholly distinguishable. Therein The Insolvency
and Bankruptcy Code, 2016 was amended by the
Parliament and a new Section 10A, was introduced,
apparently again on account of the difficulties arising
from the spread of pandemic COVID-19. That section
reads as under:
'10A. Notwithstanding anything contained in
ss. 7, 9 and 10, no application for initiation of
corporate insolvency resolution process of a
corporate debtor shall be filed, for any default
arising on or after 25th March, 2020 for a
period of six months or such further period,
not exceeding one year from such date, as
may be notified in this behalf:
Provided that no application shall ever be filed
for initiation of corporate insolvency resolution
process of a corporate debtor for the said
default occurring during the said period.
Explanation.--For the removal of doubts, it is
hereby clarified that the provisions of this
section shall not apply to any default
committed under the said sections before 25th
March, 2020.'
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78. Plainly, in that case, the earlier provisions were not
substituted rather they continued to exist. The
parliamentary intervention by introducing Section 10A
of that Act only provided no proceeding be instituted
for any default arising after 21st March, 2020, for a
period of six months or such period not exceeding one
year, as may be notified. Thus, in that case, by
virtue of amendment made, delegated power
created, could be exercised to relax the
otherwise stringent provisions of the Act, in
cases, wherein difficulties arose from the spread
of the pandemic COVID-19. Thus, that ratio is
plainly distinguishable.
79. As to the decision of the Chhattisgarh High Court,
with all respect, we are unable to persuade ourselves
to that view. According to us, it would be incorrect to
look at the delegation legislation i.e. Notification dated
31st March, 2021 issued under the Enabling Act, to
interpret the principal legislation made by Parliament,
being the Finance Act, 2021. A delegated legislation
can never overreach any Act of the principal
legislature. Second, it would be over simplistic to
ignore the provisions of, either the Enabling Act or the
Finance Act, 2021 and to read and interpret the
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provisions of Finance Act, 2021 as inoperative in view
of the fact circumstances arising from the spread of the
pandemic COVID-19. Practicality of life de hors
statutory provisions, may never be a good guiding
principle to interpret any taxation law. In absence of
any specific clause in Finance Act, 2021, either to save
the provisions of the Enabling Act or the Notifications
issued thereunder, by no interpretative process can
those Notifications be given an extended run of life,
beyond 31st March, 2020. They may also not infuse
any life into a provision that stood obliterated from the
statute w.e.f. 31st March, 2021. Inasmuch as the
Finance Act, 2021 does not enable the Central
Government to issue any notification to reactivate the
pre-existing law (which that principal legislature had
substituted), the exercise made by the
delegate/Central Government would be de hors any
statutory basis. In absence of any express saving of
the pre-existing laws, the presumption drawn in favour
of that saving, is plainly impermissible. 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 s. 148A of the Act (introduced by Finance
Act, 2021) and other provisions had been deferred.
Such Notifications did not insulate or save, the pre-
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existing provisions pertaining to reassessment under
the Act.
80. In view of the above, all the writ petitions
must succeed and are allowed. It is declared that
the Ordinance, the Enabling Act and Sections 2 to
88 of the Finance Act, 2021, as enforced w.e.f.
1st April, 2021, are not conflicted. Insofar as the
Explanation appended to clause A(a), A(b), and
the impugned Notifications dated 31st March,
2021 and 27th April, 2021 (respectively) are
concerned, we declare that the said Explanations
must be read, as applicable to reassessment
proceedings as may have been in existence on
31st March, 2021 i.e. before the substitution of
Sections 147, 148, 148A, 149, 151 and 151A of
the Act. Consequently, the reassessment notices
in all the writ petitions are quashed. It is left
open to the respective assessing authorities to
initiate reassessment proceedings in accordance
with the provisions of the Act as amended by
Finance Act, 2021, after making all compliances,
as required by law.
80. Accordingly, reassessment notice issued to the
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present petitioner dated 9th April, 2021 for assessment
year 2017-18 is quashed."
[emphasis supplied]
(B) In Mon Mohan Kohli v. Assistant Commissioner of Income
Tax, supra, while considering an identical issue, the Delhi High Court
concurred with the view taken by the Allahabad High Court and the
Rajasthan High Court and held as under:
"42. Having heard learned counsel for the parties, this
Court is of the view 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 147 to 151 of the
Income Tax Act, 1961 will take effect from 1st April,
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2021. There is also no power with the
Executive/Respondents/Revenue to defer/
postpone the implementation of Sections 2 to 88
of the Finance Act, 2021 which includes the
substituted Sections 147 to 151 of the Income
Tax Act, 1961.
43. It is settled law that the law prevailing on the
date of issuance of the notice under Section 148
has to be applied. [See: Foramer Vs. CIT, (2001)
247 ITR 436 (All.), affirmed by the Supreme Court in
(2003) 264 ITR 566 (SC), Varkey Jacob Co. Vs. CIT
and Anr., (2002) 257 ITR 231 (Ker), Smt. N. Illamathy
vs. ITO, (2020) 275 taxman 25/195 CTR 543
(Mad)(HC), RK Upadhyay v. Shanabhai, (1987) 166
ITR 163 (SC); CIT v. Rameshwar Prasad, (1991) 188
ITR 291 (All HC); Dr. Onkar Dutt Sharma v. CIT,
MANU/UP/0247/1966 : (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
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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.
...
46. Upon perusal of Section 3(1) of Relaxation Act,
2020, this Court is of the view that it extends only the
time lines. Section 3(1) of the Relaxation Act, 2020
stipulates that where, any time limit has been
stipulated in as specified Act which falls between the
period 20th day of March, 2020 and 31st day of
December, 2020 for the completion or compliance of
such action as issuance of any notice under the
provisions of the specified Acts 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 Acts, stand
extended. It is important to bear in mind that Section
3(1) of the Relaxation Act, 2020 does not empower the
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Central Government to postpone the applicability of
any provision which has been enacted from a particular
date. There is a difference between extension of
time of an action which is getting time barred
and applicability of a provision which has been
enacted and notified by the Legislature.
Relaxation Act, 2020 nowhere delegates power to
the Central Government to postpone the date of
applicability of a new law enacted by the
Legislature. Relaxation Act, 2020 also does not
put any embargo on the power of the Legislature
to legislate.
47. Also, the impugned Explanations in the
Notifications dated 31st March, 2021 and 27th April,
2021 are beyond the power delegated to the
Government, as 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. Accordingly, the provisions of
Section 148A had to be complied with before
issuing notices under Section 147 of the Income
Tax Act, 1961 and the submission of the respondents-
Revenue based on the judgment passed by
Chhattisgarh High Court in Palak Khatuja Vs. UOI
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(supra) does not find favour with this Court. After all,
it is settled law that Executive cannot make or
change law of the land without specific Authority
from Parliament to do so.
48. Consequently, the Relaxation Act, 2020 and
Notifications issued thereunder can only change
the time-lines applicable to the issuance of a
Section 148 notice, but they cannot change the
statutory provisions applicable thereto which are
required to be strictly complied with. Further,
just as the Executive cannot legislate, it cannot
impede the implementation of law made by the
Legislature.
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
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by making provisions inconsistent with the Act. The
distinction between conditional legislation or delegated
legislation is irrelevant 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. Consequently, this
Court is respectfully not in agreement with the finding
of Chhattisgarh High Court in Palak Khatuja (supra)
that the legislative delegation exercised by the Central
Government by impugned Notifications to uphold the
mechanism as prevailing prior to March, 2021 is not in
conflict with any Act. To be fair to Chhattisgarh High
Court, there was no challenge in the petitions filed
before it to the legality and validity of the impugned
Notifications dated 31st March, 2021 and 27th April,
2021. On the contrary, this Court is in agreement with
the views of the Allahabad High Court and Rajasthan
High Court (Bench at Jaipur) in Ashok Kumar Agarwal
(supra) and Bpip Infra Private Limited vs. Income Tax
Officer, Ward 4(1), S.B. Civil Writ Petition 13297/2021,
respectively.
50. Consequently, Explanations A(a)(ii)/A(b) to
the Notifications dated 31st March, 2021 and
27th April, 2021 are ultra vires the Relaxation
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Act, 2020 and are therefore, bad in law and null
and void.
...
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 necessarily be made
available even in respect of proceedings relating
to past Assessment Years provided, of course,
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Section 148 notice has been issued on or after
1st April, 2021.
...
74. Further, if the argument of learned counsel for the
respondents that the Explanation in Notification No. 20
dated 31st March, 2021 extended the applicability of
old procedure of reassessment beyond 31st March,
2021 is accepted the same shall lead to patent
arbitrariness since:
a. during the period from 1st April, 2021 to
30th June, 2021, both old as well as new
procedure as enacted by Finance Act, 2021
shall simultaneously operate [more so, since
there is no statutory provision deferring the
implementation of the new/mandatory
procedure];
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 Rs.
50 lakh, Assessing Officer shall have absolute
discretion to choose either the old or the new
mechanism;
c. 'doctrine of election' normally confers two
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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
states that the procedure in Section 148A will not apply
to cases where search/survey is initiated after 1st
April, 2021. Also, the second proviso to Section 149
states that the new limitation will not apply where
search/survey is initiated on or before 1st April, 2021.
In fact, the department's interpretation would also
make the provisions relating to search cases
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completely unworkable. 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.
...
84. Even if it is assumed that the impugned
Explanations in the two Notifications are valid,
still the impugned notices are bad in law, as the
impugned Explanations only seek to effectuate
the erstwhile Sections 148, 149 and 151 and they
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do not cover Section 147. However, the
conditions provided for in the substituted Section
147 were not considered while issuing notices by
the Assessing Officer. In fact, the said Section
147 is itself subject to Sections 148 to 153, which
would include Section 148A.
85. The "legal fiction" argument is without any
foundation. A statute can be said to enact a legal
fiction when it assumes the existence of
something which is known not to exist. The
extension of time for completing an assessment
or issuing a Section 148 notice has no element of
legal fiction in it. The only effect and
consequence of this extension of the time limit is
that if the act in question is performed within the
extended time limit, it will be considered to be
legally compliant. However, there is no
assumption that the act in question is deemed to
have been performed within the original time
limit, 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
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"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.
...
97. This Court is of the view 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
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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
impugned Explanations in the Notifications dated
31st March, 2021 and 27th April, 2021 are not
conditional legislation and are beyond the power
delegated to the Government as well as ultra
vires the parent statute i.e. the Relaxation Act.
Accordingly, this Court is respectfully not in agreement
with the view of the Chhattisgarh High Court in Palak
Khatuja (supra), but with the views of the Allahabad
High Court and Rajasthan High Court in Ashok Kumar
Agarwal (supra) and Bpip Infra Private Limited (supra)
respectively.
...
103. 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 the
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Executive/Respondents/Revenue cannot frustrate the
purpose of substituted statutory provisions, like
Sections 147 to 151 of Income Tax Act, 1961 in the
present instance, by emptying it of content or impeding
or postponing their effectual operation.
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."
[emphasis supplied]
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W.P.No.15019 of 2021 etc., batch
19. 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.
(M.N.B., ACJ.) (P.D.A., J.)
04.02.2022
Index : Yes
sasi
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W.P.No.15019 of 2021 etc., batch
To:
1. The Director,
Central Board of Direct Taxes,
Ministry of Finance,
Department of Revenue,
North Block,
New Delhi – 110 001.
2. The Assistant Commissioner of Income Tax (Exemptions)
Income Tax Department,
Annexe Building, III Floor,
No. 121, Mahatma Gandhi Road,
Nungambakkam,
Chennai – 600 024.
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W.P.No.15019 of 2021 etc., batch
M.N.BHANDARI, ACJ
AND
P.D.AUDIKESAVALU,J.
(sasi)
W.P.No.15019 of 2021 etc., batch
04.02.2022
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https://www.mhc.tn.gov.in/judis
