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HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR
Akil Kureshi, Sameer Jain, JJ.
Sudesh Tanejaa & Ors. – Appellants
Versus
Income Tax Officer, Ward-1(3) & Ors. – Respondents
Civil Writ Petition No. 969 of 2022
Decided On : 27-01-2022
The Court held that the substituted provisions of Sections 147, 148, 149, and 151 of the Income Tax Act, 1961, introduced by the Finance Act, 2021, would apply to all assessments for the period prior to 01.04.2021, and the explanations contained in the CBDT circulars dated 31.03.2021 and 27.04.2021, which purported to save the applicability of the pre-existing provisions, were ultra vires and unconstitutional.
Fact of the Case:
The petitioners, individual taxpayers, challenged the notices issued by the Assessing Officers under Section 148 of the Income Tax Act, 1961 ('the Act') for reopening of assessments for various assessment years prior to 01.04.2021. The petitioners contended that since the notices were issued after 01.04.2021, the same could be done only as per the provisions contained in the Act effective from 01.04.2021. The petitioners also challenged the explanations contained in two notifications issued by the Central Board of Direct Taxes (CBDT) clarifying that provisions of Sections 148, 149, and 151 of the Act as they stood on 31.03.2021 shall apply for the purpose of issuance of notice under Section 148 for the past period.
Finding of the Court:
The Court held that the substituted provisions of Sections 147, 148, 149, and 151 of the Act, introduced by the Finance Act, 2021, would apply to all assessments for the period prior to 01.04.2021. The Court observed that the substitution of the old provisions for reopening of assessment would not obliterate the previous set of statutory provisions. They would continue to have effect for the past period. In other words, if the notice for reopening of assessment was issued for any period prior to 01.04.2021, the provisions as they stood at the relevant time would apply. In such a case there was no requirement of following the procedure laid down under Section 148A of the Act before issuing notice under Section 148. The Court further held that the explanations contained in the CBDT circulars dated 31.03.2021 and 27.04.2021, which purported to save the applicability of the pre-existing provisions, were ultra vires and unconstitutional. The Court observed that the subordinate legislature must submit to the limits of powers vested in it by the parent Act. By way of explanation, the subordinate legislature cannot revive the statutory provisions which had lapsed.
Issues: 1. Whether the substituted provisions of Sections 147, 148, 149, and 151 of the Income Tax Act, 1961, introduced by the Finance Act, 2021, would apply to all assessments for the period prior to 01.04.2021? 2. Whether the explanations contained in the CBDT circulars dated 31.03.2021 and 27.04.2021, which purported to save the applicability of the pre-existing provisions, were ultra vires and unconstitutional?
Ratio Decidendi: The Court held that the substituted provisions of Sections 147, 148, 149, and 151 of the Act, introduced by the Finance Act, 2021, would apply to all assessments for the period prior to 01.04.2021. The Court observed that the substitution of the old provisions for reopening of assessment would not obliterate the previous set of statutory provisions. They would continue to have effect for the past period. In other words, if the notice for reopening of assessment was issued for any period prior to 01.04.2021, the provisions as they stood at the relevant time would apply. In such a case there was no requirement of following the procedure laid down under Section 148A of the Act before issuing notice under Section 148. The Court further held that the explanations contained in the CBDT circulars dated 31.03.2021 and 27.04.2021, which purported to save the applicability of the pre-existing provisions, were ultra vires and unconstitutional. The Court observed that the subordinate legislature must submit to the limits of powers vested in it by the parent Act. By way of explanation, the subordinate legislature cannot revive the statutory provisions which had lapsed.
Final Decision: The Court allowed the writ petitions and quashed the impugned notices issued by the Assessing Officers under Section 148 of the Act. The Court also dismissed the appeals filed by the revenue.
JUDGMENT
Akil Kureshi, CJ. - This group of cases involves writ petitions and D.B. Special Appeals against the judgment of the learned Single Judge. Central issues arising in all these proceedings are common with little different in material facts. They were heard on different dates but due to commonality of issues required to be considered, they were clubbed together for disposal through common judgment.
2. In the writ petitions the petitioners have challenged respective notices issued by the Assessing Officers under Section 148 of the Income Tax Act, 1961 ('the Act' for short) for reopening assessments for various assessment years. All these notices have been issued after 01.04.2021 and pertain to relevant period which is prior to the said date. The petitioners contend that since the notices are issued after 01.04.2021, the same could be done only as per the provisions contained in the Act effective from01.04.2021. Since in the present cases the notices are issued under the old provisions which have already been substituted, the notices are invalid. The petitioners have also challenged portions of two notifications issued by the Central Board of Direct Taxes (for short 'CBDT') clarifying that provisions of Sections 148, 149 and 151 of the Act as they stood on 31.03.2021 shall apply for the purpose of issuance of notice under Section 148 for the past period. According to the petitioners, this explanation is beyond the jurisdiction of CBDT.
3. In Special Appeals, the revenue has challenged the judgment of the learned Single Judge dated 25.11.2021 in case of BPIP Infra Private Limited Vs. Income Tax Officer (S.B. Civil Writ Petition No.13297/2021), reported in 2021 (12) TMI 207, in which relying on a decision of Division Bench of Allahabad High Court in case of Ashok Kumar Agarwal Vs. Union of India through its Revenue Secretary North Block And Ors. (Writ Tax Petition No.524/2021), dated 30.09.2021, reported in 2021(10) TMI 517, the learned Single Judge had quashed the notices issued under Section 148 of the Act.
4. Since material facts emerging from the record are undisputable and since the outcome of this litigation depends on pure questions of law, we have proceeded to hear these petitions and appeals finally without waiting for the replies of the department on factual aspects. Learned counsel for both the sides had also agreed to this formula.
5. Civil Writ Petition No.969/2022 is taken as a lead case. Facts may be noted in brief from the petition. The petitioner is an individual. For the assessment year 2013-14 the petitioner had filed return of income on 01.10.2013 declaring total income ofRs.4,79,420/-. It appears that such return was accepted by the department without scrutiny. To reopen such assessment for the assessment year 2013-14, the respondent No.l Income Tax Officer Jaipur issued a notice on 08.04.2021 under Section 148 of the Act. Case of the petitioner is that this notice which has been issued under provisions contained in the Act for reopening of the assessment which existed prior to 01.04.2021, is bad in law since with effect from 01.04.2021 new provisions have been introduced in the Act which are in substitution of the old provisions. According to the petitioner, since undisputably the reassessment provisions introduced in the statute with effect from 01.04.2021 have not been followed in the present case, the notice is bad in law. According to the petitioner, limitation for issuing notice would be as provided in amended section 149 of the Act. Before issuing notice under section 148, procedure prescribed in section 148A must be followed. In the present case the notice was time barred as per the amended section 149 and procedure under Section 148A was not followed. As an extension of this argument, the petitioner contends that this defect could not be cured through an explanation issued by the CBDT under purported exercise of power of delegated legislation. We would elaborate on these aspects of the matter once we
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 f....
The new scheme of reassessment under the Finance Act, 2021 applies to all notices issued after 01.04.2021, invalidating notices issued for the relevant assessment years prior to the substitution. The....
The main legal point established in the judgment is that the substituted provisions of reassessment under the Finance Act, 2021 apply to notices issued after 01.04.2021 for the assessment periods pri....
The main legal point established is that the new provisions for reassessment of income introduced by the Finance Act, 2021, would apply to notices for reassessment for the past years, and the explana....
The main legal point established in the judgment is that the substituted provisions of reassessment under the Finance Act, 2021 would apply to notices issued after 01.04.2021 for the assessment perio....
The new scheme of reassessment under the Finance Act, 2021 applies to all notices issued after 01.04.2021 for the assessment periods prior to substitution.
Time limit to issue notice under Section 148 of the Act for the Assessment Years 2015-2016 onwards was not expiring within the period for which Section 3(1) of Relaxation Act was applicable and, henc....
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