The Honourable Supreme Court has delivered his judgement in the controversies surrounding in cases of reassessment notice issued between 01.04.2021 to 31.03.2022 u/s 148 of the Income Tax Act and used power conferred under article 142 of constitution to save the revenue from humiliation to a great extent. In this decision, The Supreme Court has also outlined a time frame to complete the formalities in cases which are fit for reassessment. Read SC Judgment: SC sets aside all HC orders with a direction to treat old notices as deemed notices under section 148A
The Central Board of Direct tax (CBDT) has issued instruction no 1/2022 dated 11th May 2022 to implement the decision of the Supreme Court. As expected, CBDT has again misinterpreted the decision of the supreme court and it seems that matter will again see the court room of supreme court
The crux of whole instruction lies in the last Para of point no 6.1 and point no 6.2. The relevant Para are as under:
6.1 Hon’ble Supreme Court has upheld the views of High Courts that the benefit of new law shall be made available even in respect of proceedings relating to past assessment years. Decision of Hon’ble Supreme Court read with the time extension provided by TOLA will allow extended reassessment notices to travel back in time to their original date when such notices were to be issued and then new section 149 of the Act is to be applied at that point.
6.2 Based on above, the extended reassessment notices are to be dealt with as under:
(i) AY 2013-14, AY 2014-15 and AY 2015-16: Fresh notice under section 148 of the Act can be issued in these cases, with the approval of the specified authority, only if the case falls under clause (b) of sub-section (1) of section 149 as amended by the Finance Act, 2021 and reproduced in paragraph 6.1 above. Specified authority under section 151 of the new law in this case shall be the authority prescribed under clause
(ii) of that section.
(ii) AY 16-17, AY 17-18: Fresh notice under section 148 can be issued in these cases, with the approval of the specified authority, under clause (a) of sub-section (1) of new section 149 of the Act, since they are within the period of three years from the end of the relevant assessment year. Specified authority under section 151 of the new law in this case shall be the authority prescribed under clause (i) of that section.
First of all, CBDT should not have interpreted that Hon’ble Supreme Court has upheld the views of High Court that benefit of new Law (Amended provision) shall be made available in respect of proceedings relating to past assessment years. Decision of the Supreme Court read with time extension provided by TOLA will allow extended reassessment notice travel back in time to their original date when such notice were to be issued and the new section 149 of the Act is to be applied at that point.
First of all, The Hon’ble Supreme Court has upheld the views of High Courts except Chhattisgarh High Court that amended provision related to reassessment shall be applicable from 1st April 2021 and not the old provision accordingly new formalities as envisaged in section 148A is required to be performed before issue of notice u/s 148 of the Act. Similarly provision of section 149 shall also be applicable and rights and defence available to assessee and department in section 149 shall be available to the assessee and department.
Secondly, this is the best example to show case of interpretation without context and interpretation of its choice. If one go through the judgement of the supreme court at Para no 7, The Hon’ble court has clearly stated that new provision substituted by Finance Act, 2021 being remedial and benevolent in nature and substituted with a specific aim and object to protect the rights and interest of the assessee as well as and when the same being in public interest, the respective high court have rightly held that the benefit of new provisions shall be made available even in respect of the proceeding related to past assessment years, provided section 148 notices has been issued on or after 1st April 2021.
The above comment of Hon’ble high court is with reference to amended section 149 of the Act as can be traced from reference of Para 6.6 of the Order this means that benefit of section 149 is still available to the assessee even in the case which were reopened after 1st April 2021 though the case is related to earlier Assessment year. This was more or less a clarificatory remark of the Hon’ble Supreme Court so that assessee is not eschewed to get the benefit of section 149 by the department but legal team of the department is so smart that most of cases will again see the court room.
The Hon’ble Supreme Court has nowhere stated that TOLA will allow extended reassessment notice travel back in time to their original date when such notice were to be issued. If such would have been decision that writ should have been struck down because it was the prime issue that notice u/s 148 cannot be issued without complying the provision of section 148A of the Act. If as per interpretation of CBDT, TOLA has travel back the time limit to their original date when such notice were to be issued than on what ground cases below Rs 50.00 lacs related to AY 2013-14, 2014-15 and 2015-16 is supposed to be dropped as given in Para 6.2(1) of the instruction because department was having power to issue notice u/s 148 up to 31.03.2022 for AY 2013-14, 2014-15 where the escaped income is more than 1 Lac due to power conferred by TOLA though original time limit het expired on 31st March 2021.
Almost all legal stalwarts of the country were of the opinion that since notice u/s 148 of the will be issued in the current year accordingly no notice can be issued up to AY 2015-16 in any circumstances irrespective of amount of escapement of income. Even if it is assumed that for the purpose of this proceeding, we again reach to the time zone between 1st April to 30th June still no case be reopened irrespective of amount of escapement of income for AY 2013-14 and 2014-15 due to provisions contained in the first proviso to section 149(1) which clearly states that “ no notice under section 148 shall be issued at any time in a case for the relevant AY 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 section (1) of this section, as they stood immediately before the commencement of the Finance Act, 2021.
This instruction of CBDT portray the true character and mind-set of Indian bureaucrat and real reason for increased litigation in the courts. Such type of deliberate misinterpretation of statute is not only wastage of money, human resources but also derail the concept of ease of doing business to a great extent. Hope CBDT should come out with amended instruction to implement the SC decision or else SC should suo moto issue the required instruction to save precious time of innocent assessees.