Notice under section 148 of Income Tax Act, 1961 without following the procedure under section 148A issued during 01.04.2021 to 30.06.2021 in relation to AY 2014-15 or earlier assessment years. A Controversy
By way of various notifications issued under section 3 of the Taxation and Other Laws (Relaxation and Amendment Of Certain Provisions) Act, 2020 [in short “Taxation Relief Act”], the Central Government from time to time, inter alia, extended the limitation for issuance of notice under section 148 of the Act, as prescribed under section 149 of the Act, as under:
|S. No.||Date of Notification||Where the original limitation for issuance of notice under section 148 of the Act fell during the below period||Extended Limitation|
|1.||31.03.2020||20.03.2020 to 29.06.2020||30.06.2020|
|2.||24.06.2020||20.03.2020 to 31.12.2020||31.03.2021|
|4.||27.04.2021||30.04.2021 (due to extension)||30.06.2021|
The time to issue notice for AY 2014-15 and AY 2013-14 under the erstwhile provision of section 149 stood extended to 30.06.2021 owing to the above said extended period of limitation.
On account of the extended period of limitation, the Department has issued various notices for, inter-alia, AY 2014-15 and AY 2015-16 during the period 01.04.2021 to 30.06.2021
While issuing the notices under section 148 during 01-04-2021 – 30.06.2021, the department has followed the erstwhile provision of section 147-152.Procedure under section 148A has also not been followed by the department which is effective from 1.4.2021 as per Finance Act 2021 wef 1.4.2021.
The Department seeks to rely on the following Explanation provided under the Notification issued for extension of time limit for issuance of notice under section 148 to contest that the provision that existed prior to commencement of Finance Act, 2021 applied to such notices issued for AY 2014-15 and AY 2013-14:
“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 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.”
The notice issued by following the earlier provisions is being contested to be bad in law on account of, inter-alia, the following reasons:
The Explanation issued under the Notification is beyond the power conferred upon and delegated to the Central Government under the provisions of section 3 of the Taxation Relief Act and is also contrary to the legislative intent behind the provisions of the Taxation Relief Act.At one time two provisions under the same law can not stand .Either earlier provision related to section 147 to 151 will be operative or the new provisions . At one time two acts can not run simultaneously .
The Explanation is also contrary to and ultra vires the provisions of sections 147 to 149 of the Act as substituted/introduced vide Finance Act, 2021.
Pursuant to coming into force of the new provisions of section 149, the provisions that existed prior there to have been repealed and thus cannot be resorted to and applied by the Department for any proceedings initiated on or after 01.04.2021.
Writs filed in various High Courts to challenge notice u/s 148 issued on or after 01.04.2021 without following the procedure under section 148A
The controversy is still open and not settled . Hope the courts decides the issue soon .