The Finance Act, 2021 introduced a new set of reassessment proceedings from 01.04.21.The Central Board of Direct Taxes (C.B.D.T) by way of various notifications had extended the time limit of issuing the notice U/s 148 of the Act up to 30th June, 2021.
The Income tax department has issued many Section 148 notices for several assessment years (A.Y. 2013-14 onwards) after 31st March 2021.Many writ petitions have been filed across the country challenging the notices issued u/s 148 after 31st march 2021 and notifications issued by CBDT to extend the time limits for issuing such notices, various courts have also stayed the reassessment proceedings.
A writ petition on similar line was recently filed before Hon. Chattisgarh High Court in Palak khatuja vs. UOI and others W.P.(T) 149 of 2021 which was decided in the favour of revenue
Question before the Hon. Court:
Quote “whether with the promulgation of the Act on 1st day of April, 2021, whether the notice directly issued under Section 148 on 30.06.2021 is valid or not as bar of 148A was created by insertion of Section on 01st April, 2021.” Unquote
In answer to this question the Hon. High Court has held the notice dated 30.06.18 issued under section 148 of The IT Act,1961 to be valid and the Hon. Court was not inclined to interfere in the issuance of the notice.
Brief Facts of the case
|1.||Cut Off date for issuing notice without extension notification||31.03.21|
|2.||Cut Off date for issuing notice after extension notification||30.06.21|
|3.||Date of Issue of Notice U/s 148 in the impugned matter||30.06.21|
|4.||Assessment Year for which notice was issued||2015-16|
Contentions raised by the Assessee:
i) Notification for extension of time limit by CBDT cannot override law passed by the parliament.
ii) Notice u/s 148 was issued without complying with newly introduced Sec.148A which has come into force from 01.04.21;
iii) Sec 148A requires that before issuing sec 148 notice Assessing officer shall:
> conduct an enquiry;
> Provide opportunity of Being Heard to the Assessee;
> Issue Show Cause Notice.
iv) Because Sec.148A was not complied therefore Notice u/s 148 is illegal & liable to be quashed;
Contentions raised by the revenue:
> Due to Covid CBDT had extended time limit up to 30.06.21
> Notice is issued on 30.06.21, it is completely valid and legal.
Observations of the Hon. court:
i) Time limits were extended because of Covid Pandemic.
ii) Delegation of powers by Parliament to Ministry of Finance for extension of time limits is the interest of flexibility and smooth working of the Act i.e. it was for administrative efficiency and does not amount to abduction of power.
iii) For this proposition The Hon. High court relied on the case of A.K. Roy vs. Union of India reported in AIR 1982 SC 710, where the Apex Court held that the Constitution (44Th) Amendment Act, 1978, which conferred power on Executive to bring the provisions of that Act into force did not suffer from excessive delegation of legislative power.
iv) Therefore, this legislative delegation which is exercised by the C.G by notification to uphold the mechanism as prevailed prior to March, 2021 is not in conflict with any Act, because the main purpose of the Finance Act is not defeated. Therefore, it would be a conditional legislation.
v) The legislature has resorted to conditional legislation to give the power to executive, in what circumstances the law should become operative or when the operation should be extended would be covered by doctrine of the conditional legislation.
vi) Under the circumstances of pandemic and lock down, by the notifications the operation of Sec. 148 of the Income Tax Act was extended, thereby deferment of Sec. 148A was done and C.G can’t be said to have encroached upon turf of Parliament.
vii) By such notification, the individual identity of Sec. 148, which was prevailing prior to amendment and insertion of sec. 148A was insulated and saved up till 30.06.2021
viii) Consequently the provisions of Section 148 which was prevailing prior to the amendment of Finance Act, 2021 was also extended therefore, the power to issue notice under Sec. 148 which was prior to the amendment was also saved.
ix) In a result, the notice issued on 30.06.2021 would also be saved.
x) Therefore, no interference is required to be made in the said issuance of notice and accordingly the petitions are dismissed.
Summarized By ■■
CA Milind Wadhwani
DISA(ICAI), FAFD(ICAI), Research (Ph.D.) Scholar
Mail ID: – [email protected]