Case Law Details

Case Name : Tarun Goel Vs ITO (Delhi High Court)
Appeal Number : W.P.(C) 8806/2021
Date of Judgement/Order : 24/08/2021
Related Assessment Year :

Tarun Goel Vs ITO (Delhi High Court)

Conclusion: Revenue authorities were restrained from continuing with reassessment till further orders with respect to notices issued on or after 1-4-2021 without following the procedure prescribed under section 148A in 79 cases.

Held: Assessee stated that the notices under section 148 were invalid in the eyes of law and void from inception as they were issued without following the process of issuance of prior notice under section 148A. He submitted that the impugned notices were invalid as they had been issued under the pre-amended provisions of the Act, which were no longer in force on the date of the impugned notices. He further stated that the respective officer could not indirectly extend the operation of the old provisions of the Act  beyond 31 st March, 2021 in the guise of a clarification under delegated legislation. Officer stated that the time limit for issuing the notices under Section 148 stood expired and, therefore, any action under Section 148 would have been time barred by virtue of the proviso to Section 149(1). They submitted that by virtue of introduction of Section 3(1) of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, the time limit for taking action under Section 148 had been extended till 30th June, 2021. Consequently, according to them, the impugned notifications only provide that as the time limit for issuing notice under Section 148A had been extended by deemed fiction, the procedure to be followed till 30th mentioned under the Act. It was held that the Court was of the prima facie view that the impugned notification was contrary to settled principle of statutory interpretation, namely, that any action taken post the amendment of a procedural section would have to abide by the new procedures stipulated in the amended Act. Till further orders revenue authorities restrained from continuing with reassessment proceedings, in any manner, pursuant to impugned notices.

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FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT

1. On 13th July, 2021, this Court in similar writ petitions being W.P.(C) Nos.6442/2021, 6443/2021 and 6451/2021 had issued notices and granted stay of the impugned notices. The relevant portion of the order passed in W.P.(C) Nos. 6442/2021, 6443/021 and 6451/2021 is reproduced hereinbelow:-

“….. Learned counsel for the petitioners states that the impugned notices are invalid in the eyes of law and void from inception as they were issued without following the process of issuance of prior notice under section 148A of the Act. He submits that the impugned notices are invalid as they have been issued under the pre-amended provisions of the Act, which were no longer in force on the date of the impugned notices. He emphasises that the amendments are applicable to all the notices issued under Section 148 of the Act post 01  Section 148 of the Act post 01 st April, 2021.

Learned counsel for the petitioners states that the impugned notifications issued by the Respondent-2 are ultra vires the Act insofar as they contain the ‘explanation’ clarifying that the pre-amended Sections 148, 149 and 151 of the Act shall govern the issue of notice under Section 148 post 01 st April, 2021. According to him, Section 3(1) of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 authorizes the Central Government to only extend the time limits and nothing more.

He further states that the respondents cannot indirectly extend the operation of the old provisions of the Act  beyond 31 st March, 2021 in the guise of a clarification under delegated legislation.

He also relies upon interim stay orders passed by the Bombay High Court as well as by the learned predecessor Division Bench of this Court in Mon Mohan Kohli vs. Assistant Commissioner of Income Tax & Anr., W.P. (C) 6176/2021 dated 07th July, 2021.

Issue Notice. Mr. Sanjay Kumar, Advocate, Mr.Ajit Sharma, Advocate and Mr.Kunal Sharma, Advocate accept notice on behalf of the respondents in W.P.(C) Nos.6442/2021, 6443/2021 and 6451/2021 respectively.

Learned counsel for the respondents state that in the present cases, the time limit for issuing the notices under Section 148 of the Act stood expired and, therefore, any action under Section 148 would have been time barred by virtue of the proviso to Section 149(1) of the Act. They submit that by virtue of introduction of Section 3(1) of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, the time limit for taking action under Section 148 has been extended till 30th June, 2021. Consequently, according to them, the impugned notifications only provide that as the time limit for issuing notice under Section 148A of the Act has been extended by deemed fiction, the procedure to be followed till 30th mentioned under the Act. In support of their submission, they also rely upon Section 6 of the General Clauses Act, 1897.

Having heard learned counsel for the parties, this Court is of the prima facie view that the impugned notification is contrary to settled principle of statutory interpretation, namely, that any action taken post the amendment of a procedural section would have to abide by the new procedures stipulated in the amended Act.

Further, this Court is of the prima facie view that by virtue of a notification, which is a delegated legislation, the date for implementation of statutory provision, as stipulated in the Act, cannot be varied or changed.

This Court is also of the prima facie opinion that Section 6 of the General Clauses Act, 1897 offers no assistance to the respondents as the new Section 148A demonstrates an intent ‘to destroy’ the old procedure.

Consequently, following the interim orders passed by the learned predecessor Division Bench in Mon Mohan Kohli vs. Assistant Commissioner of Income Tax & Anr., W.P. (C) 6176/2021 dated 07th July, 2021 as well as similar interim order passed by the Bombay High Court, this Court directs that there shall be a stay of the operation of the impugned notices dated 09th June, 2021, 30th June, 2020 and 28th June, 2020 passed in W.P. (C) 6442/2021, 6443/2021 and 6451/2021 respectively.

 Let counter-affidavits be filed within three weeks. Rejoinder Affidavits, if any, be filed before the next date of hearing.

List on 28th September, 2021.”

2. Consequently, issue notice. Notice is accepted by the counsel for the respondents as mentioned hereinabove. They pray for and are permitted to file their counter-affidavits within three weeks. Rejoinder affidavits, if any, be filed before the next date of hearing.

3. Till further orders, the respondents are restrained from continuing with the reassessment proceedings, in any manner, pursuant to the impugned notices.

4. List along with WP(C) No. 6442/2021 on 28th September, 2021.

5. Kavita Jha, Advocate and Mr.Sunil Agarwal, Advocate are directed to file their short written submissions on behalf of the petitioner(s) and respondent(s) respectively not exceeding five pages each within four weeks along with the judgments that they wish to rely upon.

6. It is made clear that no adjournment shall be granted on the next date of hearing.

7. The order be uploaded on the website forthwith. Copy of the order be also forwarded to the learned counsel through e-mail.

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One Comment

  1. NEM SINGH says:

    Uphold the validity of issue of notice u/s 148 of #Income-tax Act: The Hon’ble Chhattisgarh High Court in W.P. (T) 149, 147 &148 of 2021 order dated 23.08.2021, uphold the validity of issue of notice u/s 148 of #Income-tax Act, 1961 following the extended period till 30.06.2021:
    “Considering the complexity, the Parliament thought it proper to delegate the Ministry of Finance, the date of applicability of the amended section. The delegation is not a self-contained and complete Act and is only been made in the interest of flexibility and smooth working of the Act, and the delegation therefore was a practical necessity. The Ministry of Finance have been delegated with such power therefore this delegation can always be considered to be a sound basis for administrative efficiency and it does not by itself amount to abdication of power. Reading of both the notification dated 31.03.2021 and 27.04.2021 whereby the application of section 148 of the Income Tax Act, which was originally existing before the amendment was deferred meaning thereby the reassessment mechanism as prevalent prior to 31st March, 2021 was saved by the notification. The notification is made by the Ministry of Finance, Central Government considering the fact of lock down all over India, it can be always be assumed that the deferment of the application of section 148A was done in a control way. It is settled proposition that any modification of the Executives implies certain amount of discretion and to be exercised with the aid of the legislative policy of the Act and cannot travel beyond it and run counter to it or certainly change the essential features, the identity, structure or the policy of the Act. Therefore, this legislative delegation which is exercised by the Central Government by notification to uphold the mechanism as prevailed prior to March, 2021 is not in conflict with any Act and notification by executive i.e. Ministry of Finance would be the part of legislative function.
    …………………………………………………………………………….
    Under the circumstances by the notifications the operation of Section 148 of the Income Tax Act was extended, thereby deferment of Section 148A was done. It was done by the Ministry of Finance by way of conditional legislation in the peculiar circumstances which arose during the pandemic and lock down and Central Government can not be said to have encroached upon turf of Parliament.
    ………………………………………………………………………
    By effect of such notification, the individual identity of Section 148, which was prevailing prior to amendment and insertion of section 148A was insulated and saved uptill 30.06.2021.

    So now we should wait for other High Courts course of action.

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