TMI Blog2024 (2) TMI 704X X X X Extracts X X X X X X X X Extracts X X X X ..... 2021, prior to enactment of the Finance Act, 2021, and present substituted Sections 147, 148, 149, 151 and newly inserted Section 148A of the Income Tax Act, 1961 as enacted by Finance Act, 2021, without having any savings clause for the old provisions relating to reassessment proceedings, Section 3 of the Taxation and Other Laws (Relaxation and Amendment of certain Provisions) Act, 2020 (TOLA), Notification No. 20/2021 dated 31st March, 2021 and Notification No. 38/2021 dated 27th April, 2021 issued by the CBDT in exercise of alleged delegated power conferred under TOLA, for aiding the old provisions relating to reassessment proceedings which stood and remained in force till 31st March, 2021, various judgments relied upon by the parties referred hereinabove and on reading all together we are inclined to hold that all the impugned notices issued under newly inserted Section 148A(b) of the Income Tax Act, 1961 by Finance Act, 2021, relating to assessment years 2013-14 and 2014-15, which have been issued on or after 1st April, 2021 by extending the time of limitation by the CBDT for issuance of notice under Section 148 of the old Act in exercise of power under Section 3 of TOLA is un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2022, WPO/2663/2022, WPO/2665/2022, WPO/2667/2022, WPO/2669/2022, WPO/2677/2022, WPO/2678/2022, WPO/2679/2022, WPO/2681/2022, WPO/2682/2022, WPO/2683/2022, WPO/2684/2022, WPO/2685/2022, WPO/2686/2022, WPO/2687/2022, WPO/2688/2022, WPO/2689/2022, WPO/2690/2022, WPO/2692/2022, WPO/2693/2022, WPO/2694/2022, WPO/2695/2022, WPO/2696/2022, WPO/2697/2022, WPO/2700/2022, WPO/2701/2022, WPO/2702/2022, WPO/2703/2022, WPO/2708/2022, WPO/2710/2022, WPO/2714/2022, WPO/2716/2022, WPO/2717/2022, WPO/2719/2022, WPO/2722/2022, WPO/2726/2022, WPO/2727/2022, WPO/2728/2022, WPO/2729/2022, WPO/2734/2022, WPO/2735/2022, WPO/2736/2022, WPO/2741/2022, WPO/2742/2022, WPO/2743/2022, WPO/2744/2022, WPO/2745/2022, WPO/2746/2022, WPO/2748/2022, WPO/2749/2022, WPO/2750/2022, WPO/2751/2022, WPO/2752/2022, WPO/2754/2022, WPO/2755/2022, WPO/2756/2022, WPO/2757/2022, WPO/2758/2022, WPO/2760/2022, WPO/2761/2022, WPO/2762/2022, WPO/2765/2022, WPO/2766/2022, WPO/2770/2022, WPO/2771/2022, WPO/2772/2022, WPO/2773/2022, WPO/2777/2022, WPO/2778/2022, WPO/2779/2022, WPO/2781/2022, WPO/2782/2022, WPO/2787/2022, WPO/2788/2022, WPO/2792/2022, WPO/2793/2022, WPO/2794/2022, WPO/2795/2022, WPO/2796/2022, WPO/2800/2022, WPO/2801/ ..... 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X X X X Extracts X X X X X X X X Extracts X X X X ..... ns are the impugned notices issued on or after 1st April, 2021, under Section 148 (old) of the Income Tax Act, 1961, by converting or treating the same under Section 148A(b) of the Income Tax Act, 1961 inserted by the Finance Act, 2021 which came into effect from 1st April, 2021 and all subsequent proceedings thereunder relating to assessment years 2013-14 and 2014-15 on the basis of judgment of the Hon ble Supreme Court in the case of Union of India Vs Ashish Agarwal reported in (2022) 444 ITR I (SC) and on the basis of Section 3 (1) of Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) and subsequent Notifications No. 20 of 2021 dated 31st March, 2021 and No. 38 of 2021 dated 27th April, 2021 issued by CBDT in aid of old provisions relating to reassessment proceedings, on the ground that the impugned notices have already become time barred after 31st March, 2021 under the old unamended Section 149(1)(b) of the Income Tax Act, 1961, by submitting gist of which are as hereunder. 3. Reference to some relevant notifications, legislation etc. chronologically as hereunder are necessary before detail discussion in these cases. 4. On March 31, 2020 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns which may be available to the assessee and revenue under the Finance Act, 2021 and in law shall continue to be available. 11. On May 11, 2022 Instruction No. 01/2022 issued by the Central Board of Direct Taxes. The said circular proceeded on the basis that proceedings under Sections 147/148 of the Act for, inter alia, the assessment years 2013- 14 and 2014-15 did not get time barred on March 31, 2021. 12. The Finance Act, 2021 completely reformed the system of reassessment by bringing in a completely new procedure of reassessment with effect from April 1, 2021. 13. In terms of Sections 40, 41, 43 and 44 of the Finance Act, 2021, which came into force on April 1, 2021, as per Section 2(a) thereof, the old Sections 147, 148, 149 and 151 stood repealed/abrogated and replaced by a new set of provisions. 14. Further, by Section 42, a new Section 148A was inserted also with effect from April 1, 2021. 15. By Section 43 of Finance Act 2021, old Section 149 of the Act was substituted with effect from April 1, 2021 without any savings clause. The new Section 149 laid down new time limits for issue of notice under the new Section 148 of the Act. As such, the first proviso to the new Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... saved. In the instant case, the time to issue notice under the old Section 148 of the Act for the assessment years 2013-14 and 2014-15 expired on March 31, 2021 before the old provisions stood repealed and replaced by the new provisions with effect from March 31, 2021. The old provisions stood repealed and replaced by the new provisions with effect from April 1, 2021. According to the petitioners the following decisions relied upon on behalf of the revenue do not advance its case;- (i) State of Punjab Vs Mohar Singh, AIR 1955 SC 84 (ii) Tarak Chandra Banerjee Vs Ratan Lal Ghosal, AIR 1957 Cal 257 (FB) (iii) Gammon India Ltd. Vs Special Chief Secretary, (2006) 3 SCC 354 (iv) Kolhapur Canesugar Works Ltd. Vs Union of India, (2000) 2 SCC 536 20. Petitioners submit that Section 3(1) of TOLA merely relaxed the period of limitation prescribed under various specified statutes, one of which was the Income Tax Act. The power under Section 3(1) of TOLA could be exercised only for the purpose of relaxing i.e. extending the time limit specified in various statutes. The exercise of power under Section 3(1)of TOLA was dependent on the continued existence of the statutory provision, the time limi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under old Section 151 of the Act was in the normal course available up to March 31, 2021. In the absence of old Section 149 after March 31, 2021, there can be no extension of the time limit specified thereunder beyond March 31, 2021. 26. By notification no. 20/2021 the time limit laid down in the old Section 149 for issue of notice under old Section 148 after sanction under Section 151 of the Act was sought to be extended beyond March 31, 2021. The Central Government was conscious of the fact that the old reassessment provisions including the old section 149 and the old Section 151 of the Act will not be on the statute book from April 1, 2021. The Finance Act, 2021 had received Presidential assent on March 28, 2021. As such, the said notification contained an Explanation that the old reassessment provisions, namely the old Sections 148, 149 and 151 of the Act as they stood on March 31, 2021 before repeal shall continue to apply. Such Explanation found place in the said notification because without the continued existence of the old reassessment provisions, there could be no extension of the time limit specific therein. 27. Section 3 of TOLA merely provided for extension of time spe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Section 3(1) of TOLA was never exercised with reference to the new reassessment provisions under Finance Act, 2021 effective from April 1, 2021. 34. Respondents/revenue in defending the aforesaid notices issued under Section 148A(b) of the Act and subsequent proceedings initiated on or after 1st April, 2021 relating to assessment year 2013-14 and 2014-15 submit as hereunder. a. The provisions of TOLA, 2020, especially Section 3 thereof despite being an earlier enactment than the Finance Act, 2021 would override the Finance Act, 2021, in view of the fact that TOLA is a special legislation enacted during special times when the Covid-19 pandemic had gripped the world. That being so the extension of time period done by the notifications issued under TOLA would survive despite the amendment of Section 149 of the Income Tax Act, 1961 by the Finance Act, 2021. b. Although Income Tax Act, 1961 (and the subsequent Finance Act, 2021) are special law yet, since TOLA has been enacted during the period of Covid-19 specifically for the purpose of tiding over the situation then prevailing, therefore TOLA will have more special character than that of the Income Tax Act. This fact will be evid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions, one is dated March 31, 2021 and the other is dated April 27, 2021. Going by the most conservative reasoning and assuming that the argument that TOLA is not a special act and also assuming that the proviso to Section 149 of the Act does not act as a saving clause then also the notification dated March 31, 2021 cannot be faulted at all. The same was issued before the Finance Act, 2021 took effect. Thus in any case the notification took effect and became a part of the statute before the Finance Act, 2021 came into force. The argument that the Finance Act got President s assent on March 28, 2021 is of no relevance since the Finance Act took effect on and from April 01, 2021 but before that the notification dated March 31, 2021 had been issued and it had become a part of the present Act i.e. unamended Section 149 of the Act according to revenue. 42. Revenue submits that contention of the assessees/petitioners that the Central or State Government cannot be empowered to issue notifications as they cannot legislate, in fact law is just to the contrary. In appropriate cases Central or State Government can be empowered to issue notifications which would be binding as law. In this case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tax Officer and the Hon ble Delhi High court in the case of Ganesh Das Khanna Vs Income Tax Officer, it will be clear from reading thereof that none of the points argued in the instant case was argued or considered there. Further the judgment in the case of Ganesh Das Khanna (supra) is not at all one which pertains to or relates to the proviso to Section 149 of the Act which is very much relevant there. The assessee s reliance on the judgments in the case of Man Mohan Kohli Vs ACIT, Ashok Kumar Aggarwal Vs UOI is wholly misplaced in as much as the judgments in cases of Man Mohan Kohli Vs ACIT, Ashok Kumar Aggarwal Vs UOI stood substituted and modified by the judgment in UOI Vs Ashish Aggarwal. Similarly placing reliance on the case of Rajeev Bansal for stating that these points were dealt with is again misplaced because in Rajeev Bansal s case the same Man Mohan Kohli Vs ACIT and Ashok Kumar Aggarwal Vs UOI had been referred which stood substituted and modified by the judgment in UOI Vs Ashish Aggarwal as aforesaid. None of the other cases cited by the assessee helps the assessee at all. The same are wholly inapplicable to the facts of the present case. It was submitted that in v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts to abdication of legislative power by the legislature which is not permissible in law as per view taken in the following judgments: (i) State of Tamil Nadu Vs K. Shyam Sunder (2011) 8 SCC 737 Paragraphs 44, 45 and 49 (ii) Union of India Vs Ganpati Dealcom Pvt. Ltd., (2023) 3 SCC 315 Paragraphs 52 to 54 51. Petitioners submit that the notification issued under Section 3 of TOLA is not conditional legislation but is delegated legislation. Section 3 of TOLA is by itself complete inasmuch as it is operative and effective on its own. This Section merely confers power on Central Government to extend the time fixed by it under Section 3 to a subsequent date. The Tulsipur Sugar Co. Ltd. Vs The Notified Area Committee, AIR 1980 SC 882 relied upon on behalf of the revenue has no application and even assuming for the sake of argument that notifications dated March 31, 2021 and April 27, 2021 issued under Section 3 of TOLA are conditional legislation, the same nevertheless have to pass muster having regard to the principles laid down in State of Tamil Nadu Vs K. Shyam Sunder (2011) 8 SCC 737 and Union of India Vs Ganpati Dealcon Pvt. Ltd., (2023) 3 SCC 315. 52. Petitioners submit that relia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the Hon ble Gujarat High Court in Keenara Industries Pvt. Ltd. Vs Income Tax Officer, [2023] 453 ITR 51 (Guj.) and the Hon ble Allahabad High Court in Rajeev Bansal Vs Union of India, [2023] 453 ITR 153 (All) and submit that by mere passing of interim order by the Hon ble Supreme Court staying the operation of the said judgments [ Income Tax Officer Vs Keenara Industries (P) Ltd., [2023 153 taxmann.com 205 (SC) and Union of India Vs Rajeev Bansal, [2023] 150 taxmann.com 206 (SC) does not wipe out the existence thereof or undermine the authority of the said decisions as precedents and on this proposition relied on the judgments of the Division Bench of this Court in Pijush Kani Chowdhury Vs State of West Bengal, 2007 SCC OnLine Cal 267 and Niranjan Chatterjee Vs State of West Bengal Ors., 2007 SCC OnLine Cal 283. 57. Petitioners submit that the foundation of the judgments of the Hon ble Delhi High Court in Salil Gulati Vs Assistant Commissioner of Income Tax, [2023] 455 ITR 24 (Del.) and Touchstone Holdings Pvt. Ltd. Vs Income Tax Officer, [2023] 451 ITR 196 (Del.) is paragraph 98 of the judgment of the Hon ble Delhi High Court in Mon Mohan Kohli Vs Assistant Commissioner of In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... March, 2021 and Notification No. 38/2021 dated 27th April, 2021 issued by the CBDT in exercise of alleged delegated power conferred under TOLA, for aiding the old provisions relating to reassessment proceedings which stood and remained in force till 31st March, 2021, various judgments relied upon by the parties referred hereinabove and on reading all together I am inclined to hold that all the impugned notices issued under newly inserted Section 148A(b) of the Income Tax Act, 1961 by Finance Act, 2021, relating to assessment years 2013-14 and 2014-15, which have been issued on or after 1st April, 2021 by extending the time of limitation by the CBDT for issuance of notice under Section 148 of the old Act in exercise of power under Section 3 of TOLA is unauthorised in law and all such impugned notices are barred by limitation and that all subsequent proceedings on the basis of the aforesaid impugned notices are not sustainable in law and accordingly the same are quashed for the following summarized reasons: i. TOLA which was initially enacted and subsequent notifications being Notification No. 20/2021 dated 31st March, 2021 and Notification No. 38/2021 dated 27th April, 2021 issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n altogether new regime vide the Finance Act, 2021 with effect from 01.04.2021. iv. Therefore, the provisions of TOLA which applied to the old law cannot be read into the new substituted regime to test the validity of a notice under old Section 148 of the Act issued on or after 01.04.2021, admittedly under the new regime, in view of the one-time leeway granted by Hon ble Supreme Court in Principal CIT Vs Ashish Agarwal [2022] 444 ITR 1 (SC) validity of such notice under the new/substituted regime has to necessarily be tested under the provisions of the new/substituted regime. v. If the provisions of the old regime of Section 148 of Act (including TOLA) are read into/applied to the new regime applicable w.e.f. 01.04.2021, it would necessarily result in deferring the implementation of the new/substituted reassessment regime, which was never the intention of the Parliament, and which is not permissible in law. vi. The aforesaid consequence would, in fact, be directly in the teeth of judgment (s) of Hon ble Delhi High Court in the case of Mon Mohan Kohli vs. ACIT [2021] 441 ITR 207 (Del.) and Hon ble Allahabad High Court in the case of Ashok Kumar Aggarwal vs. Union of India [2021] 439 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be deferred/postponed up to and after 30.06.2021 without having any legislation by the Parliament to this effect. 60. Revenue Respondent no. 3/Central Board of Direct Taxes ( CBDT ) has erroneously resorted to Instruction No. 1 dated 11.05.2022 by contending that the Apex Court decision in Ashis Agarwal (supra) read with TOLA permits the notices to travel back in time to their original date when such notices were to be issued i.e., on or before 31.03.2021 and that consequent notices issued from 01.04.2021 to 30.06.2021 are within time permitted it will be contrary to the intention of legislating Finance Act, 2021, coming into effect from 1st April, 2021 subsisting the old law relating to reassessment. 61. The aforesaid interpretation canvassed in the CBDT Instruction is, in fact, is again in direct conflict with the judgments of various Hon ble High Courts, which have duly been affirmed by the Apex Court in Ashis Agarwal (supra). 62. In view of the aforesaid declaration that the impugned notices issued on or after 1st April, 2021, by the CBDT, relating to assessment years 2013-14 and 2014-15, under Section 148 (old) of the Income Tax Act, 1961 by converting/treating the same as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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