Delhi HC had stayed operation of I-T reassessment notices issued after March 31
The government is considering various options to counter tax-assessment litigations. These include either amending the law or coming out with an ordinance. The Delhi High Court had recently stayed the reassessment proceedings, based on notices issued between April 1 and June 30. Similar orders have been issued by other courts, too.
Takes up three petitions
Last week, the court took up three set of petitions filed by Mudra Finance Limited, Ansal Colours Engineering and Andal Landmark Township. These three petitions challenged reassessment notices issued dates June 9, 2021, June 30, 2020, and June 28, 2020. These notices were issued under section 148 of the Income Tax Act section 148 of the Act for reopening the assessment, where the income was not assessed. Such notices are time-barred as prescribed in section 149 of the same Act.
It may be noted that in 2020 the government had extended the due date for issue of notices to June 30, 2020, from March 31. Similarly, during this year, first date was extended to April 31 and then further to June 30, 2021. The lawyer for the petitioner had argued that taxation and other laws (Relaxation and Amendment of Certain Provisions) Act, 2020, authorise the Central government to only extend the time limits and nothing more. It was further stated that the Income Tax Department cannot indirectly extend the operation of the old provisions of the Act beyond March 31, 2021, in the guise of a clarification under delegated legislation.
The lawyer had further submitted that 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 also said that these notices are invalid as they have been issued under the pre-amended provisions of the Act, which were no longer in force on the date of issuance of notices.
Time limit extension
The lawyer appearing for the Income Tax Department emphasised that time limit was extended on the basis of power given under Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. It was also said that “the impugned notifications only provided 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 June 30, 2021, would be the old procedure mentioned under the Act”.
After hearing the arguments, the court had arrived at a view that the impugned notification is contrary to settled principle of statutory interpretation – any action taken post the amendment of a procedural section will have to abide by the new procedures stipulated in the amended Act. “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,” it said and stayed the operation of notices.