The above judgement was passed by Hon’ble Chhattisgarh High court in case of PALAK KHATUJA Vs. UNION OF INDIA WP(T) 149 of 2021 Dt. 23.08.2021.
In the above mentioned case court held that lockdown had also affected the working of Income tax department and the provisions of Section 148 which was prevailing prior to the amendment of Finance Act, 2021 was also extended. Here in this case, the power to issue notice under Section 148 which was prior to the amendment was also saved and the time was extended. In a result, the notice issued on 30.06.2021 (Annexure P-1) would also be saved. Therefore, no interference is required to be made in the said issuance of notice and accordingly the petitions are dismissed.
Facts of the Case:
- Petitioners have filed the income tax return for the Assessment Year 2015-16 and Financial Year 2014-15. Subsequent thereto on the basis of some information available initially a scrutiny was done however no concealment was found but again a notice under Section 148 of the Income Tax Act, 1961 has been issued.
- It is submitted that on the date i.e. on 30.06.2021 when the notice under Section 148 of the Income Tax Act (hereinafter referred to as “Act of 1961”) is issued, the power to issue the notice was preceded with a new provision of law and thereby Section 148 is to read with Section 148-A of the Income Tax Act, 1961.
Assessee’s Contention:
- As per the amended Finance Act, 2021, which was published in the Gazette on 28th March, 2021, section 2 to 88 was notified to come into force on 1st day of April 2021 and accordingly the new Section 148A was inserted which prescribed that before issuing the notice under Section 148 of the Income Tax Act, the Assessing Officer was bound to conduct an enquiry giving an opportunity of hearing to the assessee with the prior approval of specified authority and show cause notice in detail was necessary specifying particular date for hearing.
- Since the operation of Section 148A came into being on 01st April, 2021, as such, the notice issued to the petitioner on 30.06.2021 under Section 148 of the Income Tax Act, without following the procedure under Section 148A without giving an opportunity of hearing would be illegal and contrary to the provisions of Section 148A and it cannot be sustained.
Revenue’s Contention:
- Learned counsel for the respondents would submit that because of pandemic and lock down of all activities including the normal working of office, lot of people could not file their return and submit the necessary papers with the department in respect of their income tax.
- As such, the Ministry of Finance in exercise of power under the Finance Act issued the notification whereby the application of old provisions of Section 148 of the Income Tax Act was extended initially uptill 30th April, 2021 and thereafter was further extended uptill 30th day of June, 2021.
High Court’s finding and Judgement:
- The necessity occurred because of the Covid pandemic lock down in the backdrop of the fact that few of the assessee could not file their return.
- Likewise since the offices were closed, the department also could not perform the statutory duty under the Income Tax Act.
- 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.
- 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.
- Reading of the aforesaid notification would show that it was issued in exercise of power conferred under the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 and time for issuance of notice under Section 148, the end date was initially extended uptill on 30th day of April 2021 and subsequently again by notification dated 27th April, 2021 the time limit of 30th day of April 2021 was further extended up till 30th day of June, 2021. 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.
- The pandemic and lock down prevailed all over India. The people could not file their return or comply with the various mandate of Income Tax Act. Considering such situation for the benefit of the assessee and to facilitate the individual to come out of woods the time limit framed under Income Tax Act was extended. Likewise certain right which was reserved in favour of the Income Tax Department was also preserved and was extended at parity.
- Consequently the provisions of Section 148 which was prevailing prior to the amendment of Finance Act, 2021 was also extended. Here in this case, the power to issue notice under Section 148 which was prior to the amendment was also saved and the time was extended. In a result, the notice issued on 30.06.2021 (Annexure P-1) would also be saved. Therefore, no interference is required to be made in the said issuance of notice and accordingly the petitions are dismissed.
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