Rajasthan High court’s Jaipur bench on 27.01.2022 passed an order in case of Sudesh Taneja V. Income Tax Officer, Ward-1(3), Jaipur and ors. bearing D.B. Civil Writ Petition No. 969/2022.
The above writ was filed challenging the order passed by Single judge bench of Rajasthan High court. In this judgement the division bench (two judge bench) upheld the judgement of single judge bench’s order by quashing the proceedings u/s 148 of the act after 01.04.2021 andd while passing judgement the provision of section 148, 148A, 151, 153 etc were discussed both before the amendment by Finance Act, 2021 and after that and also the relaxation act was discussed.
Assessee’s contention:
It was contended that under the taxing statutes there is no scope for intendment. If two views are possible, one favouring the assessee should be taken. It was pointed out that the two Divisions Benches of Allahabad and Delhi High Courts have already decided these issues in favour of the assessees. Being the pan-India legislation in the field of taxation, the Court should strive to achieve consistency. The view adopted by two Division Benches should therefore appeal to the Court.
It was lastly contended that the learned Single Judge of this Court in the case of BPIP Infra Private Limited has committed no error in allowing the writ petitions relying upon the decision of the Allahabad High Court in the case of Ashok Kumar Agarwal.
Revenue’s contention:
On the other hand learned counsel appearing for the revenue strongly opposed these petitions and pressed for allowing their appeals. They contended that the substitution of old provisions for reopening of assessment would not obliterate the previous set of statutory provisions. They would continue to have effect for the past period. In other words, if the notice for reopening of assessment was issued for any period prior to 01.04.2021, the provisions as they stood at the relevant time would apply. In such a case there was no requirement of following the procedure laid down under Section 148A of the Act before issuing notice under Section 148. They would point out that present situation is unprecedented and has arisen on account on account of spread of corona virus. This unprecedented situation required taking extraordinary measures. The Relaxation Ordinance, 2020 and Relaxation Act, 2020 were therefore framed giving extension of time limits for taking actions and making compliances. These extensions were for the benefit of both, actions that had to be taken by the revenue as well as compliances which had to be made by the assessees. The assessees cannot take advantage of the unusual circumstances prevailing on account of spread of corona virus. The CBDT therefore in exercise of powers conferred in sub-section (1) of Section 3 of the Relaxation Act, 2020, has issued necessary explanation which merely clarifies which statutory provisions any way provide. This explanation makes explicit what is otherwise implicit under the Act. The same is well within the power of the Government.
High court’s observation and order:
Two questions of law which arise for our consideration are as under:-
(i) Whether after introduction of new provisions for reassessment of income by virtue of the Finance Act, 2021 with effect from 01.04.2021, substituting the then existing provisions, would the substituted provisions survive and could be used for issuing notices for reassessment for the past period?
(ii) Whether the explanations contained in the CBDT circulars dated 31.03.2021 and 27.04.2021 are legal and valid?
The High court has relief on judgement of In case of Government of India and Others Vs. Indian Tobacco Association, reported in (2005) 7 SCC 396, the Supreme Court considered the effect of substitution of a statutory provision by new one and held that It can thus be seen that original provisions upon their substitution stood repealed for all purposes and had no existence after introduction of the substituting provisions. We may refer to Section 6 of the General Clauses Act, 1897 which provides interalia that where the State Act or Central Act or regulation repeals any enactment then unless a different intention appears repeal shall not revive anything not in force or existing at the time at which the repeal takes effect or affect the previous operation of any enactment so repealed or anything duly done or suffered thereunder. Under the circumstances after substitution unless there is any intention discernible in the scheme of statute either pre-existing or newly introduced, the substituted provisions would not survive.
In plain terms a notice which had become time barred prior to 01.04.2021 as per the then prevailing provisions, would not be revived by virtue of the application of Section 149(1)(b) effective from 01.04.2021. All the notices issued in the present cases are after 01.04.2021 and have been issued without following the procedure contained in Section 148A of the Act and are therefore invalid.
On second question of law the High court pronounced as under:
We may recall, under sub-section (1) of Section 3 of the Relaxation Act, 2020 while extending the time limits for taking action and making compliances in the specified Acts upto 31.12.2020 the power was given to the Central Government to extend the time further by issuing a notification. This was the only power vested in the Central Government. As a piece of delegated legislation the notifications issued in exercise of such powers, had to be within the confines of such powers. In plain terms under sub-section (1) of Section 3 of the Relaxation Act, 2020 the Government of India was authorized to extend the time limits by issuing notifications in this regard. Issuing any explanation touching the provisions of the Income Tax Act was not part of this delegation at all. The CBDT while issuing the notifications dated 31.03.2021 and 27.04.2021 when introduced an explanation which provided by way of clarification that for the purposes of issuance of notice under Section 148 as per the time limits specified in Section 149 or 151, the provisions as they stood as on 31.03.2021 before commencement of the Finance Act, 2021 shall apply, plainly exceeded its jurisdiction as a subordinate legislation. The subordinate legislation could not have travelled beyond the powers vested in the Government of India by the parent Act. Even otherwise it is extremely doubtful whether the explanation in the guise of clarification can change the very basis of the statutory provisions. If the plain meaning of the statutory provision and its interpretation is clear, by adopting a position different in an explanation and describing it to be clarificatory, the subordinate legislature cannot be permitted to amend the provisions of the parent Act. Accordingly, these explanations are unconstitutional and declared as invalid.
In the result we find that the notices impugned in the respective petitions are invalid and bad in law. The same are quashed and set aside. The learned Single Judge committed no error in quashing these notices. All the writ petitions are allowed.
Appeals of the revenue are dismissed. Pending applications if any stand disposed of.
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