The Allahabad High Court quashed the Reassessment notice for not following New Procedure for Issuance of notice where income has escaped assessment after 31 March 2021.
The petitioners, Ashok Kumar Agarwal to challenge the initiation of re-assessment proceedings under Section 148 of the Income Tax Act, 1961 for different assessment years. All reassessment proceedings have been initiated upon notices issued after the date 01.04.2021.
Since, the dispute arising in the present writ petitions is purely legal, with respect to the validity of the reassessment proceedings initiated against the individual petitioners, after 01.04.2021, having resort to the provisions of the Income Tax Act, 1961 as they existed, read with the provisions of Act No. 38 of 2020 and the notifications issued thereunder, the peculiar fact pleadings of each case are not material to the adjudication of the legal issues involved here.
The division bench of Justice Naheed Ara Moonis and Justice Saumitra Dayal Singh held that there is no conflict in the application and enforcement of the Enabling Act and the Finance Act, 2021. Juxtaposed, if the Finance Act, 2021 had not made the substitution to the reassessment procedure, the revenue authorities would have been within their rights to claim an extension of time, under the Enabling Act. However, upon that sweeping amendment made the Parliament, by necessary implication or implied force, limited the applicability of the Enabling Act and the power to grant time extensions thereunder, to only such reassessment proceedings as had been initiated till 31.03.2021. Consequently, the impugned Notifications have no applicability to the reassessment proceedings initiated from 01.04.2021 onwards.
“Upon the Finance Act, 2021 enforced w.e.f. 1.4.2021 without any saving of the provisions substituted, there is no room to reach a conclusion as to conflict of laws. It was for the assessing authority to act according to the law as existed on and after 1.4.2021. If the rule of limitation permitted, it could initiate, reassessment proceedings in accordance with the new law, after making adequate compliance of the same. That not done, the reassessment proceedings initiated against the petitioners are without jurisdiction,” the court said.
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