A Division Bench of the Allahabad High Court has recently held that the time frame under the Taxation and Other Laws (Relaxation And Amendment of Certain Provisions) Act (TOLA), 2020 is not available to the Income Tax department and quashed the reassessment proceedings initiated with the notice under Section 148 (deemed to be notice under Section 148-A) in proceedings against the assessee.
The impugned notices were issued between 01.04.2021 and 30.06.2021. For the assessment year 2013-14 and 2014-15, it was argued by the counsels for the assessees that the assessment for these years cannot be reopened, in as much as, maximum period of six years prescribed in preamendment provision of Section 149(1)(b) had expired on 31.03.2021.
No notice under Section 148 could be issued in a case for the assessment year 2013-14 and 2014-15 on or after 01.04.2021 being time barred, on account of being beyond the time limit specified under the provisions of Section 149(1)(b) as they stood immediately before the commencement of the Finance Act of 2021.
The Division Bench of Justice Vipin Chandra Dixit and Justice Sunita Agarwal took note of the legislative scheme of Section 148 of reopening of assessment pre and post amendment by the Finance Act 2021 and the relevant provisions of TOLA 2020.
It was further observed that, “It may profitably be noted, at this stage, that it is settled law that a taxing statute must be interpreted in the light of what is clearly expressed”.
The court went on to examine the provisions and stated that, “The reassessment proceedings initiated with the notice under Section 148 (deemed to be notice under Section 148-A), issued between 01.04.2021 and 30.06.2021, cannot be conducted by giving benefit of relaxation/extension under the Taxation and Other Laws (Relaxation And Amendment of Certain Provisions) Act (TOLA), 2020 up to 30.03.2021, and the time limit prescribed in Section 149 (1)(b) (as substituted w.e.f. 01.04.2021) cannot be counted by giving such relaxation from 30.03.2020 onwards to the revenue.”
It was thus clarified that, “In respect of the proceedings where the first proviso to Section 149(1)(b) is attracted, benefit of TOLA, 2020 will not be available to the revenue, or in other words, the relaxation law under TOLA, 2020 would not govern the time frame prescribed under the first proviso to Section 149 as inserted by the Finance Act’ 2021, in such cases.”
Resultantly, the impugned show cause notices and orders were quashed and set-aside.
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