The Madras High court has set aside Reassessment notices issued under old Income Tax Act as Taxation Relaxation Act Does not apply on Repealed Provisions.
The reason for the challenge to the Explanations is in reference to the reassessment notices issued to the petitioners under Section 148 of the Act of 1961 on or after 1.4.2021 applying the provision as it stood prior to the amendment brought in Sections 147 to 151 by the Finance Act, 2021, which has come into effect from 1.4.2021.
The petitioners have been served with the notices under Section 148 of the Act of 1961 for reassessment by applying the procedure as it stood under Section 147 to 151 of the Act of 1961 prior to 1.4.2021. The challenge to the reassessment notices has been made precisely on the ground that after the amendment under Sections 147 to 151 of the Act of 1961, the notices under Section 148 of the Act of 1961 could not have been given applying the repealed provisions as it could not be saved by the Notifications under challenge and even by the TOLA Act, 2020 and, therefore, the reassessment notices under Section 148 of the Act of 1961 deserve to be set aside.
A serious contest to the prayer aforesaid was made by learned counsel for the petitioners. It is submitted that if the law allows issuance of notice under Section 148 of the Act of 1961 afresh, then no liberty is required to be given, rather the assessing authority would be within its competence to initiate proceedings as per the amended provisions pursuant to the Finance Act, 2021.
It is also submitted that the liberty if granted, may be misused by the assessing authorities to harass the assessees without any reason. Referring to the last paragraph in the judgment delivered by the Allahabad High Court, learned counsel submitted that liberty of the nature prayed by the respondents was given without a rider or clarification that a fresh notice under Section 148 of the Act of 1961 should be issued only in the cases where limitation still subsists and otherwise the judgment of the Allahabad High Court has been challenged by the Revenue before the Apex Court without exercising the powers pursuant to the liberty given therein. It is further submitted that if liberty, as prayed, for causing fresh reassessment notices under Section 148 of the Act of 1961, pursuant to the amended provision, is given, the petitioners would be subjected to discrimination when compared to those whose matters were taken before the Apex Court in view of the challenge to the judgment of the Allahabad High Court without causing a fresh notice under Section 148 of the Act of 1961, as amended.
The division bench of Additional Chief Justice M.N.Bhandari and P.D.Audikesaval in view of the ratio propounded by the Allahabad and Delhi High Courts on the subject, the reassessment notices under Section 148 of the Act of 1961 served on the petitioners on or after 1.4.2021 are set aside having been issued in reference to the unamended provisions and the Explanations are to be read as applicable to reassessment proceedings if initiated on or prior to 31.3.2021, but it would be with liberty to the assessing authorities to initiate reassessment proceedings in accordance with the provisions of the Act of 1961, as amended by the Finance Act, 2021, after making all the compliances as required by law, if limitation for it survives.
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