The Rajasthan High Court has quashed 51 Reassessment Notices issued before the Insertion of Section 148A in the Income Tax Act.
The petitioners have challenged respective notices issued by the Assessing Officers under Section 148 of the Income Tax Act, 1961 for reopening assessments for various assessment years. All these notices have been issued after 01.04.2021 and pertain to the relevant period which is prior to the said date. The petitioners contend that since the notices are issued after 01.04.2021, the same could be done only as per the provisions contained in the Act effective from 01.04.2021. Since in the present cases the notices are issued under the old provisions which have already been substituted, the notices are invalid. The petitioners have also challenged portions of two notifications issued by the Central Board of Direct Taxes (CBDT) clarifying that provisions of Sections 148, 149, and 151 of the Act as they stood on 31.03.2021 shall apply for the purpose of issuance of notice under Section 148 for the past period. According to the petitioners, this explanation is beyond the jurisdiction of CBDT.
Before issuing notice under section 148, the procedure prescribed in section 148A must be followed. In the present case, the notice was time-barred as per the amended section 149, and procedure under Section 148A was not followed. As an extension of this argument, the petitioner contends that this defect could not be cured through an explanation issued by the CBDT under the purported exercise of the power of delegated legislation.
The division bench of Chief Justice Akil Kureshi and Justice Sameer Jain has ruled that 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 up to 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 the 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 the commencement of the Finance Act, 2021 shall apply, plainly exceeded its jurisdiction as subordinate legislation. The subordinate legislation could not have traveled 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 invalid.
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