The Gujarat High Court dismissed Time Barred Re-Assessment Notices and ruled that the Taxation and Other Laws (Relaxation & Amendment of Certain Provisions) Act (TOLA) cannot override the provisions of Finance Act, 2021.
The petitioners called in question the notice issued by the Assessing Officer under Section 148 of the Income Tax Act, 1961 seeking to reopen the assessment in respect of assessment year 2013-14 or assessment year 2014-15 and also challenged are the orders passed under Section 148A(d) of the Income Tax Act, 1961 (Act).
In order to properly understand the case the prior to coming into force of Finance Act, 2021 called old regime as well as the provisions introduced in the Finance Act, 2021 described as new regime, the development of the law emanating from Keenara Industries Pvt. Ltd in that regard may be revisited.
Prior to the applicability of Finance Act, 2021 with effect from 01.04.2021, for the provisions of section 149 then existed, notice under section 148 could be issued for the relevant assessment year within four/six years from the end of the relevant assessment year concerned.
In the Finance Act, 2021, passed on 28.03.2021, and made applicable with effect from 01.04.2021, Section 148A came to be brought into force under section 42 of the Finance Act.
In wake of pandemic of Covid-19 around March 2020, Ordinance No. 2/20 dated 31.03.2020 was promulgated titled as the Taxation and Other Laws (Relaxation and Amendment Of Certain Provisions) Ordinance, 2020, which became the Act subsequently, to be applied retrospectively from 31.03.2020.
The Supreme Court had an occasion to consider such cases arrived before it from different High Courts, wherein the notices issued during the period from 01.04.2021 to 30.06.2021 in relation to the earlier assessment years were challenged.
The Supreme Court observed that new provisions substituted by the Finance Act, 2021 were remedial, came to be inserted with an object to protect the right and interests of the assessee as well to sub-serve the public interest.
The Allahabad High Court also dealt with similar issues in Rajeev Bansal vs. Union of India, wherein it was held that all such notices when they would relate to Assessment Year 2013-14 or Assessment Year 2014-15 would be time barred as per the provisions of the Act as applicable in the old regime prior to 01.04.2021.
The Bench of Justices NV Anjaria and Niral R Mehta, observed that “In view of the above, all the impugned notices in the respective petitions under section 148 of the Act relatable to Assessment year 2013-14 or the assessment year 2014-15, are beyond the permissible time limit, therefore, liable to be treated illegal.”
“The Taxation and Other Laws Act, 2020 is a secondary legislation and a secondary legislation would not override the principal legislation-the Finance Act, 2021” the Bench concluded.
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