R.B. DOKANIA HUF vs. INCOME TAX OFFICER AND ORS.

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WPA/7199/2022HC CalcuttaWBCHCA015171202228 April 2022Author: HON'BLE JUSTICE MD. NIZAMUDDIN4 pages
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What did the High Court hold?

The Tribunal, in view of the submissions of the parties and the decisions of the Allahabad High Court in Ashok Kumar Agarwal v. Union of India, Rajasthan High Court in Bpip Infra Private Limited v. Income Tax Officer, Delhi High Court in Man Mohan Kohli v. Assistant Commissioner of Income Tax, and its own previous orders in Manoj Jain v. Union of India and Bagaria Properties and Investment Private Limited & Anr., allowed the writ petition. The Explanations A(a)(ii)/A(b) to the Notifications dated March 31, 2021, and April 27, 2021, were declared ultra vires the Relaxation Act, 2020, and thus void. Consequently, the impugned notice under Section 148 of the Income Tax Act, 1961, was quashed. The assessing officers were granted liberty to initiate fresh reassessment proceedings in accordance with the amended provisions of the Finance Act, 2021, and after complying with the legal formalities. The petition was allowed subject to the petitioner paying costs of Rs. 5,000/- to the Calcutta High Court Bar Association Lawyers’ Benevolent Fund within seven days, due to the delay in filing the writ petition.

What were the facts?

The petitioner, R. B. Dokania HUF, is aggrieved by a notice issued under Section 148 of the Income Tax Act, 1961. The petitioner contends that the notice is barred by limitation and that the respondent-income tax authority failed to observe the statutory formalities prescribed under Section 148A of the Act, as amended by the Finance Act, 2021, which became applicable from April 1, 2021. The petitioner also sought a declaration that certain Explanations to Notifications dated March 31, 2021, and April 27, 2021, extending the applicability of pre-amendment provisions of Sections 148, 149, and 151 beyond March 31, 2021, are ultra vires the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. The impugned notice was issued on April 6, 2021, and the writ petition was filed in April 2022.

What were the issues?

1. Whether the impugned notice issued under Section 148 of the Income Tax Act, 1961, post-31st March 2021, is barred by limitation? (Question of law) 2. Whether the respondent-income tax authority observed the statutory formalities under Section 148A of the Income Tax Act, 1961, before issuing the impugned notice under Section 148, as prescribed by the Finance Act, 2021? (Question of mixed law and fact) 3. Whether Explanations A(a)(ii)/A(b) to Notification No.20 [S.O. 1432(E)] dated 31st March 2021 and Notification No.38 [S.O.1703(E)] dated 27th April 2021, to the extent they extend the applicability of the provisions of Section 148, Section 149 and Section 151 of the Act, as they stood on 31st March 2021, to the period beyond 31st March 2021, are ultra vires the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020? (Question of law) Assessee's Contentions: The notice is barred by limitation and statutory formalities under Section 148A were not complied with. The Explanations to the Notifications extending pre-amendment provisions are ultra vires the parent legislation. Revenue's Contentions: Not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 148,Section 148A,Section 149,Section 151

AI-generated summary — verify with the full judgment below

28.04.

2022. p.b. Sl. No.

49.

W.P.A. 7199 of 2022 R. B. Dokania HUF Vs. Income Tax Officer & Ors. Mr. Avra Mazumdar, Mr. Sk. Md. Bilwal Hossain, Mr. Binayak Gupta. ……..for the petitioner. Mr. Aryak Dutt. ……..for the UOI. Heard learned advocates appearing for the parties. Petitioner is aggrieved by the issuance of impugned notice under section 148 of the Income Tax Act, 1961 on the grounds that the same is barred by limitation and that the respondent-income tax authority concerned, before issuing the impugned notices under section 148 of the Income Tax Act, 1961 have not observed the statutory formalities under section 148A of the 1961 Act as prescribed by the Finance Act, 2021 which are applicable with effect from 1st April 2021 before issuance of notices under section 148 of the 1961 Act on or after 1st April 2021. Issues arising in the present writ petition is purely legal, and in this writ petition the assessee/petitioner has sought relief of quashing of the impugned re-assessment notice issued post-31st March 2021 by the respondent-

2 income tax authority concerned under section 148 of the Act, assessee/petitioner has also sought relief by way of a declaration declaring Explanations A(a)(ii)/A(b) to the Notification No.20 [S.O. 1432(E)] dated 31st March 2021 and Notification No.38 [S.O.1703(E)] dated 27th April 2021 to the extent that the same extend the applicability of the “provisions of section 148, section 149 and section 151 of the Act, as the case may be, as they stood as on the 31st March 2021, before the commencement of the Finance Act, 2021” to the period beyond 31st March 2021 as ultra vires the parent legislation, viz., the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (hereinafter referred to as the ‘Relaxation Act, 2020’). At the outset, all the counsel appearing for the parties jointly submitted that the issues involved in this writ petition is covered by a decision of the Division Bench of the Allahabad High Court dated September 30, 2021 in the case of Ashok Kumar Agarwal v. Union of India through its Revenue Secretary North Block & Ors. (Writ Tax No.524/2021) decided in favour of the assessee/petitioner and an order of Rajasthan High Court dated November 25, 2021 in the case of Bpip Infra Private Limited v. Income Tax Officer, Ward 4(1), Jaipur (S.B. Civil Writ Petition No. 13297/2021) and also an order of Delhi High Court dated December 15, 2021 in the case of Man Mohan Kohli v. Assistant

3 Commissioner of Income Tax & Anr. [W.P.(C) 6176 of 2021] and the judgement and order of this court dated January 17, 2022 in the case of Manoj Jain v. Union of India & Ors. (WPA No.11950 of 2021) and in the case of Bagaria Properties and Investment Private Limited & Anr. (WPO No.244 of 2021). In view of the judgement and order of this court dated January 17, 2022 in the case of Manoj Jain v. Union of India & Ors. in WPA No.11950 of 2021 and in the case of Bagaria Properties and Investment Private Limited & Anr. (WPO No.244 of 2021), this writ petition being WPA No.7199 of 2022 is disposed of by allowing the same. Explanations A(a)(ii)/A(b) to the Notifications dated 31st March 2021 and 27th April 2021 are declared to be ultra vires the Relaxation Act, 2020 and are, therefore, bad in law and null and void. Accordingly, the impugned notice under section 148 of the Income Tax Act, 1961 is quashed with liberty to the assessing officers concerned to initiate fresh re- assessment proceedings in accordance with the relevant provisions of the Act as amended by the Finance Act, 2021 and after making compliance of the formalities as required by the law. This writ petition is allowed subject to payment of costs of Rs.5,000/- to the Calcutta High Court Bar Association Lawyers’Benevolent Fund, since the impugned

4 notice under section 148 of the Income Tax Act, 1961 has been issued on April 6, 2021 as appears from record and this writ petition has been filed in April 2022, that is, almost after ten months from receipt of the impugned notice, without any explanation for such delay in filing this writ petition. Such costs has to be paid by the petitioner to the Calcutta High Court Bar Association Lawyers’ Benevolent Fund within seven days from date which is to be utilised by it for the benefit and welfare of the children staying with their parents in the correctional home in West Bengal. Receipt of payment is to be produced before this court. List this writ petition under the heading “To Be Mentioned” on May 10, 2022 for compliance. (Md. Nizamuddin, J.)

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