MEENAKSHI TEA CO LTD AND ANR vs. THE ASST. COMMISSIONER OF INCOME TAX 7(1) KOLKATA AND ORS

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WPO/1513/2022HC CalcuttaWBCHCO002046202215 March 2022Author: HON'BLE JUSTICE MD. NIZAMUDDIN4 pages
AI SummaryAllowed

What did the High Court hold?

The High Court allowed all the writ petitions. It declared Explanations A(a)(ii)/A(b) to the Notifications dated March 31, 2021, and April 27, 2021, to be ultra vires the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, and consequently, bad in law and null and void. The Court quashed all the impugned notices issued under Section 148 of the Income Tax Act. The reasoning was based on the High Court's own judgment dated January 17, 2022, in Manoj Jain and Bagaria Properties and Investment Private Limited, which had addressed similar issues. The Assessing Officers were granted liberty to initiate fresh reassessment proceedings in accordance with the relevant provisions of the Act as amended by the Finance Act, 2021, and after complying with the required legal formalities. No issue was expressly left undecided.

What were the facts?

The petitioners, Moondhara Financial Consultants Pvt Ltd and others, are aggrieved by notices issued under Section 148 of the Income Tax Act, 1961. They contend these notices are barred by limitation and that the respondent Income Tax Authority failed to observe the statutory formalities prescribed under Section 148A of the Act, which became applicable from April 1, 2021. The notices in question were issued after March 31, 2021. The petitioners are seeking to quash these reassessment notices and have also challenged the validity of Explanations A(a)(ii)/A(b) to Notifications No. 20 and 38, which extended the applicability of Section 148, Section 149, and Section 151 as they stood on March 31, 2021, to periods beyond that date.

What were the issues?

1. Whether the impugned notices issued under Section 148 of the Income Tax Act, 1961, post-April 1, 2021, are barred by limitation and vitiated by non-compliance with Section 148A of the Act, as amended by the Finance Act, 2021. (Mixed question of law and fact, turning on Section 148 and Section 148A). 2. 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 Section 148, Section 149 and Section 151 of the Act as they stood on March 31, 2021, to periods beyond March 31, 2021, are ultra vires the parent legislation, the Taxation and Other Laws (Relaxation of Certain Provisions) Act, 2020. (Question of law, turning on the interpretation of the Relaxation Act, 2020). Assessee's contentions: The notices are barred by limitation and statutory formalities under Section 148A were not followed. The Explanations to the Notifications extending the old provisions are ultra vires the Relaxation Act, 2020. They rely on decisions of the Allahabad High Court in Ashok Kumar Agarwal, Rajasthan High Court in Bpip Infra Private Limited, Delhi High Court in Man Mohan Kohli, and their own High Court in Manoj Jain and Bagaria Properties and Investment Private Limited. Revenue's contentions: No specific contentions are recorded for the revenue 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

Cause title — parties, addresses and appearances
1 IN THE HIGH COURT AT CALCUTTA Constitutional Writ Jurisdiction Original Side Present :- Hon’ble Mr. Justice Md. Nizamuddin W.P.O. No. 1426 of 2022 MOONDHARA FINANCIAL CONSULTANTS PVT LTD Vs. UNION OF INDIA AND ORS. With W.P.O. No. 1427 of 2022, W.P.O. No. 1428 of 2022, W.P.O. No. 1429 of 2022, W.P.O. No. 1430 of 2022, W.P.O. No. 1431 of 2022, W.P.O. No. 1433 of 2022, W.P.O. No. 1434 of 2022, W.P.O. No. 1436 of 2022, W.P.O. No. 1450 of 2022, W.P.O. No. 1457 of 2022, W.P.O. No. 1458 of 2022, W.P.O. No. 1459 of 2022, WPO 1461 of 2022, WPO 1463 of 2022, W.P.O. No. 1464 of 2022, W.P.O. No. 1466 of 2022, W.P.O. No. 1467 of 2022, W.P.O. No. 1468 of 2022, W.P.O. No. 1469 of 2022, W.P.O. No. 1470 of 2022, W.P.O. No. 1471 of 2022, W.P.O. No. 1472 of 2022, W.P.O. No. 1473 of 2022, W.P.O. No. 1475 of 2022, W.P.O. No. 1477 of 2022, W.P.O. No. 1484 of 2022, W.P.O. No. 1495 of 2022, W.P.O. No. 1496 of 2022, WPO 1511 of 2022, WPO 1513 of 2022, WPO 1514 of 2022, WPO 1516 of 2022 For the Petitioners :- Ms. Swapna Das, Mr. Siddharth Das, Mr. Jit Roy, Mr. Abir Das, Mr. Zubeen Pandey, Ms. Amani Kayan, Mr. Arif Ali, Mr. Bikash Kumar Roy, Mr. Pradeep Kumar Jewrajka, Ms. Pooja Jewrajka, Ms. Jyoti Rauth, Mr. Asim Choudhury, Mr. Soham Sen, Ms. Aesa Dey, Advocates For the Respondents :- Ms. Smita Das De, Mr. Soumen Bhattacharjee, Mr. Tilak Mitra, Mr. Smarajit Roy Chowdhury, Mr. Om Narayan Rai, Advocates Dated : 15th March, 2022 2 MD. NIZAMUDDIN, J. Heard Learned Counsel appearing for the parties. In view of involvement of common question of law and similarity of facts in all these Writ Petitions, with the consent of the parties all these Writ Petitions have been heard together and are being decided by the present

common judgement and order. Common facts and issues involved in all these Writ Petitions as appear on perusal of relevant record and upon considering the submissions of the parties are that the petitioners are aggrieved by the issuance of impugned notices under Section 148 of the Income Tax Act, 1961 on the ground that the same are barred by limitation and the respondent Income Tax Authority concerned, before issuing the impugned notices under Section 148 of the Income Tax Act, have not observed the statutory formalities under Section 148 A of the Income Tax 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 Act on or after 1st April, 2021. Issues arising in all the present Writ Petitions are purely legal and in all these Writ Petitions the assessees/petitioners have sought relief of quashing of the impugned re-assessment notices issued post 31st March, 2021 by the respondent Income Tax Authority concerned under Section 148 of the Income Tax Act, assessees/petitioners have 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 3 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 ‘ Relaxation Act, 2020’). At the outset, all the counsels appearing for the parties jointly submitted that the issues involved in these Writ Petitions are covered by the decision of the Division Bench of the Allahabad High Court dated 30th September, 2021 in the case of ‘Ashok Kumar Agarwal –vs- Union of India through its Revenue Secretary North Block & Ors.’ (Writ Tax No. 524/2021) decided in favour of assessees/petitioners on 30.09.2021 and order of Rajasthan High Court dated 25th November, 2021 in the case of Bpip Infra Private Limited-vs.- Income Tax Officer, Ward 4 (1), Jaipur (S.B. Civil Writ Petition No. 13297/2021) and the order of Delhi High Court 15th December, 2021 in the case of Man Mohan Kohli –vs- Assistant Commissioner of Income Tax & Anr. In (W.P. (C) 6176 of 2021) and judgement and order of India & Ors. In WPA No. 11950 of 2021 and in the case of Bagaria Properites and Investment Private Limited & Anr. In WPO 244 of 2021. In view of judgement and order of this Court dated 17th January, 2022 in the case of Manoj Jain Vs. Union of India & Ors. In WPA No. 11950 of 2021 and in the case of Bagaria Properties and Investment Private Limited & Anr. in WPO No. 244 of 2021, all these Writ Petitions herein are disposed of 4 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. All the impugned notices under Section 148 of the Income Tax Act are 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 Finance Act, 2021 and after making compliance of the formalities as required by the law. Urgent certified photo copy of this order, if applied for, be supplied to the parties upon compliance with all requisite formalities. (Md. Nizamuddin, J.) TR/

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