SMARAN CHOUDHURY vs. THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRLA CIRCLE 4(1) KOLKATA AND ORS

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WPA/2427/2022HC CalcuttaWBCHCA005160202215 February 2022Author: HON'BLE JUSTICE MD. NIZAMUDDIN4 pages
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What did the High Court hold?

The High Court, in view of the common question of law and similarity of facts, heard all the writ petitions together. The Court noted that the issues involved were covered by previous judgments of the Allahabad High Court, Rajasthan High Court, Delhi High Court, and crucially, by this Court's own orders dated January 17, 2022, in the cases of Manoj Jain and Bagaria Properties and Investment Private Limited. Consequently, the Court declared Explanations A(a)(ii)/A(b) to the notifications dated March 31, 2021, and April 27, 2021, to be ultra vires the Relaxation Act, 2020, and therefore bad in law and null and void. All the impugned notices issued under Section 148 of the Income Tax Act, 1961, were quashed. The assessing officers were granted liberty to initiate fresh re-assessment proceedings in accordance with the relevant provisions of the Act as amended by the Finance Act, 2021, and after complying with the prescribed legal formalities. No issue was expressly left undecided.

What were the facts?

The petitioners, Neha Kansal 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 respondents, income-tax authorities, 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 petitions challenge the issuance of these Section 148 notices after March 31, 2021. The petitioners also seek a declaration that Explanations A(a)(ii)/A(b) to Notifications No. 20 and 38, which extend the applicability of Section 148, 149, and 151 as they stood on March 31, 2021, to periods beyond that date, are ultra vires the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020.

What were the issues?

1. Whether the impugned notices issued under Section 148 of the Income Tax Act, 1961, post-March 31, 2021, are barred by limitation and have been issued without observing the mandatory procedural formalities under Section 148A of the Act, as amended by the Finance Act, 2021? (Question of law and mixed fact and law, concerning Section 148 and Section 148A of the Income Tax Act, 1961). 2. Whether Explanations A(a)(ii)/A(b) to Notifications No. 20 [S.O. 1432 (E) dated 31st March 2021] and No. 38 [S.O.1703(E) dated 27th April 2021] are ultra vires the parent legislation, viz., The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, 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 March 31, 2021, to the period beyond March 31, 2021? (Question of law, concerning the interpretation of the Relaxation Act, 2020 and the aforementioned notifications). Assessee's Contentions: The assessees argued that the notices under Section 148 are barred by limitation and were issued without complying with the mandatory procedures under Section 148A. They also contended that the Explanations to the notifications extending the old provisions beyond March 31, 2021, are ultra vires the Relaxation Act, 2020. They relied on decisions from the Allahabad High Court in Ashok Kumar Agarwal, Rajasthan High Court in Bpip Infra Private Limited, Delhi High Court in Man Mohan Kohli, and this Court's own previous orders in Manoj Jain and Bagaria Properties and Investment Private Limited. Revenue's Contentions: No specific contentions were 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
15-02-2022 Item No.42 Subrata IN THE HIGH COURT AT CALCUTTA Constitutional Writ Jurisdiction Appellate Side WPA No.2192 of 2022 Neha Kansal -vs- Union of India & Ors. with WPA Nos. 2194/2022, 2201/2022, 2427/2022 & 2428/2022 Mr. Pratik Majumder Mr. Abul Mullick Mr. Pratyush Jhunjhunwala Mr. Indranil Banerjee Mr. Bhaskar Sengupta …for the petitioners (in all the writ petitions) Mr. Tilak Mitra ….for the respondents (in all the writ petitions) Affidavit of service filed in court be taken on records. None appears for the respondents in spite of service. Mr Tilak Mitra, learned panel counsel of the Ministry of Law and Justice, Government of India, who is present in court, is engaged in these writ petitions whose appearance is to be regularised. 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, they have been heard together and are being decided by the present common judgement and

order. Common facts and issues are involved in all these writ petitions as appear on perusal of relevant record, and upon considering the submissions of the parties it appears that the petitioners are aggrieved by the issuance of the 2 impugned notices under section 148 of the Income Tax Act, 1961 on the grounds that the same are barred by limitation, and that the respondents-income-tax authorities concerned, before issuing the impugned notices under section 148 of the 1961 Act, 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 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 respondents-income tax authorities concerned under section 148 of the Income Tax Act, 1961. Assessees/petitioners have also sought relief by way of a declaration declaring 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 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 31st March 2021, before 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 counsel 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 September 30, 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 the 3 assessees/petitioners, and an order of Rajasthan High Court dated November 25, 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 an order of the Delhi High Court dated December 15, 2021 in the case of Man Mohan Kohli-vs-Assistant Commissioner of Income Tax & Anr. [W.P. (C) 6176 of 2021] and a judgement and order of this court dated January 17, 2022 in the case of Manoj Jain-vs-Union of India & Ors. in WPA No.11950 of 2021 and also in the case of Bagaria Properties and Investment Private Limited & Anr. in WPO No.244 of 2021. In view of the judgements and orders of this court dated January 17, 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 by allowing the same. Explanations A(a)(ii)/A(b) to the notifications dated March 31, 2021 and April 27, 2021 are declared to be ultra vires the Relaxation Act, 2020 and are, therefore, bad in law and null void. All the impugned notices under section 148 of the Income Tax, 1961 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 the Finance Act, 2021 and after making compliance of the formalities as required by the law. [Md. Nizamuddin, J]

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