TEST COMMODITIES PVT LTD. vs. UNION OF INDIA AND ORS

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WPO/1667/2022HC CalcuttaWBCHCO002264202230 March 2022Bench: HON'BLE JUSTICE MD. NIZAMUDDIN4 pages
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What did the High Court hold?

The High Court, at the outset, noted that both counsels jointly submitted that the issues involved were covered by decisions of various High Courts, including the Allahabad High Court in 'Ashok Kumar Agarwal –vs- Union of India', Rajasthan High Court in 'Bpip Infra Private Limited-vs.- Income Tax Officer', Delhi High Court in 'Man Mohan Kohli –vs- Assistant Commissioner of Income Tax', and its own previous orders in 'Manoj Jain Vs. Union of India' and 'Bagaria Properties and Investment Private Limited & Anr.'. Following these precedents, particularly its own judgment dated January 17, 2022, in the case of Manoj Jain and Bagaria Properties, the High Court disposed of the writ petition by allowing it. The court declared Explanations A(a)(ii)/A(b) to the Notifications dated March 31, 2021, and April 27, 2021, as ultra vires the Relaxation Act, 2020, and consequently, bad in law and void. Accordingly, the impugned notice under Section 148 of the Income Tax Act was quashed. The Assessing Officers were granted liberty to initiate fresh reassessment proceedings in accordance with the amended provisions of the Act by the Finance Act, 2021, and after complying with the legal formalities. The petition was entertained subject to a cost of Rs. 5000/- to be paid to the Calcutta High Court Bar Association Lawyers’ Benevolent Fund due to the delay in filing the writ petition.

What were the facts?

The petitioner, Test Commodities Pvt Ltd, is challenging 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 comply with the statutory formalities prescribed under Section 148A of the Act, which became applicable from April 1, 2021. The petitioner also seeks a declaration that Explanations A(a)(ii)/A(b) to Notifications No. 20 and 38, which extended the applicability of pre-amended Section 148, 149, and 151 to periods beyond March 31, 2021, are ultra vires the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. The writ petition was filed in March 2022, approximately ten months after the impugned notice was issued on April 5, 2021.

What were the issues?

1. Whether the impugned notice issued under Section 148 of the Income Tax Act, 1961, is barred by limitation, considering the amendments brought about by the Finance Act, 2021. (Question of law) 2. Whether the respondent Income Tax Authority observed the statutory formalities prescribed under Section 148A of the Income Tax Act, 1961, prior to issuing the notice under Section 148, as mandated for notices issued on or after April 1, 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 March 31, 2021, to the period beyond March 31, 2021, are ultra vires the parent legislation, viz., The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. (Question of law) Assessee's Contentions: The petitioner argued that the notice under Section 148 is barred by limitation and that the mandatory procedural requirements of Section 148A were not followed. The petitioner also contended that the aforesaid Explanations to the Notifications are ultra vires the Relaxation Act, 2020. Revenue's Contentions: The judgment does not record specific contentions from the revenue.

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

OD – 31 ORDER SHEET WPO/1667/2022 IN THE HIGH COURT AT CALCUTTA CONSTITUTIONAL WRIT JURISDICTION ORIGINAL SIDE TEST COMMODITIES PVT LTD VS UNION OF INDIA AND ORS. BEFORE: The Hon'ble JUSTICE MD. NIZAMUDDIN Date : 30th March, 2022. Appearance: Ms. Swapna Das, Adv. Mr. Siddharth Das, Adv. …For the Petitioner Mr. Prithu Dudhoria, Adv. …For the U.O.I. The Court : Heard Learned Counsels appearing for the parties. Petitioner is aggrieved by the issuance of impugned notice under Section 148 of the Income Tax Act, 1961 on the ground that the same is 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 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

2 by the respondent Income Tax Authority concerned under Section 148 of the Income Tax 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 ‘ Relaxation Act, 2020’). At the outset, both the counsel appearing for the parties jointly submitted that the issues involved in this Writ Petition is 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 assessee/petitioner 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 this Court dated 17th January, 2022 in the case of Manoj Jain Vs. Union of India & Ors. In WPA No.

3 11950 of 2021 and in the case of Bagaria Properties and Investment Private Limited & Anr. In WPO 244 of 2021. In view of judgment 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, this Writ Petition being WPO No.1667/2022 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, impugned notice under Section 148 of the Income Tax Act 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 Finance Act, 2021 and after making compliance of the formalities as required by the law. This writ petition is being entertained subject to payment of cost of Rs. 5000/- to the Calcutta High Court Bar Association Lawyers’ Benevolent Fund since the impugned notice under Section 148 of the Income Tax Act, 1961, has been issued on 5th April, 2021 as appears from record and this writ petition has been filed in March, 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 cost has to be paid by the petitioner to the Calcutta High Court Bar Association Lawyers’ Benevolent Fund within seven days from

4 date. Payment receipt is to be produced by the petitioner before this Court. List this matter as “To be Mentioned” on 12th April, 2022 for compliance. Urgent certified photocopy 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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