Bombay High Court Judgments — 2022

The High Court held that notices issued under Section 148 of the Income Tax Act, 1961, after March 31, 2021, which followed the old procedure that stood replaced by the Finance Act, 2021, are bad in law. The Court reiterated its prior ruling in Tata Communications Transformation Services Limited Vs. Assistant Commissioner of Income Tax 14(1) & Ors., stating that such notices must be quashed. Consequently, the notices impugned in the present writ petitions were quashed and set aside. The Court noted that even if an assessment order had been passed pursuant to these invalid notices, it would be considered non-est. The petitions were disposed of accordingly.

The High Court held that the impugned order of the Principal Commissioner was incorrect and liable to be quashed. The Court found that the Commissioner erred in holding that the proportionate amount withdrawn from the escrow account should not be reduced in computing capital gains. Capital gains are computed under Section 48 by reducing the full value of consideration received or accrued by the cost of acquisition, improvement, and transfer. The Court clarified that the amount of Rs. 9,17,04,240 was neither received nor accrued to the promoters as it was directly transferred from the escrow account to meet liabilities. Therefore, the full value of consideration for computing capital gains should be the amount arrived at after reducing such liabilities from the purchase price mentioned in the agreement. The Court also held that Section 264 of the Act was correctly invoked by the petitioner, as the withdrawal from escrow occurred after the assessment was completed, and the section is designed to address such situations where income does not materialize. The reliance on Section 240 was also found to be erroneous as the circumstances in the proviso did not apply. The Court directed the Assessing Officer to recompute the capital gains after reducing the proportionate amount withdrawn from the escrow account and to grant a refund of excess tax paid.

The High Court noted that the petitioner's counsel agreed that the relief sought in prayer clause (a) regarding the whereabouts of the seized cash was satisfied, as the affidavit disclosed the deposit of Rs. 25,00,000/- in a Punjab National Bank account. Regarding prayer clause (b), concerning the credit of the seized cash and interest, the Court agreed with the revenue's submission. The Court held that this was a matter for the petitioner to pursue before the authorities or courts where the amount was presently deposited. The Court clarified that it had not prevented the petitioner from approaching the competent authority and that the petitioner was free to avail of any rights for seeking release of the amount by making a representation. The petitioner was also granted liberty to take out appropriate proceedings before the appropriate authority concerning prayer clause (b). The petition was disposed of with these clarifications and liberties, with no order as to costs.

The High Court noted that the petitioner agreed that the relief concerning the whereabouts of the seized cash was worked out since the information was disclosed by the respondent. Regarding the second prayer for crediting the seized cash with interest, the Court agreed with the revenue's submission. The Court held that this was a matter the petitioner needed to pursue before the authorities or courts where the amount was presently deposited. The Court clarified that it had not prevented the petitioner from approaching the competent authority and that the petitioner was free to avail of any rights for seeking the release of the amount by making a representation. The petitioner was also granted liberty to take out appropriate proceedings before the appropriate authority concerning the second prayer. The petition was disposed of with these clarifications and liberties, with no order as to costs.

The High Court held that the Assessing Officer was justified in not exercising discretion to grant an unconditional stay or a stay on payment of less than 20% of the tax demand. The Court found that the Assessing Officer had provided detailed reasons for rejecting the petitioner's case, and the Commissioner of Income Tax, in rejecting the review application, also provided reasons for upholding the Assessing Officer's order. The Court found no infirmity in these orders. The Court declined to accept the petitioner's submission to direct the Appellate Authority to dispose of the appeal expeditiously instead of complying with the conditional order of deposit, noting that the Appellate Authority had not fixed a hearing date due to non-compliance. The Court distinguished the case of Bhupendra Murji Shah (supra), stating its facts were peculiar and not a precedent for all cases. The petition was dismissed, but time to deposit 20% of the tax demand was extended by four weeks, with a clear direction that failure to deposit would result in the dismissal of the pending appeal without further reference to the Court.

The High Court allowed the petition. The Court held that the notice dated 31.03.2021 issued under Section 148 of the Act for AY 2015-16 was invalid. The primary reason for this decision was the invalid sanction obtained for issuing the notice. The Court noted that four years had elapsed from the end of the relevant assessment year (AY 2015-16) before the notice was issued. As per Section 151(1) of the Act, in such cases, the sanction for issuing a notice under Section 148 must be obtained from a Principal Chief Commissioner, Chief Commissioner, Principal Commissioner, or Commissioner. However, in this case, the sanction was admittedly granted by an Additional Commissioner of Income Tax. The Court found that the provisions of the Taxation and Other Laws (Relaxation of Certain Provisions) Act, 2020, relied upon by the revenue, did not validate the sanction granted by the Additional Commissioner, as they did not amend the provisions of Section 151 of the Act. Therefore, on this ground alone, the notice was set aside. The Court also observed that the reopening appeared to be based on a change of opinion, as the Assessing Officer had already considered the relevant facts during the original assessment.

The High Court held that the impugned notices under Section 148 of the IT Act were liable to be set aside. Firstly, the Court found that the CIT (Appeals) order dated 16.01.2013 did not contain any 'direction' as contemplated by Section 150 read with Explanation 3 of Section 153 of the IT Act. The observations that the AO could make an assessment of deemed dividend in the hands of shareholders were merely observations, not a direction. Secondly, even if the order contained findings affecting the petitioners, such findings were recorded without granting the petitioners an opportunity of being heard. This breached the principles of natural justice and fair play, and was contrary to Explanation 3 to Section 153 of the IT Act. The Court distinguished the case of Hungerford Investment Trust Ltd., stating that in the present case, DTRPL had a separate legal identity from its shareholders, unlike the agency relationship in Hungerford. Therefore, the invocation of Section 150 based on the CIT (Appeals) order was unsustainable. The rule was made absolute, setting aside the impugned notices.

The High Court held that the notice issued under Section 148 of the Income Tax Act, 1961, dated April 12, 2021, was bad in law and liable to be quashed. The reasoning was that the notice was issued following the old procedure, which had been superseded by the Finance Act, 2021, with effect from April 1, 2021. The Court relied on its prior decision in Tata Communications Transformation Services Limited V/s. Assistant Commissioner of Income Tax 14(1) & Ors., where a similar notice was held to be invalid. Consequently, the impugned notice was quashed and set aside. The Court accepted the statement that no assessment order had been communicated to the petitioner, and even if one were passed, it would be non-est due to the invalidity of the notice. The petition was disposed of accordingly.

The High Court held that the notice issued under Section 148 of the Income Tax Act, 1961, dated April 20, 2021, was bad in law. The Court reasoned that the procedure followed was the old procedure, which had been replaced by the Finance Act, 2021, with effect from April 1, 2021. The Court relied on its previous decision in Tata Communications Transformation Services Limited V/s. Assistant Commissioner of Income Tax 14(1) & Ors., where similar notices were quashed. The ratio decidendi is that a Section 148 notice issued after the effective date of the new procedure, but following the old procedure, is invalid. The impugned notice was quashed and set aside. The petition was disposed of accordingly.

The High Court held that the notice issued under Section 148 of the Income Tax Act, 1961, dated April 20, 2021, was bad in law and liable to be quashed. The reasoning was that the notice was issued subsequent to the effective date of the Finance Act, 2021 (April 1, 2021), which replaced the old procedure for issuing such notices. The court relied on its previous decision in Tata Communications Transformation Services Limited V/s. Assistant Commissioner of Income Tax 14(1) & Ors., where similar notices were held to be invalid. Consequently, the impugned notice in this petition was quashed and set aside. The court accepted the statement that no assessment order had been communicated and noted that even if one had been passed, it would be non-est due to the invalidity of the notice. The petition was disposed of accordingly.

The High Court held that the Explanations to Notification No. 20 of 2021 and Notification No. 38 of 2021 are ultra vires, bad in law, and null and void. The Court agreed with the assessee's submission that Section 3 of the Relaxation Act, which falls under Chapter II titled ‘Relaxation of Certain Provisions of Specified Act’, only deals with time limits and does not grant power to amend substantive provisions of the Income Tax Act. Section 4 of the Relaxation Act, which amends the Act, falls under Chapter III. Therefore, the Explanations, by attempting to revive repealed provisions for reassessment, exceeded the scope of Section 3. Furthermore, the Court found that even if the Explanations were considered valid, the impugned notices were still invalid as they failed to comply with the amended Section 147 of the Act, specifically by not following the procedure under Section 148A and by relying on the 'reason to believe' concept, which is no longer recognized. The Court also noted that the Relaxation Act was not applicable to Assessment Years 2015-2016 onwards. Consequently, all impugned notices issued under Section 148 were quashed and set aside, with liberty to the Assessing Officers to initiate fresh proceedings in accordance with the amended provisions of the Act.

The High Court held that the Explanations to Notification No. 20/2021 and Notification No. 38/2021 were ultra vires and therefore bad in law and void. The Court agreed with the petitioners that Section 3 of the Relaxation Act was a relaxation provision dealing with time limits and did not empower the Central Government to amend substantive provisions of the Income Tax Act, unlike Section 4. The Court found that the Explanations sought to give effect to erstwhile Sections 148, 149, and 151 but did not cover Section 147, which requires compliance with Sections 148 to 153, including the procedure under Section 148A. The Court also noted that the Relaxation Act was not applicable for Assessment Years 2015-2016 onwards, as the time limits for issuing notices for these years were not expiring within the period for which Section 3(1) of the Relaxation Act was applicable. Consequently, the impugned notices issued under Section 148 were quashed and set aside. The Assessing Officers were permitted to initiate fresh reassessment proceedings in accordance with the amended provisions of the Act, strictly complying with the law. The Court was in respectful agreement with the views of the Allahabad, Rajasthan, Delhi, and Madras High Courts.

The Bombay High Court held that the Explanations to Notification No. 20/2021 and Notification No. 38/2021 were ultra vires and therefore bad in law and null and void. The Court agreed with the petitioners' submission that Section 3 of the Relaxation Act was a relaxation provision dealing with time limits and did not empower the Central Government to amend the substantive provisions of the Income Tax Act, unlike Section 4 which contained legislative amendments. The Court found that the Explanations sought to give effect to the repealed provisions of Section 147 to 151, but failed to cover Section 147 itself, which is subject to Sections 148 to 153, including the mandatory Section 148A. Therefore, even if the Explanations were considered valid, the procedure under Section 148A had not been followed, rendering the notices invalid. Additionally, the Court noted that the Relaxation Act was not applicable for Assessment Years 2015-2016 onwards. Consequently, all impugned notices issued under Section 148 were quashed and set aside, with liberty to the Assessing Officers to initiate fresh proceedings in accordance with the amended provisions of the Act.

The High Court held that the Explanations to Notification No. 20 of 2021 and Notification No. 38 of 2021 were ultra vires and therefore bad in law and null and void. The Court agreed with the assessee's submission that Section 3 of the Relaxation Act was a relaxation provision dealing with time limits and did not empower the Central Government to amend substantive provisions of the Income Tax Act. Section 4 of the Relaxation Act was the provision that amended the Act. Furthermore, the Court found that even if the Explanations were considered valid, the impugned notices were still bad in law because the Assessing Officers had not complied with the amended Section 147, which requires adherence to Sections 148 to 153, including the procedure under Section 148A. The Court also noted that the Relaxation Act was not applicable to Assessment Years 2015-2016 onwards. Consequently, all impugned notices issued under Section 148 of the Act were quashed and set aside. The Assessing Officers were permitted to initiate fresh reassessment proceedings in accordance with the amended provisions of the Act, strictly complying with the law. The Court relied on decisions of the Allahabad High Court, Rajasthan High Court, Delhi High Court, and Madras High Court.

The High Court held that the Explanations to Notification No. 20 of 2021 and Notification No. 38 of 2021 were ultra vires and therefore bad in law and null and void. The Court agreed with the petitioners that Section 3 of the Relaxation Act was a relaxation provision for time limits and did not empower the Central Government to amend substantive provisions of the Income Tax Act, unlike Section 4. The Court found that the Explanations sought to extend the applicability of erstwhile Sections 148, 149, and 151 but did not cover Section 147. Consequently, the notices issued were invalid as they did not comply with the amended Section 147, which requires adherence to Sections 148 to 153, including the procedure under Section 148A, which was not followed. The Court also noted that the Relaxation Act was not applicable for Assessment Years 2015-2016 onwards. All impugned notices were quashed and set aside, with liberty to the Assessing Officers to initiate fresh proceedings in accordance with the amended provisions of the Act.

The High Court held that the Explanations to Notification No. 20/2021 and Notification No. 38/2021 were ultra vires and therefore bad in law and void. The Court reasoned that Section 3 of the Relaxation Act, which falls under Chapter II titled 'Relaxation of Certain Provisions of Specified Act', was solely a relaxation provision dealing with time limits and did not empower the Central Government to amend the substantive provisions of the Income Tax Act. In contrast, Section 4 of the Relaxation Act, which falls under Chapter III titled 'Amendments to the Income Tax Act, 1961', was the provision that actually amended the Act, and this was done by the Legislature itself, not delegated to the Central Government. The Court agreed with the petitioners that only Section 4 amended the Act. Furthermore, the Court found that even if the Explanations were considered valid, the impugned notices were still invalid because they did not comply with the amended Section 147, which is subject to Sections 148 to 153, including the mandatory procedure under Section 148A. The 'reason to believe' basis for assumption of jurisdiction was also noted as being obsolete under the amended Section 147. The Court also noted that the Relaxation Act was not applicable for Assessment Years 2015-2016 or subsequent years. Consequently, all impugned notices issued under Section 148 were quashed and set aside, with liberty to the Assessing Officers to initiate fresh reassessment proceedings in accordance with the amended provisions of the Act.

The High Court held that the Explanations to Notification No. 20/2021 and Notification No. 38/2021 were ultra vires and therefore bad in law and null and void. The Court agreed with the petitioners' submission that Section 3 of the Relaxation Act was merely a relaxation provision dealing with time limits and did not empower the Central Government to amend substantive provisions of the Income Tax Act. Section 4 of the Relaxation Act, which amended the Act, was distinct. The Court further found that even if the Explanations were considered valid, they did not cover Section 147 of the Act, which empowers reopening subject to Sections 148 to 153, including the mandatory procedure under Section 148A. Since this procedure was not followed, the notices were invalid. Additionally, the Court noted that the Relaxation Act was not applicable to assessment years 2015-2016 onwards. Consequently, all impugned notices issued under Section 148 of the Act were quashed and set aside. The Assessing Officers were permitted to initiate fresh reassessment proceedings in accordance with the amended provisions of the Act, strictly complying with the statutory requirements.

The High Court held that the Explanations to Notification No. 20/2021 and Notification No. 38/2021 are ultra vires and therefore bad in law and null and void. The Court agreed with the assessee's submission that Section 3 of the Relaxation Act only deals with relaxation of time limits and does not empower the Central Government to amend substantive provisions of the Income Tax Act. Section 4 of the Relaxation Act, which amends provisions, was enacted by the legislature itself. The Court further found that even if the Explanations were considered valid, the impugned notices are bad in law because they do not comply with the amended Section 147, as the 'reason to believe' concept is obsolete, and the mandatory procedure under Section 148A was not followed. Additionally, the Court noted that the Relaxation Act is not applicable for Assessment Years 2015-2016 onwards. Consequently, all impugned notices issued under Section 148 of the Act were quashed and set aside. The Assessing Officers were permitted to initiate fresh reassessment proceedings in accordance with the relevant provisions of the Act as amended by the Finance Act, 2021, strictly complying with the statutory requirements.

The High Court allowed the writ petitions. It held that the Explanations to Notification No. 20/2021 and Notification No. 38/2021 were ultra vires and therefore null and void. The Court reasoned that Section 3 of the Relaxation Act, which falls under Chapter II titled 'Relaxation of Certain Provisions of Specified Act', was only a relaxation provision dealing with time limits. In contrast, Section 4 of the Relaxation Act, which amended substantive provisions of the Income Tax Act, was in Chapter III. The Court agreed with the assessee that Section 3 did not grant the power to amend substantive provisions or revive repealed sections. Furthermore, even if the Explanations were considered valid, they did not cover Section 147, and the mandatory procedure under Section 148A, as introduced by the Finance Act, 2021, was not followed. The Court also noted that the Relaxation Act was not applicable for Assessment Years 2015-2016 onwards. Consequently, all impugned notices issued under Section 148 were quashed and set aside, with liberty to the Assessing Officers to initiate fresh proceedings in accordance with the amended provisions of the Act.

The High Court held that the Explanations to Notification No. 20/2021 and Notification No. 38/2021 were ultra vires and therefore bad in law and null and void. The Court agreed with the assessee that Section 3 of the Relaxation Act was a relaxation provision dealing with time limits and did not empower the Central Government to amend the substantive provisions of the Income Tax Act. Section 4 of the Relaxation Act was the provision that amended the Act, and these amendments were made by the legislature itself. The Court found that the notices issued under Section 148 were bad in law for multiple reasons: (a) the Explanations did not cover Section 147, which empowers revenue to reopen subject to Sections 148 to 153, including Section 148A; (b) the procedure under Section 148A was not followed; (c) the assumption of jurisdiction was based on 'reason to believe,' a concept no longer recognized in the amended Section 147; and (d) the Relaxation Act was not applicable for Assessment Years 2015-2016 or subsequent years. Consequently, all impugned notices were quashed and set aside. The Assessing Officers were permitted to initiate fresh reassessment proceedings in accordance with the amended provisions of the Act, strictly complying with the procedure.

The High Court held that the Explanations to Notification No. 20 of 2021 and Notification No. 38 of 2021 are ultra vires, bad in law, and null and void. The Court agreed with the assessee's submission that Section 3 of the Relaxation Act is a provision for relaxing time limits and does not empower the Central Government to amend substantive provisions of the Income Tax Act, unlike Section 4 which was enacted by the legislature itself. The Court further found that even if the Explanations were valid, the impugned notices were bad in law because they did not comply with the amended Section 147 of the Act, which requires adherence to Sections 148 to 153, including the procedure under Section 148A. The 'reason to believe' basis for assumption of jurisdiction, a concept from the repealed provisions, was also noted as a flaw. The Court also held that the Relaxation Act was not applicable for Assessment Years 2015-2016 onwards. Consequently, all impugned notices issued under Section 148 were quashed and set aside. The Assessing Officers were permitted to initiate fresh reassessment proceedings in accordance with the amended provisions of the Act, strictly complying with the statutory requirements. The Court relied on decisions of the Allahabad, Rajasthan, Delhi, and Madras High Courts.

The High Court held that the Explanations to Notification No. 20 of 2021 and Notification No. 38 of 2021 were ultra vires and therefore bad in law and null and void. The Court agreed with the petitioners that Section 3 of the Relaxation Act was a relaxation provision dealing with time limits and did not empower the Central Government to amend substantive provisions of the Income Tax Act. It noted that Section 4 of the Relaxation Act was the provision that amended the Act. The Court further found that even if the Explanations were considered valid, the impugned notices were bad in law because they did not comply with the amended Section 147, which requires compliance with Sections 148 to 153, including the procedure under Section 148A. The Court also held that the Relaxation Act was not applicable to Assessment Years 2015-2016 onwards. Consequently, all impugned notices issued under Section 148 of the Act were quashed and set aside. The Assessing Officers were permitted to initiate fresh reassessment proceedings in accordance with the amended provisions of the Act, strictly complying with the statutory requirements. The Court relied on decisions of the Allahabad, Rajasthan, Delhi, and Madras High Courts.

The High Court held that the Explanations to Notification No. 20 of 2021 and Notification No. 38 of 2021 were ultra vires and therefore bad in law and null and void. The Court agreed with the petitioners that Section 3 of the Relaxation Act was a relaxation provision dealing with time limits and did not empower the Central Government to amend substantive provisions of the Income Tax Act. It was Section 4 of the Relaxation Act that amended the Act. The Court further found that even if the Explanations were considered valid, the impugned notices were invalid because they did not comply with the amended Section 147, which no longer recognized the concept of 'reason to believe' for assumption of jurisdiction, and crucially, failed to adhere to the mandatory procedure under Section 148A. The Court also noted that the Relaxation Act was not applicable for Assessment Years 2015-2016 onwards. Consequently, all impugned notices issued under Section 148 of the Act were quashed and set aside. The Assessing Officers were permitted to initiate fresh reassessment proceedings in accordance with the relevant provisions of the Act as amended by the Finance Act, 2021, strictly complying with the statutory procedures.

The High Court held that the Explanations to Notification No. 20/2021 and Notification No. 38/2021 were ultra vires and therefore bad in law and null and void. The Court agreed with the petitioners that Section 3 of the Relaxation Act was a relaxation provision dealing with time limits and did not empower the Central Government to amend substantive provisions of the Income Tax Act. Section 4 of the Relaxation Act was the provision that amended the Act. The Court found that the impugned notices were invalid for multiple reasons: (a) the Explanations did not cover Section 147, which empowers revenue to reopen subject to Sections 148 to 153, including Section 148A; (b) the assumption of jurisdiction was based on the 'reason to believe' concept, which is no longer recognized in the amended Section 147; and (c) the procedure under Section 148A was not followed. Additionally, the Court held that the Relaxation Act was not applicable for Assessment Years 2015-2016 or any subsequent year. Consequently, all impugned notices were quashed and set aside. The Assessing Officers were permitted to initiate fresh reassessment proceedings in accordance with the amended provisions of the Act, strictly complying with the law. The Court relied on decisions of the Allahabad High Court, Rajasthan High Court, Delhi High Court, and Madras High Court.

The High Court held that the Explanations to Notification No. 20/2021 and Notification No. 38/2021 were ultra vires, bad in law, and null and void. The Court agreed with the petitioners that Section 3 of the Relaxation Act was a relaxation provision for time limits and did not empower the Central Government to amend substantive provisions of the Income Tax Act, 1961. It was noted that Section 4 of the Relaxation Act, which amended the Act, was distinct from Section 3. The Court found that the impugned notices were bad in law for multiple reasons: (a) the reliance on the 'reason to believe' clause, which is no longer recognized under the amended Section 147; (b) the non-compliance with the procedure under Section 148A, which is mandatory under the amended provisions; and (c) the inapplicability of the Relaxation Act for Assessment Years 2015-2016 and subsequent years, as the time limits for these years were not expiring within the period covered by Section 3(1) of the Relaxation Act. Consequently, all impugned notices issued under Section 148 were quashed and set aside. The Assessing Officers were permitted to initiate fresh reassessment proceedings in accordance with the relevant provisions of the Act as amended by the Finance Act, 2021, strictly complying with the statutory procedures. The Court was in respectful agreement with the views taken by the Allahabad, Rajasthan, Delhi, and Madras High Courts.

The High Court allowed the petition. The Court found significant discrepancies in the reasons recorded for reopening the assessment. The reasons stated that the information related to AY 2015-16, but the conclusion stated that income had escaped assessment for AY 2016-17. The AO's explanation of these inconsistencies as 'typographical errors' was not accepted, as the Court found it to be a casual excuse and noted that the AO did not read the reasons before signing. Furthermore, the Court observed that the approving authorities (Additional Commissioner and Respondent No. 3) also failed to apply their mind by not identifying these errors. The Court also noted that paragraph 2 of the reasons recorded lacked a demonstrable link between the information and the formation of belief, failing to specify the trading activity or the shares/derivatives involved, making the charges vague. Relying on the principle laid down in "Income Tax Office, I Ward, District VI Calcutta and Others vs. Lakhmani Mewal Das," the Court held that there must be a live link or close nexus between the material and the belief formed, and vague or remote material is insufficient. The Court emphasized that reasons for reopening cannot be improved or supplemented by affidavits or oral submissions. Consequently, the notice under Section 148 was vitiated on these grounds alone.

The High Court held that the Explanations to Notification No. 20/2021 and Notification No. 38/2021 were ultra vires and therefore bad in law and null and void. The Court agreed with the petitioners that Section 3 of the Relaxation Act was only a relaxation provision dealing with time limits and did not empower the Central Government to amend the substantive provisions of the Income Tax Act. Section 4 of the Relaxation Act was the provision that amended the Act. The Court found that the impugned notices were bad in law for multiple reasons. Firstly, the Explanations did not cover the erstwhile Section 147, which empowers the revenue to reopen assessments subject to Sections 148 to 153, including Section 148A. Thus, the procedure under Section 148A was not followed. Secondly, the assumption of jurisdiction by the Assessing Officer was based on the 'reason to believe' concept, which is no longer recognized in the amended Section 147. Thirdly, the Relaxation Act was not applicable for Assessment Years 2015-2016 or subsequent years, as the time limits for these years were not expiring within the period for which Section 3(1) of the Relaxation Act was applicable. Consequently, the Court quashed and set aside all the impugned notices. It was open to the Assessing Officers to initiate fresh reassessment proceedings in accordance with the amended provisions of the Act, strictly complying with the statutory requirements.

The High Court held that the Explanations to Notification Nos. 20/2021 and 38/2021 were ultra vires and therefore bad in law and null and void. The Court agreed with the assessee's contention that Section 3 of the Relaxation Act, which falls under Chapter II titled ‘Relaxation of Certain Provisions of Specified Act’, only deals with time limits and does not empower the Central Government to amend substantive provisions of the Income Tax Act. Section 4 of the Relaxation Act, which falls under Chapter III titled ‘Amendments to the Income Tax Act, 1961’, is where legislative amendments were made. The Court found that the impugned notices were invalid not only because the Explanations were ultra vires but also because the Assessing Officers failed to comply with the amended Section 147 (which does not recognize 'reason to believe') and the mandatory procedure under Section 148A. Furthermore, the Court noted that the Relaxation Act was not applicable for Assessment Years 2015-2016 onwards. Consequently, all impugned notices issued under Section 148 were quashed and set aside. The Assessing Officers were permitted to initiate fresh reassessment proceedings in accordance with the relevant provisions of the Act as amended by the Finance Act, 2021, strictly complying with the statutory provisions.

The High Court held that the Explanations to Notification No. 20 of 2021 and Notification No. 38 of 2021 were ultra vires the Relaxation Act and therefore bad in law and void. The Court agreed with the petitioners that Section 3 of the Relaxation Act was a relaxation provision dealing with time limits and did not empower the Central Government to amend the substantive provisions of the Income Tax Act. Section 4 of the Relaxation Act, which did amend provisions, was separate and not applicable in this context. The Court found that the impugned notices were bad in law for multiple reasons: (a) the Explanations did not cover Section 147, which empowers reopening, and thus the amended Section 147, which requires compliance with Sections 148 to 153 (including Section 148A), was not followed; (b) the assumption of jurisdiction was based on the 'reason to believe' concept, which is obsolete under the amended Section 147; (c) the Relaxation Act was not applicable for Assessment Years 2015-2016 onwards as the time limits for those years were not expiring within the period covered by Section 3(1) of the Relaxation Act. Consequently, all impugned notices issued under Section 148 were quashed and set aside. The Assessing Officers were permitted to initiate fresh reassessment proceedings in accordance with the amended provisions of the Act.

The High Court held that the Explanations to Notification No. 20/2021 and Notification No. 38/2021 were ultra vires and therefore bad in law and void. The Court agreed with the assessee's submission that Section 3 of the Relaxation Act was a relaxation provision dealing with time limits and did not empower the Central Government to amend the substantive provisions of the Income Tax Act. Only Section 4 of the Relaxation Act amended the Act. Furthermore, the Court found that even if the Explanations were considered valid, the reassessment notices were still invalid because they were issued based on the 'reason to believe' concept, which is no longer recognized in the amended Section 147, and the mandatory procedure under Section 148A was not followed. The Court also noted that the Relaxation Act was not applicable for Assessment Years 2015-2016 onwards. Consequently, all impugned notices issued under Section 148 were quashed and set aside, with liberty to the Assessing Officers to initiate fresh proceedings in accordance with the amended provisions.

The High Court held that the Explanations to Notification No. 20/2021 and Notification No. 38/2021 were ultra vires and therefore bad in law and null and void. The Court agreed with the petitioners that Section 3 of the Relaxation Act was a relaxation provision dealing with time limits and did not empower the Central Government to amend the substantive provisions of the Income Tax Act. Section 4 of the Relaxation Act, which did amend the Act, was made by the legislature itself. The Court found that the notices were also bad in law for failing to comply with the amended Section 147, which does not recognize the 'reason to believe' concept, and for not following the mandatory procedure under Section 148A. Furthermore, the Court noted that the Relaxation Act was not applicable to Assessment Years 2015-2016 onwards. Consequently, all impugned notices issued under Section 148 were quashed and set aside. The Assessing Officers were permitted to initiate fresh reassessment proceedings in accordance with the relevant provisions of the Act as amended by the Finance Act, 2021, after strictly complying with the statutory requirements.

The High Court held that the Explanations to Notification No. 20/2021 and Notification No. 38/2021 are ultra vires and therefore bad in law and void. The Court agreed with the assessee's submission that Section 3 of the Relaxation Act, which falls under Chapter II titled ‘Relaxation of Certain Provisions of Specified Act’, only deals with time limits and does not empower the Central Government to amend substantive provisions of the Income Tax Act. Section 4 of the Relaxation Act, which amends provisions, falls under Chapter III. The Court found that the Assessing Officers' assumption of jurisdiction was based on the 'reason to believe' concept, which is no longer recognized in the amended Section 147. Moreover, the amended Section 147 is subject to Sections 148 to 153, including the procedure in Section 148A, which was not followed. The Court also noted that the Relaxation Act is not applicable for Assessment Years 2015-2016 or subsequent years. Consequently, all impugned notices issued under Section 148 were quashed and set aside. The Assessing Officers were permitted to initiate fresh reassessment proceedings in accordance with the amended provisions of the Act, strictly complying with the statutory requirements.

The High Court held that the Explanations to Notification No. 20/2021 and Notification No. 38/2021 were ultra vires and therefore bad in law and void. The Court agreed with the petitioners that Section 3 of the Relaxation Act was a relaxation provision dealing with time limits and did not empower the Central Government to amend the substantive provisions of the Income Tax Act. Section 4 of the Relaxation Act was the provision that amended the Act. The Court found that the notices issued were bad in law for multiple reasons: (a) the Explanations sought to revive repealed provisions without legislative authority; (b) the notices were based on the 'reason to believe' criterion, which is no longer recognized under the amended Section 147; (c) the procedure under the amended Section 147, including Section 148A, was not followed; and (d) the Relaxation Act was not applicable for Assessment Years 2015-2016 onwards. Consequently, all impugned notices were quashed and set aside. The Assessing Officers were permitted to initiate fresh reassessment proceedings in accordance with the amended provisions of the Act.

The High Court held that the Explanations to Notification No. 20/2021 and Notification No. 38/2021 are ultra vires, bad in law, and void. The Court reasoned that Section 3 of the Relaxation Act, which falls under Chapter II titled 'Relaxation of Certain Provisions of Specified Act', only provides for relaxation of time limits and does not grant the Central Government the power to amend the substantive provisions of the Income Tax Act. Such amendments, as per Section 4 of the Relaxation Act, are made by the Legislature itself. Therefore, the Explanations, which attempted to extend the applicability of erstwhile sections, were beyond the scope of Section 3. Furthermore, the Court found that even if the Explanations were considered valid, the impugned notices were still bad in law because they failed to comply with the amended Section 147, which no longer recognizes the 'reason to believe' concept, and crucially, did not follow the mandatory procedure under Section 148A. The Court also agreed with the Assessee's contention that the Relaxation Act was not applicable to Assessment Years 2015-2016 and subsequent years. Consequently, all impugned notices were quashed and set aside. The Assessing Officers were permitted to initiate fresh reassessment proceedings in accordance with the amended provisions of the Act.

The High Court held that the Explanations to Notification No. 20/2021 and Notification No. 38/2021 were ultra vires, bad in law, and null and void. The Court agreed with the assessee's contention that Section 3 of the Relaxation Act was a relaxation provision for time limits and did not empower the Central Government to amend the substantive provisions of the Income Tax Act, 1961, or revive repealed sections. Section 4 of the Relaxation Act, which did amend provisions, was distinct and made by the legislature itself. The Court found that even if the Explanations were considered valid, the impugned notices were still bad in law because they were issued based on the 'reason to believe' concept, which is no longer part of the amended Section 147, and because the mandatory procedure under Section 148A was not followed. Additionally, the Court held that the Relaxation Act was not applicable to Assessment Years 2015-2016 and subsequent years, as the time limits for issuing notices under Section 148 for these years did not fall within the scope of Section 3(1) of the Relaxation Act. Consequently, all impugned notices were quashed and set aside. The Assessing Officers were permitted to initiate fresh reassessment proceedings in accordance with the amended provisions of the Act, strictly complying with the statutory requirements.

The High Court held that the Explanations to Notification No. 20/2021 and Notification No. 38/2021 were ultra vires, bad in law, and null and void. The Court agreed with the petitioners' contention that Section 3 of the Relaxation Act was a relaxation provision dealing with time limits and did not empower the Central Government to amend the substantive provisions of the Income Tax Act. Section 4 of the Relaxation Act, which did amend the Act, was made by the legislature itself. Furthermore, the Court found that the impugned notices were bad in law because they were issued based on the 'reason to believe' clause, which is no longer recognized under the amended Section 147, and because the procedure under Section 148A was not followed. The Court also held that the Relaxation Act was not applicable to Assessment Years 2015-2016 and subsequent years. Consequently, all impugned notices were quashed and set aside, with liberty to the Assessing Officers to initiate fresh proceedings in accordance with the amended provisions of the Act.

The High Court held that the Explanations to Notification No. 20/2021 and Notification No. 38/2021 are ultra vires and therefore bad in law and null and void. The Court agreed with the assessee's submission that Section 3 of the Relaxation Act was a relaxation provision dealing with time limits and did not empower the Central Government to amend substantive provisions of the Act; only Section 4 of the Relaxation Act amended the Act. Furthermore, the Court found that even if the Explanations were valid, the impugned notices were bad in law because the Assessing Officers assumed jurisdiction based on the 'reason to believe' concept, which is no longer recognized in the amended Section 147. Additionally, the procedure under Section 148A, which is part of the amended provisions and must be followed, was not complied with. The Court also noted that the Relaxation Act was not applicable for Assessment Years 2015-2016 onwards. Consequently, all impugned notices issued under Section 148 of the Act were quashed and set aside. The Assessing Officers were permitted to initiate fresh reassessment proceedings in accordance with the relevant provisions of the Act as amended by the Finance Act, 2021, strictly complying with the statutory requirements.

The High Court held that the Explanations to Notification No. 20/2021 and Notification No. 38/2021 were ultra vires and therefore bad in law and null and void. The Court agreed with the petitioners that Section 3 of the Relaxation Act was only a relaxation provision dealing with time limits and did not empower the Central Government to amend substantive provisions of the Income Tax Act. Section 4 of the Relaxation Act was the provision that amended the Act. The Court found that the impugned notices were bad in law for multiple reasons: (a) the Explanations did not cover Section 147, which empowers reopening, and thus the amended Section 147, including the procedure under Section 148A, was not followed; (b) Section 297 of the Act, which provides a saving clause for the 1922 Act, did not provide a similar saving clause for the erstwhile Sections 147 to 151 of the 1961 Act, meaning the amended provisions applied from April 1, 2021; and (c) the Relaxation Act was not applicable for Assessment Years 2015-2016 onwards as the time limits for these years were not expiring within the period for which Section 3(1) of the Relaxation Act was applicable. Consequently, all impugned notices issued under Section 148 were quashed and set aside. The Assessing Officers were permitted to initiate fresh reassessment proceedings in accordance with the amended provisions of the Act.

The High Court held that the Explanations to Notification No. 20/2021 and Notification No. 38/2021 were ultra vires and therefore bad in law and null and void. The Court agreed with the assessee's submission that Section 3 of the Relaxation Act was only a relaxation provision dealing with time limits and did not empower the Central Government to amend the substantive provisions of the Income Tax Act. Section 4 of the Relaxation Act was the provision that amended the Act. The Court found that the notices were bad in law for multiple reasons: (a) the Explanations to the notifications were invalid; (b) even if the Explanations were valid, they did not cover Section 147, which empowers revenue to reopen subject to Sections 148 to 153, including Section 148A, and the procedure under Section 148A was not followed; (c) the 'reason to believe' criterion, which was the basis for assuming jurisdiction, is no longer recognized in the amended Section 147; and (d) the Relaxation Act was not applicable for Assessment Years 2015-2016 or any subsequent year. Consequently, all impugned notices issued under Section 148 of the Act were quashed and set aside. The Assessing Officers were permitted to initiate fresh reassessment proceedings in accordance with the relevant provisions of the Act as amended by the Finance Act, 2021, after strictly complying with the statutory provisions.

The High Court held that the Explanations to Notification No. 20/2021 and Notification No. 38/2021 were ultra vires, bad in law, and null and void. The Court agreed with the petitioners' submission that Section 3 of the Relaxation Act was a relaxation provision dealing with time limits and did not empower the Central Government to amend the substantive provisions of the Income Tax Act. Section 4 of the Relaxation Act, which did amend provisions, was enacted by the Legislature itself. Furthermore, even if the Explanations were considered valid, they did not cover Section 147, which is the enabling provision for reopening. The Court noted that the amended Section 147 is subject to Sections 148 to 153, including the procedure under Section 148A, which was not followed. The Court also found that the Relaxation Act was not applicable for Assessment Years 2015-2016 onwards. Consequently, all impugned notices issued under Section 148 of the Act were quashed and set aside. The Assessing Officers were permitted to initiate fresh reassessment proceedings in accordance with the amended provisions of the Act, strictly complying with the statutory requirements. The Court was in respectful agreement with the High Courts of Allahabad, Rajasthan, Delhi, and Madras.

The High Court held that the Explanations to Notification No. 20/2021 and Notification No. 38/2021 are ultra vires, bad in law, and void. The Court agreed with the assessee's submission that Section 3 of the Relaxation Act was a relaxation provision dealing with time limits and did not empower the Central Government to amend substantive provisions of the Income Tax Act. Such amendments were made by the legislature itself under Section 4 of the Relaxation Act. Furthermore, the Court found that even if the Explanations were considered valid, the impugned notices were still invalid because they did not comply with the amended Section 147, which no longer recognizes the 'reason to believe' criterion for assumption of jurisdiction. Additionally, the procedure under the amended Section 148A, which is now part of the reassessment regime, was not followed. The Court also noted that the Relaxation Act was not applicable for Assessment Years 2015-2016 onwards. Consequently, all impugned notices issued under Section 148 of the Act were quashed and set aside. The Assessing Officers were permitted to initiate fresh reassessment proceedings in accordance with the relevant provisions of the Act as amended by the Finance Act, 2021, strictly complying with the statutory procedures.

The High Court held that the Explanations to Notification No. 20/2021 and Notification No. 38/2021 were ultra vires and therefore bad in law and void. The Court agreed with the assessee's submission that Section 3 of the Relaxation Act was a relaxation provision dealing with time limits and did not empower the Central Government to amend substantive provisions of the Income Tax Act, unlike Section 4 which contained legislative amendments. The Court found that the Explanations sought to extend the applicability of erstwhile Sections 148, 149, and 151 but did not cover Section 147, which empowers revenue to reopen subject to Sections 148 to 153, including Section 148A. Therefore, even if the Explanations were valid, the procedure under Section 148A was not followed, rendering the notices invalid. The Court also noted that the Relaxation Act was not applicable for Assessment Years 2015-2016 or subsequent years. Consequently, all impugned notices issued under Section 148 were quashed and set aside. The Assessing Officers were permitted to initiate fresh reassessment proceedings in accordance with the amended provisions of the Act, strictly complying with the statutory requirements. The Court relied on decisions of the Allahabad, Rajasthan, Delhi, and Madras High Courts.

The High Court held that the Explanations to Notification No. 20 of 2021 and Notification No. 38 of 2021 were ultra vires, bad in law, and null and void. The Court agreed with the petitioners that Section 3 of the Relaxation Act was a provision for relaxing time limits and did not empower the Central Government to revive repealed substantive provisions of the Income Tax Act. Section 4 of the Relaxation Act was the operative section for amending the Act. The Court found that the impugned notices were invalid for multiple reasons: (a) the Explanations were ultra vires; (b) the notices were issued based on the 'reason to believe' concept from the repealed Section 147, which is not recognized in the amended Section 147; (c) the mandatory procedure under the amended Section 147 and Section 148A was not followed; and (d) the Relaxation Act was not applicable to Assessment Years 2015-2016 onwards. Consequently, all impugned notices issued under Section 148 were quashed and set aside. The Assessing Officers were permitted to initiate fresh reassessment proceedings in accordance with the relevant provisions of the Act as amended by the Finance Act, 2021, strictly complying with the statutory procedures.

The High Court held that the Explanations to Notification No. 20/2021 and Notification No. 38/2021 are ultra vires and therefore bad in law and null and void. The Court agreed with the assessee's submission that Section 3 of the Relaxation Act was a relaxation provision dealing with time limits and did not empower the Central Government to amend the substantive provisions of the Income Tax Act. Section 4 of the Relaxation Act, which did amend provisions, was distinct. The Court also found that the impugned notices were bad in law for failing to comply with the amended Section 147, specifically by relying on the 'reason to believe' concept and not following the procedure under Section 148A. Additionally, the Court noted that the Relaxation Act was not applicable for Assessment Years 2015-2016 onwards. Consequently, all impugned notices issued under Section 148 were quashed and set aside. The Assessing Officers were permitted to initiate fresh reassessment proceedings in accordance with the relevant provisions of the Act as amended by the Finance Act, 2021, strictly complying with the statutory procedures.

The High Court held that the Explanations to Notification No. 20 of 2021 and Notification No. 38 of 2021 were ultra vires the Relaxation Act and therefore bad in law and void. The Court reasoned that Section 3 of the Relaxation Act, which falls under Chapter II titled 'Relaxation of Certain Provisions of Specified Act', was intended for relaxing time limits and did not grant the power to amend substantive provisions of the Income Tax Act. This power was vested in Section 4, which fell under Chapter III titled 'Amendments to the Income Tax Act, 1961', and was enacted by the legislature itself. The Court agreed with the petitioners that only Section 4 amended the Act, not Section 3. Furthermore, the Court found that even if the Explanations were considered valid, the reassessment notices were still invalid because they were issued based on the erstwhile Section 147's 'reason to believe' concept, which is no longer recognized in the amended Section 147. Additionally, the mandatory procedure under Section 148A, which is part of the amended provisions (Sections 148 to 153), was not followed. The Court also held that the Relaxation Act was not applicable to Assessment Years 2015-2016 and subsequent years, as the time limits for these years were not expiring within the period for which Section 3(1) of the Relaxation Act was applicable. Consequently, all impugned notices were quashed and set aside. The Assessing Officers were permitted to initiate fresh reassessment proceedings in accordance with the amended provisions of the Act.

The High Court held that the Explanations to Notification No. 20/2021 and Notification No. 38/2021 are ultra vires and therefore bad in law and null and void. The Court agreed with the assessee's contention that Section 3 of the Relaxation Act was only a relaxation provision dealing with time limits and did not empower the Central Government to amend the substantive provisions of the Income Tax Act, unlike Section 4 of the same Act. The Court found that the Explanations sought to give effect to the erstwhile Sections 148, 149, and 151, but did not cover Section 147, which is the primary section empowering reopening. Furthermore, the Court noted that even if the Explanations were valid, the procedure under the amended Section 147 and Section 148A had not been followed, rendering the notices invalid. The Court also held that the Relaxation Act was not applicable for Assessment Years 2015-2016 and subsequent years. Consequently, all impugned notices issued under Section 148 of the Act were quashed and set aside. The Assessing Officers were permitted to initiate fresh reassessment proceedings in accordance with the amended provisions of the Act, strictly complying with the statutory procedures.

The High Court held that the Explanations to Notification No. 20 of 2021 and Notification No. 38 of 2021 are ultra vires and therefore bad in law and null and void. The Court agreed with the assessee's contention that Section 3 of the Relaxation Act was a relaxation provision dealing with time limits and did not empower the Central Government to amend substantive provisions of the Income Tax Act, 1961. Such amendments were made by the Legislature itself under Section 4 of the Relaxation Act. Furthermore, the Court found that even if the Explanations were considered valid, the impugned notices were still invalid as they did not comply with the amended Section 147, which requires compliance with Section 148A and does not recognize the 'reason to believe' criterion. The Court also noted that the Relaxation Act was not applicable for Assessment Years 2015-2016 onwards. Consequently, all impugned notices issued under Section 148 of the Act were quashed and set aside. The Assessing Officers were permitted to initiate fresh reassessment proceedings in accordance with the relevant provisions of the Act as amended by the Finance Act, 2021, after strictly complying with the statutory provisions.

The High Court held that the Explanations to Notification Nos. 20/2021 and 38/2021 were ultra vires and therefore bad in law and void. The court agreed with the petitioners' submission that Section 3 of the Relaxation Act was a relaxation provision dealing with time limits and did not empower the Central Government to amend the substantive provisions of the Income Tax Act. Section 4 of the Relaxation Act was the provision that made amendments. The court found that the Explanations sought to give effect to the erstwhile Sections 148, 149, and 151 but did not cover Section 147. Consequently, the notices issued were invalid because the Assessing Officers assumed jurisdiction based on the 'reason to believe' concept, which is no longer recognized in the amended Section 147, and failed to comply with the procedure under Section 148A. The court also noted that the Relaxation Act was not applicable to Assessment Years 2015-2016 onwards. All impugned notices issued under Section 148 were quashed and set aside, with liberty to the Assessing Officers to initiate fresh proceedings in accordance with the amended provisions.

The Bombay High Court held that the Explanations to Notification No. 20 of 2021 and Notification No. 38 of 2021 were ultra vires and therefore bad in law and null and void. The Court agreed with the petitioners' submission that Section 3 of the Relaxation Act was a relaxation provision dealing with time limits and did not empower the Central Government to amend the substantive provisions of the Income Tax Act. Only Section 4 of the Relaxation Act amended the Act. The Court further found that the impugned notices were invalid because they were issued based on the erstwhile Section 147, which required 'reason to believe' (a concept no longer recognized in the amended Section 147), and failed to comply with the mandatory procedure under the amended Section 148A. Additionally, the Court noted that the Relaxation Act was not applicable to assessment years 2015-2016 or subsequent years. Consequently, all impugned notices issued under Section 148 were quashed and set aside. The Assessing Officers were permitted to initiate fresh reassessment proceedings in accordance with the amended provisions of the Act, strictly complying with the statutory requirements.

The High Court held that the Explanations to Notification No. 20/2021 and Notification No. 38/2021 were ultra vires, bad in law, and consequently null and void. The Court agreed with the assessee that Section 3 of the Relaxation Act was a relaxation provision for time limits and did not empower amendments to substantive provisions of the Income Tax Act, unlike Section 4. The Court found that the notices were bad in law for multiple reasons: (a) they were issued on the basis of 'reason to believe' which is no longer recognized in the amended Section 147; (b) the procedure under Section 148A, which is mandatory under the amended provisions, was not followed; and (c) the Relaxation Act was not applicable for Assessment Years 2015-2016 and subsequent years as the time limits for issuing notices for these years were not expiring within the period for which Section 3(1) of the Relaxation Act was applicable. Consequently, all impugned notices issued under Section 148 were quashed and set aside. The Assessing Officers were permitted to initiate fresh reassessment proceedings in accordance with the amended provisions of the Act.