Palak Khatuja v. Union Of India

-1- AFR HIGH COURT OF CHHATTISGARH AT BILASPUR W.P.(T) No. 149 of 2021 Palak Khatuja, W/o. Shri Vinod Khatuja, Aged About 40 Years, R/o.C/o Shri Nanak Ram Khatuja, Green Park Colony, Jarhabhata, P.S.Civil Lines, Bilaspur, Chhattisgarh Pin 495001 ---- Petitioner Versus 1. Union Of India, Through The Secretary, Ministry Of Finance,Income Tax Department, (Department Of Revenue) North Block,Secretariat Building, New Delhi Income Tax Department, (Department Of Revenue) North Block,Secretariat Building, New Delhi 2. Principal Commissioner Of Income Tax, Income-Tax Department,Office Of The Income Tax Officer, Raipur, Chhattisgarh Office Of The Income Tax Officer, Raipur, Chhattisgarh 3. Income Tax Officer, Govt. Of India, Ministry Of Finance, Income TaxDepartment, Ward 1(1), Aaykar Bhawan, Vyapar Vihar, BilaspurChhattisgarh Department, Ward 1(1), Aaykar Bhawan, Vyapar Vihar, BilaspurChhattisgarh ---- Respondents W.P.(T) No. 147 of 2021 Manisha Khatuja, W/o. Shri Mukesh Khatuja, Aged About 37 Years,R/o. C/o. Shri Nayak Ram Khatuja, Green Park Colony,Jarhabhata, Police Station Civil Lines, Bilaspur, Chhattisgarh, Pin495001. ---- Petitioner Versus 1. Union Of India, Through The Secretary, Ministry Of Finance,Income Tax Department, (Department Of Revenue) North Block,Secretariat Building, New Delhi Income Tax Department, (Department Of Revenue) North Block,Secretariat Building, New Delhi 2. Principal Commissioner Of Income Tax, Income-Tax Department,Office Of The Income Tax Officer, Raipur, Chhattisgarh Office Of The Income Tax Officer, Raipur, Chhattisgarh 3. Income Tax Officer, Govt. Of India, Ministry Of Finance, Income TaxDepartment, Ward 1(1), Aaykar Bhawan, Vyapar Vihar, BilaspurChhattisgarh Department, Ward 1(1), Aaykar Bhawan, Vyapar Vihar, BilaspurChhattisgarh ---- Respondents W.P.(T) No. 148 of 2021 Bharti Khatuja, W/o. Shri Ritesh Khatuja, Aged About 36 Years, R/o.C/o. Shri Nanak Ram Khatuja, Green Park Colony, Jarhabhata, P.S.Civil Lines, Bilaspur, Chhattisgarh Pin 495001. ---- Petitioner 1. Union Of India, Through The Secretary, Ministry Of Finance,Income Tax Department, (Department Of Revenue) North Block,Secretariat Building, New Delhi Income Tax Department, (Department Of Revenue) North Block,Secretariat Building, New Delhi 2. Principal Commissioner Of Income Tax, Income-Tax Department,Office Of The Income Tax Officer, Raipur, Chhattisgarh Office Of The Income Tax Officer, Raipur, Chhattisgarh 3. Income Tax Officer, Govt. Of India, Ministry Of Finance, Income TaxDepartment, Ward 1(1), Aaykar Bhawan, Vyapar Vihar, BilaspurChhattisgarh Department, Ward 1(1), Aaykar Bhawan, Vyapar Vihar, BilaspurChhattisgarh ---- Respondents For Petitioners : Mr. N Naha Roy, Advocate For Respondents: Mr. Amit Choudhary with Mrs. Naushina Ali, Advocates Naushina Ali, Advocates Hon'ble Shri Justice Goutam Bhaduri Order On Board 23.08.2021 Heard 1.Since the cause of action and facts involved in these petitions aresimilar in nature, therefore, they are being heard together anddecided by this common order. similar in nature, therefore, they are being heard together anddecided by this common order. 2.Challenge in these petitions are to the notice dated 30.06.2021(Annexure P-1) issued under Section 148 of the Income Tax Act,1961. (Annexure P-1) issued under Section 148 of the Income Tax Act,1961. ---- Respondents For Petitioners : Mr. N Naha Roy, Advocate For Respondents: Mr. Amit Choudhary with Mrs. Naushina Ali, Advocates Naushina Ali, Advocates Hon'ble Shri Justice Goutam Bhaduri Order On Board 23.08.2021 Heard 1.Since the cause of action and facts involved in these petitions aresimilar in nature, therefore, they are being heard together anddecided by this common order. similar in nature, therefore, they are being heard together anddecided by this common order. 2.Challenge in these petitions are to the notice dated 30.06.2021(Annexure P-1) issued under Section 148 of the Income Tax Act,1961. (Annexure P-1) issued under Section 148 of the Income Tax Act,1961. 3.Learned counsel for the petitioners would submit that thepetitioners have filed the income tax return for the AssessmentYear 2015-16 and Financial Year 2014-15. Subsequent thereto onthe basis of some information available initially a scrutiny was donehowever no concealment was found but again a notice underSection 148 of the Income Tax Act, 1961 has been issued. It issubmitted that on the date i.e. on 30.06.2021 when the noticepetitioners have filed the income tax return for the AssessmentYear 2015-16 and Financial Year 2014-15. Subsequent thereto onthe basis of some information available initially a scrutiny was donehowever no concealment was found but again a notice underSection 148 of the Income Tax Act, 1961 has been issued. It issubmitted that on the date i.e. on 30.06.2021 when the notice under Section 148 of the Income Tax Act (hereinafter referred to as“Act of 1961”) is issued, the power to issue the notice waspreceded with a new provision of law and thereby Section 148 is toread with Section 148-A of the Income Tax Act, 1961. He wouldsubmit that as per the amended Finance Act, 2021, which waspublished in the Gazette on 28[th] March, 2021, section 2 to 88 wasnotified to come into force on 1[st] day of April 2021 and accordinglythe new Section 148A was inserted which prescribed that beforeissuing the notice under Section 148 of the Income Tax Act, theAssessing Officer was bound to conduct an enquiry giving anopportunity of hearing to the assessee with the prior approval ofspecified authority and show cause notice in detail was necessaryspecifying particular date for hearing. He would submit that sincethe operation of Section 148A came into being on 01[st] April, 2021,as such, the notice issued to the petitioner on 30.06.2021 underSection 148 of the Income Tax Act, without following the procedureunder Section 148A without giving an opportunity of hearing wouldbe illegal and contrary to the provisions of Section 148A and itcannot be sustained. It is further submitted that the respondentsthough have placed reliance on certain notification of Ministry ofFinance but when the law has been enacted by the Parliament thenin such case the notification issued by the Ministry of Financewould not over ride even to extend the period of operation ofsection of the old Act of Section 148 of the Income Tax Act. It isstated Section 148A came in between which requires certainobligation to be performed by the Assessing Officer, thereforewithout giving any opportunity of hearing the notice under Section 4. 5. 148 of the Act, 1961 would be alleged. He therefore submits thatthe impugned notice is illegal and is liable to be quashed. 4. 5. 148 of the Act, 1961 would be alleged. He therefore submits thatthe impugned notice is illegal and is liable to be quashed. Per contra, learned counsel for the respondents would submit thatbecause of pandemic and lock down of all activities including thenormal working of office, lot of people could not file their return andsubmit the necessary papers with the department in respect of theirincome tax. As such, the Ministry of Finance in exercise of powerunder the Finance Act issued the notification whereby theapplication of old provisions of Section 148 of the Income Tax Actwas extended initially uptill 30[th] April, 2021 and thereafter wasfurther extended uptill 30[th] day of June, 2021. He would submittherefore the notice issued by Annexure P-1 dated 30.06.2021would be within its ambit of the power of department in theextended time of it's operation till 30.06.2021. Consequently, thenotice under Section 148 of the Income Tax Act is completely validand legal. Perused the documents. The notice under Section 148 of theIncome Tax Act was issued for Assessment Year of 2015-2016. Thenotice was issued on 30.06.2021. The grievance of the petitionersthat the notice of like nature could have been issued till the cut offdate 30.03.2021 as subsequent thereto the new Section 148Aintervened before issuance of notice directly under Section 148 ofthe Income Tax Act. The Finance Act, 2021 was notified on 28[th]March, 2021 which purports that Section 2 to 88 shall come intoforce on the 1[st] day of April, 2021 and Section 108 to 123 shallcome into force on such date Central Government notifies in officialGazette to appoint. The relevant part wherein Section 148A of the Income Tax Act is enveloped is covered under Section 42 of theFinance Act, 2021. By introduction of Section 148A, it wasmandated that the Assessing Officer before issuing any noticeunder Section 148 shall conduct an enquiry, if required, with theprior approval of specified authority, provide an opportunity of beingheard and show cause notice to be served and time was alsoprescribed. The question here in this case comes for considerationthat whether with the promulgation of the Act on 1[st] day of April,2021, whether the notice directly issued under Section 148 on30.06.2021 is valid or not as bar of 148A was created by insertionof Section on 01[st] April, 2021. In order to get the answer, thereference is made to the notification dated 31.03.2021 (AnnexureR-1) and 27.04.2021 (Annexure R-2). For the reasons of lock down during pandemic as all the activitieslike filing of return, assessment were arrested, the parliamentenacted the Taxation & Others Laws (Relaxation & Amendment ofCertain Provisions) Act, 2020. In such Act any time limit specified orprescribed or notified under specified Act between 20[th] March 2020to 31[st] December 2021 or other date thereafter, after December2021 Central Government were given the power to notify. For thesake of brevity, the relevant part of relaxation of certain provisionsof specified Act is reproduced herein below : “3. (1) Where, any time-limit has been specified in, orprescribed or notified under, the specified Act which fallsduring the period from the 20[th] day of March, 2020 to the31[st] day of December, 2020, or such other date after the31[st] day of December, 2020, as the Central Governmentprescribed or notified under, the specified Act which fallsduring the period from the 20[th] day of March, 2020 to the31[st] day of December, 2020, or such other date after the31[st] day of December, 2020, as the Central Government may, by notification, specify in this behalf, for thecompletion or compliance of such action as— (a) completion of any proceeding or passing ofany order or issuance of any notice, intimation,notification, sanction or approval, or such other action,by whatever name called, by any authority, commissionor tribunal, by whatever name called, under theprovisions of the specified Act;” may, by notification, specify in this behalf, for thecompletion or compliance of such action as— (a) completion of any proceeding or passing ofany order or issuance of any notice, intimation,notification, sanction or approval, or such other action,by whatever name called, by any authority, commissionor tribunal, by whatever name called, under theprovisions of the specified Act;” 7.The necessity occurred because of the Covid pandemic lock downin the backdrop of the fact that few of the assessee could not filetheir return. Likewise since the offices were closed, the departmentalso could not perform the statutory duty under the Income Tax Act.Considering the complexity, the Parliament thought it proper todelegate the Ministry of Finance, the date of applicability of theamended section. The delegation is not a self-contained andcomplete Act and is only been made in the interest of flexibility andsmooth working of the Act, and the delegation therefore was apractical necessity. The Ministry of Finance have been delegatedwith such power therefore this delegation can always beconsidered to be a sound basis for administrative efficiency and itdoes not by itself amount to abdication of power. Reading of boththe notification dated 31.03.2021 and 27.04.2021 whereby theapplication of section 148 of the Income Tax Act, which wasoriginally existing before the amendment was deferred meaningthereby the reassessment mechanism as prevalent prior to 31[st]March, 2021 was saved by the notification. The notification is madeby the Ministry of Finance, Central Government considering thefact of lock down all over India, it can be always be assumed that the deferment of the application of section 148A was done in acontrol way. It is settled proposition that any modification of theExecutives implies certain amount of discretion and to be exercisedwith the aid of the legislative policy of the Act and cannot travelbeyond it and run counter to it or certainly change the essentialfeatures, the identity, structure or the policy of the Act. Therefore,this legislative delegation which is exercised by the CentralGovernment by notification to uphold the mechanism as prevailedprior to March, 2021 is not in conflict with any Act and notificationby executive i.e. Ministry of Finance would be the part of legislativefunction. 8.In likewise situation the principle as laid down in case of A.K.Royv. Union of India reported in AIR 1982 SC 710, the SupremeCourt held that the Constitution (Fourty-Fourth) Amendment Act,1978, which conferred power on the Executive to bring theprovisions of that Act into force did not suffer from excessivedelegation of legislative power. The Court observed that the powerto issue a notification for bringing into force the provisions of aconstitutional amendment is not a constituent power, because itdoes not carry with it the power to amend the Constitution in anymanner. Likewise in this case, the delegation to the executive withconferment of the power to the Central Government to specify thedate by way of relaxation of time limit, the main purpose of theFinance Act is not defeated. Therefore, it would be a conditionallegislation. As the legislature has declared the Act and has giventhe power to executive to extend the implementation by way ofnotification. The legislature has resorted to conditional legislation to give the power to executive, in what circumstances the law shouldbecome operative or when the operation should be extended wouldbe covered by doctrine of the conditional legislation. give the power to executive, in what circumstances the law shouldbecome operative or when the operation should be extended wouldbe covered by doctrine of the conditional legislation. Under the circumstances by the notifications the operation ofSection 148 of the Income Tax Act was extended, therebydeferment of Section 148A was done. It was done by the Ministry ofFinance by way of conditional legislation in the peculiarcircumstances which arose during the pandemic and lock downand Central Government can not be said to have encroached uponturf of Parliament. For sake of brevity, both the notifications arereproduced herein below :- (A) MINISTRY OF FINANCE(Department of Revenue)(CENTRAL BOARD OF DIRECT TAXES)NOTIFICATIONNew Delhi, the 31[st] March, 2021 S.O. 1432(E).—In exercise of the powers conferred by sub-section (1) of section 3 of the Taxation and Other Laws(Relaxation and Amendment of Certain Provisions) Act, 2020 (38of 2020) (hereinafter referred to as the said Act), and in partialmodification of the notification of the Government of India in theMinistry of Finance, (Department of Revenue) No.93/2020 datedthe 31[st] December, 2020, published in the Gazette of India,Extraordinary, Part II, Section 3, Sub-section (ii), vide number S.O.4805(E), dated the 31[st] December, 2020, the Central Governmenthereby specifies that,–– (A) where the specified Act is the Income-tax Act, 1961 (43 of1961) (hereinafter referred to as the Income-tax Act) and, — (a) the completion of any action referred to in clause(a) of sub-section (1) of section 3 of the Act relates topassing of an order under sub-section (13) of section144C or issuance of notice under section 148 as pertime-limit specified in section 149 or sanction undersection 151 of the Income-tax Act, — (i) the 31[st] day of March, 2021 shall be the end date ofthe period during which the time limit, specified in, orprescribed or notified under, the Income-tax Act fallsfor the completion of such action; and (ii) the 30[th] day of April, 2021 shall be the end date towhich the time-limit for the completion of such actionshall stand extended. Explanation.— For the removal of doubts, it is herebyclarified that for the purposes of issuance of notice undersection 148 as per time-limit specified in section 149 orsanction under section 151 of the Income-tax Act, under thissub-clause, the provisions of section 148, section 149 andsection 151 of the Income-tax Act, as the case may be, asthey stood as on the 31[st] day of March 2021, before thecommencement of the Finance Act, 2021, shall apply. (b) the compliance of any action referred to in clause (b) ofsub-section (1) of section 3 of the said Act relates tointimation of Aadhaar number to the prescribed authorityunder sub-section (2) of section 139AA of the Income-taxAct, the time-limit for compliance of such action shall standextended to the 30th day of June, 2021. (B) where the specified Act is the Chapter VIII of the Finance Act,2016 (28 of 2016) (hereinafter referred to as the Finance Act) andthe completion of any action referred to in clause (a) of sub-section (1) of section 3 of the said Act relates to sending anintimation under sub-section (1) of section 168 of the Finance Act,— (i) the 31[st] day of March, 2021 shall be the end date of theperiod during which the time limit, specified in, or prescribedor notified under, the Finance Act falls for the completion ofsuch action; and (ii) the 30[th] day of April, 2021 shall be the end date to whichthe time-limit for the completion of such action shall standextended. [Notification No. 20/2021/F. No. 370142/35/2020-TPL]SHEFALI SINGH, Under Secy., Tax Policy and Legislation Division Note : The principal notification was published in the Gazette ofIndia, Extraordinary, Part II, Section 3,Sub-section (ii) vide S.O.No. 4805 dated 31[st] December, 2020. (B) MINISTRY OF FINANCE(Department of Revenue)(CENTRAL BOARD OF DIRECT TAXES)NOTIFICATIONNew Delhi, the 27th April, 2021 (i) the 31[st] day of March, 2021 shall be the end date of theperiod during which the time limit, specified in, or prescribedor notified under, the Finance Act falls for the completion ofsuch action; and (ii) the 30[th] day of April, 2021 shall be the end date to whichthe time-limit for the completion of such action shall standextended. [Notification No. 20/2021/F. No. 370142/35/2020-TPL]SHEFALI SINGH, Under Secy., Tax Policy and Legislation Division Note : The principal notification was published in the Gazette ofIndia, Extraordinary, Part II, Section 3,Sub-section (ii) vide S.O.No. 4805 dated 31[st] December, 2020. (B) MINISTRY OF FINANCE(Department of Revenue)(CENTRAL BOARD OF DIRECT TAXES)NOTIFICATIONNew Delhi, the 27th April, 2021 S.O. 1703(E).— In exercise of the powers conferred by sub-section (1) of section 3 of the Taxation and Other Laws (Relaxationand Amendment of Certain Provisions) Act, 2020 (38 of 2020)(hereinafter referred to as the said Act), and in partial modificationof the notifications of the Government of India in the Ministry ofFinance, (Department of Revenue) No. 93/2020 dated the 31stDecember, 2020, No. 10/2021 dated the 27[th] February, 2021 andNo. 20/2021 dated the 31[st] March, 2021, published in the Gazetteof India, Extraordinary, Part-II, Section 3, Subsection (ii), vide number S.O. 4805(E), dated the 31[st] December, 2020, videnumber S.O. 966(E) dated the 27[th] February, 2021 and videnumber S.O. 1432(E) dated the 31[st] March, 2021, respectively(hereinafter referred to as the said notifications), the CentralGovernment hereby specifies for the purpose of sub-section (1) ofsection 3 of the said Act that, — (A) where the specified Act is the Income-tax Act, 1961 (43 of1961) (hereinafter referred to as the Income-tax Act) and, — (a) the completion of any action, referred to in clause (a) ofsub-section (1) of section 3 of the said Act, relates to passingof any order for assessment or reassessment under theIncome-tax Act, and the time limit for completion of suchaction under section 153 or section 153B thereof, expires onthe 30[th] day of April, 2021 due to its extension by the saidnotifications, such time limit shall further stand extended tothe 30[th] day of June, 2021; (b) the completion of any action, referred to in clause (a) ofsub-section (1) of section 3 of the said Act, relates to passingof an order under sub-section (13) of section 144C of theIncome-tax Act or issuance of notice under section 148 asper time-limit specified in section 149 or sanction undersection 151 of the Income-tax Act, and the time limit forcompletion of such action expires on the 30[th] day of April,2021 due to its extension by the said notifications, such timelimit shall further stand extended to the 30[th] day of June,2021. Explanation.— For the removal of doubts, it is hereby clarified thatfor the purposes of issuance of notice under section 148 as pertime-limit specified in section 149 or sanction under section 151 ofthe Income-tax Act, under this sub-clause, the provisions of section148, section 149 and section 151 of the Income-tax Act, as thecase may be, as they stood as on the 31[st] day of March 2021,before the commencement of the Finance Act, 2021, shall apply. (B) where the specified Act is the Chapter VIII of the FinanceAct, 2016 (28 of 2016) (hereinafter referred to as the FinanceAct) and the completion of any action, referred to in clause(a) of sub-section (1) of section 3 of the said Act, relates tosending an intimation under sub-section (1) of section 168 ofthe Finance Act, and the time limit for completion of suchaction expires on the 30[th] day of April, 2021 due to itsextension by the said notifications, such time limit shallfurther stand extended to the 30[th] day of June, 2021. [Notification No. 38 /2021/ F. No. 370142/35/2020-TPL]RAJESH KUMAR BHOOT, Jt. Secy. Tax Policy & Legislation Division (B) where the specified Act is the Chapter VIII of the FinanceAct, 2016 (28 of 2016) (hereinafter referred to as the FinanceAct) and the completion of any action, referred to in clause(a) of sub-section (1) of section 3 of the said Act, relates tosending an intimation under sub-section (1) of section 168 ofthe Finance Act, and the time limit for completion of suchaction expires on the 30[th] day of April, 2021 due to itsextension by the said notifications, such time limit shallfurther stand extended to the 30[th] day of June, 2021. [Notification No. 38 /2021/ F. No. 370142/35/2020-TPL]RAJESH KUMAR BHOOT, Jt. Secy. Tax Policy & Legislation Division Note: The principal notification was published in the Gazette ofIndia, Extraordinary, Part II, Section 3, Sub-section (ii) vide S.O.No. 4805 dated 31[st] December, 2020. Aks 10.Reading of the aforesaid notification would show that it was issuedin exercise of power conferred under the Taxation and other Laws(Relaxation and Amendment of Certain Provisions) Act, 2020 andtime for issuance of notice under Section 148, the end date wasinitially extended uptill on 30[th] day of April 2021 and subsequentlyagain by notification dated 27[th] April, 2021 the time limit of 30[th] dayof April 2021 was further extended up till 30[th] day of June, 2021. Byeffect of such notification, the individual identity of Section 148,which was prevailing prior to amendment and insertion of section148A was insulated and saved uptill 30.06.2021. in exercise of power conferred under the Taxation and other Laws(Relaxation and Amendment of Certain Provisions) Act, 2020 andtime for issuance of notice under Section 148, the end date wasinitially extended uptill on 30[th] day of April 2021 and subsequentlyagain by notification dated 27[th] April, 2021 the time limit of 30[th] dayof April 2021 was further extended up till 30[th] day of June, 2021. Byeffect of such notification, the individual identity of Section 148,which was prevailing prior to amendment and insertion of section148A was insulated and saved uptill 30.06.2021. 11.The pandemic and lock down prevailed all over India. The peoplecould not file their return or comply with the various mandate ofIncome Tax Act. Considering such situation for the benefit of theassessee and to facilitate the individual to come out of woods thetime limit framed under Income Tax Act was extended. Likewisecertain right which was reserved in favour of the Income TaxDepartment was also preserved and was extended at parity.Consequently the provisions of Section 148 which was prevailingprior to the amendment of Finance Act, 2021 was also extended.Here in this case, the power to issue notice under Section 148which was prior to the amendment was also saved and the timewas extended. In a result, the notice issued on 30.06.2021(Annexure P-1) would also be saved. Therefore, no interference isrequired to be made in the said issuance of notice and accordinglythe petitions are dismissed. Sd/- (Goutam Bhaduri)Judge