Satish Kumar Sharma v. Income Tax Officer, Ward 1, Sikar

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Civil Writ Petition No. 5957/2022 Satish Kumar Sharma S/o Shri Kundan Mal Sharma, Prop. OfTirupati Hardware, Out Side Of Nani Gate, Sikar 332001Rajasthan. ----Petitioner Versus Income Tax Officer, Ward 1, Sikar Having its address at Office OfThe Income Tax Officer Ward 1, Sikar Rajasthan Through IncomeTax Officer, ----Respondent For Petitioner(s) : Mr. Shrawan Kumar Gupta, Advocatewith Mr. Ashok Kumar Gupta, Advocate (through VC)with Mr. Ashok Kumar Gupta, Advocate (through VC) HON'BLE MR. JUSTICE PRAKASH GUPTA HON'BLE MR. JUSTICE SAMEER JAIN 21/04/2022 Order The petitioner has challenged a re-assessment notice dated 29.6.2021 issued under Section 148 of the Income Tax Act,1961 (for short, 'the Act of 1961') for the Assessment Year 2016-2017. Learned counsel for the petitioner submits that the Assessing Officer has applied the old provision of the Act of 1961for issuing notice and the procedure prescribed under Section148A of the Act which was inserted w.e.f. 1.4.2021 has not beenfollowed. He further submits that pursuant to the impugned re-assessment notice dated 29.6.2021, no assessment order hasbeen passed till date. Heard. Considered. In D.B. Civil Writ Petition No. 969/2022titled Sudesh Taneja Versus Income Tax Officer and Another and otherconnected matters, the Coordinate Bench of this Court hadquashed the re-assessment notices. The relevant part of thejudgment passed in the case of Sudesh Taneja (supra) isreproduced as under: "37. In this context we have perused the provisions ofreassessment contained in the Finance Act, 2021. Wehave noticed earlier the major departure that the newscheme of reassessment has made under theseprovisions. The time limits for issuing notice forreassessment have been changed. The concept ofincome chargeable to tax escaping assessment onaccount of failure on the part of the assessee todisclose truly or fully all material facts is no longerrelevant. Elaborate provisions are made under Section148A of the Act enabling the Assessing Officer tomake enquiry with respect to material suggesting thatincome has escaped assessment, issuance of notice tothe assessee calling upon why notice under Section148 should not be issued and passing an orderconsidering the material available on record includingresponse of the assessee if made while decidingwhether the case is fit for issuing notice under Section148. There is absolutely no indication in all theseprovisions which would suggest that the legislatureintended that the new scheme of reopening ofassessments would be applicable only to the periodpost 01.04.2021. In absence of any such indication allnotices which were issued after 01.04.2021 had to bein accordance with such provisions. To reiterate, wefind no indication whatsoever in the scheme ofstatutory provisions suggesting that the pastprovisions would continue to apply even after thesubstitution for the assessment periods prior tosubstitution. In fact there are strong indications to thecontrary. We may recall, that time limits for issuingnotice under Section 148 of the Act have beenmodified under substituted Section 149. Clause (a) ofsub-section (1) of Section 149 reduces such period tothree years instead of originally prevailing four yearsunder normal circumstances. Clause (b) extends theupper limit of six years previously prevailing to tenyears in cases where income chargeable to tax whichhas escaped assessment amounts to or is likely to amount to 50 lacs or more. Sub-section (1) of Section149 thus contracts as well as expands the time limitfor issuing notice under Section 148 depending on thequestion whether the case falls under clause (a) orclause (b). In this context the first proviso to Section149(1) provides that no notice under Section 148shall be issued at any time in a case for the relevantassessment year beginning on or before 01.04.2021 ifsuch notice could not have been issued at that timeon account of being beyond the time limit specifiedunder the provisions of clause (b) of sub-section (1)of Section 149 as they stood immediately before thecommencement of the Finance Act, 2021. As per thisproviso thus no notice under Section 148 would beissued for the past assessment years by resorting tothe larger period of limitation prescribed in newlysubstituted clause (b) of Section 149(1). This wouldindicate that the notice that would be issued after01.04.2021 would be in terms of the substitutedSection 149(1) but without breaching the upper timelimit provided in the original Section 149(1) whichstood substituted. This aspect has also beenhighlighted in the memorandum explaining theproposed provisions in the Finance Bill. If according tothe revenue for past period provisions of section 149before amendment were applicable, this first provisoto section 149(1) was wholly unnecessary. Lookedfrom both angles, namely, no indication of survivingthe past provisions after the substitution and in factan active indication to the contrary, inescapableconclusion that we must arrive at is that for anyaction of issuance of notice under Section 148 after01.04.2021 the newly introduced provisions under theFinance Act, 2021 would apply. Mere extension oftime limits for issuing notice under section 148 wouldnot change this position that obtains in law. Under nocircumstances the extended period available in clause(b) of sub-section (1) of Section 149 which we mayrecall now stands at 10 years instead of 6 yearspreviously available with the revenue, can be pressedin service for reopening assessments for the pastperiod. This flows from the plain meaning of the firstproviso to sub-section (1) of Section 149. In plainterms a notice which had become time barred prior to01.04.2021 as per the then prevailing provisions,would not be revived by virtue of the application ofSection 149(1)(b) effective from 01.04.2021. All thenotices issued in the present cases are after01.04.2021 and have been issued without followingthe procedure contained in Section 148A of the Actand are therefore invalid. 38. The second question framed by us arises in thiscontext. Would the explanation contained in both the notifications of CBDT dated 31.03.2021 and27.04.2021 save the situation for the revenue? 38. The second question framed by us arises in thiscontext. Would the explanation contained in both the notifications of CBDT dated 31.03.2021 and27.04.2021 save the situation for the revenue? 39. It is well settled that there is presumption ofconstitutionality of a statute (refer to the ConstitutionBench judgment in case of The State of Jammu &Kashmir, Vs. Triloki Nath Khosa and Ors.,reported in AIR 1974 SC 1). The said principle ofpresumption of constitutionality also applies to pieceof delegated legislation. In case of St. JohnsTeachers Training Institute Vs. RegionalDirector, National Council For TeachersEducation and Another, reported in (2003) 3 SCC321, it was observed that it is well settled inconsidering the vires of subordinate legislation oneshould start with the presumption that it is intra viresand if it is open to two constructions, one of whichwould make it valid and other invalid, the courts mustadopt that construction which makes it valid. Howeverit is equally well settled that the subordinatelegislation does not enjoy same level of immunity asthe law framed by the Parliament or the StateLegislature. The law framed by the Parliament or theState Legislature can be challenged only on thegrounds of being beyond the legislative competenceor being contrary to the fundamental rights or anyother constitutional provisions. Third ground ofchallenge which is now recognized in the judgment incase of Shayara Bano Vs Union of India reportedin 2017 9 SCC 1 is of legislation being manifestlyarbitrary. A subordinate legislation can be challengedon all these grounds as well as on the grounds that itdoes not conform to the statute under which it ismade or that it is inconsistent with the provisions ofthe Act or it is contrary to some of the statutesapplicable on the subject matter. In case of J.K.Industries Ltd. and Ors. Vs. Union of India andOrs., reported in (2007) 13 SCC 673, it was observedas under:- “63. At the outset, we may state that onaccount of globalization and socioeconomicproblems (including income disparities inour economy) the power of Delegation hasbecome a constituent element of legislativepower as a whole. However, as held in thecase of Indian Express Newspaper v. Unionof India reported in (1985) 1 SCC 641 atpage 689, subordinate legislation does notcarry the same degree of immunity whichis enjoyed by a statute passed by acompetentLegislature.Subordinatelegislation may be questioned on any ofthe grounds on which plenary legislation isquestioned. In addition, it may also be questioned on the ground that it does notconform to the statute under which it ismade. It may further be questioned on theground that it is inconsistent with theprovisions of the Act or that it is contraryto some other statute applicable on thesame subject matter. Therefore, it has toyield to plenary legislation. It can also bequestioned on the ground that it ismanifestly arbitrary and unjust. That, anyinquiry into its vires must be confined tothe grounds on which plenary legislationmay be questioned, to the grounds that itis contrary to the statute under which it ismade, to the grounds that it is contrary toother statutory provisions or on the groundthat it is so patently arbitrary that it cannotbe said to be inconformity with the statute.It can also be challenged on the groundthat it violates Article 14 of theConstitution.” 40. With this background we may revert to theRelaxation Act, 2020 and the two notifications issuedby the CBDT. We may recall, under sub-section (1) ofSection 3 of the Relaxation Act, 2020 while extendingthe time limits for taking action and makingcompliances in the specified Acts upto 31.12.2020 thepower was given to the Central Government to extendthe time further by issuing a notification. This was theonly power vested in the Central Government. As apiece of delegated legislation the notifications issuedin exercise of such powers, had to be within theconfines of such powers. In plain terms undersubsection (1) of Section 3 of the Relaxation Act,2020 the Government of India was authorized toextend the time limits by issuing notifications in thisregard. Issuing any explanation touching theprovisions of the Income Tax Act was not part of thisdelegation at all. The CBDT while issuing thenotifications dated 31.03.2021 and 27.04.2021 whenintroduced an explanation which provided by way ofclarification that for the purposes of issuance of noticeunder Section 148 as per the time limits specified inSection 149 or 151, the provisions as they stood ason 31.03.2021 before commencement of the FinanceAct, 2021 shall apply, plainly exceeded its jurisdictionas a subordinate legislation. The subordinatelegislation could not have travelled beyond the powersvested in the Government of India by the parent Act.Even otherwise it is extremely doubtful whether theexplanation in the guise of clarification can change thevery basis of the statutory provisions. If the plainmeaning of the statutory provision and itsinterpretation is clear, by adopting a position different in an explanation and describing it to be clarificatory,the subordinate legislature cannot be permitted toamend the provisions of the parent Act. Accordingly,these explanations are unconstitutional and declaredas invalid. 41. As noted, two Division Benches of Allahabad andDelhi High Courts have taken similar view. Twolearned Single Judges of Calcutta and this High Courthave followed this trend. Independently also we holdthe same beliefs. As noted earlier we are consciousthat Single Judge of Chhattisgarh High Court in PalakKhatuja (supra) has taken a different view. The viewof the High Court was that the impugned notices werevalid since by virtue of notifications dated 31.03.2021and 27.04.2021 the application of Section 148 whichwas originally existing before amendment wasdeferred. It was further observed as under:- “Reading of the aforesaid notification wouldshow that it was issued in exercise ofpower conferred under the Taxation andother Laws (Relaxation and Amendment ofCertain Provisions) Act, 2020 and time forissuance of notice under Section 148, theend date was initially extended uptill on30th day of April 2021 and subsequentlyagain by notification dated 27th April, 2021the time limit of 30th day of April 2021 wasfurther extended up till 30th day of June,2021. By effect of such notification, theindividual identity of Section 148, whichwas prevailing prior to amendment andinsertion of section 148A was insulated andsaved uptill 30.06.2021.” With respect, we are unable to persuadeourselves to accept this analysis of the situation. Inour understanding by virtue of notifications dated31.03.2021 and 01.04.2021 issued by CBDTsubstitution of reassessment provisions framed underthe Finance Act, 2021 were not deferred nor couldthey have been deferred. The date of suchamendments coming into effect remained 01.04.2021. 42. In the result we find that the notices impugned inthe respective petitions are invalid and bad in law.The same are quashed and set aside. The learnedSingle Judge committed no error in quashing thesenotices. All the writ petitions are allowed. Appeals ofthe revenue are dismissed. Pending applications if anystand disposed of." With respect, we are unable to persuadeourselves to accept this analysis of the situation. Inour understanding by virtue of notifications dated31.03.2021 and 01.04.2021 issued by CBDTsubstitution of reassessment provisions framed underthe Finance Act, 2021 were not deferred nor couldthey have been deferred. The date of suchamendments coming into effect remained 01.04.2021. 42. In the result we find that the notices impugned inthe respective petitions are invalid and bad in law.The same are quashed and set aside. The learnedSingle Judge committed no error in quashing thesenotices. All the writ petitions are allowed. Appeals ofthe revenue are dismissed. Pending applications if anystand disposed of." In view of the above and for the reasons given by theCoordinate Bench of this Court in the case of Sudesh Taneja(supra), the impugned notice challenged in this writ petition isquashed and set-aside. The writ petition stands disposed ofaccordingly. Consequently, the stay application also stands disposedof accordingly. (SAMEER JAIN),J(PRAKASH GUPTA),J DK/14