High Court Invalidates Reassessment Notices Post March 31, 2021 under Income Tax Act

The High Court addressed the validity of reassessment notices issued post 31st March, 2021 under Sections 147 to 151 of the Income Tax Act, 1961. It declared Explanations in certain Notifications as ultra vires the Relaxation Act, 2020, quashed the reassessment notices, and allowed the writ petitions. The respondents/revenue were granted liberty to take further steps in accordance with the law, with the petitioners having the right to seek remedies if needed. The judgment emphasized compliance with the substituted Sections introduced by the Finance Act, 2021 for reassessment proceedings.

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Issues:
Validity of reassessment notices issued post 31st March, 2021 under Sections 147 to 151 of the Income Tax Act, 1961.

Analysis:
The High Court addressed the issue of the validity of reassessment notices issued post 31st March, 2021 under Sections 147 to 151 of the Income Tax Act, 1961. The Court referred to a previous judgment in the case of Mon Mohan Kohli vs. Assistant Commissioner of Income Tax & Anr., where it was concluded that reassessment notices issued after 31st March, 2021 needed to comply with the substituted Sections introduced by the Finance Act, 2021. The Court highlighted that the power of reassessment existing before 31st March, 2021 continued until 30th June, 2021, but the Finance Act, 2021 changed the procedure effective from 1st April, 2021.

The Court further discussed the Relaxation Act and concluded that it only empowered the Government to extend time limits, not to legislate on provisions for reassessment proceedings. The Court found the Explanations in the Notifications dated 31st March, 2021 and 27th April, 2021 to be ultra vires the Relaxation Act, 2020, and hence declared them null and void. Consequently, the Court quashed the impugned reassessment notices issued under Section 148 of the Income Tax Act, 1961 and allowed the writ petitions. The respondents/revenue were granted liberty to take further steps in accordance with the law, with the petitioners having the right to seek remedies if needed.

In summary, the judgment focused on the procedural requirements for reassessment notices issued post 31st March, 2021 under Sections 147 to 151 of the Income Tax Act, 1961. It emphasized compliance with the substituted Sections introduced by the Finance Act, 2021 and declared Explanations in certain Notifications as ultra vires the Relaxation Act, 2020. The Court's decision resulted in quashing the impugned reassessment notices and granting liberty to the respondents/revenue to take further steps while allowing the petitioners to seek remedies if necessary.

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