Court Quashes Reassessment Notices Post March 31, 2021

The court ruled in favor of the petitioners, quashing the reassessment notices issued post 31st March, 2021 for non-compliance with the prescribed procedures under the Income Tax Act, 1961. It held that the new provisions introduced by the Finance Act, 2021 altered the reassessment procedure effective from 1st April, 2021. Explanations in certain notifications were deemed ultra vires the Relaxation Act, 2020, leading to the invalidation of the notices. The respondents were given liberty to proceed lawfully, while the petitioners retained the right to seek further remedies if needed.

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Issues:
Challenges to reassessment notices issued post 31st March, 2021 without following prescribed procedures under Sections 147 to 151 of the Income Tax Act, 1961.

Analysis:

1. The judgment highlighted that the impugned notices in the present matters were issued post 31st March, 2021 without adhering to the prescribed procedures under the substituted Sections 147 to 151 effective from 1st April, 2021. The Court referred to a previous case, Mon Mohan Kohli vs. Assistant Commissioner of Income Tax, where it was concluded that reassessment notices post 31st March, 2021 must comply with the new provisions introduced by the Finance Act, 2021.

2. The Court reiterated the conclusion from the Mon Mohan Kohli case, emphasizing that the new provisions introduced by the Finance Act, 2021 altered the procedure for reassessment notices issued after 31st March, 2021. It clarified that the power of reassessment existing before 31st March, 2021 continued until the extended period of 30th June, 2021, but the procedure changed from 1st April, 2021 onwards.

3. The judgment declared Explanations A(a)(ii)/A(b) to the Notifications dated 31st March, 2021 and 27th April, 2021 as ultra vires the Relaxation Act, 2020, rendering them invalid in law. Consequently, the impugned reassessment notices issued under Section 148 of the Income Tax Act, 1961 were quashed, and the writ petitions were allowed. The respondents/revenue were granted liberty to take further steps in accordance with the law, with the petitioners having the right to pursue remedies if necessary.

In summary, the judgment addressed the challenges to reassessment notices issued post 31st March, 2021 without following the prescribed procedures under the Income Tax Act, 1961. It emphasized the need for compliance with the new provisions introduced by the Finance Act, 2021 from 1st April, 2021 onwards, leading to the quashing of the impugned reassessment notices and declaring certain explanations as invalid under the Relaxation Act, 2020.

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