Invalid Notices Issued Without Prior Notice; Court Grants Stay and Sets Next Hearing Date

The Court held that the challenged notices under section 148 of the Income Tax Act, 1961 were invalid as they were issued without prior notice under section 148A. It found that the notifications issued by the Central Board of Direct Taxes exceeded the Central Government's authority by clarifying the application of pre-amended sections post-April 1, 2021. Consequently, the Court granted a stay on the operation of the notices and scheduled the next hearing for September 28, 2021, directing the filing of counter-affidavits.

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Issues: Challenge to notices under section 148 of the Income Tax Act, 1961 and the validity of notifications issued by the Central Board of Direct Taxes.

Analysis:

The petitioners challenged the notices dated 09th June, 2021, 30th June, 2020, and 28th June, 2020, along with notifications issued by the Central Board of Direct Taxes. They argued that the notices were invalid as they were issued without prior notice under section 148A of the Act. The petitioners contended that the notices were issued under pre-amended provisions that were no longer in force, emphasizing that post-April 1, 2021, the amendments should apply to all notices under Section 148. They also challenged the notifications issued by the Respondent-2, stating that they were ultra vires the Act as they clarified the application of pre-amended sections post-April 1, 2021, which, according to the petitioners, exceeded the Central Government's authority under the Taxation and Other Laws Act, 2020.

The respondents argued that the time limit for issuing notices under Section 148 had expired in the present cases, and any action under Section 148 would have been time-barred. They claimed that the time limit had been extended till June 30, 2021, under the Taxation and Other Laws Act, 2020, and therefore, the old procedures under the Act applied until that date. They relied on Section 6 of the General Clauses Act, 1897, to support their position.

After hearing both parties, the Court held that the impugned notification contradicted the principle that post-amendment, actions should follow the new procedures. The Court also noted that a notification, as delegated legislation, could not alter the implementation date of a statutory provision. Citing previous interim orders, the Court granted a stay on the operation of the challenged notices dated 09th June, 2021, 30th June, 2020, and 28th June, 2020, in the respective cases. The Court directed the filing of counter-affidavits and set the next hearing for 28th September, 2021, with instructions for uploading the order on the website and sharing it with the counsel via email.

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