Invalidation of Reassessment Notices Post March 31, 2021

The court invalidated reassessment notices issued post 31st March 2021 under Section 148 of the Income Tax Act for non-compliance with new procedural requirements introduced by the Finance Act, 2021. It held that the Finance Act, 2021 replaced old provisions, making reassessment notices issued after 31st March 2021 invalid if not in line with the new provisions. Additionally, the court declared Notifications extending old provisions beyond 31st March 2021 ultra vires and nullified them, allowing Assessing Officers to initiate fresh reassessment proceedings under the amended provisions of the Act.

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Issues Involved:
1. Validity of reassessment notices under Section 148 of the Income Tax Act, 1961 issued post 31st March 2021.
2. Applicability of the Finance Act, 2021 and its procedural changes effective from 1st April 2021.
3. Ultra vires nature of Notifications extending old provisions of Sections 147, 148, 149, and 151 beyond 31st March 2021.

Issue-Wise Detailed Analysis:

1. Validity of Reassessment Notices Under Section 148 Post 31st March 2021:
The petitioners challenged the reassessment notices issued under Section 148 of the Income Tax Act, claiming they were barred by limitation and did not comply with the statutory formalities under Section 148A as prescribed by the Finance Act, 2021, effective from 1st April 2021. The court noted that the old provisions were substituted by the Finance Act, 2021, and any reassessment notices issued after 31st March 2021 must comply with the new provisions, including Section 148A. The court held that the reassessment notices issued post 31st March 2021 without following the new procedural requirements were invalid.

2. Applicability of Finance Act, 2021:
The court emphasized that the Finance Act, 2021, introduced new provisions for reassessment proceedings effective from 1st April 2021, replacing the old provisions. The court referred to the decision of the Allahabad High Court in Ashok Kumar Agarwal v. Union of India, which held that the old provisions were obliterated and replaced by new ones effective from 1st April 2021. The court agreed with this reasoning and concluded that any reassessment proceedings initiated after this date must adhere to the new provisions, and the old provisions could not be applied beyond 31st March 2021.

3. Ultra Vires Nature of Notifications:
The petitioners sought a declaration that the Explanations A(a)(ii)/A(b) to Notification No. 20 dated 31st March 2021 and Notification No. 38 dated 27th April 2021, which extended the applicability of the old provisions beyond 31st March 2021, were ultra vires the Relaxation Act, 2020. The court agreed with the petitioners, citing the Allahabad High Court's decision, which held that the Enabling Act did not delegate the power to extend the old provisions beyond their repeal by the Finance Act, 2021. The court found that the Notifications were beyond the power delegated to the Government and were thus invalid.

Conclusion:
The court quashed all the impugned reassessment notices issued under Section 148 post 31st March 2021. It declared the Explanations A(a)(ii)/A(b) to the Notifications dated 31st March 2021 and 27th April 2021 to be ultra vires the Relaxation Act, 2020, and null and void. The Assessing Officers were given liberty to initiate fresh reassessment proceedings in accordance with the amended provisions of the Act as per the Finance Act, 2021, after complying with the required formalities.

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