Court sets aside old reassessment notices, new provisions apply from 1.4.2021. Assessing authorities can initiate reassessment under amended Sections.

The court set aside reassessment notices issued under old provisions and held that amended provisions should apply from 1.4.2021. Assessing authorities were granted liberty to initiate reassessment proceedings under amended Sections 147 to 151 if the limitation period remained. The court emphasized that the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, did not save provisions amended by the Finance Act, 2021. Judgments from Allahabad and Delhi High Courts supported applying amended provisions post 1.4.2021 and stated notifications could not preserve old provisions.

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Issues Involved:
1. Challenge to Explanations A(a)(ii)/A(b) to Notification No.20, dated 31.3.2021, and Notification No.38, dated 27.4.2021.
2. Challenge to reassessment notices issued under Section 148 of the Income Tax Act, 1961.
3. Application of the amended provisions of Sections 147 to 151 of the Income Tax Act, 1961, effective from 1.4.2021.
4. The impact of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA Act, 2020) on the reassessment notices.

Detailed Analysis:

1. Challenge to Explanations A(a)(ii)/A(b) to Notification No.20, dated 31.3.2021, and Notification No.38, dated 27.4.2021:
The petitioners challenged these notifications on the grounds that they extended the applicability of the provisions of Sections 148, 149, and 151 of the Income Tax Act, 1961, beyond 31.3.2021. The court examined the provisions of the TOLA Act, 2020, and the amendments brought by the Finance Act, 2021. The court noted that the amended provisions of Sections 147 to 151, which came into effect on 1.4.2021, should have been followed, and the notifications could not save the repealed provisions. The court referred to judgments from various High Courts, including the Allahabad High Court, which held that the notifications could not override the amended provisions.

2. Challenge to reassessment notices issued under Section 148 of the Income Tax Act, 1961:
The petitioners argued that the reassessment notices issued on or after 1.4.2021 were invalid as they applied the provisions as they stood before the amendment. The court agreed, stating that after the amendment, the reassessment notices should have followed the new procedure outlined in Sections 147 to 151, as amended by the Finance Act, 2021. The court set aside the reassessment notices issued under the old provisions and held that the amended provisions should apply.

3. Application of the amended provisions of Sections 147 to 151 of the Income Tax Act, 1961, effective from 1.4.2021:
The court emphasized that the amended provisions simplified the procedure for reassessment and added Section 148A, which required compliance before issuing reassessment notices. The court held that the relaxations granted by the TOLA Act, 2020, could not result in the application of the repealed provisions after 1.4.2021. The court referred to the Allahabad High Court's judgment, which stated that the Finance Act, 2021, introduced new provisions that should be applied from 1.4.2021, and the old provisions could not be saved by the notifications.

4. The impact of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA Act, 2020) on the reassessment notices:
The court analyzed the TOLA Act, 2020, which extended the period of limitation due to the Covid-19 pandemic but did not save the provisions amended by the Finance Act, 2021. The court held that the TOLA Act, 2020, could not override the amended provisions, and the reassessment notices should follow the new procedure. The court referred to the judgments of the Allahabad and Delhi High Courts, which held that the reassessment notices issued after 1.4.2021 should comply with the amended provisions.

Conclusion:
The court set aside the reassessment notices issued under the old provisions and held that the amended provisions should apply. The court granted liberty to the assessing authorities to initiate reassessment proceedings in accordance with the amended provisions if the limitation period still subsisted. The court referred to the judgments of the Allahabad and Delhi High Courts, which supported the view that the amended provisions should apply from 1.4.2021, and the old provisions could not be saved by the notifications.

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