High Court invalidates re-assessment notices post 31st March 2021 under Income Tax Act

The High Court of Calcutta allowed multiple Writ Petitions challenging re-assessment notices issued post 31st March, 2021 under Section 148 of the Income Tax Act. The Court declared explanations to certain notifications as ultra vires the Relaxation Act, 2020, invalidating them. All impugned notices were quashed, allowing Assessing Officers to initiate fresh re-assessment proceedings in compliance with the law. The judgment clarified legal issues, emphasizing adherence to statutory formalities and upholding the validity of re-assessment proceedings under the Income Tax Act post 31st March, 2021.

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Issues:
Challenging impugned notices under Section 148 of the Income Tax Act issued post 31st March, 2021; Declaration regarding the extension of applicability of certain provisions beyond 31st March, 2021 as ultra vires the parent legislation.

Analysis:
The High Court of Calcutta addressed the common legal issues presented in multiple Writ Petitions where the petitioners contested the validity of re-assessment notices issued by the Income Tax Authority post 31st March, 2021 under Section 148 of the Income Tax Act. The crux of the matter revolved around the contention that the statutory formalities under Section 148 A of the Income Tax Act, as mandated by the Finance Act, 2021 effective from 1st April, 2021, were not adhered to by the Income Tax Authority before issuing the impugned notices. The petitioners sought relief by challenging the validity of the re-assessment notices and declaring certain explanations to the notifications dated 31st March, 2021 and 27th April, 2021 as ultra vires the parent legislation, the Relaxation Act, 2020.

The Court acknowledged that the issues raised in the present Writ Petitions were purely legal in nature, with the petitioners seeking the quashing of the impugned re-assessment notices and a declaration regarding the extension of certain provisions beyond 31st March, 2021. The counsels for both parties jointly referred to relevant judgments by other High Courts, including the Division Bench of the Allahabad High Court, the Rajasthan High Court, and the Delhi High Court, which favored the assessees/petitioners in similar cases.

Relying on its own previous judgments dated 17th January, 2022 in specific cases, the High Court of Calcutta disposed of all the writ petitions by allowing them. The Court declared the explanations to the notifications dated 31st March, 2021 and 27th April, 2021 as ultra vires the Relaxation Act, 2020, rendering them invalid. Consequently, all impugned notices under Section 148 of the Income Tax Act were quashed. However, the Assessing Officers were granted liberty to initiate fresh re-assessment proceedings in compliance with the relevant provisions of the Act as amended by the Finance Act, 2021 and in adherence to the required formalities as per the law.

In conclusion, the Court's judgment provided clarity on the legal issues raised in the Writ Petitions, ensuring adherence to statutory formalities and upholding the validity of re-assessment proceedings under the Income Tax Act post 31st March, 2021 in accordance with the applicable legislation.

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