Court Invalidates Reassessment Notices under Income Tax Act, 1961

The court found reassessment notices issued under Section 148 of the Income Tax Act, 1961 post Finance Act, 2021 to be invalid for not complying with new provisions introduced by the Finance Act. Additionally, the court held CBDT circulars dated 31.03.2021 and 27.04.2021 as unconstitutional for attempting to alter statutory provisions. The impugned notices were quashed, writ petitions allowed, and directions from a previous case applied. Pending applications were disposed of, and the registry was directed to place a copy of the order in other connected petitions.

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Issues Involved:
1. Validity of reassessment notices issued under Section 148 of the Income Tax Act, 1961 after the introduction of new provisions by the Finance Act, 2021.
2. Legality and validity of the explanations contained in the CBDT circulars dated 31.03.2021 and 27.04.2021.

Issue-Wise Detailed Analysis:

1. Validity of Reassessment Notices Issued Under Section 148 Post Finance Act, 2021:
The petitioners challenged the reassessment notices issued by the Assessing Officers under Section 148 of the Income Tax Act, 1961, for reopening assessments for various years. These notices were issued after 01.04.2021 but pertained to periods before this date. The court referred to a previous decision in "Sudesh Taneja Vs. Income Tax Officer," where it was established that the original provisions, upon substitution by the Finance Act, 2021, stood repealed and had no existence post-substitution. The court noted that the new reassessment scheme under the Finance Act, 2021, introduced significant changes, including time limits for issuing notices and procedures under Section 148A. The court found no legislative intent to apply the new scheme only prospectively from 01.04.2021. Consequently, all notices issued after 01.04.2021 had to comply with the new provisions. The court concluded that notices issued without following Section 148A procedures were invalid.

2. Legality and Validity of CBDT Circulars Dated 31.03.2021 and 27.04.2021:
The court examined whether the explanations in the CBDT circulars could validate the impugned notices. It reiterated the presumption of constitutionality for statutes and subordinate legislation but emphasized that subordinate legislation does not enjoy the same immunity as primary legislation. The court found that the CBDT exceeded its jurisdiction by introducing explanations in the circulars, which attempted to alter the statutory provisions of the Income Tax Act. The court held that the explanations were unconstitutional and invalid as they did not conform to the statute under which they were made.

Conclusion:
The court agreed with the judgment in "Sudesh Taneja Vs. Income Tax Officer" and found the impugned notices invalid and bad in law. The notices were quashed, and the writ petitions were allowed. The directions from the "Sudesh Taneja" case were applied mutatis mutandis to the present cases. Pending applications were also disposed of, and the registry was directed to place a copy of the order in other connected petitions.

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