Court Invalidates Notices under Section 148 of Income Tax Act post April 2021

The court declared all notices issued under Section 148 of the Income Tax Act, 1961 after 1st April 2021 invalid for not complying with the amended provisions introduced by the Finance Act, 2021. It quashed the notices and allowed Assessing Officers to initiate fresh reassessment proceedings in line with the new provisions. The court emphasized that the old provisions ceased to exist after 31st March 2021 and must not be applied to actions initiated post 1st April 2021. It also held the CBDT Notifications No. 20/2021 and 38/2021 as ultra vires, emphasizing that subordinate legislation cannot revive repealed statutory provisions.

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Issues Involved:
1. Validity of assessment proceedings initiated under Section 148 of the Income Tax Act, 1961 post 1st April 2021.
2. Applicability of the amended provisions of the Income Tax Act, 1961 introduced by the Finance Act, 2021.
3. Legal validity of the CBDT Notifications No. 20/2021 and 38/2021.

Detailed Analysis:

Issue 1: Validity of Assessment Proceedings Initiated Post 1st April 2021
The core issue is whether the notices issued under Section 148 of the Income Tax Act, 1961 after 1st April 2021 are valid under the old provisions or the newly amended provisions introduced by the Finance Act, 2021. The court concluded that the old provisions ceased to exist after 31st March 2021 and any notices issued post 1st April 2021 must comply with the new provisions. The court emphasized that the substitution of old provisions by new ones implies that the old provisions are repealed and cannot be applied unless expressly saved by a legislative provision.

Issue 2: Applicability of the Amended Provisions
The Finance Act, 2021 introduced significant changes to the provisions related to reassessment under Sections 147 to 151 of the Income Tax Act, 1961, effective from 1st April 2021. The court noted that the new provisions, including Section 148A, must be followed for any reassessment proceedings initiated after this date. The court highlighted that the new provisions codify the procedure laid down by the Supreme Court in GKN Driveshafts (India) Ltd. v. Income Tax Officer. The court also observed that the new provisions do not contain any saving clause indicating that the old provisions should continue to apply for actions initiated after 1st April 2021.

Issue 3: Legal Validity of CBDT Notifications
The court examined the CBDT Notifications No. 20/2021 and 38/2021, which extended the time limits for issuing notices under Section 148 and purported to apply the old provisions of the Income Tax Act, 1961. The court declared these notifications ultra vires, stating that the subordinate legislation cannot revive repealed statutory provisions. The court emphasized that the Relaxation Act, 2020, only extended time limits and did not authorize the application of old provisions post their repeal. The court held that the explanations in the notifications were beyond the powers conferred by the Relaxation Act and, therefore, invalid.

Conclusion:
The court quashed all the impugned notices issued under Section 148 of the Income Tax Act, 1961 after 1st April 2021, declaring them invalid for not complying with the amended provisions. The court allowed the Assessing Officers to initiate fresh reassessment proceedings in accordance with the new provisions introduced by the Finance Act, 2021, after strictly complying with the procedural requirements.

Summary of Judgments:
The court aligned with the views of the Allahabad High Court, Delhi High Court, Rajasthan High Court, and Madras High Court, which have uniformly held that the notices issued under Section 148 post 1st April 2021 must comply with the new provisions. The court rejected the contrary view taken by the Chhattisgarh High Court. The detailed analysis covered the legislative intent, procedural requirements, and the limitations of subordinate legislation, reinforcing the principle that legislative amendments must be applied as per their effective date unless explicitly saved by the legislature.

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