Court Dismisses Writ Petitions on Income Tax Notices Pre-2021

The court dismissed the writ petitions challenging the notices issued under Section 148 of the Income Tax Act, as they were issued before 1.4.2021. Consequently, the petitions challenging the constitutionality of the Explanation to Clause A(a) in the notifications were also dismissed. The petitioners were granted liberty to challenge the assessment orders through appropriate legal avenues.

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Issues Involved:
1. Constitutionality of the Explanation to Clause A(a) in the notifications dated 31.3.2021, 27.4.2021, and 25.6.2021.
2. Validity of notices issued under Section 148 of the Income Tax Act, 1961, especially concerning their issuance date.

Issue-wise Detailed Analysis:

1. Constitutionality of the Explanation to Clause A(a):

The petitioner argued that the Explanation to Clause A(a) in the impugned notifications indirectly extends the old provisions of the Income Tax Act, 1961 beyond 31.3.2021, under the guise of a clarification by delegated legislation, and hence should be declared unconstitutional. The petitioner contended that Section 3(1) of the TOLA Act, 2020 allows the Central Government to issue notifications only for extending time limits, not for extending the operation of old provisions.

The court noted that the challenge to the Explanation to Clause A(a) would only be academic if the notices under Section 148 were found to be issued before 1.4.2021. Thus, the court first examined the issuance dates of these notices.

2. Validity of Notices Issued Under Section 148:

The primary contention was whether the notices under Section 148 were issued before or after 1.4.2021. The court referred to Sections 148 and 149 of the Income Tax Act, 1961, as they stood before the amendment by the Finance Act, 2021. Section 149 provides the time limit for issuing notices under Section 148.

The court also examined Sections 282 and 282A of the Income Tax Act, 1961, and Rule 127A of the Income Tax Rules, 1962, which deal with the manner and authentication of notices. It was established that the notice dated 31.3.2021 was electronically generated and sent via email, with the name and office of the income tax authority printed on the attachment, thus meeting the requirements of Rule 127A.

The petitioner argued that although the notice was issued on 31.3.2021, it was served on 1.4.2021, and hence the old provisions should not apply. However, the court emphasized that the relevant factor is the issuance date, not the receipt date. The court referenced the Allahabad High Court's judgment in Daujee Abhushan Bhandar Pvt Ltd v. Union of India, which discussed the issuance of notices in electronic form and concluded that the issuance occurs when the notice enters a computer resource outside the control of the originator.

The court agreed with the Allahabad High Court's interpretation but disagreed with its conclusion that the date of receipt is relevant. The court found that the notice in question was issued on 31.3.2021, thus falling under the old provisions of Section 148.

Conclusion:

The court dismissed the writ petitions challenging the notices issued under Section 148, as the notices were issued before 1.4.2021. Consequently, the petitions challenging the validity of the Explanation to Clause A(a) were also dismissed as not pressed. The court allowed the petitioners the liberty to challenge the assessment orders through available legal remedies.

Orders:

1. W.P.Nos.27998 and 28000 of 2021 and W.P.(MD) No.11312 of 2021 were dismissed.
2. W.P.Nos.27997 and 27999 of 2021 and W.P.(MD) No.16821 of 2021 were dismissed as not pressed.
3. No order as to costs. All connected miscellaneous petitions were closed.

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