2023 (2) TMI 1081 - HC - Income Tax

Court rules on reassessment proceedings under TOLA 2020

Rajeev Bansal Versus Union of India And 3 Others

The court held that reassessment proceedings initiated with notices issued between 01.04.2021 and 30.06.2021 cannot benefit from the relaxation/extension ... Reopening of assessment u/s 147 - scope of enactment of Section 148A - benefit of relaxation/extension under the Taxation and Other Laws (Relaxation And Amendment of Certain Provisions) Act' (TOLA) 2020 - legislative scheme of Section 148 of reopening of assessment pre and post amendment by the Finance Act 2021 - effect and scope of the Enabling Act (TOLA' 2020) on the notices issued under Section 148 after completion of the inquiry and passing of orders in terms of Section 148 A(d) - Whether timeline provided in the unamended Section 149 would extend uptil 31.03.2021 under the Enabling Act, 2021, with further extensions by the notifications dated 31.03.2021 and 27.04.2021 issued under TOLA, in the timeline provided under the amended Section 149 of the Finance Act, 2021? - HELD THAT:- Extension in time untill 30.6.2021 can be granted to the time limit provided in the amended Section 149 of the Income Tax Act brought by the Finance Act, 2021 by plain provisions of clause (A)(a) of the Notification No. 20 of 2021 dated 31.3.2021 ignoring Explanation to the same (quashed by this Court). Similarly extension in time as per the plain provision of clause (A)(a)(b) of the Notification No. 38 dated 27.4.2021 ignoring Explanation to it, may be granted as and when the said extensions are applicable for issuance of notice under Section 148 as per the time limit specified in Section 149 or sanctions under Section 151 of the Income Tax Act as amended by the Finance Act, 2021, after making all compliances, as required under the Income Tax Act, 1961 (amended provisions). As profitably be noted, at this stage, that it is settled law that a taxing statute must be interpreted in the light of what is clearly expressed. It is not permissible to import provisions in a taxing statute so as to supply any assumed deficiency. In interpreting a taxing statute, equitable considerations are out of place. Nor can taxing statutes be interpreted on any presumptions or assumptions. The court must look squarely at the words of the statute and interpret them; Interpreting taxing statute in the light of what is clearly expressed: it cannot imply anything which is not expressed. Before taxing any person it must be shown that he falls within the ambit of the charging section by clear words used in the section, and if the words are ambiguous and open to two interpretations, the benefit of interpretation is given to the subject. There is nothing unjust in the taxpayer escaping if the letter of the law fails to catch him on account of the legislature's failure to express itself clearly. Conclusions:- (i) The reassessment proceedings initiated with the notice under Section 148 (deemed to be notice under Section 148-A), issued between 01.04.2021 and 30.06.2021, cannot be conducted by giving benefit of relaxation/extension under the Taxation and Other Laws (Relaxation And Amendment of Certain Provisions) Act' (TOLA) 2020 upto 30.03.2021, and the time limit prescribed in Section 149 (1)(b) (as substituted w.e.f. 01.04.2021) cannot be counted by giving such relaxation from 30.03.2020 onwards to the revenue. (ii) In respect of the proceedings where the first proviso to Section 149(1)(b) is attracted, benefit of TOLA' 2020 will not be available to the revenue, or in other words, the relaxation law under TOLA' 2020 would not govern the time frame prescribed under the first proviso to Section 149 as inserted by the Finance Act' 2021, in such cases. (iii) The reassessment notices issued to the petitioners in this bunch of writ petitions, on or after 1.4.2021 for different assessment years (A.Y. 2013-14 to 2017-18), are to be dealt with, accordingly, by the revenue. Issues Involved:1. Whether the reassessment proceedings initiated with the notice under Section 148 (deemed to be notice under Section 148-A), issued between 01.04.2021 and 30.06.2021, can be conducted by giving benefit of relaxation/extension under the Taxation and Other Laws (Relaxation & Amendment of Certain Provisions) Act' (TOLA) 2020 upto 30.03.2021, and then the time limit prescribed in Section 149 (1) (b) (as substituted w.e.f. 01.04.2021) is to be counted by giving such relaxation, benefit of TOLA from 30.03.2020 onwards to the revenue.2. Whether in respect of the proceedings where the first proviso to Section 149(1)(b) is attracted, benefit of TOLA' 2020 will be available to the revenue, or in other words the relaxation law under TOLA' 2020 would govern the time frame prescribed under the first proviso to Section 149 as inserted by the Finance Act' 2021, in such cases.Analysis of Judgment:Issue 1:The court examined whether reassessment proceedings initiated with notices under Section 148 (deemed to be under Section 148-A) issued between 01.04.2021 and 30.06.2021 could be conducted by giving the benefit of relaxation/extension under TOLA 2020 up to 30.03.2021. The court noted that the Finance Act, 2021 brought substantial changes to the reassessment procedure, simplifying tax administration, easing compliance, and reducing litigation. The court observed that the Enabling Act (TOLA 2020) was enacted due to the pandemic to extend timelines but did not save the pre-existing provisions of Sections 147 to 151 of the Income Tax Act, which were replaced by the Finance Act, 2021 from 01.04.2021.The court held that the Enabling Act is an enactment to extend timelines only and, from 01.04.2021 onwards, all references to issuance of notices must be read as references to the substituted provisions. Consequently, reassessment notices issued on or after 01.04.2021 must comply with the new provisions. The court concluded that the reassessment proceedings initiated with notices issued between 01.04.2021 and 30.06.2021 cannot be conducted by giving the benefit of relaxation/extension under TOLA 2020.Issue 2:The court examined whether the benefit of TOLA 2020 would be available to the revenue in cases where the first proviso to Section 149(1)(b) is attracted. The first proviso to Section 149(1)(b) prohibits the issuance of notice under Section 148 if it is beyond the time limit specified under the unamended clause (b) of Section 149, i.e., six years from the end of the relevant assessment year. The court noted that the Finance Act, 2021 introduced a higher threshold for reopening assessments after three years and limited the applicability of the Enabling Act to reassessment proceedings initiated till 31.03.2021.The court held that the benefit of TOLA 2020 would not be available to the revenue in cases where the first proviso to Section 149(1)(b) is attracted. The relaxation law under TOLA 2020 would not govern the time frame prescribed under the first proviso to Section 149 as inserted by the Finance Act, 2021. The court concluded that the reassessment notices issued on or after 01.04.2021 must comply with the new provisions, and the first proviso to Section 149(1)(b) would apply, prohibiting the reopening of assessments that have become time-barred under the unamended provisions.Conclusion:The court concluded that the reassessment proceedings initiated with notices issued between 01.04.2021 and 30.06.2021 cannot be conducted by giving the benefit of relaxation/extension under TOLA 2020. The benefit of TOLA 2020 would not be available to the revenue in cases where the first proviso to Section 149(1)(b) is attracted. The reassessment notices issued for different assessment years (A.Y. 2013-14 to 2017-18) must comply with the new provisions, and the first proviso to Section 149(1)(b) would apply, prohibiting the reopening of assessments that have become time-barred under the unamended provisions. The court disposed of all the writ petitions accordingly.