TaxTMI 
TaxTMI 
2021 (12) TMI 664
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....tes. Mr. Kapil Gupta, Advocate. Mr. Puneet Agarwal, Mr. Yuvraj Singh, Mr. Prem Kandpal, Mr. Chetan Kumar Shukla, Ms. Hemlata Rawat, Advocates. Mr. Gaurav Gupta, Mr. Jaspal Singh Sethi, Mr. Gaurav Gupta & Ms. Sahiba Pantel, Advocates. Mr. T.M. Shivakumar, Advocate. Mr. Manibhadra Jain, Advocate. Dr. Rakesh Gupta, Mr. Somil Agarwal, Mr. Tani Malik, Mr. Anshul Mittal Advocates. Mr. Mayank Nagi, Advocate. Mr. Arvind Kumar & Ms. Devina Sharma, Advocates. Mr. Sunil K.Mukhi, Mr. Ishan Garg, Mr.T.S Nerwal, Advocates. Mr. P.C. Yadav, Advocate. Mr. Raghvendra Singh and Mr Satish kumar, Advocates. Mr. Rahul Chaudhary, Mr. Avesh Chaudhary, Mr. Abhay Shankar Dubey, Advocates. Mr. Navin Kumar with Mr. Deepak and Mr. Rohit Pal, Advs. Mr. Kamal Sawhney with Mr. Prashant Meharchandani, Mr. Nikhil Agarwal, Mr. Arun Bhaduria, Mr. Divyansh Singh, Advocates . Mr. Inder Paul Bansal and Mr. Vivek Bansal. Adv. Mr. Suresh Chandra Sati, Advocate. Mr.Sushil Tekriwal & Dr. Mamta Tekriwal, Advs. Mr. Piyush Singhal, Mr. Risabh Sharma, Advs. Mr. Rajiv Kumar Virmani, Mr. Abhinav Agrawal, Mr. Rishi Vohar, Ms. Swati Bhardwaj, Advs. Mr.Rishabh Ostwal, Adv. Mr. Rano Jain with Mr. Venketesh Chaurasia, Advs. Mr.Sourav ....
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....Krishnan, Advs. Mr. S. Krishnan & Mr. Rakesh Kumar, Adv. Mr. Mayank Nagi, Mr.Tarun Singh & Mr.Pulkit Verma, Advs. Mr. Ruchesh Sinha, Mr. Gautam Khaitan, Mr. AT Patra, Mr. Aditya Ghadge, Mr. Ramaditya Tiwari & Ms.Divya, Advs. Ms.Priamvada Surolia, Ms.Lakshita Arora & Mr. Abhishek Parmar, Advs. Mr. Shafiq Khan, Adv. Ms. Ranjana Roy Gawai, Mr. Ujjwal Jain & Mr. Shikher Upadhyay, Advs. Mr. P.R Rajhans, Mr. Ankur Vats & Mr. Vivek Singh, Advs. Mr. Sekhar Gupta & Mr. Mehendra Pratap, Advs. Mr. Deepanshu Jain & Mr. Shaantanu Jain, Advs. Mr. Gagan Kumar, Adv. Mr. Abhimanyu, Mr. Ankit Panwar, Mr. Parth Dixit & Mr. Abhishek Singh & Ms. Leena Kalra, AR of the Company. Mr. Hemant Shah and Saurabh Pal, Advs. Mr. R. K. Handoo, Mr.Yoginder Handoo, Mr.Ashwin Kataria, Mr.Aditya Chaudhary and Mr.Raghav Bhalla, Advs. Mr. Rahul Malhotra, Mr. Manas Tripathi and Ms. Diksha Singh Dhakre, Advocates. Mr. K.R. Manjani & Mr.Tarun Aswani, Advs. Mr. Vishal Kalra, Mr. S.S. Tomar and Mr. Ankit Sahni, Advs. Mr. Rajeev Sharma, Adv. Mr. Kapil Goel and Mr.Sandeep Goel, Advocates Mr. Rohit Bansal, Adv. Mr. Amit Kaushik, Adv. Mr. Vikas Arora, Ms. Radhika Arora and Mr. Mohit Dagar, Advocates Mr. Satyen Sethi & Mr. Arta ....
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..... for Respondents/UOI. Mr. Dilbag Singh Sr. CGC for Respondents/UOI. Mr. Kamal Kant Jha, Senior Panel Counsel for UOI. Mr. Ranvir Singh, (CGSC) for UOI. Mr. D.S.Mehandru, Sr. Panel Counsel for UOI. Mr. Anil Dabas, Adv. for UOI. Mr. Praveen Kumar Jain, Adv. Ms. Richa Dhawan, Senior Panel counsel for UOI. Ms. Aakanksha Kaul, Mr. Manek Singh, Mr. Aman Sahani, Advs. Mr. Nitin Khanna, Advocate for R-4/UOI. Ms. Arti Bansal for Respondent No.3/ UOI. Mr. Prakash Kumar, Sr. Central Govt. Counsel. Mr. Narendra Kumar Srivastava Senior Panel Counsel for the respondent No. 3. Mr. Praveen Kumar Jain, Adv. Ms. Talish Ray, Adv. for UOI. Ms. Sunieta Ojha, Adv. for UOI. Mr. Neeraj, Mr. Sahaj Garg , Mr. Vedansh Anand, Mr. Rudra Paliwal and Mr. Sanjay Pal, Advs. Mr.Ajay Digpaul CGSC with Kamal R. Digpaul Adv. Mr. Ravi Prakash CGSC with Mr. Gurtejpal Singh, Ms. Shruti Shivkumar, Advs. Mr. Ashwani Kumar Sharma, CGSC. Mr.Sushil Kumar Pandey, Adv. with Mr. Rahul Mourya, Ms. Sweety Singh Chauhan & Ms. Anjum Kaur, Advs. Mr. Jitesh Vikram Srivastava, Mr. Prajesh Vikram Srivastava, Adv. Ms. Aakanksha Kaul, Mr. Manek Singh, Mr. Aman Sahani, Advs. Mr. Ajay Digpaul, Adv. Mr. Vivekanand Mishra, Senior Panel Couns....
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....h Gogna, CGSC with Mr. Arihant Jain, Adv. Mr. Kirtiman Singh CGSC with Mr. Taha Yasin, Adv. Ms. Sarika Singh, Adv. Mr. Rahul Sharma, Central Government Counsel Panel and Mr. C.K.Bhatt, Adv. Mr.Virender Pratap Singh Charak with Ms.Shubhra Parashar, Mr. Pushpender Singh Charak, Mr. Kapil Gaur, Mr. Vaishnav Kirti Singh, Mr. Shubham Ahuja, Mr. Sanjay Singh Chauhan, Mr. Ram Pal Singh Tomar, Mr. Gyanwardhan Singh & Mr. Vivek Nagar, Advs. for UOI. Mr.Nirvikar Verma, Adv. for UOI. Mr.Rajesh Kumar, Adv. for UOI. Mr. Manish Mohan, CGSC with Ms. Manisha Saroha, Adv. Mr. Shyam Sundar Rai, Adv. W.P.(C) Nos. 6442/2021, 6443/2021, 6451/2021, 6465/2021, 6563/2021, 6531/2021, 6596/2021, 6607/2021, 6645/2021,6665/2021, 6667/2021, 6668/2021, 6705/2021, 6717/2021, 6718/2021, 6777/2021, 6799/2021, 6800/2021, 6801/2021, 6805/2021, 6822/2021, 6830/2021, 6832/2021, 6857/2021, 6877/2021, 6880/2021, 6888/2021, 6889/2021, 6890/2021, 6894/2021, 6896/2021, 6897/2021, 6898/2021, 6904/2021, 6905/2021, 6906/2021, 6910/2021, 6917/2021, 6918/2021, 6920/2021, 6922/2021, 6924/2021, 6931/2021, 6950/2021 6954/2021, 6955/2021, 6962/2021, 6963/2021, 6965/2021, 6966/2021, 6968/2021, 6972/2021, 6976/2021, 7015/20....
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...., 7539/2021, 7541/2021, 7543/2021, 7544/2021, 7545/2021, 7546/2021, 7549/2021, 7552/2021, 7554/2021, 7555/2021, 7556/2021, 7557/2021, 7561/2021, 7562/2021, 7563/2021, 7567/2021, 7568/2021, 7569/2021, 7570/2021, 7571/2021, 7573/2021, 7574/2021, 7576/2021, 7577/2021, 7582/2021, 7584/2021, 7585/2021, 7586/2021, 7588/2021, 7590/2021, 7591/2021, 7593/2021, 7594/2021, 7595/2021, 7596/2021, 7598/2021, 7599/2021, 7600/2021, 7603/2021, 7610/2021, 7622/2021, 7630/2021, 7631/2021, 7632/2021, 7636/2021, 7639/2021, 7643/2021, 7646/2021, 7647/2021, 7648/2021, 7650/2021, 7651/2021, 7654/2021, 7655/2021, 7656/2021, 7658/2021, 7659/2021, 7660/2021, 7661/2021, 7663/2021, 7664/2021, 7667/2021, 7668/2021, 7675/2021, 7677/2021, 7678/2021, 7679/2021, 7681/2021, 7682/2021, 7683/2021, 7684/2021, 7685/2021, 7686/2021, 7687/2021, 7688/2021, 7689/2021, 7690/2021, 7691/2021, 7692/2021, 7693/2021, 7694/2021, 7695/2021, 7696/2021, 7697/2021, 7698/2021, 7699/2021, 7730/2021, 7731/2021, 7732/2021, 7733/2021, 7734/2021, 7735/2021, 7736/2021, 7737/2021, 7738/2021, 7754/2021, 7763/2021, 7770/2021, 7771/2021, 7772/2021, 7773/2021, 7774/2021, 7775/2021, 7776/2021, 7777/2021, 7783/2021, 7786/2021, 7787/2021, 7789/2021,....
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....369/2021, 8370/2021, 8372/2021, 8373/2021, 8374/2021, 8376/2021, 8378/2021, 8380/2021, 8383/2021, 8384/2021, 8386/2021, 8387/2021, 8388/2021, 8389/2021, 8390/2021, 8416/2021, 8431/2021, 8436/2021, 8438/2021, 8441/2021, 8443/2021, 8444/2021, 8446/2021, 8448/2021, 8450/2021, 8462/2021, 8463/2021, 8464/2021, 8465/2021, 8466/2021, 8467/2021, 8468/2021, 8469/2021, 8475/2021, 8476/2021, 8478/2021, 8480/2021, 8492/2021, 8499/2021, 8501/2021, 8502/2021, 8503/2021, 8505/2021, 8506/2021, 8511/2021, 8512/2021, 8513/2021, 8514/2021, 8517/2021, 8518/2021, 8519/2021, 8523/2021, 8525/2021, 8526/2021, 8527/2021, 8530/2021, 8531/2021, 8533/2021, 8534/2021, 8535/2021, 8536/2021, 8537/2021, 8538/2021, 8539/2021, 8541/2021, 8542/2021, 8543/2021, 8544/2021, 8545/2021, 8546/2021, 8550/2021, 8574/2021, 8575/2021, 8583/2021, 8584/2021, 8585/2021, 8586/2021, 8589/2021, 8590/2021, 8591/2021, 8593/2021, 8594/2021, 8595/2021, 8596/2021, 8600/2021, 8604/2021, 8607/2021, 8608/2021, 8616/2021, 8619/2021, 8622/2021, 8627/2021, 8629/2021, 8631/2021, 8633/2021, 8634/2021, 8636/2021, 8637/2021, 8638/2021, 8639/2021, 8641/2021, 8642/2021, 8644/2021, 8646/2021, 8647/2021, 8648/2021, 8660/2021, 8661/2021, 8662/2021, 86....
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..../2021, 9306/2021, 9310/2021, 9311/2021, 9315/2021, 9316/2021, 9317/2021, 9319/2021, 9321/2021, 9322/2021, 9323/2021, 9325/2021, 9327/2021, 9329/2021, 9330/2021, 9331/2021, 9332/2021, 9333/2021, 9334/2021, 9335/2021, 9337/2021, 9339/2021, 9340/2021, 9341/2021, 9342/2021, 9348/2021, 9350/2021, 9351/2021, 9353/2021, 9355/2021, 9356/2021, 9379/2021, 9391/2021, 9396/2021, 9397/2021, 9398/2021, 9399/2021, 9402/2021, 9403/2021, 9404/2021, 9406/2021, 9408/2021, 9414/2021, 9416/2021, 9422/2021, 9424/2021, 9431/2021, 9433/2021, 9434/2021, 9437/2021, 9439/2021, 9441/2021, 9443/2021, 9445/2021, 9446/2021, 9447/2021, 9449/2021, 9451/2021, 9453/2021, 9456/2021, 9458/2021, 9459/2021, 9488/2021, 9489/2021, 9490/2021, 9491/2021, 9492/2021, 9493/2021, 9494/2021, 9495/2021, 9497/2021, 9500/2021, 9501/2021, 9503/2021, 9506/2021, 9510/2021, 9513/2021, 9516/2021, 9517/2021, 9519/2021, 9520/2021, 9521/2021, 9524/2021, 9526/2021, 9527/2021, 9528/2021, 9532/2021, 9533/2021, 9534/2021, 9535/2021, 9536/2021, 9538/2021, 9542/2021, 9543/2021, 9544/2021, 9545/2021, 9546/2021, 9547/2021, 9548/2021, 9549/2021, 9550/2021, 9551/2021, 9552/2021, 9553/2021, 9554/2021, 9555/2021, 9557/2021, 9567/2021, 9569/2021, 9571/....
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....1, 10478/2021, 10479/2021, 10480/2021, 10481/2021, 10483/2021, 10484/2021, 10485/2021, 10487/2021, 10488/2021, 10491/2021, 10512/2021, 10515/2021, 10516/2021, 10521/2021, 10526/2021, 10527/2021, 10541/2021, 10542/2021, 10544/2021, 10547/2021, 10548/2021, 10549/2021, 10550/2021, 10551/2021, 10553/2021, 10555/2021, 10557/2021, 10564/2021, 10568/2021, 10570/2021, 10572/2021, 10580/2021, 10581/2021, 10588/2021, 10626/2021, 10627/2021, 10628/2021, 10640/2021, 10643/2021, 10650/2021, 10653/2021, 6152/2021, 10396/2021, 10414/2021, 10533/2021, 10565/2021, 10587/2021, 10608/2021, 10609/2021, 10612/2021, 10613/2021, 10615/2021, 10618/2021, 10619/2021, 10620/2021, 10621/2021, 10642/2021, 10661/2021, 10662/2021, 10663/2021, 10683/2021, 10684/2021, 10685/2021, 10687/2021, 10688/2021, 10692/2021, 10693/2021, 10694/2021, 10695/2021, 10696/2021, 10697/2021, 10700/2021, 10702/2021, 10704/2021, 10706/2021, 10734/2021, 10735/2021, 10739/2021, 10741/2021, 10744/2021, 10748/2021, 10752/2021, 10756/2021, 10757/2021, 10761/2021, 10764/2021, 10766/2021, 10767/2021, 10783/2021, 10799/2021, 10802/2021, 10803/2021, 10811/2021, 10819/2021, 10820/2021, 10827/2021, 10829/2021, 10841/2021, 10843/2021 J....
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....assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year: Provided further that nothing contained in the first proviso shall apply in a case where any income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment for any assessment year: Provided also that the Assessing Officer may assess or reassess such income, other than the income involving matters which are the subject matters of any appeal, reference or revision, which is chargeable to tax and has escaped assessment. Explanation 1.-Production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the....
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....sons recorded under sub-section (2) of section 148. Explanation 4.-For the removal of doubts, it is hereby clarified that the provisions of this section, as amended by the Finance Act, 2012, shall also be applicable for any assessment year beginning on or before the 1st day of April, 2012. Issue of notice where income has escaped assessment. 148.(1) Before making the assessment, reassessment or re-computation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139: Provided that in a case- (a) where a return has been furnished during the period commencing on the 1st day of October, 1991 and e....
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....financial interest in any entity) located outside India, chargeable to tax, has escaped assessment. Explanation.-In determining income chargeable to tax which has escaped assessment for the purposes of this sub-section, the provisions of Explanation 2 of section 147 shall apply as they apply for the purposes of that section. (2) The provisions of sub-section (1) as to the issue of notice shall be subject to the provisions of section 151. (3) If the person on whom a notice under section 148 is to be served is a person treated as the agent of a nonresident under section 163 and the assessment, reassessment or recomputation to be made in pursuance of the notice is to be made on him as the agent of such non-resident, the notice shall not be issued after the expiry of a period of six years from the end of the relevant assessment year. Explanation.-For the removal of doubts, it is hereby clarified that the provisions of sub-sections (1) and (3), as amended by the Finance Act, 2012, shall also be applicable for any assessment year beginning on or before the 1st day of April, 2012. Sanction for issue of notice. 151. (1) No notice shall ....
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....that circumstances exist which render it necessary for him to take immediate action; NOW, THEREFORE, in exercise of the powers conferred by clause (1) of article 123 of the Constitution, the President is pleased to promulgate the following Ordinance: - CHAPTER I PRELIMINARY Short title and commencement 1. (1) This Ordinance may be called the Taxation and Other Laws commencement. (Relaxation of Certain Provisions) Ordinance, 2020. (2) Save as otherwise provided, it shall come into force at once. Definitions 2. (1) In this Ordinance, unless the context otherwise requires,- (a) "specified Act" means- (i) the Wealth-tax Act, 1957 (27 of 1957); (ii) the Income-tax Act, 1961 (43 of 1961); (iii) the Prohibition of Benami Property Transactions Act, 1988 (45 of 1988); (iv) Chapter VII of the Finance (No. 2) Act, 2004 (22 of 2004); (v) Chapter VII of the Finance Act, 2013 (17 of 2013); (vi) the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (22 of 2015); (vii) Chapter VIII of the Finance Act, 2016; (28 of 2016) or (v....
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.... Act, 2005 (28 of 2005), has been issued on or before the 31st day of March, 2020 (28 of 2005), and where completion or compliance of such action has not been made within such time, then, the time limit for completion or compliance of such action shall, notwithstanding anything contained in the specified Act, stand extended to the 30th day of June, 2020, or such other date after the 30th day of June, 2020, as the Central Government may, by notification, specify in this behalf: Provided that the Central Government may specify different dates for completion or compliance of different actions. Provided further that such action shall not include payment of any amount as is referred to in sub-section (2)." 5. As the pandemic and problems arising therefrom did not show any sign of abatement, the Legislature enacted Relaxation Act, 2020 in September, 2020. By way of Relaxation Act, 2020, various due dates/time limits/limitations prescribed in different Central Acts, including the Income Tax Act, 1961, were relaxed. Additionally, Section 3 of Relaxation Act, 2020 enabled the Central Government to issue Notifications for further relaxing the time limits/limitations pres....
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....ief in Emergency Situations Fund (PM CARES FUND) and exemption to its income, incorporation of Faceless Assessment Scheme, 2019 therein, empowering the Central Government to notify schemes for faceless processes under certain provisions by eliminating physical interface to the extent technologically feasible and to provide deduction or collection at source in respect of certain transactions at three-fourth's rate for the period from 14th May, 2020 to 31st March, 2021. 6. The Bill also proposes to amend the Direct Tax Vivad se Viswas Act, 2020 to extend the date for payment without additional amount to 31st December, 2020 and to empower the Central Government to notify certain dates relating to filing of declaration and making of payment. 7. The Finance Act, 2020 is also proposed to be amended to clarify regarding capping of surcharge at 15 per cent on dividend income of the Foreign Portfolio Investor. 8. The Bill also proposes to empower the Central Government toremove any difficulty up to a period of two years and provide for repeal and savings of the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020. 9. The Bil....
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....ority, commission or tribunal, by whatever name called, under the provisions of the specified Act; or (b) filing of any appeal, reply or application or furnishing of any report, document, return or statement or such other record, by whatever name called, under the provisions of the specified Act; or (c) in case where the specified Act is the Income-tax Act,1961,- (i) making of investment, deposit, payment, acquisition, purchase, construction or such other action, by whatever name called, for the purposes of claiming any deduction, exemption or allowance under the provisions contained in- (I) sections 54 to 54GB, or under any provisions of Chapter VI-A under the heading "B.-Deductions in respect of certain payments" thereof; or (II) such other provisions of that Act, subject to fulfilment of such conditions, as the Central Government may, by notification, specify; or (ii) beginning of manufacture or production of articles or things or providing any services referred to in section 10AA of that Act, in a case where the letter of approval, required to be issued in accordance with the provisions of the Special Economic Zones Act, 200....
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....mpugned in the present proceedings. The said Notifications are reproduced hereinbelow:- "A. NOTIFICATION S.O.1432(E) [NO.20/2021/F.NO.370142/ 35/2020-TPL] SECTION 3 OF THE TAXATION AND OTHER LAWS (RELAXATION AND AMENDMENT OF CERTAIN PROVISIONS) ACT, 2020, READ WITH SECTIONS 139AA, 144C, 148, 149 AND 151 OF THE INCOME-TAX ACT, 1961 AND SECTION 168 OF THE FINANCE ACT, 2016 - RELAXATION OF CERTAIN PROVISIONS OF SPECIFIED ACT EXTENSION OF DUE DATE FOR COMPLETION OF ACTION UNDER SPECIFIED ACTS NOTIFICATION S.O.1432(E) [NO.20/2021/F.NO.370142 /35/2020TPL], DATED 31-3-2021 In exercise of the powers conferred by sub-section (1) of section 3 of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (38 of 2020) (hereinafter referred to as the said Act), and in partial modification of the notification of the Government of India in the Ministry of Finance, (Department of Revenue) No. 93/2020 dated the 31st December, 2020, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (ii), vide number S.O. 4805(E), dated the 31st December, 2020, the Central Government hereby specifies that,- (A) where the specified Act....
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....ATION AND AMENDMENT OF CERTAIN PROVISIONS) ACT, 2020 - RELAXATION OF CERTAIN PROVISIONS OF SPECIFIED ACT - EXTENSION OF DUE DATE FOR COMPLETION OF ACTION UNDER SPECIFIED ACTS NOTIFICATION S.O. 1703 (E) [NO. 38 /2021/ F. NO. 370142/ 35/2020-TPL], DATED 27-4-2021 In exercise of the powers conferred by sub-section (1) of section 3 of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (38 of 2020) (hereinafter referred to as the said Act), and in partial modification of the notifications of the Government of India in the Ministry of Finance, (Department of Revenue) No. 93/2020 dated the 31st December, 2020, No. 10/2021 dated the 27th February, 2021 and No. 20/2021 dated the 31st March, 2021, published in the Gazette of India, Extraordinary, Part-II, Section 3, Subsection (ii), vide number S.O. 4805(E), dated the 31st December, 2020, vide number S.O. 966(E) dated the 27th February, 2021 and vide number S.O. 1432(E) dated the 31st March, 2021, respectively (hereinafter referred to as the said notifications), the Central Government hereby specifies for the purpose of sub-section (1) of section 3 of the said Act that, - (A) where the....
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.... the Budget Speech 2021-2022 of the Minister of Finance, Union of India as well as Memorandum explaining the provisions in the Finance Bill, 2021, the Notes on clauses to the Finance Bill, 2021 and the Finance Act, 2021 are reproduced hereinbelow:- "A. BUDGET SPEECH 2021-2022 OF THE MINISTER OF FINANCE Direct Tax Proposals 149. Keeping this in mind, our Government introduced a series of reforms in the Direct tax system for the benefit of our taxpayers and economy. Few months prior to the pandemic, in order to attract investments we slashed our Corporate tax rate to make it among the lowest in the world. The Dividend Distribution Tax too was abolished. The burden of taxation on small taxpayers was eased by increasing rebates. In 2020, the return filers saw a dramatic increase to 6.48 crore from 3.31 crore in 2014. 150. In the Direct Tax administration, we had recently introduced the Faceless Assessment and Faceless Appeal. I now seek to take further steps to simplify the tax administration, ease compliance, and reduce litigation. "Annex to Part B of Budget Speech Direct Tax Proposals Sl.No. Proposals Proposed Amendments in brief 1. ....
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....axpayers from third parties under section 285BA of the Act (statement of financial transaction or reportable account). Similarly, information is also received from other law enforcement agencies. This information is also shared with the taxpayer through Annual Information Statement under section 285BB of the Act. Department uses this information to verify the information declared by a taxpayer in the return and to detect non-filers or or those who have not disclosed the correct amount of total income. Therefore, assessment or reassessment or recomputation of income escaping assessment, to a large extent, is information-driven. In view of above, there is a need to completely reform the system of assessment or reassessment or re-computation of income escaping assessment and the assessment of search related cases. The Bill proposes a completely new procedure of assessment of such cases. It is expected that the new system would result in less litigation and would provide ease of doing business to taxpayers as there is a reduction in time limit by which a notice for assessment or reassessment or re-computation can be issued. The salient features of new procedure are as....
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....quisitioned or survey is conducted. (vii) New Section 148A of the Act proposes that before issuance of notice the Assessing Officer shall conduct enquiries, if required, and provide an opportunity of being heard to the assessee. After considering his reply, the Assessing Office shall decide, by passing an order, whether it is a fit case for issue of notice under section 148 and serve a copy of such order along with such notice on the assessee. The Assessing Officer shall before conducting any such enquiries or providing opportunity to the assessee or passing such order obtain the approval of specified authority. However, this procedure of enquiry, providing opportunity and passing order, before issuing notice under section 148 of the Act, shall not be applicable in search or requisition cases. (viii) The time limitation for issuance of notice under section148 of the Act is proposed to be provided in section 149 of the Act and is as below: * in normal cases, no notice shall be issued if three years have elapsed from the end of the relevant assessment year. Notice beyond the period of three years from the end of the relevant assessment year can be taken onl....
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....ar. (x) Once assessment or reassessment or re-computation has started the Assessing officer is proposed to be empowered (as at present) to assess or reassess the income in respect of any issue which has escaped assessment and which comes to his notice subsequently in the course of the proceeding under this procedure notwithstanding that the procedure prescribed in section 148A was not followed before issuing such notice for such income. These amendments will take effect from 1st April, 2021. xxxx xxxx xxxx xxxx C. NOTES ON CLAUSES TO THE FINANCE BILL, 2021 ...... Clause 35 of the Bill seeks to amend section 147 of the Income-tax Act relating to income escaping assessment. It is proposed to substitute the said section so as to provide that if any income chargeable to tax, in the case of an assessee, has escaped assessment for any assessment year, the Assessing officer may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute t....
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....ase of the assessee; or (ii) survey is conducted under section 133A in the case of the assessee; or (iii) the Assessing Officer is satisfied, with the prior approval of Principal Commissioner or Commissioner, that any money, bullion, jewellery or other valuable article or thing, seized or requisitioned in case of any other person on or after the 1st day of April, 2021, belongs to the assessee; or (iv) the Assessing officer is satisfied, with the prior approval of Principal Commissioner or Commissioner, that any books of account or documents, seized or requisitioned in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information contained therein, relate to, the assessee, the Assessing officer shall be deemed to have information which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the three assessment years immediately preceding the assessment year relevant to the previous year in which the search is initiated or books of account, other documents or any assets are requisitioned or survey is conducted or money, bullion, jewellery or other valuable article or th....
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....or the Assessing officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any money, bullion, jewellery or other valuable article or thing, seized in a search under section 132 or requisitioned under section 132A, in the case of any other person on or after the 1st day of April, 2021, belongs to the assessee; or the Assessing officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any books of account or documents, seized in a search under section 132 or requisitioned under section 132A, in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information contained therein, relates to, the assessee. Explanation 3 to the said section provides that "Specified authority" shall mean specified authority referred to in section 151. This amendment will take effect from 1st April, 2021. Clause 38 of the Bill seeks to amend section 149 of the Incometax Act relating to time limit for notice. It is proposed to substitute the said section so as to provide that no notice under section 148 shall be issued for the relevant assessment year - ....
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....hree years have elapsed from the end of the relevant assessment year; (ii) Principal Chief Commissioner of Income-tax or Principal Director General of Income-tax, or where there is no Principal Chief Commissioner of Income-tax or Principal Director General of Income-tax, Chief Commissioner of Income-tax or Director General of Income-tax, if more than three years have elapsed from the end of the relevant assessment year. This amendment will take effect from 1st April, 2021... D. RELEVANT EXTRACT OF THE FINANCE ACT, 2021 MINISTRY OF LAW AND JUSTICE (Legislative Department) New Delhi, the 28th March, 2021/Chaitra 7, 1943 (Saka) The following Act of Parliament received the assent of the President on the 28th March, 2021, and is hereby published for general information:- THE FINANCE ACT, 2021 NO. 13 OF 2021 An Act to give effect to the financial proposals of the Central Government for the financial year 2021-2022. BE it enacted by Parliament in the Seventy-second Year of the Republic of India as follows:-- CHAPTER I PRELIMINARY 1. (1) This Act may be called the Finance Act, 2021. (2) Save as otherwise....
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.... the relevant assessment year and the Assessing Officer has obtained prior approval of the specified authority to issue such notice. Explanation 1.-For the purposes of this section and section 148A, the information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment means,- (i) any information flagged in the case of the assessee for the relevant assessment year in accordance with the risk management strategy formulated by the Board from time to time; (ii) any final objection raised by the Comptroller and Auditor-General of India to the effect that the assessment in the case of the assessee for the relevant assessment year has not been made in accordance with the provisions of this Act. Explanation 2.-For the purposes of this section, where,- (i) a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A, on or after the 1st day of April, 2021, in the case of the assessee; or (ii) a survey is conducted under section 133A, other than under sub-section (2A) or sub-section (5) of that section, on or after the 1st day o....
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....ble to tax has escaped assessment in his case for the relevant assessment year and results of enquiry conducted, if any, as per clause (a); (c) consider the reply of assessee furnished, if any, in response to the show-cause notice referred to in clause (b); (d) decide, on the basis of material available on record including reply of the assessee, whether or not it is a fit case to issue a notice under section 148, by passing an order, with the prior approval of specified authority, within one month from the end of the month in which the reply referred to in clause (c) is received by him, or where no such reply is furnished, within one month from the end of the month in which time or extended time allowed to furnish a reply as per clause (b) expires: Provided that the provisions of this section shall not apply in a case where,- (a) a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A in the case of the assessee on or after the 1st day of April, 2021; or (b) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any mone....
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.... extended time allowed to the assessee, as per show-cause notice issued under clause (b) of section 148A or the period during which the proceeding under section 148A is stayed by an order or injunction of any court, shall be excluded: Provided also that where immediately after the exclusion of the period referred to in the immediately preceding proviso, the period of limitation available to the Assessing Officer for passing an order under clause (d) of section 148A is less than seven days, such remaining period shall be extended to seven days and the period of limitation under this sub-section shall be deemed to be extended accordingly. Explanation.-For the purposes of clause (b) of this subsection, "asset" shall include immovable property, being land or building or both, shares and securities, loans and advances, deposits in bank account. (2) The provisions of sub-section (1) as to the issue of notice shall be subject to the provisions of section 151.' 44. For section 151 of the Income-tax Act, the following section shall be substituted, namely:- "151. Specified authority for the purposes of section 148 and section 148A shall be,- ....
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....) of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 authorizes the Central Government to only extend the time limits and nothing more. He further states that the respondents cannot indirectly extend the operation of the old provisions of the Act beyond 31st March, 2021 in the guise of a clarification under delegated legislation. He also relies upon interim stay orders passed by the Bombay High Court as well as by the learned predecessor Division Bench of this Court in Mon Mohan Kohli vs. Assistant Commissioner of Income Tax & Anr., W.P. (C) 6176/2021 dated 07th July, 2021. Issue Notice. Mr. Sanjay Kumar, Advocate, Mr.Ajit Sharma, Advocate and Mr.Kunal Sharma, Advocate accept notice on behalf of the respondents in W.P.(C) Nos.6442/2021, 6443/2021 and 6451/2021 respectively. Learned counsel for the respondents state that in the present cases, the time limit for issuing the notices under Section 148 of the Act stood expired and, therefore, any action under Section 148 would have been time barred by virtue of the proviso to Section 149(1) of the Act. They submit that by virtue of introduction of Section 3(1) of....
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.... counsel for the petitioners submitted that as the Finance Act, 2021 had substituted / replaced the earlier provisions, being Sections 147, 148, 149 & 151 of the Income Tax Act, 1961, with the new provisions, the same would result in repeal of the earlier provisions and, therefore, the earlier provisions could not be relied upon or referred to. In support of their submission, they relied upon the judgment passed by the Supreme Court in PTC India Limited Vs. Central Electricity Regulatory Commission, Through Secretary, (2010) 4 SCC 603. The relevant portion of the said judgment is reproduced hereinbelow:- "91. In this connection, it may be seen that Section 121 of the original Act stood substituted by Amendment Act 57 of 2003. Substitution of a provision results in repeal of the earlier provision and its replacement by the new provision. Substitution is a combination of repeal and fresh enactment. (See Principles of Statutory Interpretation by G.P. Singh, 11th Edn., p. 638.) Section 121 of the original Electricity Act, 2003 was never brought into force. It was substituted by new Section 121 by Amendment Act 57 of 2003 which was brought into force by a Notification dated 27-....
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....any Assessment Year prior to Assessment Year 2018-19, exceptional conditions of Section 149 clause (b) were required to be satisfied by the Revenue. Importantly, satisfaction of the aforesaid preconditions prescribed by clause (b) could be ascertained only when the procedure prescribed under Section 148A had been followed prior to issuance of notice under Section 148 of the Income Tax Act, 1961. 16. Learned counsel for petitioners submitted that once the Parliament had exercised its powers of legislation (enactment of Finance Act, 2021), then any action, such as issuance of Notifications dated 31st March, 2021 and 27th April, 2021 contrary to said legislation, taken by any other agency/wing of the Government was bad in law as the same fell foul of the doctrine of 'Occupied Field'. They submitted that the entire law stood substituted and was specifically made applicable from a particular date. Accordingly pursuant to the Legislature occupying the field governing initiation of reassessment proceedings, no authority was vested in Government to issue the Notifications dated 31st March, 2021 and 27th April, 2021, so as to disturb/intrude into the field occupied by the Legislature. ....
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....r set of provisions is by itself a complete code with respect to the same matter. In such a case the actual detailed comparison of the two sets of provisions may not be necessary. It is a matter of legislative intent that the two sets of provisions were not expected to be applied simultaneously. Section 80 is a special provision. It deals with certain class of suits distinguishable on the basis of their particular subject matters." (at para 18)" 18. Learned counsel for petitioners further submitted that Notifications dated 31st March, 2021 and 27th April, 2021 were ultra vires the Income Tax Act, 1961 as amended by Finance Act, 2021 and in excess of the enabling powers prescribed under Section 3 of Relaxation Act, 2020. They stated that Legislature by virtue of Section 3 of Relaxation Act, 2020 had bestowed upon the Central Government very specific and limited power to issue Notifications extending time limits which fell during the period specified therein. They further stated that Explanation (A)(a)(ii) of Notification dated 31st March, 2021 and Explanation to clause (A)(b) of Notification dated 27th April, 2021 had illegally prescribed that the repealed Sections 148, 149 & 151....
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....ct, 1961. 22. In the alternative, learned counsel for the petitioners submitted that Sections 147 to 151 were procedural provisions, inasmuch as, they primarily amended limitation period and therefore applied retrospectively i.e. to reassessment notices deemed to have been issued within the limitation period. ARGUMENTS ON BEHALF OF THE RESPONDENTS 23. Per contra, Mr. Sunil Agarwal, Mr. Zoheb Hossain, Mr. Puneet Rai, Mr. Sanjay Kumar, Mr. Shailender Singh, Mr. Ruchir Bhatia, learned counsel for the respondents, contended that the present batch of writ petitions challenged the legality and validity of only the Explanations to the two Notifications, being Notification No.20/2021 dated 31st March, 2021 and Notification No.38/2021 dated 27th April, 2021, issued by Central Government in exercise of powers vested under Section 3(1) of Relaxation Act, 2020. They emphasized that petitioners had not challenged either the main Clause of the said Notifications to which 'Explanations' were appended or the Relaxation Ordinance, 2020 or Relaxation Act, 2020, which enabled the Central Government to extend dates as a measure of relief contingent upon on-ground analysis of Covid-19 situatio....
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....SCC 634. The relevant portions of the said judgments are reproduced hereinbelow:- A. Re Delhi Laws Act, 1912, Ajmer-Merwara (Extension of Laws) Act, 1947 (supra) "301. Broadly speaking, the question of delegated legislation has come up for consideration before courts of law in two distinct classes of cases. One of these classes comprises what is known as cases of "conditional legislation", where according to the generally accepted view, the element of delegation that is present relates not to any legislative function at all, but to the determination of a contingency or event, upon the happening of which the legislative provisions are made to operate. The other class comprises cases of delegation proper, where admittedly some portion of the legislative power has been conferred by the legislative body upon what is described as a subordinate agent or authority. xxx xxx xxx 306. Thus, conditional legislation has all along been treated in judicial pronouncements not to be a species of delegated legislation at all. It comes under a separate category, and, if in a particular case all the elements of a conditional legislation exist, the question does not....
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....sions, including extension of time-limit'. They submitted that the limited fiction which came into play by virtue of Section 3(1) of Relaxation Act, 2020 was that 'such action' which was due for completion or compliance between 20th March, 2020 and 31st December, 2020 or such other date after 31st December, 2020 as the Central Government may by Notification specify, which in this case is 31st March, 2021 [later modified to 30th April, 2021] stood 'extended' for the purpose of compliance or completion of 'such action' [which could not be completed] to a date beyond 31st March, 2021, which was finally specified by the Central Government to be 30th June, 2021. They submitted that it was this liminal period of 1st April, 2021 till 30th June, 2021 that the fiction came into play. 27. According to them, the two expressions vital for the purpose of understanding the fiction at play were 'such action' and 'extended'. They submitted that one could not be read in isolation of the other without doing violence to the plain language of Section 3(1) of Relaxation Act, 2020. They pointed out that neither the vires of Section 3(1) of Relaxation Act, 2020 nor the power conferred by Section 3(1) of ....
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....by Section 3 of Relaxation Act, 2020, the Revenue had available to it the "power" in cases where the limitation for issuance of notice was expiring between 20th March, 2020 and 31st March, 2021 [later modified to 30th April, 2021], to take "such action" i.e. the issuance of Notice under Section 148, on or before 30th June, 2021. The jural co-relative of "power", as per Hohfeld's theory on Jural Relations, is "liability". Therefore, where there is a power, it follows that there is a liability imposed on the person against whom the power exists. If the power under the erstwhile Section 148 existed, then consequently, the corresponding liability to be reopened under unamended Section 148 continued. 30. They also submitted that there was no conflict between Relaxation Act, 2020 and Finance Act, 2021 due to their specific text, context, scheme and object. They submitted that the principles of harmonious construction and ut res magis valeat quam pereat lead to an inexorable conclusion that if there was some conflict, alleged or real, between two provisions of law, the Courts were enjoined to make all out efforts to save both the provisions, rather than declaring any of them as a usele....
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....151, which could not be taken away by applying retrospectively a shorter period of limitation in a new provision i.e., the substituted Section 149. In support of their submissions, they relied upon the judgment passed by the Supreme Court in M.P Steel Corporation vs. Commissioner of Central Excise (2015) 7 SCC 58, wherein it has been held, "....The new law of limitation providing a longer period cannot revive a dead remedy. Nor can it suddenly extinguish a vested right of action by providing for a shorter period of limitation...a new law of limitation providing for a shorter period cannot certainly extinguish a vested right of action." 34. Learned counsel for the respondents contended that the Relaxation Act, 2020 maintains equality ensuring that notices under old Section 148 were issued to all similarly placed assessees i.e. the assessees to whom notices were issued prior to March, 2020 and those to whom notices could not be issued due to the pandemic. According to them, if the assessees' arguments were accepted, it would lead to unreasonable classification between those assessees who could not be issued notices only due to pandemic, who would be treated more favourably and une....
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....In American Pipe the Court rejected the claim that antitrust claims brought by various Utah public agencies and municipalities was barred by the four-year limitations period of § 4B of the Clayton Act, reasoning that the running of this period had been tolled on three occasions. As to two of these occasions, involving periods during which federal litigation was pending, the Court's reasoning simply applied § 5(b) of the Clayton Act. Section 5(b) explicitly addressed the effect of pending federal litigation, stating unambiguously that "Whenever any civil or criminal proceeding is instituted by the United States to prevent, restrain, or punish violations of any of the antitrust laws, . . . the running of the statute of limitations in respect of every private right of action arising under said laws . . . shall be suspended during the pendency thereof and for one year thereafter." 15 U.S.C. § 16(b). The first two periods in which American Pipe held that § 4B had been tolled followed simply from a straightforward application of § 5(b). ....The more orthodox inquiry, however, would seem to be what the Court actually decided then, not what we now thin....
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....ies but whether it manifests an intention to destroy them. Section 6 of the General clauses Act therefore will be applicable unless the new legislation manifests an intention incompatible with or contrary to the provisions of the section. Such incompatibility would have to be ascertained from a consideration of all the relevant provisions of the new statute and the mere absence of a saving clause is by itself not material...." 37. Learned counsel for respondents lastly relied upon the judgment passed by the High Court of Chhattisgarh in Palak Khatuja vs. Union of India and Ors., W.P.(T) No. 149 of 2021 upholding the legality and validity of similarly issued reassessment notices. In the said judgment, the Chhattisgarh High Court has held, "....legislative delegation which is exercised by the Central Government by notification to uphold the mechanism as prevailed prior to March, 2021 is not in conflict with any Act and notification by executive i.e. Ministry of Finance would be the part of legislative function." REJOINDER 38. In rejoinder, learned counsel for the petitioners submitted that the reasoning given by the Chhattisgarh High Court in the case of Palak Khatuja (supra....
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....ing of assessments came into force on 1st April, 2021. The significance of the expression 'shall' in Section 1(2)(a) of the Finance Act, 2021 cannot be lost sight of. This is in contrast to the language under Section 1(2)(b) which states that Sections 108 to 123 of the Finance Act, 2021 shall come into force on such date, as the Central Government may, by Notification in the Official Gazette, appoint. The Memorandum to the Finance Bill, 2021, too, clarifies that its Sections 2 to 88 which included the substituted Sections 147 to 151 of the Income Tax Act, 1961 will take effect from 1st April, 2021. There is also no power with the Executive/Respondents/Revenue to defer/postpone the implementation of Sections 2 to 88 of the Finance Act, 2021 which includes the substituted Sections 147 to 151 of the Income Tax Act, 1961. 43. It is settled law that the law prevailing on the date of issuance of the notice under Section 148 has to be applied. [See: Foramer Vs. CIT (2001) 247 ITR 436 (All.), affirmed by the Supreme Court in (2003) 264 ITR 566 (SC), Varkey Jacob Co. Vs. CIT and Anr. (2002) 257 ITR 231 (Ker), Smt. N.Illamathy vs. ITO (2020) 275 taxman 25/195 CTR 543 (Mad)(HC), RK Upadhya....
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....ure to legislate. 47. Also, the impugned Explanations in the Notifications dated 31st March, 2021 and 27th April, 2021 are beyond the power delegated to the Government, as the Relaxation Act does not give power to Government to extend the erstwhile Sections 147 to 151 beyond 31st March, 2021 and/or defer the operation of substituted provisions enacted by the Finance Act, 2021. Accordingly, the provisions of Section 148A had to be complied with before issuing notices under Section 147 of the Income Tax Act, 1961 and the submission of the respondents-Revenue based on the judgment passed by Chhattisgarh High Court in Palak Khatuja Vs. UOI (supra) does not find favour with this Court. After all, it is settled law that Executive cannot make or change law of the land without specific Authority from Parliament to do so^2. 48. Consequently, the Relaxation Act, 2020 and Notifications issued thereunder can only change the time-lines applicable to the issuance of a Section 148 notice, but they cannot change the statutory provisions applicable thereto which are required to be strictly complied with. Further, just as the Executive cannot legislate, it cannot impede the implementation of l....
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...., bad in law and null and void. FINANCE ACT, 2021 HAS MERELY CHANGED THE PROCEDURE OF ISSUING NOTICE. CONSEQUENTLY, THE "POWER" OF REASSESSMENT THAT EXISTED PRIOR TO 31ST MARCH, 2021 CONTINUES TO EXIST EVEN THEREAFTER. 51. Hohfeld's theory on Jural Relations does not come to the aid of the Revenue. It is not disputed that as per Hohfeld's theory, the jural correlative of "power" is "liability". Where there is power, there is corresponding liability imposed upon the person against whom such power exists. However, with the coming into force of the Finance Act, 2021 w.e.f. 1st April, 2021, there has been no curtailing or taking away the power of the Revenue. It has merely changed the procedure of issuing notice. Consequently, the "power" as per Hohfeld's theory that existed prior to 31st March, 2021 continues to exist even thereafter. TO IGNORE THE LEGISLATIVE INTENT OF FINANCE ACT, 2021 WOULD NOT BE IN ACCORDANCE WITH PAST PRACTICE. 52. It is pertinent to mention that the Legislature had even prior to Finance Act, 2021 enhanced/reduced time limit specified in Section 149 of the Income Tax Act, 1961, by way of Finance Acts, 1961, 1989, 2001, 2012 and pertinently such enhan....
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.... right. In the latter case, there is only hope which is destroyed by the repeal. What is protected is the preserved right and privileges acquired and accrued and corresponding obligation and liability incurred on the other party. The legal process or the procedure for the enjoyment of the said right is not protected. Section 6, normally does not apply to procedural law. The procedural law when amended or substituted is generally retroactive and applies from the day of its enforcement and to this extent it can be retrospective. The question raised is whether the amendment/substitution of the period with effect from 1.6.2001 in Section 149 of the Act, is procedural or substantive.... xxx xxx xxx xxx 11. Law of limitation, therefore, being procedural law has to be applied to the proceedings on the date of institution/filing. No person can have a vested right in the procedure. Therefore, the procedural law on the date when it was enforced is applied. Bennion Statutory interpretation (1st addition page 446 para 191) has elucidated:- "Because a change made by the legislator in procedural provisions is expected to be for the general benefit of litigants and othe....
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.... such cases were within his power to tax. We have such a case here in CA No. 509 of 1958 where the notice was issued in 1949 to the lady whose husband had remitted Rs. 9180 to her from Bangkok in the year relative to Assessment Year 1942-43. That lady was assessable in respect of this sum under Section 4(2) of the Income Tax Act. She did not file a return. If the case stood governed by the 1939 Amendment the period applicable would have been four years if she had not concealed the particulars of the income. She had of course not deliberately furnished inaccurate particulars thereof. If the case was governed by the 1948 Amendment she would come within the eight-year rule because she had failed to furnish a return. Now, we do not think that we can treat the different periods indicated under Section 34 as periods of limitation, the expiry of which grant prescriptive title to defaulting tax-payers It may be said that an assessment once made is final and conclusive except for the provisions of Sections 34 and 35 but it is quite a different matter to say that a "vested right" arises in the assessee. On the expiry of the period the assessments, if any, may also become final and conclusive....
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....t vested rights. It does not apply to statutes which only alter the form of procedure or the admissibility of evidence, or the effect which the courts give to evidence^8". If the new Act affects matters of procedure only, then, prima facie, "it applies to all actions pending as well as future^9". In fact, there is line of authority to the effect that, in the absence of contrary intention, procedural changes apply to pending as well as future proceedings^10. The nature of the exception was also clearly encapsulated in R. v. Makanjuola, (1995) 2 Cr. App. R. 469 at 472A-B, where Lord Taylor of Gosforth CJ held, "The general rule against the retrospective operation of statutes does not apply to procedural provisions...Indeed, a general presumption is that a statutory change in procedure applies to pending as well as future proceedings.^11" RATIONALE BEHIND THE PRINCIPLE THAT CHANGE IN PROCEDURAL LAW OPERATES RETROSPECTIVELY 57. In stating the principle that "a change in the law of procedure operates retrospectively and unlike the law relating to vested right is not only prospective"^12, the Supreme Court has quoted with approval the reason of the rule as expressed in MAXWELL.[MAX....
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....istration, ease compliance, and reduce litigation." 61. In the memorandum explaining the provisions in the Finance Bill, 2021, it was categorically admitted that it "proposes a completely new procedure of assessment of such cases. It is expected that the new system would result in less litigation and would provide ease of doing business to taxpayers as there is a reduction in time limit by which a notice for assessment or reassessment or re-computation can be issued..." 62. In fact, the unamended Sections 147 to 149 and 151 of the Income Tax Act, 1961 prescribed the procedure governing initiation of reassessment proceedings. However, the same gave rise to numerous litigations, particularly on the issues that reassessment proceedings were often initiated: (a) without recording any valid 'reason to believe', (b) in absence of any tangible/reliable material/information in possession the Assessing Officer leading to formation of belief that income has escaped assessment, (c) without any enquiry being conducted by the Assessing Officer prior to the issuance of notice, (d) without following the mandatory procedure laid down by the Supreme Court i....
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....time limit; e. Section 151: The earlier existing provision prescribing the sanctioning authorities for issuance of notice under Section 148 was replaced with new provisions prescribing the sanctioning authorities for the purposes of Sections 148 & 148A; pertinently for issuance of notice after three years from the end of relevant Assessment Year, wherein reopening is permitted in exceptional cases, sanction from the highest level of Income Tax Department is required to be obtained. 65. Based on the aforesaid substituted provisions as well as the speech of Finance Minister and the Memorandum explaining the provisions in the Finance Bill, 2021, it is apparent that the legislative intent behind the aforesaid substitutions/amendments is to reduce the time limit in ordinary cases to three years and to increase the threshold amount of income having escaped assessment to Rs. 50 lakhs for invoking extended time limit of ten years is to reduce litigation and compliance burden, remove discretion, impart certainty and promote ease of doing business. 66. This Court is of the opinion that the new provisions are remedial and benevolent provisions which are meant and intended to pr....
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.... 71. Circular 549 of 1989 issued by the CBDT explaining the provisions of the Direct Tax Laws (Amendment Act), 1989 amending erstwhile Sections 147 to 152 clarified that the said provisions were procedural in nature and would have retrospective effect, unless the amending statute provides otherwise. The relevant provisions of Circular 549 of 1989 issued by the CBDT is reproduced hereinbelow:- "...7.13 Amendments to have retrospective effect. - These amendments come into force with effect from the 1st day of April, 1989. However, it may be clarified that since the provisions of sections 147 to 152 lay down procedural law, these have retrospective effect, unless the amending statute provides otherwise. Therefore, the amendments made to these sections by the Amending Acts, 1987 and 1989, discussed in the preceding paragraphs, which came into force with effect from 1st April, 1989, will be retrospective in the sense that these will apply to all matters which were pending on 1st April, 1989 and had not become closed or dead on this date. 7.14 Thus, from 1st April, 1989 onwards, any action for opening or re-opening an assessment for the assessment year 1988-89 and ea....
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.... THE RESPONDENTS THAT THE EXPLANATION IN NOTIFICATION NO. 20 DATED 31ST MARCH, 2021 EXTENDED THE APPLICABILITY OF OLD PROCEDURE OF REASSESSMENT BEYOND 31ST MARCH, 2021 IS ACCEPTED, THE SAME SHALL LEAD TO MANIFEST ARBITRARINESS AND CONFLICT. 74. Further, if the argument of learned counsel for the respondents that the Explanation in Notification No. 20 dated 31st March, 2021 extended the applicability of old procedure of reassessment beyond 31st March, 2021 is accepted the same shall lead to patent arbitrariness since: a. during the period from 1st April, 2021 to 30th June, 2021, both old as well as new procedure as enacted by Finance Act, 2021 shall simultaneously operate [more so, since there is no statutory provision deferring the implementation of the new/mandatory procedure]; b. for example: For A.Y.'s 2015-16 to 2017-18 [with limitation upto March, 22 to 24], in case of two identically placed taxpayers (say A & B) with "information" of having asset above Rs. 50 lakh, Assessing Officer shall have absolute discretion to choose either the old or the new mechanism; c. 'doctrine of election' normally confers two separate alternative statutory powers/rem....
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....ruary, 2021 and the Finance Act, 2021 was enacted in March, 2021, COVID-19 was widely prevalent and Parliament was fully aware of the same. Nevertheless, with the objective of promoting ease of doing business and reducing litigation, Parliament specifically enacted that the new reassessment provisions would come into operation on 1st April, 2021. The Revenue cannot, therefore, rely on COVID-19 for contending that the new provisions should not operate during the period 1st April, 2021 to 30th June, 2021 or that Relaxation Act, 2020 deals with the situation arising out of Covid-19 and the Finance Act, 2021 was passed being oblivious of the Covid-19 Pandemic. NON-OBSTANTE CLAUSE HAS TO BE CONSTRUED STRICTLY. SECTION 3(1) OF RELAXATION ACT IS EXPRESSLY CONFINED TO AND ONLY SUPERSEDES THE TIME LIMITS. IT DOES NOT EXCLUDE THE APPLICABILITY OF PROVISIONS SUBSTITUTED BY FINANCE ACT, 2021. 77. It is settled law that the non-obstante clause in a statute has to be given a contextual interpretation and cannot be interpreted in a way which defeats or extends the object and purpose of the enactment. In Nawal Singh vs. State of U.P. & Anr. 2003(8) SCC 117^14, the Supreme Court has held that....
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....ant to controversy at hand. THE REVENUE'S CHOOSING AND PICKING OF TWO TERMS VIZ. "SUCH ACTION" & "EXTENSION/EXTENDED" IS CONTRARY TO BASIC PRINCIPLES OF INTERPRETATIONS WHICH PROHIBITS SELECTIVELY CHOOSING/IGNORING WORDS FROM THE STATUTORY LANGUAGE AS WELL AS THE FACT THAT THE RELAXATION ACT, 2020 WAS ENACTED LONG BEFORE FINANCE ACT, 2021. 80. To substantiate its stand that the impugned notices are not barred by limitation, the Revenue without even considering the pre-condition prescribed by Section 3 of Relaxation Act, 2020 has selectively chosen and picked up two terms viz. "such action" & "stand extended" to put forward an interpretation which could not have been contemplated by the Legislature at the time of enactment of the said provision, namely, that notices under Section 148 will relate back and be governed by old law. In the opinion of this Court, the submission of the Revenue is completely flawed, as the same is contrary to basic principles of interpretations, which prohibits selectively choosing/ignoring words from the statutory language. 81. It is settled law that when the words of a statute are clear and unambiguous, it is not permissible for the Court to read....
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....ON" IS TAKEN WITHIN THE EXTENDED TIME LIMIT, IT WOULD BE DEEMED TO HAVE BEEN TAKEN BEFORE THE EXPIRY OF THE ORIGINAL (UN-EXTENDED) TIME LIMIT. 85. The "legal fiction" argument is without any foundation. A statute can be said to enact a legal fiction when it assumes the existence of something which is known not to exist. The extension of time for completing an assessment or issuing a Section 148 notice has no element of legal fiction in it. The only effect and consequence of this extension of the time limit is that if the act in question is performed within the extended time limit, it will be considered to be legally compliant. However, there is no assumption that the act in question is deemed to have been performed within the original time limit, as wrongly contended by the learned counsel for the Respondents. For achieving that result, clear and unequivocal language was required in the Relaxation Act, 2020 - which is missing. In fact, there is no provision in Relaxation Act, 2020 laying down that if the "action" is taken within the extended time limit, it would be deemed to have been taken before the expiry of the original (un-extended) time limit. THE ESSENTIAL CONDITION FO....
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.... is being contended by the Respondents, then all the penalty orders passed under Section 274(2A) - Faceless Penalty Scheme till 31st March, 2022, following the new procedure will be bad in law. Consequently, it cannot be said that a fiction is created or clock stopped only for reassessment and not for assessment and/or Faceless Penalty Scheme. 90. In fact, wherever the Legislature intended that the old procedure is to be followed in respect of any assessment year as against the new procedure post the amendment, then it has specifically provided so. For instance, the Direct Laws (Amendment) Act, 1987 had introduced a new scheme for best judgment assessment (ex parte) under Section 144 w.e.f. 1st April 1989. However, in order to ensure that the assessments for years before coming into force of the new law is done under the old law, a specific sub-Section (2) was inserted in Section 144 to provide that the provisions of this Section as they stood immediately before their amendment by the Direct Tax Laws (Amendment) Act, 1987, shall apply to and in relation to any assessment for the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year. THE PRIN....
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....nder Section 148 of the Income Tax Act, 1961 is untenable in law, as in the present case, the repeal is followed by a fresh legislation on the same subject and the new Act manifests an intention to destroy the old procedure^18. APPRECIATION 96. Before parting with this case, this Court places on record its deep appreciation for the assistance rendered by all the learned counsel, who appeared in the present batch of matters, in particular, Ms.Kavita Jha, Mr.Ved Jain, Mr.Sunil Agarwal and Mr.Zoheb Hossain, as they filed not only compilation of documents and judgments but they also ensured that the virtual hearing was conducted in an organized and proper manner. CONCLUSION 97. This Court is of the view that as the Legislature has introduced the new provisions, Sections 147 to 151 of the Income Tax Act, 1961 by way of the Finance Act, 2021 with effect from 1st April, 2021 and as the said Section 147 is not even mentioned in the impugned Explanations, the reassessment notices relating to any Assessment Year issued under Section 148 after 31st March, 2021 had to comply with the substituted Sections. 98. It is clarified that the power of reassessment that existed prior to 3....
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....Section 3(1) of the Relaxation Act, 'legal fiction' and 'stop the clock provision' are contrary to facts and untenable in law. 103. Consequently, this Court is of the view that the Executive/Respondents/Revenue cannot use the administrative power to issue Notifications under Section 3(1) of the Relaxation Act, 2020 to undermine the expression of Parliamentary supremacy in the form of an Act of Parliament, namely, the Finance Act, 2021. This Court is also of the opinion that the Executive/Respondents/Revenue cannot frustrate the purpose of substituted statutory provisions, like Sections 147 to 151 of Income Tax Act, 1961 in the present instance, by emptying it of content or impeding or postponing their effectual operation. RELIEF: 104. Keeping in view the aforesaid conclusions, Explanations A(a)(ii)/A(b) to the Notifications dated 31st March, 2021 and 27th April, 2021 are declared to be ultra vires the Relaxation Act, 2020 and are therefore bad in law and null and void. 105. Consequently, the impugned reassessment notices issued under Section 148 of the Income Tax Act, 1961 are quashed and the present writ petitions are allowed. If the law permits the respondents/revenue....
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.... 1 SCC 445 8. Blyth v. Blyth, (1966) 1 All ER 524 9. A.G. v. Vernazza, (1960) 3 All ER 97; K. Eapin Chako v. Provident Fund Investment Company (P) Ltd., (1977) 1 SCC 583 10. Athlumney, Re, ex p Wilson [1898] 2 QB 54 per R S Wright J at 551-552; Kensinghton International Ltd. v. Republic of the Congo [2007] EWHC, 1632 (Comm), [2007] All ER (D) 209 (Jul) at [74] 11. See also: R. v. Bradley [2005] EWCA Crim. 20. Also Justice GP Singh in his treatise Principles of Statutory Interpretation states, "Fiscal legislation imposing liability is generally governed by the normal presumption that it is not retrospective and it is a cardinal principle of the tax law that the law to be applied is that in force in the assessment year unless otherwise provided expressly or by necessary implication. The above rule applies to the charging section and other substantive provisions such as a provision imposing penalty and does not apply to machinery or procedural provisions of a taxing Act which are generally retrospective and apply even to pending proceedings." 12. Anant Gopal Sheorey v. State of Bombay, 1959 SCR 919; Union of India v. Sukumar Pyne, 1966 (2) SCR 34; Tikaram & Son....