Provisions Of Section 148 Under Old Regime Including TOLA Can't Be Applied To New Regime: Calcutta High Court

The Calcutta High Court has held that if the provisions of the old regime of Section 148 of the Income Tax Act, including Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA), are read into or applied to the new regime applicable from 01.04.2021, it would also necessarily mean that a provision repealed by the Parliament without any savings and exception clause is applied by the department even after its life has come to an end, which is clearly not permissible in law.The bench of Justice Md. Nizamuddin has relied on the decision of the Supreme Court in the case of Union of India vs. Ashis Aggarwal, in which the judgment of the Calcutta High Court was modified or substituted by directing that the notice under the old Section 148 of the Income Tax Act shall be deemed to have been issued under the new Section 148A(b), and all defenses that may be available to the assessee, including those under Section 149 of the Income Tax Act, and all rights and contentions that may be available to the assessee and department under the Finance Act, 2021, shall continue to be available.The petitioner/assessee has challenged the notices issued on or after April 1, 2021, under Section 148 (old) of the Income Tax Act, 1961, by converting or treating them under Section 148A(b) of the Income Tax Act, 1961, inserted by the Finance Act, 2021, which came into effect on April 1, 2021, and all subsequent proceedings. The assessee has challenged the notices on the grounds that the notices have already become time-barred after March 31, 2021, under the old, unamended Section 149(1)(b) of the Income Tax Act, 1961.On March 31, 2020, the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020, was promulgated. In terms of Section 3(1), the time to issue notice under the old, unsubstituted Section 148 of the Income Tax Act, 1961, which was due to expire on March 31, 2020, was extended to June 30, 2020.On June 24, 2020, Notification No. 35/2020 was issued by the CBDT in exercise of the power of Section 3(1) of the Ordinance, extending the time for the issue of notice under Section 148 to March 31, 2021. The notification came into force on June 30, 2020.On September 29, 2020, the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) was enacted to replace the Ordinance, which received the assent of the President. TOLA was deemed to have come into force on March 31, 2020. In terms of Section 3(1), the time to issue notice under Section 148 of the Income Tax Act (old unsubstituted) was extended to March 31, 2021.On March 28, 2021, the Finance Act, 2021, received the assent of the President. By Sections 40, 41, 43, and 44, old Sections 147, 148, 149, and 151 were to be substituted with effect from April 1, 2021, and by Section 42, Section 148A was to be inserted also with effect from April 1, 2021.On March 31, 2021, Notification No. 20/2021 was issued by the CBDT in purported exercise of power under Section 3(1) of TOLA to extend the time limit under the old Section 149 for the issue of notice under the old Section 148 for the assessment years 2013–14 and 2014–15 (which was to expire on March 31, 2021) to April 30, 2021.On April 27, 2021, Notification No. 38/2021 was issued by the CBDT in exercise of power under Section 3(1) of TOLA to extend the time limit under the old Section 149 for the issue of notice under the old Section 148 for the assessment years 2013–14 and 2014–15, which was extended to June 30, 2021.On May 4, 2022, a judgment of the Hon'ble Supreme Court was passed in the case of Union of India vs. Ashis Aggarwal (2022) 444 ITR 1 (SC), by which the judgment dated January 17, 2022, of this Hon'ble Court was modified or substituted by directing that the notice under the old Section 148 of the Act shall be deemed to have been issued under the new Section 148A(b) and all defenses which may be available to the assessee, including under Section 149 of the Act, and all rights and contentions which may be available to the assessee and revenue under the Finance Act, 2021, shall continue to be available.On May 11, 2022, Instruction No. 01/2022 was issued by the Central Board of Direct Taxes. The circular proceeded on the basis that proceedings under Sections 147/148 for, inter alia, the assessment years 2013–14 and 2014–15 did not get time barred on March 31, 2021.The Finance Act, 2021, completely reformed the system of reassessment by bringing in a completely new procedure for reassessment with effect from April 1, 2021.In terms of Sections 40, 41, 43, and 44 of the Finance Act, 2021, which came into force on April 1, 2021, as per Section 2(a), the old Sections 147, 148, 149, and 151 were repealed or abrogated and replaced by a new set of provisions.By Section 42, a new Section 148A was also inserted, with effect from April 1, 2021. By Section 43 of the Finance Act 2021, old Section 149 of the Act was substituted with effect from April 1, 2021, without ...

Provisions Of Section 148 Under Old Regime Including TOLA Can't Be Applied To New Regime: Calcutta High Court

Mariya Paliwala

Tags