No Acts & Articles mentioned in this case
1
AFR
Court No. - 3
Case :- WRIT TAX No. - 524 of 2021
Petitioner:- Ashok Kumar Agarwal
Respondents:- Union of India through its Revenue Secretary North Block
and 2 Others
Counsel for Petitioner:- Suyash Agarwal
Counsel for Respondents:- Gaurav Mahajan, Ashish Agrawal, Gopal
Verma
Hon'ble Naheed Ara Moonis, J.
Hon'ble Saumitra Dayal Singh, J.
Heard Sri Rakesh Ranjan Agarwal, learned Senior Advocate, assisted
by Sri Suyash Agarwal, Sri Shambhu Chopra, learned Senior Advocate,
assisted by Ms. Mahima Jaiswal, Sri Abhinav Mehrotra, Sri Akhilesh Kumar
along with Sri Ashish Bansal, Sri Divyanshu Agarwal along with Sri Ankit
Saran, Sri Deepak Kapoor along with Sri Shubham Agarwal, Sri V.K.
Sabarwal and Shri R.B. Gupta along with Sri Rishi Raj Kapoor, Sri Shakeel
Ahmad, Sri Parv Agarwal, Sri Salil Kapoor along with Sri Anuj Srivastava
& Ms Soumya Singh alongwith Sri Satya Vrat Mehrotra, Sri Ankur Agarwal,
Sri Krishna Deo Vyas, Sri Ashok Shankar Bhatnagar & Sri Harshul
Bhatnagar, Sri Pranchal Agarwal, Sri V.K. Sabharwal, Sri R.B. Gupta, Ms.
Shalini Goel and Ms. Rupal Agarwal, learned counsel for the petitioners; Sri
Shashi Prakash Singh, learned Additional Solicitor General of India assisted
by Sri Gopal Verma, Sri Dinesh Kumar Mishra, Sri Gaya Prasad Singh, Sri
Sudarshan Singh, Sri Santosh Kumar Singh Paliwal, Sri Ajai Singh, Sri
Gaurav Kumar Chand and Sri Krishna Agarwal, learned counsel appearing
for the Union of India; Sri Gaurav Mahajan, Sri Praveen Kumar, Sri Krishna
Agarwal, Sri Ashish Agarwal and Sri Manu Ghildyal, learned Standing
Counsel for the revenue authorities.
2. This writ petition along with the other petitions mentioned in
paragraph 4 below, have been filed by individual petitioners, to challenge
initiation of re-assessment proceedings under Section 148 of the Income Tax
2
Act, 1961 for different assessment years. All reassessment proceedings have
been initiated upon notices issued after the date 01.04.2021.
3.These petitions had been entertained and interim protection granted.
Pursuant to earlier orders passed in the leading petitions - Writ Tax Nos. 524
of 2021 and 521 of 2021 and other matters, the revenue and the Union of
India were required to file counter affidavits in those cases. Copies of such
counter affidavits were, under a direction of this Court, served on all learned
counsel for the petitioners. Replies by way of rejoinder affidavits have also
been received in some of the cases. Those affidavits thus filed, have been
read in all the writ petitions.
4.Since, the dispute arising in the present writ petitions is purely legal,
with respect to the validity of the re-assessment proceedings initiated against
the individual petitioners, after 01.04.2021, having resort to the provisions
of the Income Tax Act, 1961 (hereinafter referred to as the 'Act') as they
existed, read with the provisions of Act No. 38 of 2020 and the notifications
issued thereunder, the peculiar fact pleadings of each case are not material to
the adjudication of the legal issues involved here. However, for the purposes
of convenience, the basic relevant facts, obtaining in each individual case
are recorded in the below given chart:
Sl.
No.
Writ Tax
No.
Name of the
Petitioner
A.Y. Date of
Notice U/s
148
Date of
filing of
original
return
1.521/2021KAUKAB GHULAM
MOHAMED
QURESHI
2015-1629.06.202129.12.2017
2.524-2021ASHOK KUMAR
AGARWAL
2017-1809.04.202108.03.2018
3.531-2021 M/S ARIHANT
PUBLICATIONS
(INDIA) LTD.
2015-1630.06.202130.09.2015
4.540-2021 BAJAJ STEELS
AND INDUSTRIES
LTD.
2017-1829.06.202107.11.2017
5.549-2021 BAJAJ STEELS
AND INDUSTRIES
LTD.
2016-1729.06.202117.10.2016
6.554-2021 SMT. NEERAJ
AGARWAL
2016-1709.04.202121.03.20217
3
7.559-2021 FIROZ AHMED
ZAHIR AHMED
SHAIKH
2015-1629.06.202120.07.2015
8.561-2021 M/S JUBILANT
PHARMOVA
LIMITED
2015-1630.06.202129.11.2015
9.562-2021SHOBHIT SHUKLA 2013-1430.06.2021 --
10.564-2021 VARDHMAN
INDUSTRIES
2015-1616.04.202125.09.2015
11.565-2021YOGESH JAISWAL 2017-1825.05.202129.10.2017
12.567-2021NEERAJ PRAKASH 2013-1430.06.202131.12.2015
13.573-2021 PARVEEN
QURESHI
2016-1730.06.202115.06.2017
14.592-2021 SARLA JAIN 2013-1426.04.202131.03.2014
15.612-2021 J.M. HOUSING
LIMITED
2016-1730.06.202115.10.2016
16.613-2021 J.M. HOUSING
LIMITED
2017-1830.06.202127.01.2018
17.614-2021 GSR MOVIES 2013-1428.06.202128.09.2013
18.615-2021 PAWANPUTRA
HOTELS AND
RESORTS PVT.
LTD.
2013-1430.06.202127.09.2013
19.623/2021 HIRA LAL JAIN 2013-1427.04.202129.07.2013
20.624-2021DEVOY BENARA 2013-1427.04.2021 --
21.625-2021 JAI JAGDAMBA
METALLOYS
LIMITED
2017-1814.04.202131.10.2017
22.636-2021 STAR
CORPORATION
2014-1530.06.202129.09.2014
23.640-2021 STAR
CORPORATION
2013-1429.06.202129.09.2013
24.641-2021STAR ASSOCIATES 2013-1429.06.202128.09.2013
25.642-2021 NAMAN GOVIL 2013-1419.04.202130.11.2013
26.643-2021 RUPA GOYAL 2017-1825.05.202128.10.2018
27.655-2021 NAMAN GOVIL 2014-1519.04.202122.09.2014
28.665-2021RAJEEV BANSAL 2016-1716.06.202108.10.2016
29.667-2021 MOHD SHAKIR 2017-1810.06.202131.10.2017
30.668-2021 AMIT SONI 2016-1730.06.202122.07.2016
31.669-2021 AMIT SONI 2015-1630.06.202116.07.2015
32.670-2021 ARUN KUMAR 2013-1425.06.202105.09.2013
33.677-2021 CRESCENT
TANNERIES PVT
LTD
2015-1611.05.202126.09.2015
34.678-2021 SURENDRA
PRATAP SINGH
2013-1430.06.202129.03.2014
4
35.679-2021METAL CANS AND
CLOSURES
PRIVATE LIMITED
2013-1417.06.202130.09.2013
36.680-2021METAL CANS AND
CLOSURES
PRIVATE LIMITED
2014-1517.06.202128.11.2014
37.681-2021METAL CANS AND
CLOSURES
PRIVATE LIMITED
2015-1617.06.202129.09.2015
38.691-2021ARBIND KUMAR
OMER
2016-1730.06.202117.10.2016
39.693-2021SUBHASH KUMAR
GUPTA
2014-1529.06.202130.03.2015
40.695-2021KAMAL KUMAR
AGARWAL (HUF)
2013-1430.06.202131.07.2013
41.696-2021SHRI BHUVENDRA
KUMAR
VARSHNEY
2015-1621.06.202131.03.2016
42.697-2021NITIN AGGARWAL
HUF
2013-1430.06.202129.07.2013
43.707-2021SUNITA AGARWAL 2013-1430.06.2021 --
44.724-2021NIRMAL KUMAR
GOYAL
2014-1506.04.202126.07.2014
45.727-2021MADHUR MITTAL 2013-1422.06.202124.07.2013
46.728-2021 SUMIT MITTAL 2013-1426.06.202125.07.2013
47.732-2021 NAVDEEP
VARSHNEYA
2013-1406.04.202116.08.2013
48.735-2021MADHU AGARWAL 2013-1406.04.202131.03.2014
49.740-2021KARAN MAHANA 2015-1604.04.202127.03.2016
50.742-2021ASHISH AGARWAL 2013-1429.06.202130.03.2018
51.743-2021 AJAY GUPTA 2013-1428.06.202127.07.2013
52.744-2021ASHISH AGARWAL 2014-1529.06.202130.03.2018
53.746-2021BALA AGARWAL 2014-1530.06.202123.08.2014
54.749-2021 SHREE JEE
ASSOCIATES
2013-1423.04.202131.03.2014
55.757-2021 JIVAN KUMAR
AGARWAL
2013-1427.04.202121.10.2013
56.763-2021KAPIL SHARMA 2013-1425.06.202118.07.2013
57.764-2021KAPIL SHARMA 2014-1525.06.202103.02.2015
58.765-2021 NEERU GUPTA 2013-1406.04.202127.09.2013
59.769-2021 NEERU GUPTA 2015-1601.04.202127.03.2016
60.775-2021 MUKESH PAL
SINGH
2014-1530.06.202114.03.2015
61.776-2021 SHIV SHAKTI
CONSTRUCTIONS
2013-1430.06.202121.10.2013
62.777-2021MUKESH KUMAR 2013-1430.06.202101.02.2014
5
63.778-2021 EXOTIC
BUILDMART PVT.
LTD
2014-1530.06.202125.03.2015
64.779-2021 KIRTI SINGH 2014-1530.06.202114.03.2015
65.780-2021 SUSHIL JOSHI 2013-1430.06.202131.03.2014
66.781-2021 SHIV SHAKTI
CONSTRUCTIONS
2014-1530.06.202129.11.2014
67.782-2021MUKESH KUMAR 2014-1530.06.202114.03.2015
68.795-2021AMBIKA ENCLAVE
PRIVATE LIMITED
2015-1628.06.202130.03.2016
69.796-2021KUSUM ENCLAVE
PRIVATE LIMITED
2015-1628.06.202120.09.2015
70.797-2021AMBIKA ENCLAVE
PRIVATE LIMITED
2017-1828.06.202127.11.2017
71.801-2021 KANTA DEVI 2015-1610.06.202119.03.2017
72.810-2021 MRITUNJAY
KUMAR
2013-1406.04.2021 --
73.811-2021VINITA KEJRIWAL 2014-1528.06.202131.07.2014
74.813-2021 MRITUNJAY
KUMAR
2014-1506.04.2021 –
5.As to the exact challenge raised, it may be noted, the petitioners have
challenged the validity of the re-assessment notices issued to them, under
Section 148 of the Act. Another challenge has been raised to the validity of
the Explanation appended to clause (A)(a) of CBDT Notification No. 20 of
2021, dated 31.03.2021 and Explanation to clause (A)(b) of CBDT
Notification No. 38 of 2021, dated 27.04.2021. Those notifications have
been issued under the powers vested under Section 3(1) of the Act 38 of
2020 namely, the Taxation and Other Laws (Relaxation of Certain
Provisions) Act, 2020 (hereinafter referred to as the 'Enabling Act').
6.Before recording the individual submissions advanced by learned
counsel for the parties, we may take note of the legislative provisions giving
rise to the issues before us. Prior to enforcement of the Finance Act, 2021,
the law for making re-assessment under the Act was governed by the
provisions of Sections 147, 148, 149 read with Sections 150, 151, 152 and
153 of the Act. Under that law, the jurisdiction to reassess an assessee could
arise upon necessary 'reason to believe' being recorded by the jurisdictional
Assessing Officer, of that assessee - as to escapement of any income from
6
assessment. Subject to the rule of limitation and prior sanction (where
applicable), the Assessing Officer would then assume jurisdiction to reassess
such an assessee, by issuing a notice under Section 148 of the Act.
7.As to the challenge procedure available to that assessee, the Supreme
Court, in the case of GKN Driveshafts (India) Ltd. Vs. Income-tax
Officer, (2003) 259 ITR 19 (SC), had observed as below:
“We see no justifiable reason to interfere with the order under challenge.
However, we clarify that when a notice under section 148 of the Income Tax
Act is issued, the proper course of action for the noticee is to file return and if
he so desires, to seek reasons for issuing notices. The Assessing Officer is
bound to furnish reasons within a reasonable time. On receipt of reasons, the
noticee is entitled to file objections to issuance of notice and the Assessing
Officer is bound to dispose of the same by passing a speaking order. In the
instant case, as the reasons have been disclosed in these proceedings, the
Assessing Officer has to dispose of the objections, if filed, by passing a
speaking order, before proceeding with the assessment in respect of the
abovesaid five assessment years.”
8.Around March, 2020, the pandemic COVID-19 reached our shores
and spread all over country. It led to enforcement of a lockdown. Even
thereafter, life is yet to normalise. The pandemic severely impacted the
normal functioning of the Government as also all other institutions and it
obstructed the normal life of the citizens as well. In such facts, judicial
intervention had been made by the Supreme Court as also by this Court, to
relax the rules of limitation - to institute various proceedings. The Central
Government also recognized that difficulty and promulgated the Ordinance
No. 2 of 2020 dated 31.03.2020 titled Taxation and Other Laws (Relaxation
of Certain Provisions) Ordinance, 2020 (hereinafter referred to as the
'Ordinance'). Relevant to our discussion, the introductory text of the said
Ordinance together with provisions of Sections 1, 2 and 3 of the Ordinance
are quoted below:
“TAXATION AND OTHER LAWS (RELAXATION OF CERTAIN
PROVISIONS) ORDINANCE, 2020
NO.2 OF 2020, DATED 31-3-2020
Promulgated by the President in the Seventy-first Year of the Republic of
India.
An Ordinance to provide relaxation in the provisions of certain Acts and for
matters connected therewith or incidental thereto.
WHEREAS, in view of the spread of pandemic COVID-19 across many
7
countries of the world including India, causing immense loss to the lives of
people, it has become imperative to relax certain provisions, including
extension of time limit, in the taxation and other laws;
AND WHEREAS, Parliament is not in session and the President is satisfied
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
(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
(viii) the Direct Tax Vivad se Vishwas Act, 2020 (3 of 2020).
b) “notification” means the notification published in the Official
Gazette.
(2) The words and expressions used herein and not defined, but defined
in the specified Act, the Central Excise Act, 1944 (1 of 1944), the
Customs Act, 1962 (52 of 1962), the Customs Tariff Act, 1975 (51 of
1975) or the Finance Act, 1994 (32 of 1994), as the case may be, shall
have the meaning respectively assigned to them in that Act.
CHAPTER II
RELAXATION OF CERTAIN PROVISIONS OF SPECIFIED ACT
Relaxation of certain provision of specified Act.
3. (1) Where, 'any time-limit' has been specified in, or prescribed or notified
under, the specified Act which falls during the period from the 20th day of
March, 2020 to the 29th day of June, 2020, or such other date after the 29th
day of June, 2020, as the Central Government may, by notification, specify in
this behalf, for the completion or compliance of such action as—
8
(a) completion of any proceeding or passing of any order or 'issuance of
any notice', intimation, notification, sanction or approval or such other
action, by whatever name called, by any authority, 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 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 (43 of
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 fulfillment 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, 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 30
th
day of June, 2020, or such other date after the 30
th
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).
(2) Where any due date has been specified in, or prescribed or notified under,
the specified Act for payment of any amount towards tax or levy, by whatever
name called, which falls during the period from the 20th day of March, 2020 to
the 29th day of June, 2020 or such other date after the 29th day of June, 2020
as the Central Government may, by notification, specify in this behalf, and such
amount has not been paid within such date, but has been paid on or before 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, then,
notwithstanding anything contained in the specified Act, —
(a) the rate of interest payable, if any, in respect of such amount for the
period of delay shall not exceed three-fourth per cent for every month
or part thereof;
(b) no penalty shall be levied and no prosecution shall be sanctioned in
respect of such amount for the period of delay.
9
Explanation.— For the purposes of this sub-section, "the period of delay"
means the period between the due date and the date on which the amount has
been paid.”
Further, in view of the submissions as have been received, it would be
fruitful to also quote the provisions of Chapter III of the Ordinance -
containing the amendments made to the Act. It reads:
“CHAPTER III
AMENDMENT TO THE INCOME-TAX ACT, 1961
Amendment of sections 10 and 80G of Act 43 of 1961
4. In the Income-tax Act, 1961, with effect from the 1st day of April, 2020 (43
of 1961), –
(i) in section 10, in clause (23C), in sub-clause (i), after the word
“Fund”, the words and brackets “or the Prime Minister's Citizen
Assistance and Relief in Emergency Situations Fund (PM CARES
FUND)” shall be inserted;
(ii) in section 80G, in sub-section (2), in clause (a), in sub-clause (iiia),
after the word “fund”, the words and brackets “or the Prime Minister's
Citizen Assistance and Relief in Emergency Situations Fund (PM
CARES FUND)” shall be inserted.”
9.Acting in exercise of powers vested under the Ordinance, the Central
Government then issued Notification Nos. 35 of 2020, 39 of 2020 and 56 of
2020, dated 24.06.2020, 29.06.2020 and 29.07.2020, respectively. Briefly,
by those Notifications, general time extension was granted under the Act for
certain purposes. Since, the present dispute does not arise in the context of
those Notifications, no useful purpose would be served in extracting their
contents.
10.The aforesaid Ordinance was succeeded by the Enabling Act. It
received the assent of the President on 29.09.2020 and was published in the
Official Gazette, on that date itself. It was enforced retrospectively, with
effect from 31.03.2020. By the Enabling Act, further provisions were made
in addition to the provisions of Section 3 of the Ordinance. We may
therefore take note of Sections 1, 2 and 3 of the Enabling Act. They read as
below:
“THE TAXATION AND OTHER LAWS (RELAXATION AND
AMENDMENT OF CERTAIN PROVISIONS) ACT, 2020
NO. 38 OF 2020
[29th September, 2020.]
AN ACT to provide for relaxation and amendment of provisions of certain
Acts and for matters connected therewith or incidental thereto.
10
BE it enacted by Parliament in the Seventy-first Year of the Republic of India
as follows:—
CHAPTER I
PRELIMINARY
1. (1) This Act may be called the Taxation and Other Laws (Relaxation and
Amendment of Certain Provisions) Act, 2020.
(2) Save as otherwise provided, it shall be deemed to have come into force on
the 31st day of March, 2020.
2. (1) In this Act, unless the context otherwise requires,—
(a) "notification" means the notification published in the Official Gazette;
(b) "specified Act" means—
(i) the Wealth-tax Act, 1957;
(ii) the Income-tax Act, 1961;
(iii) the Prohibition of Benami Property Transactions Act, 1988;
(iv) Chapter VII of the Finance (No. 2) Act, 2004;
(v) Chapter VII of the Finance Act, 2013;
(vi) the Black Money (Undisclosed Foreign Income and Assets)
and Imposition of Tax Act, 2015;
(vii) Chapter VIII of the Finance Act, 2016; or
(viii) the Direct Tax Vivad se Vishwas Act, 2020.
(2) The words and expressions used herein and not defined, but defined in the
specified Act, the Central Excise Act, 1944, the Customs Act, 1962, the
Customs Tariff Act, 1975 or the Finance Act, 1994, as the case may be, shall
have the same meaning respectively assigned to them in that Act.
CHAPTER II
RELAXATION OF CERTAIN PROVISIONS OF SPECIFIED ACT
3. (1) Where, any time-limit has been specified in, or prescribed or notified
under, the specified Act which falls during the period from the 20th day of
March, 2020 to the 31st day of December, 2020, or such other date after the 31st
day of December, 2020, as the Central Government may, by notification, specify
in this behalf, for the completion or compliance of such action as—
(a) completion of any proceeding or passing of any order or issuance of
any notice, intimation, notification, sanction or approval, or such other
action, by whatever name called, by any authority, 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—
11
(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, 2005, has been issued on or before the 31st day of March,
2020,
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 31st day of March, 2021, or such other date
after the 31st day of March, 2021, 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):
Provided also that where the specified Act is the Income-tax Act, 1961
and the compliance relates to—
(i) furnishing of return under section 139 thereof, for the
assessment year commencing on the—
(a) 1st day of April, 2019, the provision of this sub-section shall
have the effect as if for the figures, letters and words "31st day
of March, 2021", the figures, letters and words "30th day of
September, 2020" had been substituted;
(b) 1st day of April, 2020, the provision of this sub-section shall
have the effect as if for the figures, letters and words "31st day
of March, 2021", the figures, letters and words "30th day of
November, 2020" had been substituted;
(ii) delivering of statement of deduction of tax at source under sub-
section (2A) of section 200 of that Act or statement of collection of
tax at source under sub-section (3A) of section 206C thereof for the
month of February or March, 2020, or for the quarter ending on the
31st day of March, 2020, as the case may be, the provision of this
sub-section shall have the effect as if for the figures, letters and
words "31st day of March, 2021", the figures, letters and words
"15th day of July, 2020" had been substituted;
(iii) delivering of statement of deduction of tax at source under sub-
section (3) of section 200 of that Act or statement of collection of
tax at source under proviso to sub-section (3) of section 206C
thereof for the month of February or March, 2020, or for the quarter
ending on the 31st day of March, 2020, as the case may be, the
provision of this sub-section shall have the effect as if for the
figures, letters and words "31st day of March, 2021", the figures,
letters and words "31st day of July, 2020" had been substituted;
12
(iv) furnishing of certificate under section 203 of that Act in respect
of deduction or payment of tax under section 192 thereof for the
financial year commencing on the 1st day of April, 2019, the
provision of this sub-section shall have the effect as if for the
figures, letters and words "31st day of March, 2021", the figures,
letters and words "15th day of August, 2020" had been substituted;
(v) sections 54 to 54GB of that Act, referred to in item (I) of sub-
clause (i) of clause (c), or sub-clause (ii) of the said clause, the
provision of this sub-section shall have the effect as if –
(a) for the figures, letters and words "31st day of December,
2020", the figures, letters and words "29th day of September,
2020" had been substituted for the time-limit for the
completion or compliance; and
(b) for the figures, letters and words "31st day of March,
2021", the figures, letters and words "30th day of September,
2020" had been substituted for making such completion or
compliance;
(vi) any provisions of Chapter VI-A under the heading "B.—
Deductions in respect of certain payments" of that Act, referred
to in item (I) of sub-clause (i) of clause (c), the provision of this
sub-section shall have the effect as if—
(a) for the figures, letters and words "31st day of December,
2020", the figures, letters and words "30th day of July, 2020"
had been substituted for the time-limit for the completion or
compliance; and
(b) for the figures, letters and words "31st day of March,
2021", the figures, letters and words "31st day of July, 2020"
had been substituted for making such completion or
compliance;
(vii) furnishing of report of audit under any provision thereof for
the assessment year commencing on the 1st day of April, 2020,
the provision of this sub-section shall have the effect as if for the
figures, letters and words "31st day of March, 2021", the figures,
letters and words "31st day of October, 2020" had been
substituted:
Provided also that the extension of the date as referred to in sub-clause
(b) of clause (i) of the third proviso shall not apply to Explanation 1 to
section 234A of the Income-tax Act, 1961 in cases where the amount
of tax on the total income as reduced by the amount as specified in
clauses (i) to (vi) of sub-section (1) of the said section exceeds one
lakh rupees:
Provided also that for the purposes of the fourth proviso, in case of an
individual resident in India referred to in sub-section (2) of section
207 of the Income-tax Act, 1961, the tax paid by him under section
140A of that Act within the due date (before extension) provided in
that Act, shall be deemed to be the advance tax:
Provided also that where the specified Act is the Direct Tax Vivad Se
Vishwas Act, 2020, the provision of this sub-section shall have the
effect as if—
(a) for the figures, letters and words "31st day of December,
13
2020", the figures, letters and words "30th day of December,
2020" had been substituted for the time limit for the completion
or compliance of the action; and
(b) for the figures, letters and words "31st day of March, 2021",
the figures, letters and words "31st day of December, 2020" had
been substituted for making such completion or compliance.
(2) Where any due date has been specified in, or prescribed or notified under
the specified Act for payment of any amount towards tax or levy, by whatever
name called, which falls during the period from the 20th day of March, 2020 to
the 29th day of June, 2020 or such other date after the 29th day of June, 2020 as
the Central Government may, by notification, specify in this behalf, and if such
amount has not been paid within such date, but has been paid on or before 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, then,
notwithstanding anything contained in the specified Act,—
(a) the rate of interest payable, if any, in respect of such amount for the
period of delay shall not exceed three-fourth per cent. for every month
or part thereof;
(b) no penalty shall be levied and no prosecution shall be sanctioned in
respect of such amount for the period of delay.
Explanation.—For the purposes of this sub-section, "the period of delay" means
the period between the due date and the date on which the amount has been
paid.”
11.Reference has also been made to provisions of Chapter III to the
Enabling Act. Numerous amendments were made to the Act as were not
contemplated by the Ordinance. While no useful purpose would be served in
extracting the entire contents of Section 4 of the Enabling Act, it would be
useful to reproduce, and indicate some of the provisions amended, together
with reference to the date from which such amendments were made
effective.
Sl. No.Section no. of the Income Tax Act,
1961, amended
Insertion/Omission/Substitution with
effect from
1. Explanation 1(1) to Section 6 01.04.2021
2. Section 10(4D) 01.04.2021
3. Section 10(23C) 01.04.2020
4. Provisos to Section 10 01.04.2021 & 01.06.2020
5. Section 10(23FBC) 01.04.2021
6. Explanation to Section 10(23FE) 01.04.2021
7. Explanation II to Section 11(1) 01.04.2021
8. Section 11(7) 01.06.2020
9. Second Proviso to Section 11 01.06.2020 and 01.04.2021
10. Omission of Section 12A(1)(ac) 01.06.2020
11. Insertion of Section 12A(1)(ac) 01.04.2021
12. Section 12A(2) 01.06.2020
14
13. Proviso to Section 12A 01.04.2021
14. Omission of Section 12AA(5) 01.06.2020
15. Insertion of Section 12AA(5) 01.04.2021
16. Omission of Section 12AB 01.06.2020
17. Insertion of Section 12AB 01.04.2021
18. Explanation I to Section 13 01.04.2021
19. Section 35(1) 01.06.2020
20. Sub-clause III to Explanation to Section 35 01.04.2021
21. Omission of Fifth and Sixth Provisos to
Section 35(1)(iv)
01.06.2020
22. Insertion of Fifth and Sixth Provisos to
Section 35(1)(iv)
01.04.2021
23. Omission of Section 35(1A) 01.06.2020
24. Insertion of Section 35(1A) 01.04.2021
25. Section 35AC 01.11.2020
26. Section 56(2) 01.06.2020 & 01.04.2021
27. Section 80G 01.04.2021
28. Section 80G(5) 01.06.2020 &01.04.2021
29. Section 92CA 01.11.2020
30. Section 115AD 01.04.2021
31. Substitution in Explanation to Section
115BBDA(b)(iii)
01.06.2020 & 01.04.2021
32. Substitution in Section 115TD 01.06.2020 & 01.04.2021
33. Insertion of Section 130 01.11.2020
34. Substitution of Proviso to Section 133A(6) 01.11.2020
35. Section 133C 01.11.2020
36. Insertion of Section 135 01.11.2020
37. Insertion of Section 142A 01.11.2020
38. Substitution of Proviso to Section 143(3B) 01.04.2021
39. Insertion of Section 144A 01.04.2021
40. Insertion of Section 144C(14A) 01.11.2020
41. Insertion of Section 151A 01.11.2020
42. Insertion of Section 157A 01.11.2020
43. Insertion of Section 196D(1) 01.11.2020
44. Insertion of Section 197B 14.05.2020
45. Insertion of Section 206C(10) 14.05.2020
46. Insertion of Section 231 01.11.2020
47. Substitution in Section 253(1)(c) 01.06.2020 & 01.04.2021
48. Insertion of Section 253(8), (9) and (10) 01.11.2020
49. Section 263(1) 01.11.2020
50. Section 264(1, 2, 3 and 4) 01.11.2020
51. Insertion of Section 264A & 264B 01.11.2020
52. Omission of Section 271K 01.06.2020
53. Insertion of Section 271K 01.04.2021
54. Substitution in Section 274(2A)(a) 01.04.2021
55. Insertion of Section 279 (4, 5 and 6) 01.11.2020
56. Insertion of Section 293D 01.11.2020
15
12.On 29.10.2020, Notification No. 88 of 2020 was issued by the Central
Government for the purposes of extension of time limits stipulated under
Section 139 of the Act. For ready reference, the said provision reads as
below:
“MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
NOTIFICATION
New Delhi, the 29th October, 2020
TAXATION AND OTHER LAWS
S.O. 3906(E).-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
Act), the Central Government hereby specifies, for the purpose of the said
sub-section (1), that, in a case where the specified Act is the Income-tax Act,
1961 and the compliance for the assessment year commencing on the 1st day
of April, 2020, relates to -
(i) furnishing of return under section 139 thereof, the time-limit
for furnishing of such return, shall–
(a) in respect of the assessees referred to in clauses (a) and
(aa) of Explanation 2 to sub-section (1) of the said section
139, stand extended to the 31
st
day of January, 2021; and
(b) in respect of other assessees, stand extended to the 31
st
day of December, 2020:
Provided that the provisions of the fourth proviso to sub-
section (1) of the Act shall, mutatis mutandis apply to these
extensions of due date, as they apply to the date referred to in
sub-clause (b) of clause (i) of the third proviso thereof.
(ii) furnishing of report of audit under any provision of that Act, the
time-limit for furnishing of such report of audit shall stand extended
to the 31" day of December, 2020.
2. This notification shall come into force from the date of its publication in
the Official Gazette.”
13.Then, on 31.12.2020, another Notification No. 4805 (E) was issued
under Section 3(1) of the Enabling Act. Without making any specific
reference to reassessment proceedings under the Act, time extensions were
granted. For ready reference, that provision reads as below:
“NOTIFICATION S.O. 4805 (E) [NO. 93/2020/F. No.
370142/35/2020-TPL], DATED 31.12.2020
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 the Act) and in supersession of
16
the notification of the Government of India in the Ministry of Finance,
(Department of Revenue) No. 88/2020 dated the 29th October, 2020,
published in the Gazette of India, Extraordinary, Part-II, Section 3, Sub-
section (ii), vide number S.O. 3906(E), dated the 29th October, 2020, except
as respects things done or omitted to be done before such supersession, the
Central Government hereby specifies, for the completion or compliance of
action referred to in-
(A) clause (a) of sub-section (1) of section 3 of the Act, -
(i) the 30th day of March, 2021 shall be the end date of the
period during which the time limit specified in, or prescribed or
notified under, the specified Act falls for the completion or
compliance of such action as specified under the said sub-
section; and
(ii) the 31st day of March, 2021 shall be the end date to which
the time limit for completion or compliance of such action shall
stand extended:
Provided that where the specified Act is the Direct Tax Vivad Se
Vishwas Act, 2020 (3 of 2020), the provision of this clause shall
have the effect as if—
(a) for the figures, letters and words "30th day of March,
2021", the figures, letters and words "30th day of January,
2021" had been substituted; and
(b) for the figures, letters and words "31st day of March,
2021", the figures, letters and words "31st day of January,
2021" had been substituted:
Provided further that where the specified Act is the Income-tax
Act, 1961 (43 of 1961) and completion or compliance of action
referred to in clause (a) of sub-section (1) of section 3 of the Act
is an order under sub-section (3) of section 92CA of the Income-
tax Act, 1961, the provision of this clause shall have the effect as
if—
(a) for the figures, letters and words "30th day of March,
2021", the figures, letters and words "30th day of January,
2021" had been substituted; and
(b) for the figures, letters and words "31st day of March,
2021", the figures, letters and words "31st day of January,
2021" had been substituted;
(B) clause (b) of sub-section (1) of section 3 of the Act, where the
specified Act is the Income-tax Act, 1961 (43 of 1961) and the
compliance for the assessment year commencing on the 1st day of
April, 2020 relates to -
(i) furnishing of return under section 139 thereof, the time limit for
furnishing of such return, shall -
(a) in respect of the assessees referred to in clauses (a) and (aa)
of Explanation 2 to sub-section (1) of the said section 139, stand
extended to the 15th day of February 2021; and
(b) in respect of other assessees, stand extended to the 10th day
of January, 2021:
Provided that the provisions of the fourth proviso to sub-section
(1) of section 3 of the Act shall, mutatis mutandis apply to these
extensions of due date, as they apply to the date referred to in
17
sub-clause (b) of clause (i) of the third proviso thereof;
(ii) furnishing of report of audit under any provision of that Act, the
time limit for furnishing of such report of audit shall stand extended
to the 15th day of January, 2021.
2. This notification shall come into force from the date of its publication in
the Official Gazette.”
14.On 27.02.2021, Notification No. 966E was issued under Section 3(1)
of the Enabling Act. It, for the first time, made specific reference to
reassessment proceedings under Section 153 or Section 153B of the Act. For
ready reference, the said provisions read as below:
“NOTIFICATION NO. S.O. 966(E) [NO. 10/2021/F. NO.
370142/35/2020-TPL], DATED 27-2-2021
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 (i), vide number S.O. 4805(E), dated the 31st December, 2020
(hereinafter referred to as the said notification), the Central Government
hereby specifics, for the purpose of sub-section (1) of section 3 of the said Act,
that -
(A) where the specified Act is the Income-tax Act, 1961 (43 of 1961)
(hereinafter referred to as the Income-tax Act) and the completion of
any action, as referred to in clause (a) of sub-section (1) of section 3 of
the said Act, relates to passing of any order-
(a) for imposition of penalty under Chapter XXI of the
Income-tax Act, -
(i) the 29th day of June, 2021 shall be the end date of the
period during which the time limit specified in or
prescribed or notified under the Income-tax Act falls, for
the completion of such action; and
(ii) the 30th day of June, 2021 shall be the end date to
which the time limit for completion of such action shall
stand extended;
(b) for assessment or reassessment under the Income-tax Act,
and the time limit for completion of such action under section
153 or section 153B thereof,-
(i) expires on the 31st day of March, 2021 due to its
extension by the said notification, such time limit shall
stand extended to the 30th day of April, 2021;
(ii) is not covered under (1) and expires on 31st day of
March, 2021, such time limit shall stand extended to the
30th day of September, 2021;
(B) where the specified Act is the Prohibition of Benami Property
Transaction Act, 1988, (45 of 1988) (hereinafter referred to as the
Benami Act) and the completion of any action, as referred to in clause
(a) of sub-section (1) of section 3 of the said Act, relates to issue of
notice under sub-section (1) or passing of any order under sub-section
18
(3) of section 26 of the Benami Act,—
(i) the 30th day of June, 2021 shall be the end date of the period
during which the time limit specified in or prescribed or notified
under the Benami Act falls, for the completion of such action;
and
(ii) the 30th day of September, 2021 shall be the end date to
which the time limit for completion of such action shall stand
extended.”
15.Next, at the time of enforcement of the Finance Act, 2021, another
Notification No. 1432 dated 31.03.2021 came to be issued under Section
3(1) of the Enabling Act, containing specific stipulations, both with respect
to issuance of notices under Section 148 of the Act and also with respect to
completion of reassessment proceedings. For ready reference, the said
provisions read as below:
“NOTIFICATION S.O. 1432(E) [NO. 20/2021/F. NO.
370142/35/2020-TPL), 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, the Central
Government hereby specifies that,-
(A) where the specified Act is the Income-tax Act, 1961 (43 Income-tax
Act) and, -
(a) the completion of any action referred to in clause (a) of sub-
section (1) of section 3 of the Act relates to passing of an order
under sub-section (13) of section 144C or issuance of notice
under section 148 as per time-limit specified in section 149 or
sanction under section 151 of the Income-tax Act, -
(i) the 31st day of March, 2021 shall be the end date of the
period during which the time limit, specified in, or
prescribed or notified under, the Income-tax Act falls for
the completion of such action; and
(ii) the 30th day of April, 2021 shall be the end date to
which the time-limit for the completion of such action
shall stand extended.
Explanation. For the removal of doubts, it is hereby
clarified that for the purposes of issuance of notice under
section 148 as per time-limit specified in section 149 or
sanction under section 151 of the Income-tax Act, under
this sub-clause, the provisions of section 148, section 149
and section 151 of the Income-tax Act, as the case may be,
as they stood as on the 31st day of March 2021, before the
commencement of the Finance Act, 2021, shall apply.
(b) the compliance of any action referred to in clause (b) of sub-
19
section (1) of section 3 of the said Act relates to intimation of
Aadhaar number to the prescribed authority under sub-section (2)
of section 139AA of the Income-tax Act, the time-limit for
compliance of such action shall stand extended to the 30th day of
June, 2021.
(B) where the specified Act is the Chapter VIII of the Finance Act, 2016
(28 of 2016) (hereinafter referred to as the Finance Act) and the
completion of any action referred to in clause (a) of sub section (1) of
section 3 of the said Act relates to sending an intimation under sub-section
(1) of section 168 of the Finance Act,-
(i) the 31st day of March, 2021 shall be the end date of the period
during which the time-limit, specified in, or prescribed or notified
under, the Finance Act falls for the completion of such action; and
(ii) the 30th day of April, 2021 shall be the end date to which the
time-limit for the completion of such action shall stand extended.”
16.Last, Notification No. 1703 (E) dated 27.04.2021 came to be issued
under Section 3(1) of the Enabling Act, again providing for extensions of
time to initiate reassessment proceedings and to conclude said proceedings.
It reads thus:
“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 specified Act is the Income-tax Act, 1961 (43 of
1961) (hereinafter referred to as the Income-tax Act) and, —
(a) the completion of any action, referred to in clause (a) of
sub-section (1) of section 3 of the said Act, relates to passing
of any order for assessment or reassessment under the
Income-tax Act, and the time limit for completion of such
action under section 153 or section 153B thereof, expires on
the 30
th
day of April, 2021 due to its extension by the said
notifications, such time limit shall further stand extended to
the 30
th
day of June, 2021;
(b) the completion of any action, referred to in clause (a) of
sub-section (1) of section 3 of the said Act, relates to passing
of an order under sub-section (13) of section 144C of the
20
Income-tax Act or issuance of notice under section 148 as
per time-limit specified in section 149 or sanction under
section 151 of the Income-tax Act, and the time limit for
completion of such action expires on the 30
th
day of April,
2021 due to its extension by the said notifications, such time
limit shall further stand extended to the 30th day of June,
2021.
Explanation.— For the removal of doubts, it is hereby clarified
that for the purposes of issuance of notice under section 148 as per
time-limit specified in section 149 or sanction under section 151 of
the Income-tax Act, under this sub-clause, the provisions of section
148, section 149 and section 151 of the Income-tax Act, as the case
may be, as they stood as on the 31
st
day of March 2021, before the
commencement of the Finance Act, 2021, shall apply.
(B) where the specified Act is the Chapter VIII of the Finance Act,
2016 (28 of 2016) (hereinafter referred to as the Finance Act) and
the completion of any action, referred to in clause (a) of sub-
section (1) of section 3 of the said Act, relates to sending an
intimation under sub-section (1) of section 168 of the Finance
Act, and the time limit for completion of such action expires on
the 30
th
day of April, 2021 due to its extension by the said
notifications, such time limit shall further stand extended to the
30
th
day of June, 2021.”
17.In the meanwhile, the Finance Act, 2021, being Act No. 13 of 2021
came into force. Relevant to our discussion, we consider it appropriate to
extract Sections 1 and 40 to 45 of the said Act. They read as below:
“FINANCE ACT, 2021
[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
Short title and commencement.
1. (1) This Act may be called the Finance Act, 2021.
(2) Save as otherwise provided in this Act,-
(a) sections 2 to 88 shall come into force on the 1
st
day of April,
2021;
(b) sections 108 to 123 shall come into force on such date as the
Central Government may, by notification in the Official Gazette,
appoint.
Substitution of new section for section 147.
21
40. For section 147 of the Income-tax Act, the following section shall be
substituted, namely:—
147. Income escaping assessment.—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 or recompute the loss or the depreciation allowance
or any other allowance or deduction for such assessment year
(hereafter in this section and in sections 148 to 153 referred to as
the relevant assessment year).
Explanation.—For the purposes of assessment or reassessment or
recomputation under this section, the Assessing Officer may
assess or reassess the income in respect of any issue, which has
escaped assessment, and such issue comes to his notice
subsequently in the course of the proceedings under this section,
irrespective of the fact that the provisions of section 148A have
not been complied with.
Substitution of new section for section 148.
41. For section 148 of the Income-tax Act, the following section shall be
substituted, namely:—
148. Issue of notice where income has escaped
assessment.—Before making the assessment, reassessment or
recomputation under section 147, and subject to the provisions of
section 148A, the Assessing Officer shall serve on the assessee a
notice, along with a copy of the order passed, if required, under
clause (d) of section 148A, requiring him to furnish within such
period, as may be specified in such 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 no notice under this section shall be issued unless
there is information with the Assessing Officer which suggests that
the income chargeable to tax has escaped assessment in the case of
the assessee for 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
22
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 of April, 2021, in the case of the assessee;
or
(iii) 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 or requisitioned under section 132 or section 132A 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 under
section 132 or 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, 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 in the case of the assessee or money, bullion, jewellery
or other valuable article or thing or books of account or documents
are seized or requisitioned in case of any other person.
Explanation 3. — For the purposes of this section, specified authority
means the specified authority referred to in section 151.
Insertion of new section 148A.
42. After section 148 of the Income-tax Act, the following section shall be
inserted, namely:—
"148A. Conducting inquiry, providing opportunity before issue
of notice under section 148.— The Assessing Officer shall, before
issuing any notice under section 148,—
(a) conduct any enquiry, if required, with the prior approval of
specified authority, with respect to the information which
suggests that the income chargeable to tax has escaped
assessment;
(b) provide an opportunity of being heard to the assessee, with the
prior approval of specified authority, by serving upon him a
notice to show cause within such time, as may be specified in
the notice, being not less than seven days and but not exceeding
thirty days from the date on which such notice is issued, or
such time, as may be extended by him on the basis of an
application in this behalf, as to why a notice under section 148
should not be issued on the basis of information which suggests
23
that income chargeable 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 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
(c) 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, relate to, the
assessee.
Explanation.—For the purposes of this section, specified authority
means the specified authority referred to in section 151."
Substitution of new section for section 149.
43. For section 149 of the Income-tax Act, the following section shall be
substituted, namely:—
149. Time limit for notice.—(1) No notice under section 148 shall
be issued for the relevant assessment year,—
(a) if three years have elapsed from the end of the relevant
assessment year, unless the case falls under clause (b);
(b) if three years, but not more than ten years, have elapsed from
the end of the relevant assessment year unless the Assessing
Officer has in his possession books of account or other
documents or evidence which reveal that the income
chargeable to tax, represented in the form of asset, which has
escaped assessment amounts to or is likely to amount to fifty
lakh rupees or more for that year:
Provided that no notice under section 148 shall be issued at any
time in a case for the relevant assessment year beginning on or before
24
1st day of April, 2021, if such notice could not have been issued at
that time on account of being beyond the time limit specified under
the provisions of clause (b) of sub-section (1) of this section, as they
stood immediately before the commencement of the Finance Act,
2021:
Provided further that the provisions of this sub-section shall not
apply in a case, where a notice under section 153A, or section 153C
read with section 153A, is required to be issued in relation to a search
initiated under section 132 or books of account, other documents or
any assets requisitioned under section 132A, on or before the 31st
day of March, 2021:
Provided also that for the purposes of computing the period of
limitation as per this section, the time or 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 sub- section,
"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.
Substitution of new section for section 151.
44. For section 151 of the Income-tax Act, the following section shall be
substituted, namely:—
151. Sanction for issue of notice.—Specified authority for the
purposes of section 148 and section 148A shall be,—
(i) Principal Commissioner or Principal Director or Commissioner or
Director, if three years or less than three years have elapsed from the
end of the relevant assessment year;
(ii) Principal Chief Commissioner or Principal Director General or
where there is no Principal Chief Commissioner or Principal
Director General, Chief Commissioner or Director General, if more
than three years have elapsed from the end of the relevant
assessment year
Amendment of section 151A.
45. In section 151A of the Income-tax Act, in sub-section (1), in the
opening portion, after the words and figures "issuance of notice under
section 148", the words, figures and letter "or conducting of enquiries or
25
issuance of show-cause notice or passing of order under section 148A"
shall be inserted.”
18.In the above statutory context and reference, submissions have been
advanced by learned counsel for the petitioners and have been responded to
by the learned Additional Solicitor General of India representing the Union
and the CBDT and learned counsel for the revenue.
19.Shri Rakesh Ranjan Agarwal, learned Senior Advocate has first
submitted, upon enforcement of the Finance Act, 2021, the pre-existing
Sections 147 to 151 of the Act stood repealed and replaced by the above
noted provisions. The entire statutory scheme of initiating, inquiring,
conducting, and concluding the reassessment proceedings underwent a sea
change. The act of substitution of the old provision obliterated from the
statute book the pre-existing provisions pertaining to reassessment under the
Act. The unamended provision became dead and unenforceable, by that
operation of law. Since the Enabling Act only sought to enlarge limitation
with respect to the pre-existing provisions, it could not, and it did not
resurrect the pre-existing provisions that were already dead. In short, it has
been submitted, the procedural amendments cannot recreate a non-existing
substantive law. He has placed reliance on a decision of the Supreme Court
in Government of India & Ors. Vs. Indian Tobacco Association,
(2005) 7 SCC 396, wherein it has been observed as follows:
“15. The word "substitute" ordinarily would mean "to put (one) in
place of another"; or "to replace". In Black's Law Dictionary, Fifth
Edition, at page 1281, the word "substitute" has been defined to mean
"To put in the place of another person or thing" or "to exchange". In
Collins English Dictionary, the word "substitute" has been defined to
mean "to serve or cause to serve in place of another person or thing";
"to replace (an atom or group in a molecule) with (another atom or
group)"; or "a person or thing that serves in place of another, such as a
player in a game who takes the place of an injured colleague".
20.Further reliance has been placed on a decision of the Supreme Court
in Gottumukkala Venkata Krishamraju Vs. Union of India &
Ors., (2019) 17 SCC 590, wherein it was observed as under:-
“13. This expression has also come up for interpretation by the Courts
in Zile Singh v. State of Haryana and Others, (2004) 8 SCC
1, the import and impact of substituted provision were discussed in the
following manner:
“23. The text of Section 2 of the Second Amendment Act
26
provides for the word “upto” being substituted for the word
“after”. What is the meaning and effect of the expression
employed therein — “shall be substituted”?
24. The substitution of one text for the other pre-existing
text is one of the known and well-recognised practices
employed in legislative drafting. “Substitution” has to be
distinguished from “supersession” or a mere repeal of an
existing provision.”
14. Ordinarily wherever the word ‘substitute’ or ‘substitution’ is used
by the legislature, it has the effect of deleting the old provision and
make the new provision operative. The process of substitution consists
of two steps: first, the old rule is made to cease to exist and, next, the
new rule is brought into existence in its place. The rule is that when a
subsequent Act amends an earlier one in such a way as to incorporate
itself, or a part of itself, into the earlier, then the earlier Act must
thereafter be read and construed as if the altered words had been
written into the earlier Act with pen and ink and the old words scored
out so that thereafter there is no need to refer to the amending Act at
all. No doubt, in certain situations, the Court having regard to the
purport and object sought to be achieved by the Legislature may
construe the word "substitution" as an "amendment" having a
prospective effect. Therefore, we do not think that it is a universal rule
that the word ‘substitution’ necessarily or always connotes two
severable steps, that is to say, one of repeal and another of a fresh
enactment even if it implies two steps. However, the aforesaid general
meaning is to be given effect to, unless it is found that legislature
intended otherwise. Insofar as present case is concerned, as discussed
hereinafter, the legislative intent was also to give effect to the amended
provision even in respect of those incumbents who were in service as
on September 01, 2016.”
21.Reference has also been made to another decision of the Supreme
Court in PTC India Limited Vs. Central Electricity Regulatory
Commissioner, (2010) 4 SCC 603, wherein again it was observed as
below:
“... 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.”
22.Last, reference has been made to a decision of the Delhi High Court,
applying the same principle, in C.B. Richards Ellis Mauritius Ltd.
Vs. Assistant Director of Income-tax, (2012) 208 Taxman 322
(Delhi).
23.Second, it has been submitted, the Enabling Act was enacted solely to
extend the limitation under the pre-existing provisions of the Act, as they
stood prior to the amendment made by the Finance Act, 2021. The later Act,
i.e. the Finance Act, 2021 does not contain any saving clause as may allow
the pre-existing provisions an extended life, after the enactment of the
27
Finance Act, 2021. Thus, the pre-existing provisions cannot be pressed into
service by the revenue. Reliance has been placed on a decision of the
Supreme Court in Kolhapur Canesugar Works Ltd. & Anr. Vs.
Union Of India & Ors., (2000) 2 SCC 536.
24.Third, it has been submitted, even otherwise, the Enabling Act does
not, and it could not save the pre-existing Sections 147, 148 and other
provisions pertaining to reassessment, nor overriding effect can arise or be
given (to itself) by the Enabling Act, since on the date of enactment of the
Enabling Act, the Finance Act, 2021 was not born. Therefore, it was only
through the Finance Act, 2021 that the provisions of the pre-existing law
may have been saved if it had been so intended by the Parliament. In
absence of that saving clause, there exists no power either under Section
3(1) of the Enabling Act or any other law as may validate the issuance of the
impugned Notification.
25.To validate such Notification, would be to resurrect and enforce a
dead law, contrary to the statutory law in force, on the date of issuance of
impugned Notification dated 27.04.2021. Clearly, that would be a legislative
overreach by the delegate and therefore, ultra vires the Constitution of India.
In that regard, reliance has been placed on another decision of the Supreme
Court in Assam Company Ltd. & Anr. Vs. State of Assam & Ors.,
(2001) 248 ITR 567 (SC). Therein, it was held as below:
“We will now consider the effect of Rule 5 of the State Rules. As noticed
hereinabove, Rule 5 of the Rules in its proviso has in unequivocal terms
empowered the State authorities in given cases to refuse to accept the
computation of agricultural income made by the Central Officers after
examining the books already examined by such Central Officers. The
appellants contend that this provision is beyond the rule-making power
under the Act, hence, is in excess of the power delegated under the State
Act. They also contend that assuming that such rule-making power has
entrusted the delegation under Section 50 of the State Act, same would be
ultra vires the Constitution.
We see force in the above contention. A perusal of Section 50 of the Act
shows that the State Government has been empowered to make such Rules
as are necessary for the purpose of carrying out the purposes of the Act. We
have already noticed that the object and the scheme of the Act do not
contemplate the State authorities being empowered to recompute the
agricultural income contrary to the computation made by the Central
Officers, nor do the subjects specified in sub-sections 2(a) to (m)
of Section 50 provide for making such rules empowering the State Officers
28
to make computation of agricultural income contrary to what is computed
by the Central Officers under the Central Act. We have noticed that by
virtue of the provisions made by the legislature in Explanation to Section
2(a)(2), the second proviso to Section 8 and Section 20D, it is clear that the
State Legislature intended to adopt the computation of agricultural income
made under the provisions of the Central Act. Having specifically said so
in the above Sections of the Act, if the Legislature wanted to deviate from
that scheme of the Act, it could have in clear terms provided for a power
being vested with its officers in any given case to recompute the income
keeping in mind the revenue of the State but the Legislature has not
thought it necessary to do so. Even under Section 50, we do not see any
provision which specifically authorises the State Government to make any
such rules in the nature of the proviso to Rule 5 of the State Rules. It is an
established principle that the power to make rules under an Act is derived
from the enabling provision found in such Act. Therefore, it is fundamental
that a delegate on whom such power is conferred has to act within the
limits of the authority conferred by the Act and it cannot enlarge the scope
of the Act. A delegate cannot override the Act either by exceeding the
authority or by making provision which is inconsistent with the Act. Any
Rule made in exercise of such delegated power has to be in consonance
with the provisions of the Act, and if the Rule goes beyond what the Act
contemplates, the Rule becomes in excess of the power delegated under the
Act, and if it does any of the above, the Rule becomes ultra vires the Act.”
26.It is also submitted, the delegation authorized being only for the
purpose of enlarging limitation under a valid law, such delegation could not
be exercised to resurrect the provision of law that stood omitted from the
statute book by virtue of its substitution made by the Finance Act, 2021,
w.e.f. 01.04.2021.
27.Shri Agarwal has further relied on Union of India & Ors. Vs. S.
Srinivasan, (2012) 7 SCC 683, wherein that principle was clearly
recognized and applied:
“21. At this stage, it is apposite to state about the rule making powers of
a delegating authority. If a rule goes beyond the rule making power
conferred by the statute, the same has to be declared ultra vires. If a rule
supplants any provision for which power has not been conferred, it
becomes ultra vires. The basic test is to determine and consider the
source of power which is relatable to the rule. Similarly, a rule must be
in accord with the parent statute as it cannot travel beyond it.
22. In this context, we may refer with profit to the decision in General
Officer Commanding-in-Chief v. Dr. Subhash Chandra Yadav, (1988) 2
SCC 351, wherein it has been held as follows:-
“14......Before a rule can have the effect of a statutory
provision, two conditions must be fulfilled, namely (1) it must
conform to the provisions of the statute under which it is
framed; and (2) it must also come within the scope and
purview of the rule making power of the authority framing the
rule. If either of these two conditions is not fulfilled, the rule so
framed would be void.”
23. In Additional District Magistrate (Rev.) Delhi Administration v.
29
Shri Ram, (2000) 5 SCC 451, it has been ruled that it is a well
recognised principle that the conferment of rule making power by an Act
does not enable the rule making authority to make a rule which travels
beyond the scope of the enabling Act or which is inconsistent therewith
or repugnant thereto.
24. In Sukhdev Singh v. Bhagatram Sardar Singh Raghuvanshi, (1975)
1 SCC 421, the Constitution Bench has held that:
“18. ... statutory bodies cannot use the power to make rules and
regulations to enlarge the powers beyond the scope intended
by the legislature. Rules and regulations made by reason of the
specific power conferred by the statute to make rules and
regulations establish the pattern of conduct to be followed.”
25. In State of Karnataka and another v. H. Ganesh Kamath, (1983) 2
SCC 402, it has been stated that:
“7. ... It is a well settled principle of interpretation of statutes
that the conferment of rule making power by an Act does not
enable the rule-making authority to make a rule which travels
beyond the scope of the enabling Act or which is inconsistent
therewith or repugnant thereto.”
28.Last, serious attempt has been made by Shri Agarwal, learned Senior
Advocate to demonstrate that the decision of the learned Single Judge of the
Chhattisgarh High Court in W.P. (T) No. 149 of 2021 Palak Khatuja
Vs Union of India & Ors., decided on 23.08.2021 does not lay down
the correct law. He has taken us through that decision at length and sought to
draw points of distinction. Thus, it has been submitted that the Chhattisgarh
High Court has applied a wrong test to look at the notification dated
31.03.2021 issued under the Enabling Act to interpret the principal
legislation made by Parliament, being the Finance Act, 2021. He would
submit, the delegated legislation can never overreach any Act of principal
legislature. Second, though it may be true that the Ordinance was enforced
arising from the spread of the pandemic COVID-19 and the circumstances
emerging therefrom, yet it would be over simplistic to ignore the provisions
of, either the Enabling Act or the Finance Act, 2021 and to read and interpret
the provisions of Finance Act, 2021 as inoperative in view of those
circumstances. Similarly, practicality of life may never be a good guiding
principle to interpret any law less so taxation laws which must be interpreted
of their own language and scheme. In absence of any specific clause in
Finance Act, 2021, either to save the provisions of the Enabling Act or the
Notifications issued thereunder, by no interpretative process can those
30
Notifications be given an extended run of life, beyond 31 March 2020. In
fact, any notification issued under the Enabling Act, after the date
31.03.2021 is plainly in conflict with the law as enforced by the Finance Act
2021. It would remain a dead letter of law. It may also not infuse any life
into a provision that stood obliterated from the statute with effect from
31.03.2021. Such an exercise made by the delegate would be plainly
unconstitutional. No discretion may arise in the executive authority as may
be impliedly or expressly barred by statutory law. Inasmuch as the Finance
Act, 2021 does not enable the Central Government to issue any notification
to reactivate the pre-existing law (which that principal legislature had
substituted), the exercise made by the delegate/Central Government is de
hors any statutory basis. It is ultra vires. A completely wrong principle has
been applied by the Chhattisgarh High Court while relying on the decision
of the Supreme Court in A.K. Roy Etc. Vs. Union of India & Anr.,
AIR 1982 SC 710, as that fact or legal situation does not exist in the
present case. Last, it has been submitted that in absence of any express
saving of the pre-existing laws, the presumption drawn in favour of that
saving, is plainly impermissible.
29.Shri Shambhu Chopra, learned Senior Advocate has, besides adopting
the submissions so advanced by Shri Rakesh Ranjan Agarwal, further
submitted, the notifications extending time as had been issued under the
Ordinance and under the Enabling Act were only for the purpose of
overcoming the immediate difficulty arising from the spread of the
pandemic COVID-19. Both, the assessees as also the authorities under the
Act were vastly inconvenienced and even obstructed. The authorities were
inconvenienced in issuing and serving notices and orders as also in receiving
replies and objections and conducting hearing in pending cases. Similarly,
the assessees were inconvenienced. They could not have availed their rights
both on account of initial lockdown enforced all over the country as also on
account of the devastation caused by the spread of COVID-19 and its
aftermath with which we are still dealing, today.
31
30.However, the only intervention offered by the Ordinance and the
Enabling Act was to extend the timelines under then pre-existing provisions
of the Act, with reference to pending proceedings. Those provisions of the
Ordinance and the Enabling Act had been enforced much before the
enforcement of the Finance Act, 2021. Therefore, the Enabling Act was not
visualized to impact the provisions of the Finance Act, 2021. The
Notifications that may have been issued under the Ordinance and the
Enabling Act cannot be read to remedy the situation upon the enforcement
of the Finance Act, 2021 which has substituted and thus repealed the pre-
existing provisions of the Act and has re-enacted a new scheme for
reassessment under the Act, with effect from 01.04.2021.
31.He would further submit, the provisions of Section 148 read with
Section 148A as substituted by Finance Act, 2021 are completely mandatory.
There can be no exception to the same. If the impugned Notifications were
to be held to be valid after 01.04.2021, it would create a conflict of laws
wherein solely on account of that delegated legislation, the mandatory
provision of the principal legislature would have been rendered ineffective
or inoperative. That may never be done. Elaborating his submissions, Shri
Chopra would state, the impugned Notifications read together only provide
for an extension of time, limited to the permissions contained in the
Enabling Act. Since the Enabling Act does not, in any way, seek to save the
pre-existing provisions of the Act, notwithstanding any change of
legislation, that intent cannot be created by those Notifications.
32.Next, it has been submitted by Sri Chopra, cassus omisus cannot be
supplied, either by the delegated legislation or by Courts. Reliance has been
placed on the decision of the Supreme Court in Parle Biscuits (P) Ltd.
Vs State of Bihar And Ors. (2005) 9 SCC 669.
33.He would further submit, the delegate cannot override the principal
legislation as has been sought to be done in the present case. Reliance has
been placed on two decisions of the Supreme Court in Chairman and
Managing Director, Food Corporation of India & Ors. Vs.
32
Jagdish Balaram Bahira & Ors., (2017) 8 SCC 670 and Dilip
Kumar Ghosh & Ors. Vs Chairman & Ors., (2005) 7 SCC 567 ,
wherein it was clearly recognized that a Circular cannot override the Rules.
In Jagdish Balaram Bahira (supra), it was recognized that the
administrative Circulars are subservient to legislative action, and they
cannot act contrary either to the Constitutional or statutory provisions.
34.Sri Chopra has further sought to draw a distinction in the decision of
the Chhattisgarh High Court by submitting, a wrong presumption has been
drawn in the aforesaid decision that by issuance of the Notification under
the Enabling Act, the operation of the pre-existing provision of the Act had
been extended and thereby provisions of Section 148A of the Act
(introduced by Finance Act 2021) and other provisions had been deferred.
He would submit, there is no cannon of law as would allow such an
interpretation to be made by this Court. Similarly, he would submit, the
Chhattisgarh High Court has erred in reaching the conclusion that the
Notifications insulated and saved (up to 30.06.2021), the pre-existing
provisions pertaining to reassessment under the Act. It is his submission,
unless there was a clear legislative enactment by the principal legislature -
to keep in abeyance Sections 2 to 88 of the Finance Act, 2021, no such
saving or insulation by whatever name called, may ever arise.
35.On facts, once the principal legislature expressed its intent otherwise
by enforcing those provisions w.e.f. 01.04.2021, the situation in law arises
otherwise. The pre-existing provisions no longer continue to exist. No
amount of effort by the delegate could resurrect those provisions or infuse
life into those dead letters of law, in absence of enabling law delegating
such function to the delegate of the Parliament i.e. to the Central
Government or any other authority.
36.Adopting the submissions advanced by Sri Agarwal and Sri Chopra
and Sri Abhinav Mehrotra, learned counsel for the petitioner has laid stress
on the fact - by virtue of Sections 4 and 6 read with Section 292 of the Act,
both substantive and procedural provisions under that Act remain dynamic
33
since the Act seeks material validation every year through enactment of the
Finance Act. Income tax laws suffer a process of continuous change and
there is no inherent logic or principle embedded in that law, to save a pre-
existing provision despite enactment of another law in the subsequent year.
Such changes are suffered, both by substantive law as also procedural law.
37.Relying on the above, he vehemently urged, the provisions of the
Enabling Act together with the Notifications issued thereunder must be seen
as they confronted the Act as amended by the Finance Act, 2021, on the date
of issuance of the impugned re-assessment notices. Upon enforcement of
the Finance Act 2021, the entire situation and dynamics of statutory law
underwent a change. While the Enabling Act did not undergo any statutory
amendment or change upon enactment of the Finance Act, the latter Act
substituted the provisions of Sections-147, 148, 149, 150 and 151 of the Act,
w.e.f. 01.04.2021. Therefore, the Enabling Act became wholly
unenforceable or incapable to the proceedings that would now arise under
those provisions, after 01.04.2021.
38.Sri Mehrotra, has then referred to certain provisions under Chapter II
of the Enabling Act to contend, even under that Act, different dates had been
specified for different provisions introduced to the Act. We have already
taken note of such changes in the earlier part of this order. Referring to
those, it has been submitted, there is nothing in the Enabling Act and in fact
there could never be any provision in that Act as may have put in abeyance
the provisions of the Finance Act, 2021, that was yet to be born/enacted.
Inasmuch as the Enabling Act has not undergone any amendment as may
put in abeyance, provisions of Sections 2 to 88 of the Finance Act, 2021 and
there is no other law to that effect, those provisions continue to be the only
law occupying the field, w.e.f. 01.04.2021. All Notifications issued with
reference to the pre-existing laws would therefore remain confined to the
time limits to conclude pending proceedings, beyond the date 31.03.2021.
Those Notifications may never be read to enable the executive authorities to
initiate any fresh proceedings under the pre-existing laws, which
34
proceedings did not exist on 01.04.2021.
39.Third, it is his submission, while enacting the Finance Act, 2021, the
Parliament was aware of the ground realities. The Parliament was also
aware of the existing statutory laws both under the Act as amended by the
Finance Act, 2020 as also the Ordinance and the Enabling Act and
Notifications issued thereunder. Still, it chose to enforce the new scheme for
re-assessment w.e.f. 01.04.2021 without enacting a saving clause. Thereby it
brought an end to the possibility of any fresh proceeding being initiated
under the pre-existing/unamended reassessment provisions, after the date
01.04.2021.
40.In support of his submission, Shri Abhinav Mehrotra has referred to
the decision of the Supreme Court in Syndicate Bank v Prabha D.
Naik & Anr., AIR 2001 SC 1968, wherein it was held as below:
“Incidentally, the legislature is supposed to be aware of the needs of the
society and the existing state of law: There is no reason whatsoever to
consider that the legislature was unaware of the existing situation as regards
the Portuguese Civil laws with a different provision for limitation. Needless
to record, the special reference has been made to the State of Jammu and
Kashmir but after incorporation of the State of Goa, Daman and Diu within
the Indian Territory, if there was any intent of having the local law being
made prevalent there pertaining to the question of limitation only, there
would have been an express exclusion and in the absence of which no contra
intention can be deduced, neither any contra inference can be drawn. In any
event, as noticed above, the Portuguese Civil Code, in our view, could not
be read to be providing a distinct and separate period of limitation for a
cause of action arising under the Indian Contract Act or under the
Negotiable Instruments Act since the Civil Code ought to be read as one
instrument and cause of action arising therefrom ought only to be governed
thereunder and not otherwise. The entire Civil Code ought to be treated as a
local law or special law including the provisions pertaining to the question
of limitation for enforcement of the right arising under that particular Civil
Code and not dehors the same and in this respect the observations of the
High Court in Cadar Constructions [AIR 1984 Bom 258 : 1984 Mah LJ 603]
that the Portuguese Civil Code could not provide for a period of limitation
for a cause of action which arose outside the provisions of that Code, stands
approved. A contra approach to the issue will not only yield to an absurdity
but render the law of the land wholly inappropriate. There would also be
repugnancy insofar as application of the Limitation Act in various States of
the country is concerned: Whereas in Goa, Daman and Diu, the period of
limitation will be for a much larger period than the State of Maharashtra —
the situation even conceptually cannot be sustained having due regard to the
rule of law and the jurisprudential aspect of the Limitation Act.”
41.Next, it has been submitted, the Enabling Act only extended the
limitation up to 31.03.2021 to do certain things only. Thereafter, it delegated
35
the power to cause such further extensions to do those things beyond the
date 31.12.2020, upto 30.06.2021. Since after 31.03.2021, the provisions
under which such things were required to be done underwent substitution of
law, the delegate of the legislature cannot now, seek to do or allow doing
such things under the law that no longer exists. To allow such a possibility to
exist would be to allow the delegate to do colourably, that which it cannot
directly do after the Parliament enforced Sections 2 to 88 of the Finance Act
2021, w.e.f. 01.04.2021.
42.Then, it has been submitted, once the principal legislation enacted the
law as has been done in the present case, its delegate was denuded of its
powers, in the field occupied by the principal legislature. Here, reliance has
been placed on yet another decision of the Supreme Court in A.B. Krishna
& Ors. Vs. State of Karnataka & Ors., AIR 1998 SC 1050, where
it was observed as below:
“The Fire Services under the State Government were created and established
under the Fire Force Act, 1964 made by the State Legislature. It was in
exercise of the power conferred under Section 39 of the Act that the State
Government made Service Rules regulating the conditions of the Fire
Services. Since the Fire Services had been specially established under an Act
of the legislature and the Government, in pursuance of the power conferred
upon it under that Act, has already made Service Rules, any amendment in
the Karnataka Civil Services (General Recruitment) Rules, 1977 would not
affect the special provisions Validly made for the Fire Services. As a matter
of fact, under the scheme of Article 309 of the Constitution, once a
legislature intervenes to enact a law regulating the conditions of service, the
power of the Executive, including the President or the Governor, as the case
may be, is totally displaced on the principle of “doctrine of occupied field”.
If, however, any matter is not touched by that enactment, it will be
competent for the Executive to either issue executive instructions or to make
a rule under Article 309 in respect of that matter.”
43.Next, it has been submitted, the Enabling Act and the Finance Act
2021 do not conflict and, therefore, there is no repugnancy between the two.
Both enactments operate in different time spaces. While the Enabling Act
takes care of the law as it pre-existed i.e. before the enactment of the
Finance Act 2021, the latter Act operates w.e.f. 01.04.2021. Since the old
provisions did not exist beyond 31.03.2021 and since the provisions of the
Finance Act 2021 have not been given retrospective effect, there is no
occasion for any conflict between the two laws.
36
44.Then, neither the Enabling Act nor any other law, delegates to the
Central Government any power to create any law except with respect to time
extensions under the pre-existing law. In fact, it is only if the delegated
legislation enforced under the Enabling Act is applied after 01.04.2021, that
a situation of conflict of laws may arise. Relying on another decision of the
Supreme Court in State of M.P. Vs. Kedia Leather & Liquor Ltd.
& Ors., (2003) 7 SCC 389, he submits, the repeal is inferred by
necessary implication if the provisions of the later Act are so repugnant to
the provisions of the earlier Act that the two cannot stand together. Here,
though, principally, there is no repugnancy between the Act as amended by
the Finance Act 2021 and the enabling law viz-a-viz the Act as amended by
the Finance Act 2021, as the later Act came into force only w.e.f. 01.04.2021
(with respect to re-assessment procedure), the repugnancy may arise only in
the event, the delegated legislation under the Enabling Act is enforced after
01.04.2021. To the extent that was not the clear intent of the Enabling Act,
there is no repugnancy. Relevant to our discussion, paragraph nos. 13, 14
and 15 of the aforesaid decision, are quoted as below:
“13. There is presumption against a repeal by implication; and the reason of
this rule is based on the theory that the legislature while enacting a law has
complete knowledge of the existing laws on the same subject-matter, and
therefore, when it does not provide a repealing provision, the intention is
clear not to repeal the existing legislation. When the new Act contains a
repealing section mentioning the Acts which it expressly repeals, the
presumption against implied repeal of other laws is further strengthened on
the principle expressio unius (persone vel rei) est exclusio alterius. (The
express intention of one person or thing is the exclusion of another), as
illuminatingly stated in Garnett v. Bradley [(1878) 3 AC 944 : (1874-80) All
ER Rep 648 : 48 LJQB 186 : 39 LT 261 (HL)] . The continuance of the
existing legislation, in the absence of an express provision of repeal being
presumed, the burden to show that these has been repeal by implication lies
on the party asserting the same. The presumption is, however, rebutted and a
repeal is inferred by necessary implication when the provisions of the later
Act are so inconsistent with or repugnant to the provisions of the earlier Act
that the two cannot stand together. But, if the two can be read together and
some application can be made of the words in the earlier Act, a repeal will
not be inferred.
14. The necessary questions to be asked are:
(1) Whether there is direct conflict between the two provisions.
(2) Whether the legislature intended to lay down an exhaustive Code in respect
of the subject-matter replacing the earlier law.
(3) Whether the two laws occupy the same field.
15. The doctrine of implied repeal is based on the theory that the legislature,
which is presumed to know the existing law, did not intend to create any
37
confusion by retaining conflicting provisions and, therefore, when the court
applies the doctrine, it does no more than give effect to the intention of the
legislature by examining the scope and the object of the two enactments and by a
comparison of their provisions. The matter in each case is one of the construction
and comparison of the two statutes. The court leans against implying a repeal,
unless two Acts are so plainly repugnant to each other that effect cannot be given
to both at the same time, a repeal will not be implied, or that there is a necessary
inconsistency in the two Acts standing together. To determine whether a later
statute repeals by implication an earlier statute, it is necessary to scrutinize the
terms and consider the true meaning and effect of the earlier Act. Until this is
done, it is impossible to ascertain whether any inconsistency exists between the
two enactments. The area of operation in the Code and the pollution laws in
question are different with wholly different aims and objects, and though they
alleviate nuisance, that is not of identical nature. They operate in their respective
fields and there is no impediment for their existence side by side.”
45.Last, relying on another decision of the Supreme Court in Gammon
India Ltd. Vs. Special Chief Secretary & Ors., (2006) 3 SCC
354, Sri Mehrotra would further emphasize - the first submission advanced
by Sri Rakesh Ranjan Agarwal, learned counsel for the petitioners, that
substitution has the twin effect of repeal and enactment by replacement.
46.Sri Ashish Bansal, learned counsel has adopted the submissions
advanced by learned counsel for the petitioners, as noted above. He has
further relied on the provisions of Section 151-A of the Act introduced by
the Enabling Act. It reads as below:
“151A. (1) The Central Government may make a scheme, by notification in
the Official Gazette, for the purposes of assessment, reassessment or re-
computation under section 147 or issuance of notice under section 148 or
sanction for issue of such notice under section 151, so as to impart greater
efficiency, transparency and accountability by—
(a) eliminating the interface between the income-tax authority and the
assessee or any other person to the extent technologically feasible;
(b) optimising utilisation of the resources through economies of scale
and functional specialisation;
(c) introducing a team-based assessment, reassessment, re-computation
or issuance or sanction of notice with dynamic jurisdiction.
(2) The Central Government may, for the purpose of giving effect to the
scheme made under sub-section (1), by notification in the Official
Gazette, direct that any of the provisions of this Act shall not apply or
shall apply with such exceptions, modifications and adaptations as may
be specified in the notification:
Provided that no direction shall be issued after the 31st day of March,
2022.
(3) Every notification issued under sub-section (1) and sub-section (2) shall, as
soon as may be after the notification is issued, be laid before each House of
Parliament.;”
38
47. He would submit that that provision alone-pertaining to re-assessment
proceedings had been introduced by the Enabling Act w.e.f. 01.11.2020.
Otherwise, the Enabling Act does not touch upon re-assessment proceedings
in any way. Therefore, it is preposterous on part of the revenue authorities to
rely on the Enabling Act for any other purpose. Only upon assumption of
jurisdiction and issuance of jurisdictional notice under Section 148 of the
Act, a proceeding could come into existence under the pre-existing laws.
That procedure having been transformed completely, by the Finance Act,
2021, w.e.f. 01.04.2021 before any reassessment proceeding came into
existence, there survives no room to rely on the pre-existing provisions of
law. Thus, it has been emphasized by Sri Bansal, the scope of Section 3(1)
of the Enabling Act is limited to extend the time qua reassessment
proceedings, validly initiated under the unamended Income Tax Act, up to
31.03.2021. It neither creates any jurisdiction nor it confers validity on any
reassessment proceedings instituted under the unamended law, after the
enforcement of the Finance Act, 2021.
48.As to the non-obstante clause appearing in the latter part of Section
3(1) of the Enabling Act, it has been vehemently urged by Shri Bansal that
that non-obstante clause cannot be given any applicability and it cannot be
read into the first part of Section 3(1), which alone pertains to issuance of
any notice under the Act as it existed upto 31.03.2021. A non-obstante
clause has to be read in a manner as to allow for a overriding effect viz-a-viz
other laws or such laws as may be specified in that non-obstante clause.
However, its effect must remain confined to the intendment of such a clause.
Plainly, a non-obstante clause cannot be interpreted to cause effect, not
contemplated.
49.Insofar as the phrase 'notwithstanding anything contained in the
specified act' appears only in the context of completion or compliance of
such action, it can only be applied to a proceeding that was already in
existence when that clause confronted the Act as amended by the Finance
Act, 2021, on 01.04.2021. Inasmuch as, in all the petitions, re-assessment
notices were issued after 01.04.2021, it can never be said that there were any
39
proceedings of re-assessment pending on the date when the non-obstante
clause may be applied. He has placed reliance on a decision of the Supreme
Court in A.G. Varadarajulu & Anr. Vs. State of T.N. & Ors.,
(1998) 4 SCC 231, wherein it was held as below:
“14. We shall now deal with the issues raised before us.
Do the words “notwithstanding anything in any other provision of this Act”
occurring in Section 21-A override Section 3(42)?
15. It is true that the Tribunals below had accepted that the partition deed
dated 24-9-1970 was executed after 15-2-1970 and before 2-10-1970 and
was therefore a valid document. Section 21-A says that that section shall
have effect “notwithstanding anything contained in Section 22 or in any
other provision of this Act and in any other law for the time being in force”
(emphasis supplied). The contention of the appellants is that if the partition
deed is valid in view of Section 21-A, then in view of the above non
obstante clause, the respondents cannot insist that the land allotted to the
second appellant under the deed on 24-9-1990 shall further conform to the
conditions contained in the definition of “stridhana land” in Section 3(42),
namely, that she must be holding the land as on 15-2-1970.
16. It is well settled that while dealing with a non obstante clause under
which the legislature wants to give overriding effect to a section, the court
must try to find out the extent to which the legislature had intended to give
one provision overriding effect over another provision. Such intention of
the legislature in this behalf is to be gathered from the enacting part of the
section. In Aswini Kumar Ghose v. Arabinda Bose [AIR 1952 SC 369 :
1953 SCR 1] , Patanjali Sastri, J. observed:
“The enacting part of a statute must, where it is clear, be taken to
control the non obstante clause where both cannot be read
harmoniously;”
In Madhav Rao Scindia v. Union of India [(1971) 1 SCC 85] (SCC at p.
139) Hidayatullah, C.J. observed that the non obstante clause is no doubt a
very potent clause intended to exclude every consideration arising from
other provisions of the same statute or other statute but “for that reason
alone we must determine the scope” of that provision strictly. When the
section containing the said clause does not refer to any particular provisions
which it intends to override but refers to the provisions of the statute
generally, it is not permissible to hold that it excludes the whole Act and
stands all alone by itself. “A search has, therefore, to be made with a view
to determining which provision answers the description and which does
not.”
50.Sri Divyanshu Agarwal, learned counsel also appearing for the
petitioners has adopted the submissions advanced by other learned counsel
for the petitioners, as noted above. He has further emphasized; Section 3(1)
of the Enabling Act only seeks to enlarge the time limit specified in or
prescribed under the Act between the dates 20.03.2020 to 31.12.2020.
Thereafter, a limited delegation was made in favour of the Central
Government - to extend that time line, only for the purposes of completion
or compliance etc. and issuance of certain notices. However, once the law
40
underwent a change, upon enactment of the Finance Act, 2021, whereby the
re-assessment procedure was completely changed, the time extension
provision is of no help to the respondents as such time extension, cannot be
exercised in absence of statutory substratum to which that time extension
may be applied.
51.Adopting the submissions advanced by learned counsel for the
petitioners noted above, Sri Parv Agarwal, learned counsel has laid stress;
besides the above, Section 148-A, first introduced by the Finance Act, 2021
lays down a mandatory procedure to be followed for the purpose of making
a re-assessment. Unless that procedure is first followed, no notice under
Section 148 of the Act, either under the pre-existing law or under the
substituted law, could ever be issued. Therefore, in any case, the impugned
notices are without jurisdiction. He has placed reliance on a Constitution
Bench decision of the Supreme Court in Memon Abdul Karim Haji
Tayab, Central Cutlery Stories, Veraval Vs. Deputy Custodian-
General, New Delhi & Ors., AIR 1964 SC 1256, wherein it was
observed as under:
“It will be seen that this is mainly a procedural section replacing the earlier
Section 48 and lays down that sums payable to the Government or to the
Custodian can be recovered thereunder as arrears of land revenue. The
section also provides that where there is any dispute as to whether any sum is
payable or not to the Custodian or to the Government, the Custodian has to
make an enquiry into the matter and give the person raising the dispute an
opportunity of being heard and thereafter decide the question. Further, the
section makes the decision of the Custodian final subject to any appeal or
revision under the Act and not open to question by any court or any other
authority. Lastly the section provides that the sum shall be deemed to be
payable to the Custodian notwithstanding that its recovery is barred by the
Indian Limitation Act or any other law for the time being in force relating to
limitation of action. Sub-sections (1) and (2) are clearly procedural and
would apply to all cases which have to be investigated in accordance
therewith after October 22, 1956, even though the claim may have arisen
before the amended section was inserted in the Act. It is well settled that
procedural amendments to a law apply, in the absence of anything to the
contrary, retrospectively in the sense that they apply to all actions after the
date they come into force even though the actions may have begun earlier or
the claim on which the action may be based may be of an anterior date.
Therefore, when the Assistant Custodian issued notice to the appellant on
January 22, 1958 claiming the amount from him, the recovery could be dealt
with under sub-section (1) and (2) of the amended Section 48, as they are
merely procedural provisions. But it is urged on behalf of the appellant that
sub-section (1) in terms does not apply to the present case, and if so, sub-
section (2) would also not apply. The argument is that under sub-section (1)
it is only any sum payable to the Government or to the Custodian in respect
of any evacuee property which can be recovered as arrears of land revenue.”
41
52.Sri Salil Kapoor alongwith Sri Anuj Srivastava and Ms. Saumya
Singh, learned counsel for the petitioners, besides adopting the submissions
noted above, laid great stress that the provisions of Sections 2 to 88 of the
Finance Act, 2021 came into force w.e.f. 01.04.2021 and they completely
replaced the pre-existing law. He further emphasized, different dates were
prescribed by the Finance Act, 2021 for enforcement of different provisions.
Thus, Sections 2 to 88 of that Act were enforced with effect from
01.04.2021 by virtue of the clear stipulation made in Section 1(2) (a) of that
Act and different stipulations were made for enforcement of other
provisions. By way of example, it has been stated that Section 54 of Finance
Act, 2021 enforced the provisions of Section 194Q, with effect from
01.07.2021. Similarly, Section 56 of the Finance Act, 2021 introduced and
enforced the proviso to Section 206 AA, with effect from 01.07.2021.
Again, by Section 57 of the Finance Act, 2021, Section 206 AB was
introduced and enforced with effect from 01.07.2021. Thus, it has been
submitted, the legislature was conscious of the realities and in its own
wisdom, the Parliament chose to substitute the provisions of Sections 147,
148, 149, 150 and introduced Section 148-A of the Act, with effect from
01.04.2021. That having been done without saving the pre-existing
provisions and without any legislative intent expressed either under the
Finance Act, 2021 or the Enabling Act to preserve any part of the pre-
existing provisions for the purpose of assumption of jurisdiction and
initiation of reassessment proceedings, for any of the previous years, no
reassessment proceedings could be initiated under Section 148 of the Act
after 01.04.2021 by taking resort to the pre-existing and now omitted
provisions, pertaining to reassessment.
53.Other learned counsel for the petitioners have adopted the aforesaid
submissions, noted above.
54.Shri Shashi Prakash Singh, learned Additional Solicitor General of
India, appearing for the Union of India as also the CBDT and learned
counsel for the revenue, have submitted, the Ordinance was promulgated,
occasioned solely by the circumstances arising from the spread of the
42
pandemic COVID-19. The extension of limitation granted or, the strict rule
of limitation relaxed by the Ordinance was for the benefit of the assessees as
also the statutory authorities. These extensions were granted by way of
legislative acceptance of the hard realities obtaining from the spread of the
pandemic COVID-19, which largely disabled normal human activity and
prevented statutory authorities from discharging their statutory obligations
in accordance with law and obstructed and/or prevented the assessees from
making compliances and pursing their rights.
55.Relying on the decision of the Supreme Court in Union of India &
Ors. Vs. Exide Industries Limited & Anr., (2020) 5 SCC 274, it
has been vehemently urged, the constitutional validity of a law may be
challenged on only two grounds – either, it may be shown that there was
legislative incompetence in enacting the law or that the law impinges on any
of the fundamental rights enshrined in Part III of the Constitution of India.
He would further submit, there always exists a presumption in favour of the
constitutionality of the law and that no enacted law may be struck down on a
simple reasoning of it being arbitrary or unreasonable. Strict application of
that rule must be ensured while dealing with taxation legislation. Thus, he
has placed reliance on paragraphs 15 and 16 of the aforesaid report, which
read as below:
“15. The approach of the Court in testing the constitutional validity of a
provision is well settled and the fundamental concern of the Court is to
inspect the existence of enacting power and once such power is found to
be present, the next examination is to ascertain whether the enacted
provision impinges upon any right enshrined in Part III of the
Constitution. Broadly speaking, the process of examining validity of a
duly enacted provision, as envisaged under Article 13 of the
Constitution, is premised on these two steps. No doubt, the second test of
infringement of Part III is a deeper test undertaken in light of settled
constitutional principles. In State of Madhya Pradesh vs. Rakesh Kohli &
Anr. (2012) 6 SCC 312, this Court observed thus:
“17. This Court has repeatedly stated that legislative
enactment can be struck down by Court only on two grounds,
namely (i) that the appropriate legislature does not have
competence to make the law, and (ii) that it does not take
away or abridge any of the fundamental rights enumerated in
Part III of the Constitution or any other constitutional
provisions….” (emphasis supplied) The above exposition has
been quoted by this Court with approval in a catena of other
cases including Bhanumati & Ors. vs. State of Uttar Pradesh
& Ors. (2010) 12 SCC 1, State of Andhra Pradesh & Ors. vs.
McDowell & Co. (1996) 3 SCC 709 and Kuldip Nayar &
43
Ors. vs. Union of India & Ors.(2006) 7 SCC 1, to state a few.
16. In furtherance of the twofold approach stated above, the Court, in
Rakesh Kohli (supra) also called for a prudent approach to the following
principleswhile examining the validity of statutes on taxability: (SCC
p.327, para 32)
“32. While dealing with constitutional validity of a taxation
law enacted by Parliament or State Legislature, the court
must have regard to the following principles:
(i) there is always presumption in favour of
constitutionality of a law made by Parliament or a
State Legislature,
(ii) no enactment can be struck down by just
saying that it is arbitrary or unreasonable or
irrational but some constitutional infirmity has to
be found,
(iii) the court is not concerned with the wisdom or
unwisdom, the justice or injustice of the law as
Parliament and State Legislatures are supposed to
be alive to the needs of the people whom they
represent and they are the best judge of the
community by whose suffrage they come into
existence,
(iv) hardship is not relevant in pronouncing on the
constitutional validity of a fiscal statute or
economic law, and
(v) in the field of taxation, the legislature enjoys
greater latitude for classification…..” (emphasis
supplied)”
56.It has been further submitted, no ground has been raised in any of the
petitions to test the validity of the law and, in fact, no such ground exists.
The Enabling Act had become necessary to be enacted, considering the
hardships arising from the spread of the pandemic COVID-19, affecting
both the assessees as also the statutory authorities and their functioning.
Once limitation had been extended in favour of the assessee, to submit
replies and to make other compliances, correspondingly, extension of time
was granted to the statutory authorities to initiate, amongst others,
reassessment proceedings, beyond the normal limitation of time.
57.Placing further reliance on the aforesaid decision of the Supreme
Court, the learned ASGI would submit, Section 3(1) of the Enabling Act
contains a non-obstante clause which clearly overrides any period of
limitation or any disability arising from such period of limitation as may
44
have been prescribed under the Act. That non-obstante clause has an
overriding effect against all other provisions of general application, and it
cannot be controlled or overridden, unless specifically permitted. Since the
petitioners have been unable to show any provision of law as may restrict
the operation of such non-obstante clause, the writ petition must fail. In that
regard, paragraph 21 of the decision in Union of India & Ors. Vs.
Exide Industries Limited & Anr. (supra), is quoted below:
“21. Section 43-B bears heading “certain deductions to be only on
actual payment”. It opens with a non obstante clause. As per settled
principles of interpretation, a non obstante clause assumes an overriding
character against any other provision of general application. It declares
that within the sphere allotted to it by the Parliament, it shall not be
controlled or overridden by any other provision unless specifically
provided for. Out of the allowable deductions, the legislature
consciously earmarked certain deductions from time to time and
included them in the ambit of Section 43-B so as to subject such
deductions to conditionality of actual payment. Such conditionality may
have the inevitable effect of being different from the theme of mercantile
system of accounting on accrual of liability basis qua the specific head
of deduction covered therein and not to other heads. But that is a matter
for the legislature and its wisdom in doing so.”
58.Relying further on the aforesaid decision, the learned ASGI would
also submit, if any ambiguity may exist or may be perceived on account of
enforcement of the Finance Act, 2021 it must be examined, and the law may
be interpreted by applying the mischief rule. As noted above, the mischief
being the unforeseen and difficult circumstances arising from spread of
pandemic COVID-19, the Enabling Act only sought to remedy the same.
Examined in that light, the extension of limitation to issue a reassessment
notice under the Act, is incidental to the mischief addressed.
59.Unless free play is given to Section 3(1) of the Enabling Act read with
the Notifications issued thereunder, a wholly lop-sided situation would arise
whereby the assessee would remain saved from adverse consequences
despite non-compliance shown but the statutory authorities would be hand-
tied and restrained from taking any corrective action, solely on account of
force majeure. In that regard, reliance has been placed on paragraph 26 of
the decision in Union of India & Ors. Vs. Exide Industries
Limited & Anr. (supra), which is quoted below:
“26. Be it noted that the interpretation of a statute cannot be unrelated
45
to the nature of the statute. In line with other clauses under Section 43-
B, clause (f) was enacted to remedy a particular mischief and the
concerns of public good, employees’ welfare and prevention of fraud
upon Revenue is writ large in the said clause. In our view, such statutes
are to be viewed through the prism of the mischief they seek to suppress,
that is, the Heydon’s case, (1584) 3 Co Rep 7a: 76 ER 637, principle. In
Crawford Statutory Construction, it has been gainfully delineated that
“an enactment designed to prevent fraud upon the Revenue is more
properly a statute against fraud rather than a taxing statute, and hence
should receive a liberal construction in the government’s favour.”
60.Applying the above principle, it has been further submitted, the time
limitation existing under the Act had been extended under the Ordinance as
also the Enabling Act, much prior to the introduction of the Finance Act,
2021. It is only that extension which was given one final push by the
impugned Notification dated 27.04.2021 as it became necessary on account
of the spread of the second wave of the pandemic COVID-19. It has further
been submitted that no further extension has been granted beyond 30 June
2021. Therefore, the mischief that existed stands addressed and remedied,
and no prejudice has been caused to the petitioners who were otherwise
liable to suffer initiation of reassessment proceedings.
61.Then, it has been submitted, Explanation to Clause A(a) of
Notification No. 20 of 2021 dated 31.03.2021 and Explanation to Clause
A(b) of Notification No. 38 dated 27.04.2021 are only clarificatory. Even if
those Explanations were to be ignored, by virtue of the clear language of
Section 3(1) of the Enabling Act, the time limits specified under the Act
(prior to is amendment by Finance Act, 2021), stood extended by the
Parliament, in cases where such limitations were expiring after 20
th
March
2020 and upto 31
st
December 2020, upto 31
st
December 2020. It is only with
respect to such extension that a power was delegated on the Central
Government to grant further extension/s. Therefore, the Explanations
referred to above do not create any new law and they do not, in any way,
offend the existing law. Hence, the argument; the delegated power has been
exercised in excess of the delegation made, is plainly erroneous and
unfounded.
62.Last, reliance has been placed on a recent decision of the Supreme
46
Court in Ramesh Kymal Vs. Siemens Gamesa Renewable Power
Private Limited, (2021) 3 SCC 224, wherein, according to learned
ASGI, in similar facts, the Supreme Court has read a similar amendment
made to the Insolvency and Bankruptcy Code 2016 to enlarge the limitation,
as unexceptionally applicable, to all cases.
63.Having heard learned counsel for the parties and having perused the
record, we find that the thrust of the submissions advanced by learned
counsel for the petitioners, are:
(i) By substituting the provisions of the Act by means of the Finance
Act, 2021 with effect from 01.04.2021, the old provisions were omitted from
the statute book and replaced by fresh provisions with effect from
01.04.2021. Relying on the principle - substitution omits and thus obliterates
the pre-existing provision, it has been further submitted, in absence of any
saving clause shown to exist either under the Ordinance or the Enabling Act
or the Finance Act 2021, there exists no presumption in favour of the old
provision continuing to operate for any purpose, beyond 31.03.2021.
(ii) The Act is a dynamic enactment that sustains through enactment
of the Finance Act every year. Therefore, on 1
st
April every year, it is the Act
as amended by the Finance Act, for that year which is applied. In the present
case, it is the Act as amended by the Finance Act 2021, that confronted the
Enabling Act as was pre-existing. In absence of any legislative intent
expressed either under the Finance Act, 2021 or under the Enabling Act, to
preserve any part of the pre-existing Act, plainly, reference to provisions of
Sections 147 and 148 of the Act and the words 'assessment' and
'reassessment' appearing in the Notifications issued under the Enabling Act
may be read to be indicating only at proceedings already commenced prior
to 01.04.2021, under the Act (before amendment by the Finance Act, 2021).
The delegated action performed under the Enabling Act cannot, itself create
an overriding effect in favour of the Enabling Act.
(iii) The Enabling Act read with its Notifications does not validate the
initiation of any proceeding that may otherwise be incompetent under the
47
law. That law only affects the time limitation to conduct or conclude any
proceeding that may have been or may be validly instituted under the Act,
whether prior to or after its amendment by Finance Act, 2021. Insofar as,
Section 1(2)(a) unequivocally enforced Sections 2 to 88 of the Finance Act,
2021, w.e.f. 01.04.2021, there can be no dispute if any valid proceeding
could be initiated under the pre-existing Section 148 read with Section 147,
after 01.04.2021. In support thereof other submission also appear to exist -
based upon the enactment of Section 148A (w.e.f. 01.04.2021).
(iv) The delegation made could be exercised within the four corners
of the principal legislation and not to overreach it. Insofar as the Enabling
Act does not delegate any power to legislate - with respect to enforceability
of any provision of the Finance Act, 2021 and those provisions (Sections 2
to 88) had come into force, on their own, on 01.04.2021, any exercise of the
delegate under the Enabling Act, to defeat the plain enforcement of that law
would be wholly unconstitutional.
(v) It also appears to be the submission of learned counsel for the
petitioners that the Parliament being aware of all realities, both as to the fact
situation and the laws that were existing, it had consciously enacted the
Enabling Act, to extend certain time limitations and to enforce only a partial
change to the reassessment procedure, by enacting section 151-A to the Act.
It then enacted the Finance Act, 2021 to change the substantive and
procedural law governing the reassessment proceedings. That having been
done, together with introduction of section 148-A to the Act, legislative field
stood occupied, leaving the delegate with no room to manipulate the law
except as to the time lines with respect to proceedings that may have been
initiated under the Act (both prior to and after enforcement of the Finance
Act, 2021). To bolster their submission, learned counsel for the petitioners
also rely on the principle - the delegated legislation can never defeat the
principal legislation.
(vi) Last, it has also been asserted, the non-obstante clause created
under section 3(1) of the Enabling Act must be read in the context and for
48
the purpose or intent for which it is created. It cannot be given a wider
meaning or application as may defeat the other laws.
64.As to the first line of reasoning applied by the learned counsel for the
petitioner, as noted above, there can be no exception to the principle - an Act
of legislative substitution is a composite act. Thereby, the legislature
chooses to put in place another or, replace an existing provision of law. It
involves simultaneous omission and re-enactment. By its very nature, once a
new provision has been put in place of a pre-existing provision, the earlier
provision cannot survive, except for things done or already undertaken to be
done or things expressly saved to be done. In absence of any express saving
clause and, since no reassessment proceeding had been initiated prior to the
Act of legislative substitution, the second aspect of the matter does not
require any further examination.
65.Therefore, other things apart, undeniably, on 01.04.2021, by virtue of
plain/unexcepted effect of Section 1(2)(a) of the Finance Act, 2021, the
provisions of Sections 147, 148, 149, 151 (as those provisions existed upto
31.03.2021), stood substituted, along with a new provision enacted by way
of Section 148A of that Act. In absence of any saving clause, to save the
pre-existing (and now substituted) provisions, the revenue authorities could
only initiate reassessment proceeding on or after 01.04.2021, in accordance
with the substituted law and not the pre-existing laws.
66.It is equally true that the Enabling Act that was pre-existing, had been
enforced prior to enforcement of the Finance Act, 2021. It confronted the
Act as amended by Finance Act, 2021, as it came into existence on
01.04.2021. In the Enabling Act and the Finance Act, 2021, there is absence,
both of any express provision in itself or to delegate the function - to save
applicability of the provisions of sections 147, 148, 149 or 151 of the Act, as
they existed up to 31.03.2021. Plainly, the Enabling Act is an enactment to
extend timelines only. Consequently, it flows from the above - 01.04.2021
onwards, all references to issuance of notice contained in the Enabling Act
must be read as reference to the substituted provisions only. Equally there is
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no difficulty in applying the pre-existing provisions to pending proceedings.
Looked in that manner, the laws are harmonized.
67. It may also be not forgotten, a reassessment proceeding is not just
another proceeding emanating from a simple show cause notice. Both, under
the pre-existing law as also under the law enforced from 01.04.2021, that
proceeding must arise only upon jurisdiction being validly assumed by the
assessing authority. Till such time jurisdiction is validly assumed by
assessing authority - evidenced by issuance of the jurisdictional notice under
Section 148, no re-assessment proceeding may ever be said to be pending
before the assessing authority. The admission of the revenue authorities that
all re-assessment notices involved in this batch of writ petitions had been
issued after the enforcement date 01.04.2021, is tell-tale and critical. As a
fact, no jurisdiction had been assumed by the assessing authority against any
of the petitioners, under the unamended law. Hence, no time extension could
ever be made under section 3(1) of the Enabling Act, read with the
Notifications issued thereunder.
68.The submission of the learned Additional Solicitor General of India
that the provision of Section 3(1) of the Enabling Act gave an overriding
effect to that Act and therefore saved the provisions as existed under the
unamended law, also cannot be accepted. That saving could arise only if
jurisdiction had been validly assumed before the date 01.04.2021. In the
first place Section 3(1) of the Enabling Act does not speak of saving any
provision of law. It only speaks of saving or protecting certain proceedings
from being hit by the rule of limitation. That provision also does not speak
of saving any proceeding from any law that may be enacted by the
Parliament, in future. For both reasons, the submission advanced by learned
Additional Solicitor General of India is unacceptable.
69.Even otherwise the word 'notwithstanding' creating the non obstante
clause, does not govern the entire scope of Section 3(1) of the Enabling Act.
It is confined to and may be employed only with reference to the second
part of Section 3(1) of the Enabling Act i.e. to protect proceedings already
50
under way. There is nothing in the language of that provision to admit a
wider or sweeping application to be given to that clause – to serve a purpose
not contemplated under that provision and the enactment, wherein it
appears.
70.The upshot of the above reasoning is, the Enabling Act only protected
certain proceedings that may have become time barred on 20.03.2021, upto
the date 30.06.2021. Correspondingly, by delegated legislation incorporated
by the Central Government, it may extend that time limit. That time limit
alone stood extended upto 30 June, 2021. We also note, the learned
Additional Solicitor General of India may not be entirely correct in stating
that no extension of time was granted beyond 30.06.2021. Vide Notification
No. 3814 dated 17.09.2021, issued under section 3(1) of the Enabling Act,
further extension of time has been granted till 31.03.2022. In absence of any
specific delegation made, to allow the delegate of the Parliament, to
indefinitely extend such limitation, would be to allow the validity of an
enacted law i.e. the Finance Act, 2021 to be defeated by a purely colourable
exercise of power, by the delegate of the Parliament.
71.Here, it may also be clarified, Section 3(1) of the Enabling Act does
not itself speak of reassessment proceeding or of Section 147 or Section 148
of the Act as it existed prior to 01.04.2021. It only provides a general
relaxation of limitation granted on account of general hardship existing
upon the spread of pandemic COVID -19. After enforcement of the Finance
Act, 2021, it applies to the substituted provisions and not the pre-existing
provisions.
72.Reference to reassessment proceedings with respect to pre-existing
and now substituted provisions of Sections 147 and 148 of the Act has been
introduced only by the later Notifications issued under the Act. Therefore,
the validity of those provisions is also required to be examined. We have
concluded as above, that the provisions of Sections 147, 148, 148A, 149,
150 and 151 substituted the old/pre-existing provisions of the Act w.e.f.
01.04.2021. We have further concluded, in absence of any proceeding of
51
reassessment having been initiated prior to the date 01.04.2021, it is the
amended law alone that would apply. We do not see how the delegate i.e.
Central Government or the CBDT could have issued the Notifications,
plainly to over reach the principal legislation. Unless harmonized as above,
those Notifications would remain invalid.
73.Unless specifically enabled under any law and unless that burden had
been discharged by the respondents, we are unable to accept the further
submission advanced by the learned Additional Solicitor General of India
that practicality dictates that the reassessment proceedings be protected.
Practicality, if any, may lead to legislation. Once the matter reaches Court, it
is the legislation and its language, and the interpretation offered to that
language as may primarily be decisive to govern the outcome of the
proceeding. To read practicality into enacted law is dangerous. Also, it
would involve legislation by the Court, an idea and exercise we carefully
tread away from.
74.Similarly, the mischief rule has limited application in the present case.
Only in case of any doubt existing as to which of the two interpretations
may apply or to clear a doubt as to the true interpretation of a provision, the
Court may look at the mischief rule to find the correct law. However, where
plain legislative action exists, as in the present case (whereunder the
Parliament has substituted the old provisions regarding reassessment with
new provisions w.e.f. 01.04.2021), the mischief rule has no application.
75.As we see there is no conflict in the application and enforcement of
the Enabling Act and the Finance Act, 2021. Juxtaposed, if the Finance Act,
2021 had not made the substitution to the reassessment procedure, the
revenue authorities would have been within their rights to claim extension
of time, under the Enabling Act. However, upon that sweeping amendment
made the Parliament, by necessary implication or implied force, it limited
the applicability of the Enabling Act and the power to grant time extensions
thereunder, to only such reassessment proceedings as had been initiated till
31.03.2021. Consequently, the impugned Notifications have no
52
applicability to the reassessment proceedings initiated from 01.04.2021
onwards.
76.Upon the Finance Act 2021 enforced w.e.f. 1.4.2021 without any
saving of the provisions substituted, there is no room to reach a conclusion
as to conflict of laws. It was for the assessing authority to act according to
the law as existed on and after 1.4.2021. If the rule of limitation permitted, it
could initiate, reassessment proceedings in accordance with the new law,
after making adequate compliance of the same. That not done, the
reassessment proceedings initiated against the petitioners are without
jurisdiction.
77. Insofar as the decision of the Supreme Court in the case of Ramesh
Kymal Vs. Siemens Gamesa Renewable Power Private Limited
(supra) is concerned, we opine, the same is wholly distinguishable.
Therein The Insolvency and Bankruptcy Code 2016 was amended by the
Parliament and a new Section 10A, was introduced, apparently again on
account of the difficulties arising from the spread of pandemic COVID-19.
That Section reads as under:
“10A. Notwithstanding anything contained in sections 7, 9 and 10, no
application for initiation of corporate insolvency resolution process of a
corporate debtor shall be filed, for any default arising on or after 25th March,
2020 for a period of six months or such further period, not exceeding one year
from such date, as may be notified2in this behalf:
Provided that no application shall ever be filed for initiation of corporate
insolvency resolution process of a corporate debtor for the said default
occurring during the said period.
Explanation. – For the removal of doubts, it is hereby clarified that the
provisions of this section shall not apply to any default committed under the
said sections before 25th March, 2020.]”
78.Plainly, in that case, the earlier provisions were not substituted rather
they continued to exist. The parliamentary intervention by introducing
Section 10A of that Act only provided - no proceeding be instituted for any
default arising after 21.3.2020, for a period of six months or such period not
exceeding one year, as may be notified. Thus, in that case, by virtue of
amendment made, delegated power created, could be exercised to relax the
53
otherwise stringent provisions of the Act, in cases, wherein difficulties arose
from the spread of the pandemic COVID-19. Thus, that ratio is plainly
distinguishable.
79.As to the decision of the Chhattisgarh High Court, with all respect,
we are unable to persuade ourselves to that view. According to us, it would
be incorrect to look at the delegation legislation i.e. Notification dated
31.03.2021 issued under the Enabling Act, to interpret the principal
legislation made by Parliament, being the Finance Act, 2021. A delegated
legislation can never overreach any Act of the principal legislature. Second,
it would be over simplistic to ignore the provisions of, either the Enabling
Act or the Finance Act, 2021 and to read and interpret the provisions of
Finance Act, 2021 as inoperative in view of the fact circumstances arising
from the spread of the pandemic COVID-19. Practicality of life de hors
statutory provisions, may never be a good guiding principle to interpret any
taxation law. In absence of any specific clause in Finance Act, 2021, either
to save the provisions of the Enabling Act or the Notifications issued
thereunder, by no interpretative process can those Notifications be given an
extended run of life, beyond 31 March 2020. They may also not infuse any
life into a provision that stood obliterated from the statute with effect from
31.03.2021. Inasmuch as the Finance Act, 2021 does not enable the Central
Government to issue any notification to reactivate the pre-existing law
(which that principal legislature had substituted), the exercise made by the
delegate/Central Government would be de hors any statutory basis. In
absence of any express saving of the pre-existing laws, the presumption
drawn in favour of that saving, is plainly impermissible. Also, no
presumption exists that by Notification issued under the Enabling Act, the
operation of the pre-existing provision of the Act had been extended and
thereby provisions of Section 148A of the Act (introduced by Finance Act
2021) and other provisions had been deferred. Such Notifications did not
insulate or save, the pre-existing provisions pertaining to reassessment
under the Act.
54
80.In view of the above, all the writ petitions must succeed and are
allowed. It is declared that the Ordinance, the Enabling Act and Sections 2
to 88 of the Finance Act 2021, as enforced w.e.f. 01.04.2021, are not
conflicted. Insofar as the Explanation appended to Clause A(a), A(b), and
the impugned Notifications dated 31.03.2021 and 27.04.2021 (respectively)
are concerned, we declare that the said Explanations must be read, as
applicable to reassessment proceedings as may have been in existence on
31.03.2021 i.e. before the substitution of Sections 147, 148, 148A, 149, 151
& 151A of the Act. Consequently, the reassessment notices in all the writ
petitions are quashed. It is left open to the respective assessing authorities to
initiate reassessment proceedings in accordance with the provisions of the
Act as amended by Finance Act, 2021, after making all compliances, as
required by law.
81.Accordingly, reassessment notice issued to the present petitioner
dated 09.04.2021 for A.Y. 2017-18 is quashed.
82.All writ petitions are allowed. No order as to costs.
30.09.2021
Abhilash/Prakhar/AHA
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