The Rajasthan High Court has held that the subordinate legislature cannot be permitted to amend the provisions of the parent Act.
This bunch of writ petitions have filed challenging the notices issued by the Assessing Officers under Section 148 of the Income Tax Act, 1961, for reopening the assessment for various assessment years, after introduction of new provisions for reassessment of income by virtue of the Finance Act, 2021 with effect from 01.04.2021, by substituting the then existing provisions. All these notices were issued after 01.04.2021 and pertain to the relevant period which is prior to the said date.
The issue involved in these writ petitions has already been decided by the Co-ordinate Bench of Honorable High Court of Rajasthan while deciding a batch of petitions with the lead case of “Sudesh Tanesh Vs. Income Tax Officer”.
It was observed by the Co-ordinate bench that the major departure in the provisions of reassessment contained in the Finance Act, 2021 is that the new scheme of reassessment has made and time limits for issuing notice for reassessment have been changed. Elaborate provisions are made under Section 148A of the Act enabling the Assessing Officer to make enquiry with respect to material suggesting that income has escaped assessment, issuance of notice to the assessee calling upon why notice under Section 148 should not be issued and passing an order considering the material available on record including response of the assessee if made while deciding whether the case is fit for issuing notice under Section 148. Any action of issuance of notice under Section 148 after 01.04.2021 the newly introduced provisions under the Finance Act, 2021 would apply. In plain terms a notice which had become time barred prior to 01.04.2021 as per the then prevailing provisions, would not be revived by virtue of the application of Section 149(1) (b) effective from 01.04.2021. All the notices issued in the present cases are after 01.04.2021 and have been issued without following the procedure contained in Section 148A of the Act and are therefore invalid.
The Co-ordinate Bench in Sudesh Tanesh Vs. Income Tax Officer has observed that in case of J.K. Industries Ltd. and Ors. Vs. Union of India and Ors., reported in (2007) 13 SCC 673, it was observed as under:-
“However, as held in the case of Indian Express Newspaper v. Union of India reported in (1985) 1 SCC 641, subordinate legislation does not carry the same degree of immunity which is enjoyed by a statute passed by a competent Legislature. Subordinate legislation may be questioned on any of the grounds on which plenary legislation is questioned. In addition, it may also be questioned on the ground that it does not conform to the statute under which it is made. It may further be questioned on the ground that it is inconsistent with the provisions of the Act or that it is contrary to some other statute applicable on the same subject matter”.
The Co-ordinate bench further observed that in plain terms under sub-section (1) of Section 3 of the Relaxation Act, 2020 the Government of India was authorized to extend the time limits by issuing notifications in this regard. Issuing any explanation touching the provisions of the Income Tax Act was not part of this delegation at all. The CBDT while issuing the notifications dated 31.03.2021 and 27.04.2021 when introduced an explanation which provided by way of clarification that for the purposes of issuance of notice under Section 148 as per the time limits specified in Section 149 or 151, the provisions as they stood as on 31.03.2021 before commencement of the Finance Act, 2021 shall apply, plainly exceeded its jurisdiction as a subordinate legislation. The subordinate legislation could not have travelled beyond the powers vested in the Government of India by the parent Act.
The division bench presided by Honorable Mr. Justice Pankaj Bhandari and Honorable Mr. Justice Anoop Kumar Dhand while allowing the writ petition has held that “we are in full agreement with the judgment passed by the Co-ordinate Bench of this Court in the case of Sudesh Taneja (Supra). We see no reason to take a different view. In the result, we find that the notices impugned in the respective petitions are held to be invalid and bad in law and the same are quashed and set aside”.
Shweta Kedia vs Income Tax Officer
CITATION: 2022 TAXSCAN (HC) 229
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