Important ruling by the Allahabad High Court regarding Section 148 Notices sent between April 1, 2021, and June 30, 2021

Fact and issue of the case

The writ petitions in this bunch are directed against the orders passed by the Assessing Authority under Section 148-A(d) of the Income Tax Act’ 1961 (hereinafter referred as Act’ 1961) and the consequential notices issued under Section 148 of the Act’ 1961. The dispute pertains to the assessment years 2013-14, 2014-15, 2015-16, 2016-17 and 2017-18. The disputed notices having been issued on or after 01.04.2021, the period concerned is between 01.04.2021 to 30.06.2021. 3. At the outset, learned counsels for the parties had agreed to address the Court on two questions framed and discussed jointly, answer to which would decide the fate of the individual notices under challenge, on factual aspects. 4. We have, therefore, not entered into the merits of the individual notices under challenge and heard the learned counsels for the parties on the following two legal issues:-

(i) Whether the reassessment proceedings initiated with the notice under Section 148 (deemed to be notice under Section 148-A), issued between 01.04.2021 and 30.06.2021, can be conducted by giving benefit of relaxation/extension under the Taxation and Other Laws (Relaxation & Amendment of Certain Provisions) Act’ (TOLA)’ 2020 upto 30.03.2021, and then the time limit prescribed in Section 149 (1) (b) (as substituted w.e.f. 01.04.2021) is to be counted by giving such relaxation, benefit of TOLA from 30.03.2020 onwards to the revenue.

(ii) Whether in respect of the proceedings where the first proviso to Section 149(1)(b) is attracted, benefit of TOLA’ 2020 will be available to the revenue, or in other words the relaxation law under TOLA’ 2020 would govern the time frame prescribed under the first proviso to Section 149 as inserted by the Finance Act’ 2021,

Observation of the court

To deal with this submission, suffice it to say that extension in time uptill 30.6.2021 can be granted to the time limit provided in the amended Section 149 of the Income Tax Act brought by the Finance Act, 2021 by plain provisions of clause (A)(a) of the Notification No. 20 of 2021 dated 31.3.2021 ignoring Explanation to the same (quashed by this Court). Similarly extension in time as per the plain provision of clause (A)(a)(b) of the Notification No. 38 dated 27.4.2021 ignoring Explanation to it, may be granted as and when the said extensions are applicable for issuance of notice under Section 148 as per the time limit specified in Section 149 or sanctions under Section 151 of the Income Tax Act as amended by the Finance Act, 2021, after making all compliances, as required under the Income Tax Act, 1961 (amended provisions).

It may profitably be noted, at this stage, that it is settled law that a taxing statute must be interpreted in the light of what is clearly expressed. It is not permissible to import provisions in a taxing statute so as to supply any assumed deficiency. In interpreting a taxing statute, equitable considerations are out of place. Nor can taxing statutes be interpreted on any presumptions or assumptions. The court must look squarely at the words of the statute and interpret them; Interpreting taxing statute in the light of what is clearly expressed: it cannot imply anything which is not expressed. Before taxing any person it must be shown that he falls within the ambit of the charging section by clear words used in the section, and if the words are ambiguous and open to two interpretations, the benefit of interpretation is given to the subject. There is nothing unjust in the taxpayer escaping if the letter of the law fails to catch him on account of the legislature’s failure to express itself clearly. (Reference Union of India & others Ind-Swift Laboratories Ltd18; CIT Vs. Modi Sugar Mills Ltd19; State of West Bengal Vs. Kesoram Industries Ltd20.