Dismissed

Assistant Commissioner of Income Tax v. Balbir Singh S/O Shri Jai Singh Choudhary

Rajasthan HC24 Feb 2022SAW/224/2022

Case brief

AI extract

What is this about?

The Division Bench dismissed revenue appeals and upheld writ petitions challenging income tax reassessment notices issued after 01.04.2021. The court held that the new Finance Act, 2021 provisions apply to notices issued after that date, rendering notices issued under old procedures invalid. CBDT notifications attempting to validate such notices via explanation were declared ultra vires.

What did the court decide?

Impugined notices of reassessment are quashed and set aside; writ petitions allowed; revenue appeals dismissed.

Assistant Commissioner of Income Tax Vs Balbir Singh S/O Shri… — Income Tax | Rajasthan HC (2022)

¶1

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR

¶2

1. D.B. Special Appeal Writ No. 223/2022

¶3

Income Tax Officer, Ward-Behror Having Its Address At Income Tax Building, Riico Industrial Area, Behror, Alwar-301701.

¶4

----Appellant

¶5

Versus

¶6

Prem Bai W/o Balbir Singh, Aged About 50 Years, Currently Residing At A-88, Near Bsnl Exchange, Tehsil Behror, Alwar In The State Of Rajasthan.

¶7

----Respondent

¶8

2. D.B. Special Appeal Writ No. 224/2022

¶9

Assistant Commissioner Of Income Tax, Circle-1, Alwar, Having Its Address At C.r. Building Moti Doongri Road, Alwar 301001

¶10

----Appellant

¶11

Versus

¶12

Balbir Singh S/o Shri Jai Singh Choudhary, Aged About 51 Years, Currently Residing At A-88, Near Bsnl Exchange, Tehsil Behror, Alwar In The State Of Rajasthan

¶13

----Respondent

¶14

3. D.B. Special Appeal Writ No. 253/2022

¶15

Assistant Commissioner Of Income Tax, ITO WD, Behror, Income Tax Building, Riico Colony, Riico Industrial Area, Behror, Rajasthan, 301701.

¶16

----Appellant

¶17

Versus

¶18

Dara Singh, Aged About 42 Years, 0, Village Post Gandala, Behror, Alwar, Rajasthan 301709, India.

¶19

----Respondent

¶20

4. D.B. Special Appeal Writ No. 314/2022

¶21

Income Tax Officer, Ward-1 Court Campus, Ajmer Road, Beawar, Rajasthan 305901

----Appellant

(2 of 13)

[SAW-223/2022]

Versus

Neeta Lalwani D/o Shanti Lal Gokhru, Aged About 45 Years, R/o 301, Lokashah Nagar, Outside Mewari Gate, Beawar, Ajmer 305901

¶27

----Respondent

¶28

5. D.B. Special Appeal Writ No. 316/2022

¶29

Assistant Commissioner Of Income Tax, Circle-2, Ajmer.

¶30

----Appellant

¶31

Versus

¶32

C R Kothari And Sons Stock Broking Private Limited, Having Its Registered Office At 12, Lrcm Officers Colony, Mehta Cottage, 119/505, Darshan Pura Kalpi Road, Kanpur 208012 Uttar Pradesh, Through Its Director Hemant Kothari S/o Late Shri Chainraj Kothari, Aged About 61 Years, R/o 4-Ya-7, Jawahar Nagar, Monilek Hospital Marg, Jaipur 302004 (Raj.)

¶33

----Respondent

¶34

6. D.B. Special Appeal Writ No. 317/2022

¶35

Assistant Commissioner Of Income Tax, Circle-2, Ajmer.

----Appellant

Versus

----Respondent

7. D.B. Special Appeal Writ No. 318/2022

¶41

Assistant Commissioner Of Income Tax, Circle-2, Ajmer.

¶42

----Appellant

¶43

Versus

¶44

C R Kothari And Sons Commodities Private Limited, Having Its Registered Office At Kothari House A-495/a Panchsheel Nagar, A Block, Makarwali Road, Ajmer 305006, Rajasthan Through Its Director Priti Kothari W/o Mr. Alok Kothari R/o 1403, Amarnath

¶45

(3 of 13)

¶46

[SAW-223/2022]

¶47

Towers, Off. Yari Road, Versova, Andheri (West) Mumbai 400061

¶48

----Respondent

¶49

8. D.B. Special Appeal Writ No. 319/2022

¶50

Assistant Commissioner Of Income Tax Circle-2, Ajmer

----Appellant

Versus

----Respondent

9. D.B. Special Appeal Writ No. 320/2022

¶56

Assistant Commissioner Of Income Tax, Circle-2, Ajmer.

¶57

----Appellant

¶58

Versus

¶59

Robust Finvest Private Limited, Having Its Registered Office At Kothari House, A-495/a Panchsheel Nagar, A Block, Makarwali Road, Ajmer Through Its Director Hemant Kothari S/o Late Shri Chainraj Kothari Aged About 61 Years, R/o 4-Ya-7, Jawahar Nagar, Monilek Hospital Marg, Jaipur 302004 (Raj.)

¶60

----Respondent

¶61

10. D.B. Special Appeal Writ No. 321/2022

¶62

Assistant Commissioner Of Income Tax, Circle-2, Ajmer.

¶63

----Appellant

¶64

Versus

¶65

Robust Finvest Private Limited, Having Its Registered Office At Kothari House, A-495/a, Panchsheel Nagar, A Block, Makarwali Road, Ajmer Through Its Director, Hemant Kothari, S/o Late Shri Chainraj Kothari, Aged About 61 Years, R/o 4-Ya-7, Jawahar Nagar, Monilek Hospital Marg, Jaipur 302004 (Raj.)

----Respondent

(4 of 13)

[SAW-223/2022]

11. D.B. Special Appeal Writ No. 324/2022

¶70

Assistant Commissioner Of Income Tax, Circle-2, Ajmer

¶71

----Appellant

¶72

Versus

¶73

Robust Finvest Private Limited, Having Its Registered At Kothari House, A-495/a, Panchsheel Nagar, A Block, Makarwali Road, Ajmer Through Its Director Hemant Kothari S/o Late Shri Chainraj Kothari, Aged About 61 Years, R/o 4-Ya-7, Jawahar Nagar, Monilek Hospital Marg, Jaipur 302004, (Raj.)

¶74

----Respondent

¶75

12. D.B. Special Appeal Writ No. 328/2022

¶76

Income Tax Officer, Ward-1, Court Campus, Ajmer Road, Beawar, Rajasthan 305901.

¶77

----Appellant

¶78

Versus

¶79

Archana Jain D/o Noratmal Padawat, Aged About 37 Years, R/o Shitala Mata Marg, Kumhar Mohalla, Bijainagar, Ajmer 305624

¶80

----Respondent

¶81

13. D.B. Special Appeal Writ No. 340/2022

¶82

Assistant Commissioner Of Income Tax, Circle-2, Ajmer.

¶83

----Appellant

¶84

Versus

¶85

Chartered Gold Financial Services Private Limited, Having Its Registered Office At Kothari House, A-495/a, Panchsheel Nagar, A Block, Makarwali Road, Ajmer, Through Its Director Pradeep Kothari S/o Late Shri Chainraj Kothari Aged About 62 Years, R/o 1403, Amarnath Towers, Off Yari Road, Versova, Andheri West, Mumbai-400061

¶86

----Respondent

¶87

14. D.B. Special Appeal Writ No. 360/2022

¶88

Income Tax Officer, Ward-2(1), Dainik Navjyoti, Rawat Bhata Road, Kota, Rajasthan-324009.

----Appellant

(5 of 13)

[SAW-223/2022]

Versus

Porwal Yuvak Sangh, 77-78, Porwal Bhawan, Vallabh Bari, Kota, (Rajasthan) 324006 Through Its Secretary Vinod Prakash Porwal S/o Gauri Sahai Porwal, Age About 65 Years, R/o House No. 794, Jyoti Mandir Road Vistar Yojana, Dadabari, Kota, Rajasthan-324009.

¶94

----Respondent

¶95

15. D.B. Special Appeal Writ No. 361/2022

¶96

Income Tax Officer, Ward-2(1), Dainik Navjyoti, Rawat Bhata Road, Kota, Rajasthan-324009.

----Appellant

Versus

----Respondent

16. D.B. Special Appeal Writ No. 368/2022

¶102

Income Tax Officer, Ward 2(2), Dainik Navjyoti, Rawat Bhata Road, Kota, Rajasthan- 324009.

¶103

----Appellant

¶104

Versus

¶105

M/s Neva Ji Estates Private Limited, Having Its Registered Office At Khinchi Sadan, Hatai Ka Chowk, Sakatpura, Kota324008, Through Mr. Harish Gurjar, Its Authorized Person.

¶106

----Respondent

¶107

17. D.B. Special Appeal Writ No. 369/2022

¶108

Income Tax Officer, Ward-2(1), Dainik Navjyoti, Rawat Bhata Road, Kota, Rajasthan, 324009

¶109

----Appellant

¶110

Versus

¶111

Porwal Yuvak Sangh, 77-78 Porwal Bhawan, Vallabh Bari, Kota (Rajasthan) 324006 Through Its Secretary Vinod Prakash

¶112

(6 of 13)

¶113

[SAW-223/2022]

¶114

Porwal S/o Gauri Sahai Porwal, Age About 65 Years, R/o House No. 794, Jyoti Mandir Road Vistar Yojna, Dadabari, Kota, Rajasthan - 324009.

¶115

----Respondent

¶116

18. D.B. Special Appeal Writ No. 372/2022

¶117

Income Tax Officer,ward -2 (2), Ajmer, Cr Building, Opposite Session Court, Jaipur Road, Ajmer Rajasthan, 305001.

¶118

----Appellant

¶119

Versus

¶120

Dhanvarsha Oil Mills Private Limited, Having Its Registered Office At F-157, 158, 159 Riico Industrial Area, Jaipur Road, Kekri, Ajmer Ajmer 305404 Rajasthan India Through Its Director Jyoti Mittal

¶121

----Respondent

¶122

19. D.B. Special Appeal Writ No. 375/2022

¶123

Income Tax Officer, Ward 2(1), Kota Having Its Address At Central Revenue Building, Dainik Navjyoti Building, Rawat Bhata Road, Kota 324009

¶124

----Appellant

¶125

Versus

¶126

Ashok Kumar Adlakha Son Of Shri Shyam Lal Adlakha, Prop. M/s Shri Anand Associates Having His Address At 4, Railway Society, Mala Road, Kota 324001

¶127

----Respondent

¶128

20. D.B. Special Appeal Writ No. 397/2022

¶129

Income Tax Officer, Ward-1, Kishangarh, Ajmer.

¶130

----Appellant

¶131

Versus

¶132

Uma Devi Gupta W/o Sh. Babu Lal Gupta, Aged About 86 Years, R/o- Opp. Laxmi Narayan Mandir, Ajmer Road, Madanganj, Kishangarh, Ajmer-305801 (Raj.)

----Respondent

(7 of 13)

[SAW-223/2022]

21. D.B. Special Appeal Writ No. 400/2022

¶137

Income Tax Officer, Ward -1, Kishangarh, Ajmer.

¶138

----Appellant

¶139

Versus

¶140

Sourabh Gupta S/o Sh. Dharmendra Gupta, Aged About 25 Years, R/o 202, Near Gas Company, Opp. Laxmi Narayan Mandir, Madanganj, Ajmer Road, Kishangarh - 305801, District - Ajmer (Raj.)

¶141

----Respondent

¶142

22. D.B. Special Appeal Writ No. 411/2022

¶143

Income Tax Officer, Ward -1, Kishangarh, Ajmer.

¶144

----Appellant

¶145

Versus

¶146

Rajendra Gupta (Huf) representative through Karta Shri Rajendra Gupta S/o Sh. Babu La Gupta, R/o Opp. Laxmi Narayan Mandir, Ajmer Road, Madanganj, Kishangarh, Ajmer - 305801 (Raj.)

¶147

----Respondent

¶148

23. D.B. Special Appeal Writ No. 412/2022

¶149

Income Tax Officer, Ward 2(1), Kota Having Its Address At Central Revenue Building, Dainik Navjyoti Building, Rawat Bhata Road, Kota 324009

¶150

----Appellant

¶151

Versus

¶152

Ashok Kumar Adlakha Son Of Shri Shyam Lal Adlakha, Aged About 42 Years, Prop. M/s Shri Anand Associates Having His Address At 4, Railway Society, Mala Road, Kota 324001

¶153

----Respondent

¶154

For Appellant(s) : Ms. Parinitoo Jain through VC For Respondent(s) :

¶155

HON'BLE THE CHIEF JUSTICE MR. AKIL KURESHI HON'BLE MR. JUSTICE SUDESH BANSAL

(8 of 13)

[SAW-223/2022]

Order

24/02/2022

Applications for dispensing with the filing of the certified copies in each appeal is allowed in view of the fact that the judgment being common certified copy has been produced in one of the appeals. Rest of the defects are waived.

¶161

All these appeals which are filed by the revenue arise out of a common judgment of the learned Single Judge dated 25.11.2021. By the impugned judgment the learned Single had quashed respective notices of reassessment issued by the department against the petitioners-assessees. Bunch of appeals filed by the revenue arising out of the same judgment was disposed of by common judgment along with group of writ petitions filed by the assessees challenging the similar such reassessment notices issued after 01.04.2021 but applying the provisions for reassessment contained in the Income Tax Act, 1961 which existed prior to 01.04.2021. By a judgment dated 27.01.2022 in case of Sudesh Taneja Vs. Income Tax Officer and Anr. (D.B. Civil Writ Petition No. 969/2022) , the writ petitions were allowed and revenue's appeals were dismissed. Following observations may be noted:-

¶162

"37. In this context we have perused the provisions of reassessment contained in the Finance Act, 2021. We have noticed earlier the major departure that the new scheme of reassessment has made under these provisions. The time limits for issuing notice for reassessment have been changed. The concept of income chargeable to tax escaping assessment on account of failure on the part of the assessee to disclose truly or fully all material facts is no longer relevant. 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

¶163

(9 of 13)

¶164

[SAW-223/2022]

¶165

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. There is absolutely no indication in all these provisions which would suggest that the legislature intended that the new scheme of reopening of assessments would be applicable only to the period post 01.04.2021. In absence of any such indication all notices which were issued after 01.04.2021 had to be in accordance with such provisions. To reiterate, we find no indication whatsoever in the scheme of statutory provisions suggesting that the past provisions would continue to apply even after the substitution for the assessment periods prior to substitution. In fact there are strong indications to the contrary. We may recall, that time limits for issuing notice under Section 148 of the Act have been modified under substituted Section 149. Clause (a) of sub-section (1) of Section 149 reduces such period to three years instead of originally prevailing four years under normal circumstances. Clause (b) extends the upper limit of six years previously prevailing to ten years in cases where income chargeable to tax which has escaped assessment amounts to or is likely to amount to 50 lacs or more. Sub-section (1) of Section 149 thus contracts as well as expands the time limit for issuing notice under Section 148 depending on the question whether the case falls under clause (a) or clause (b). In this context the first proviso to Section 149(1) provides that no notice under Section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 01.04.2021 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 subsection (1) of Section 149 as they stood immediately before the commencement of the Finance Act, 2021. As per this proviso thus no notice under Section 148 would be issued for the past assessment years by resorting to the larger period of limitation prescribed in newly substituted clause (b) of Section 149(1). This would indicate that the notice that would be issued after 01.04.2021 would be in terms of the substituted Section 149(1) but without breaching the upper time limit provided in the original Section 149(1) which stood substituted. This aspect has also been highlighted in the memorandum explaining the proposed provisions in the Finance Bill. If according to the revenue for past period provisions of section 149 before amendment were applicable, this first proviso to section 149(1) was wholly unnecessary. Looked from both angles, namely, no indication of surviving the past provisions after the substitution and in fact an active indication to the contrary, inescapable conclusion that we must arrive at is that for any action of issuance of notice under Section

¶166

(10 of 13)

¶167

[SAW-223/2022]

¶168

148 after 01.04.2021 the newly introduced provisions under the Finance Act, 2021 would apply. Mere extension of time limits for issuing notice under section 148 would not change this position that obtains in law. Under no circumstances the extended period available in clause (b) of sub-section (1) of Section 149 which we may recall now stands at 10 years instead of 6 years previously available with the revenue, can be pressed in service for reopening assessments for the past period. This flows from the plain meaning of the first proviso to sub-section (1) of Section 149. 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.

¶169

The second question framed by us arises in this context. Would the explanation contained in both the notifications of CBDT dated 31.03.2021 and 27.04.2021 save the situation for the revenue?

¶170

It is well settled that there is presumption of constitutionality of a statute (refer to the Constitution Bench judgment in case of The State of Jammu & Kashmir, Vs. Triloki Nath Khosa and Ors., reported in AIR 1974 SC 1 ). The said principle of presumption of constitutionality also applies to piece of delegated legislation. In case of St. Johns Teachers Training Institute Vs. Regional Director, National Council For Teachers Education and Another, reported in (2003) 3 SCC 321, it was observed that it is well settled in considering the vires of subordinate legislation one should start with the presumption that it is intra vires and if it is open to two constructions, one of which would make it valid and other invalid, the courts must adopt that construction which makes it valid. However it is equally well settled that the subordinate legislation does not enjoy same level of immunity as the law framed by the Parliament or the State Legislature. The law framed by the Parliament or the State Legislature can be challenged only on the grounds of being beyond the legislative competence or being contrary to the fundamental rights or any other constitutional provisions. Third ground of challenge which is now recognized in the judgment in case of Shayara Bano Vs Union of India reported in 2017 9 SCC 1 is of legislation being manifestly arbitrary. A subordinate legislation can be challenged on all these grounds as well as on the grounds that it does not conform to the statute under which it is made or that it is inconsistent with the provisions of the Act or it is contrary to some of the statutes applicable on the subject matter. In case of J.K.

¶171

(11 of 13)

¶172

[SAW-223/2022]

¶173

Industries Ltd. and Ors. Vs. Union of India and Ors., reported in (2007) 13 SCC 673, it was observed as under:-

¶174

“63. At the outset, we may state that on account of globalization and socioeconomic problems (including income disparities in our economy) the power of Delegation has become a constituent element of legislative power as a whole. However, as held in the case of Indian Express Newspaper v. Union of India reported in (1985) 1 SCC 641 at page 689, 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. Therefore, it has to yield to plenary legislation. It can also be questioned on the ground that it is manifestly arbitrary and unjust. That, any inquiry into its vires must be confined to the grounds on which plenary legislation may be questioned, to the grounds that it is contrary to the statute under which it is made, to the grounds that it is contrary to other statutory provisions or on the ground that it is so patently arbitrary that it cannot be said to be inconformity with the statute. It can also be challenged on the ground that it violates Article 14 of the Constitution.”

¶175

With this background we may revert to the Relaxation Act, 2020 and the two notifications issued by the CBDT. We may recall, under sub-section (1) of Section 3 of the Relaxation Act, 2020 while extending the time limits for taking action and making compliances in the specified Acts upto 31.12.2020 the power was given to the Central Government to extend the time further by issuing a notification. This was the only power vested in the Central Government. As a piece of delegated legislation the notifications issued in exercise of such powers, had to be within the confines of such powers. In plain terms under subsection (1) of Section 3 of the Relaxation Act, 2020 the Government of India was authorized to extend the

¶176

(12 of 13)

¶177

[SAW-223/2022]

¶178

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. Even otherwise it is extremely doubtful whether the explanation in the guise of clarification can change the very basis of the statutory provisions. If the plain meaning of the statutory provision and its interpretation is clear, by adopting a position different in an explanation and describing it to be clarificatory, the subordinate legislature cannot be permitted to amend the provisions of the parent Act. Accordingly, these explanations are unconstitutional and declared as invalid.

¶179

As noted, two Division Benches of Allahabad and Delhi High Courts have taken similar view. Two learned Single Judges of Calcutta and this High Court have followed this trend. Independently also we hold the same beliefs. As noted earlier we are conscious that Single Judge of Chhattisgarh High Court in Palak Khatuja (supra) has taken a different view. The view of the High Court was that the impugned notices were valid since by virtue of notifications dated 31.03.2021 and 27.04.2021 the application of Section 148 which was originally existing before amendment was deferred. It was further observed as under:-

¶180

“Reading of the aforesaid notification would show that it was issued in exercise of power conferred under the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 and time for issuance of notice under Section 148, the end date was initially extended uptill on 30th day of April 2021 and subsequently again by notification dated 27th April, 2021 the time limit of 30th day of April 2021 was further extended up till 30th day of June, 2021. By effect of such notification, the individual identity of Section 148, which was prevailing prior to amendment and insertion of section 148A was insulated and saved uptill 30.06.2021.”

¶181

(13 of 13)

¶182

[SAW-223/2022]

¶183

With respect, we are unable to persuade ourselves to accept this analysis of the situation. In our understanding by virtue of notifications dated 31.03.2021 and 01.04.2021 issued by CBDT substitution of reassessment provisions framed under the Finance Act, 2021 were not deferred nor could they have been deferred. The date of such amendments coming into effect remained 01.04.2021.

¶184

In the result we find that the notices impugned in the respective petitions are invalid and bad in law. The same are quashed and set aside. The learned Single Judge committed no error in quashing these notices. All the writ petitions are allowed. Appeals of the revenue are dismissed. Pending applications if any stand disposed of."

¶185

In the result these appeals are also dismissed.

¶186

(SUDESH BANSAL),J

¶187

(AKIL KURESHI),CJ

¶188

KAMLESH KUMAR /s-80 to 104 (except 91 and 102)

Assistant Commissioner of Income Tax v. Balbir Singh S/O Shri Jai Singh Choudhary

Case brief

What is this about?

What did the court decide?

Assistant Commissioner of Income Tax v. Balbir Singh S/O Shri Jai Singh Choudhary

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

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