Reply to the Notice issued under old provision of section 148

Reply to the Notice issued under old provision of section 148

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Reply to the Notice issued under old provision of section 148

Old Section 148 has been totally replaced by New Section 148 by the Finance Act- 2021.  Almost all new parameters of reassessment proceeding are applicable from 1st April 2021 and the old provisions relating to Reassessment will no more be applicable now.
It may be recalled that the Central Board of Direct Taxes (C.B.D.T)   had extended the time limit of issuing the notice U/s 148 of the Act up to  30th June, 2021 by way of various notifications. Further, Income tax department has issued many Section 148 notices for several assessment years (A.Y. 2013-14 onwards) after 31st March 2021 without considering the fact that the issuance of Notification extending the due date for issuance of Notice under the Act beyond the existence of relevant provisions would amount to excessive delegation as the Finance Act is passed by the Parliament which overrides the delegated authorities of the CBDT. In view of this, many writ petitions were also filed across the country wherein the validity of the notices issued u/s 148 after 31st march 2021 is challenged. More particularly, Notifications issued by CBDT to extend the time limits for issuing such notices is questioned by such writ petitions.
As a result of these petitions, the courts have also stayed the reassessment proceedings. In a case before Delhi High Court in MUDRA FINANCE LIMITED vs. ITO W.P.(C) 6442/2021, the Hon’ble High court was of the prima facie opinion that the impugned notifications were contrary to settled principles of statutory interpretation that any action taken post the amendment of a procedural section would have to abide by the new procedures stipulated in the amended Act and further that by virtue of a notification, which is a delegated legislation, the date for implementation of statutory provision, as stipulated in the Act, cannot be varied or changed.
In this case also, the Hon’ble High Court has stayed the proceedings of reassessment in the case of the assessee.
However, the Chhattisgarh HC in Palak Khatuja vs. Union of India [W.P.(T) No. 149 of 2021] decided that the notices issued even after 01.04.2021 are valid. The same may be accessed at https://thetaxtalk.com/2021/09/02/section-148/.
However, the other HC has not yet decided the issue and the matter is still pending before other High Courts.
What assessee should do on notice issued after 01/04/2021 under section 148?
  1. The finality or outcome of the Petitions before other High Court is still pending. It cannot be ascertained at this stage.
  2. The notices received by the taxpayers are required to be responded to if the taxpayers have not filed the writ petitions against such notice Those who have filed the writ petitions can hold the response till their appeal is disposed-off by the department.
  3. For other assessee, my personal opinion is that the assessee should respond to the notice after filing objections before the Assessing Officer.
  4. In the reply following points can be incorporated as an objection to the Validity to notice u/s 148:
  5. Assessee would like to submit that the notices issued u/s 148 after 01/04/2021 is not accordance with the provision of law in view of amendment done by the Finance Act- 2021
  6. There are a lot of petitions which have already been filed by the Taxpayers against the issuance of notice under the old provision of section 148 after 01/4/2021.
  7. Without prejudice to all the rights and contentions in the matter, the notice issued by your good self u/s 148 of the act is ab-initio void & illegal
  8. Assessee would humbly request you to kindly hold on the present notice till the disposal of the writ petitions by the jurisdictional High Court.
  9. Assessee would humbly request your kind honour to apply the ratio of such writ petitions to the present case as well.
However, the above reply may not be appropriate for the assessee falling under Bilaspur High Court jurisdiction which has already disposed-of the writ in favour of the department. However, assessees of other High Court Jurisdiction can still take the above stand before complying with the notices.

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