Section 148 Notice issued till 30/06/2021 are valid – Writ filed by taxpayers dismissed by Chhattisgarh HC


Section 148 Notice issued till 30/06/2021 are valid – Writ filed by taxpayers dismissed by Chhattisgarh HC

There is a new Twist in the controversy regarding old section 148 vs New section 148 vis a vis noncompliance with the provision of section 148A for notices issued across India till 30/06/2018. The matter is decided by the Chhattisgarh HC.
It is decided in favour of  income tax department in the case of Palak Khatuja vs. Union of India [W.P.(T) No. 149 of 2021] & others by the Hon’ble High Court of Chhattisgarh. With cases pending in Bombay High Court and Delhi High Court coupled with issue of an Ordinance, this issue is going to drag on. Let us see what other HC opines on the similar issues.
The Hon’ble Chhattisgarh HC has upheld validity of Section 148 notice issued after 01.04.2021 without following procedure laid down in Section 148A. It is asserted by the Writ Petitioner that the Finance Act, 2021, which was published in the Gazette on 28.03.2021, and the operation of Section 148A came into being on 01.04.2021. Hence, the notice issued thereafter, on 30.06.2021, under Section 148 of the Income Tax Act, without following the procedure under Section 148A would be illegal and unsustainable.
The Hon’ble. Court did not allow the Writ and adopted the following reasoning while deciding the case in favour of the revenue:
1. The Parliament enacted the Taxation & Others Laws (Relaxation & Amendment of Certain Provisions) Act, 2020. In such Act, any time limit specified between 20.03.2020 to 31.12. 2021 or other date thereafter, after Dec. 2021 Central Government were given the power to notify time-limits. The delegation of power has been made in the interest of flexibility and smooth working of the Act, and it was a practical necessity.
2. The Hon’ble High Court took note of the fact that the impugned extension notification is made by the Ministry of Finance, considering the fact of lock-down all over India, it can be always be assumed that the deferment of the application of section 148A was done in a control way. Therefore, notification by executive i.e. Ministry of Finance would be the part of legislative function.
3. The Hon’ble Court observed that the power to issue a notification for bringing into force the provisions of a constitutional amendment is not a constituent power.
4. The delegation to the executive with conferment of the power to the Central Govt. to specify the date by way of relaxation of time limit, the main purpose of the Finance Act is not defeated. Therefore, it would be a conditional legislation. And the legislature has resorted to conditional legislation to give the power to Executive, in what circumstances the law should become operative or when the operation should be extended would be covered by doctrine of the conditional legislation. It was done by the Ministry of Finance in the peculiar circumstances which arose during the pandemic and lock down and Central Government cannot be said to have encroached upon turf of Parliament.
5. Considering such a situation for the benefit of the taxpayer and to facilitate the individual to come out of the woods, the time limit framed under Income Tax Act was extended. Likewise, certain right which was reserved in favour of the Income Tax Department was also preserved and was extended at parity.
Thus, the Hon’ble High Court has held that by effect of such notification saves 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.

The copy of the order by Chhattisgarh HC is as under:

Section 148 Notice issued till 30/06/2021 are valid - Writ filed by taxpayers dismissed by Chhattisgarh HC