Allahabad HC quashes Reassessment Notice issued under old regime; unconvinced with view’s of Chhattisgarh HC

Case Details: Ashok Kumar Agarwal v. Union of India - [2021] 131 taxmann.com 22 (Allahabad)

Judiciary and Counsel Details

• • Naheed Ara Moonis and Saumitra Dayal Singh, JJ.
  • Suyash Agarwal for the Petitioner. 
  • Gaurav Mahajan, Ashish Agrawal and Gopal Verma for the Respondent.

Facts of the Case

The instant writ petition was filed before the Allahabad High Court to challenge the initiation of re-assessment proceedings for different assessment years. All the reassessment proceedings were initiated upon notices issued after the date 01-04-2021.

The assessee challenged the validity of the Explanation appended to clause (A)(a) of notification No. 20 of 2021, dated 31.03.2021, and Explanation to clause (A)(b) of notification No. 38 of 2021, dated 27.04.2021. Those notifications had been issued under the powers vested under Section 3(1) of the Taxation and Other Laws (Relaxation of Certain Provisions) Act, 2020 (TLA, 2020). These notifications gave power to revenue to issue reassessment notice under section 147 after the expiry of 31-03-2021 under old provisions. However, the provisions related to reassessment have been amended w.e.f 01-04-2021 by the Finance Act, 2021.

High Court Held

The Allahabad Court said that Section 3(1) of the TLA 2020 does not itself speak of reassessment proceeding or Section 147 or Section 148 as it existed before 01.04.2021. It only provides a general relaxation of limitation granted on account of general hardship existing upon the spread of pandemic COVID -19. After enforcement of the Finance Act, 2021, it applies to the substituted provisions rather than pre-existing ones.

Further, the Allahabad Court said we are unable to persuade ourselves to view taken by the Chhattisgarh High Court in the case of Palak Khatuja [2021] 130 taxmann.com 44 (Chhattisgarh).

The Finance Act, 2021 does not enable the Central Government to issue any notification to reactivate the pre-existing law (which that principle legislature had substituted). The exercise made by the delegate/Central Government would be de hors any statutory basis.

Consequently, the reassessment notices were liable to be quashed. However, the revenue may initiate reassessment proceedings in accordance with the new provisions.