HC Discards ‘Travel Back in Time’ Theory Propounded by Revenue Relying Upon Ashish Agarwal Case

Case Details: Ganesh Dass Khanna v. ITO - [2023] 156 taxmann.com 417 (Delhi)

Judiciary and Counsel Details

• • Rajiv Shakdher & Girish Kathpalia, JJ.
  • Satyen Sethi, Arta Trana Panda, Amol Sinha, M. Kshitiz Garg, Vaibhavv Kulkarni & Himanshu Agarwal, Advs. for the Appellant. & Others.
  • Kunal Sharma, Sr. Adv. Ms Zehra Khan, Puneet Rai, Ashvini Kumar & Ms Madhavi Shukla, Advs. for the Respondent. & Others.

Facts of the Case

“Whether order passed under Section 148A(d) and the consequent notice issued under Section 148 of the amended 1961 Act [as obtaining with the enactment of FA 2021], falls foul of the limitation prescribed in Section 149(1)(a)?”

Assessee contended that the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 [TOLA] does not delegate any power to revenue to postpone the applicability of the new regime enacted by the Legislature.

High Court Held

The Delhi High Court held that the revenue’s argument that actions taken before the extended time limit of 30-06-2021 are valid by virtue of the Notifications issued under Section 3(1) of TOLA is flawed for these reasons:

(a) There was no power invested under TOLA, and that too via Notifications, to amend the statute, which had the imprimatur of the Legislature. Since, with effect from 01.04.2021, when FA 2021 came into force, the Notifications dated 31.03.2021 and 27.04.2021, which are sought to be portrayed by the revenue as extending the period of limitation, were contrary to the provisions of Section 149(1)(a).

(b) The extension of the end date for completion of proceedings and compliances, a power which was conferred on the Central Government under Section 3(1) of TOLA, cannot be construed as one which could extend the period of limitation provided under Section 149(1)(a).

(c) A careful perusal of the judgment of the Supreme Court rendered in Ashish Agrawal’s case [2022] 138 taxmann.com 64 (SC) and the provisions of TOLA would show that neither the said judgment nor TOLA allowed for any such modality to be taken recourse to by the revenue, i.e., that extended reassessment notice would “travel back in time” to their original date when such notices were to be issued and thereupon the provisions of amended Section 149 would apply.

(d) Furthermore, the judgment would show that it did not rule on the provisions contained in TOLA or the impact they could have on the reassessment proceedings. In any event, TOLA conferred no such power on the CBDT.

Thus, orders passed under Section 148A(d) and the consequent notices issued under Section 148 concerning AY 2016-17 and AY 2017-18 cannot be sustained.