[Opinion] Reassessment and Article 142 of the Constitution of India – Does the SC Judgement in Ashish Agarwal Need a Fresh Analysis?
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- Last Updated on 1 April, 2024
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Devendra Jain & CA Aniket Barve – [2024] 160 taxmann.com 719 (Article)
Background
The Apex Court decision in the case of Union of India v. Ashish Agarwal [2022] 138 taxmann.com 64/286 Taxman 183/44 ITR 1 (SC) gave an entire new direction to the widespread litigation post Finance Act, 2021 to the reopening provisions under the Income Tax cat, 1961 (The Act).
The Finance Act, 2021 had amended the scheme of reassessment under the Act with effect from 01.04.2021. New sections 147, 148, 149 and 151 were substituted and section 148A was introduced in the Act. Accordingly, the old provisions or the old scheme of reassessment was applicable till 31.03.2021.
Meanwhile, major disruptions were caused due to the onslaught of the COVID-19 pandemic from around March 2020. Since the functioning of the Income-tax department was also affected due to COVID-19, difficulties were faced in initiating the reassessments within the prescribed time limits under the old scheme for the period ending 31.03.2020 and 31.03.2021.
Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020
To counter this difficulty, the legislature enacted the Taxation and Other Laws (Relaxation of certain provisions) Act, 2020 [referred to as TOLA] on 29.09.2020.
In the exercise of the powers given by TOLA, the Central Government had issued Notification No. 93/2020 dated 31.12.2020, whereby the due date was extended to 31.03.2021 in respect of the compliances falling due up to 30.03.2021 (including issue of notice u/s 148). Vide Notification No. 20/2021 dated 31.03.2021, the due date for the issue of notice was yet again extended to 30.04.2021. Thereafter, vide another Notification No. 38/2021 dated 27.04.21, the due date for issuance of notice under section 148 for reopening the assessment was further extended to 30.06.2021.
As a result, several notices were issued by the Revenue between 01.04.2021 and 30.06.2021 under the old scheme of reassessment, seeking shelter under the extended time limits of TOLA. Thus, a controversy arose whether such notices issued under the old scheme post 01.04.2021 are valid or not, given that the new scheme of reassessment was made applicable with effect from 01.04.2021 vide Finance Act, 2021.
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