After the Calcutta High Court quashed 1,083 reassessment notices and dismissed the income-tax (I-T) department contentions, the government has taken the matter to the Supreme Court. The I-T department has challenged an order passed by the Allahabad High Court in October 2021. This is despite adverse rulings and trials in multiple courts, including high courts (HCs) of Delhi, Rajasthan and Calcutta.
In a significant relief to 1,083 taxpayers, the Calcutta High Court (HC) on Monday asked the I-T department to quash notices issued under Section 148 of the I-T Act after 31 March 2021.
In an order, justice Mohammad Nizamuddin of the Calcutta HC says, "...agreeing with the reasonings and views taken by the Allahabad High Court, Rajasthan High Court and Delhi High Court all these writ petitions herein are disposed of by allowing the same. Explanations A(a)(ii)/A(b) to the notifications dated 31 March 2021 and 27 April 2021 are declared to be ultra vires the Relaxation Act 2020 and are therefore bad in law and null and void."
"All the impugned notices under Section 148 of the I-T Act are quashed with liberty to the assessing officers (AOs) concerned to initiate fresh re-assessment proceedings in accordance with the relevant provisions of the Act as amended by Finance Act 2021 and after making compliance of the formalities as required by the law," the HC says.
The Calcutta HC was hearing over 1,530 writ petitions clubbed with Bagaria Properties and Investment Pvt Ltd vs Union government. (WPO No244 of 2021)
The Finance Act 2021 has substituted the provisions relating to re-assessment and a new set of re-assessment proceedings have been introduced from 1 April 2021.
On 29 September 2020, the Parliament passed the Relaxation Act, which extended various time limits for completing actions under the specified Acts.
Using the powers conferred by the Relaxation Act, the Central Board of Direct Taxes (CBDT) issued a notification extending the time limit to 30 June 2021 from 31 March 2021 for issuing notice to taxpayers under Section 148 of the I-T Act. Based on the CBDT notification, the I-T department issued notices for re-assessment under Section 148 of the I-T Act for many assessment years (AY) from 2013-14.
Several taxpayers filed writ petitions across the country challenging the notices issued under Section 148 of the I-T Act and the notification issued by the CBDT to extend the time limits for issuing such notices. Many courts stayed the re-assessment proceedings, while some high courts have quashed these notices in bulk.