Allahabad HC quashes Reassessment proceedings u/s 148 of the Income tax Act initiated from April 01, 2021

Last updated: 09 October 2021

Save Share

Quick Summary

The Allahabad High Court has ruled that reassessment proceedings under Section 148 of the Income Tax Act, initiated from April 1, 2021, are invalid. This decision stems from amendments made by the Finance Act, 2021, which implicitly limited the scope of reassessment procedures and time extensions to those initiated before March 31, 2021. Consequently, notices issued after this date for reassessment were deemed inapplicable.

Court :
Allahabad High Court

Brief :
In Ashok Kumar Agarwal v. Union of India [WRIT TAX No. - 524 of 2021 dated September 30, 2021], Ashok Kumar Agarwal ("the Petitioner") had filed a Petition to challenge the initiation of re-assessment proceedings under Section 148 of the Income Tax Act, 1961 ("the IT Act") for different Assessment Years ("AYs").

Citation :
WRIT TAX No. - 524 of 2021 dated September 30, 2021

In Ashok Kumar Agarwal v. Union of India [WRIT TAX No. - 524 of 2021 dated September 30, 2021], Ashok Kumar Agarwal ("the Petitioner") had filed a Petition to challenge the initiation of re-assessment proceedings under Section 148 of the Income Tax Act, 1961 ("the IT Act") for different Assessment Years ("AYs").

The Petitioners contended that all the impugned re-assessment proceedings had been initiated upon notices issued after April 01, 2021 and the Finance Act, 2021 had made certain substitutions regarding the procedures of reassessment. The Petitioners therefore prayed that the reassessment proceedings are invalid and cannot be undertaken by the Tax Authorities.

After taking all the facts and evidences into perusal, the Honorable Allahabad High Court ("Allahabad HC") held that there is no conflict in the application and enforcement of the IT Act and the Finance Act, 2021. Just aposed, if the Finance Act, 2021 had not made the substitution to the reassessment procedure, the Tax Authorities would have been within their rights to claim an extension of time, under the IT Act.

However, upon that sweeping amendment made by the Parliament, by necessary implication or implied force, limited the applicability of the IT Act and the power to grant time extensions thereunder, to only such reassessment proceedings as had been initiated till March 31, 2021.

Consequently, the impugned Notifications had no applicability to the reassessment proceedings initiated from April 01, 2021 onwards.

FAQ :

The Allahabad High Court quashed reassessment proceedings initiated under Section 148 of the Income Tax Act from April 1, 2021, onwards.

They were deemed invalid because the Finance Act, 2021, introduced amendments that limited the reassessment procedures and time extensions to proceedings initiated on or before March 31, 2021.

The Finance Act, 2021, made significant substitutions to the reassessment procedures, implicitly restricting their application to cases initiated before April 1, 2021.

No, the court ruled that the amendments by the Finance Act, 2021, limited the power to grant time extensions to reassessment proceedings initiated only until March 31, 2021.