Notices issued under section 148 to assessees shall be deemed to have been issued under section 148A of the IT Act as substituted by the Finance Act, 2021- Supreme Court.

Background:

During the outbreak of COVID-19 pandemic, in order to provide sufficient time to comply with various provisions under the Income Tax Act, 1961 (‘ITA’) and other laws, Central Government (‘CG’) has enacted Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (‘TOLA, 2020’)

Section 3 of TOLA, 2020 states that where the time for completion of proceedings, issue of notice, letter, intimation etc. falls between 20.03.2020 to 31.12.2020, such date is extended to 31.03.2021.

Read more: Supreme Court on Reassessment Controversy - Union of India vs. Ashish Agarwal

In this 95^th edition of, we bring you the judgments which have shaken the trade. The Supreme Court in the matter of Union of India vs. Ashish Agarwal has tried to put an end to the controversy on the re-assessment. Though the majority of the High Courts have ruled in favour of tax payers, the Supreme Court stated that it was a genuine and bona fide mistake on the part of the revenue and for which the revenue cannot be made remediless and allowed the appeal of revenue, deeming the notices issued on or after 01.04.21 under Section 148 as show cause notices issued under Section 148A. Though, the Supreme Court has not specifically stated that the extensions made under TOLA, 2020 are not valid, there exists an interpretation that notices issued on or after 01.04.21 must be treated as issued in light of new time lines as per Section 149. If such an interpretation is taken, then assessment for AY 13-14, AY 14-15, AY 16-17 and AY 17-18 would get time barred. In other words, the whole TOLA is being ignored. This definitely paves way to the second round of litigation, which has to be eventually settled by Supreme Court.

Read more: SBS Wiki E Journal June 2022

In this 94^th edition of ours, we bring you our inquisitive analysis on the judgment of Delhi ITAT in the matter of Young Indian. The story of Young Indian is quite popular and am saving your time from detailing the facts. The ITAT has made a detailed analysis of taxation of the value of assets under Section 28(iv) in the hands of Young Indian and a must read. Though the judgment deals with a total of 16 grounds, we have concentrated in the article, only the grounds that deal with the taxation. It would be as curious as any other commercial movie sequel as to what happens to the fate of tribunal’s decision in the higher courts. Let’s wait and see.

The next article is on the routine usage of the draconian powers under Section 83 of CT Act, 17. We have witnessed the usage of the Section 83 in a routine and absurd manner in one of our client’s cases, which is a large taxpayer. The Commissioner went ahead and issued a provisional attachment order attaching 6 to 7 bank accounts, without any basis in the middle of inspection proceedings, thereby creating hardship for the client. We have advised the client to file a writ petition and the matter is currently before the High Court. The same procedure is followed by authorities dehors the circular issued by CBIC, all over the country, which is evident from the judgments used in our article. The only way to restrict the powers under Section 83 is to amend it by incorporating certain conditions for its usage.

Read more: SBS Wiki E Journal May 2022

The powers to provisionally attach the properties of tax payer to protect the interests of revenue comes from Section 83 of CT Act[1]. The power is to be exercised by Commissioner, if he is of the opinion that it is necessary for the purposes of protecting the interest of Government. Though it was held on numerous occasions that such a power cannot be exercised without application of mind, the tax authorities continue to use in the same manner. The Honourable Supreme Court in the matter of Radha Krishna Industries vs. State of Himachal Pradesh[2] has held in detail the scope and guidelines to be followed for the exercise of power under Section 83. CBIC has also issued a circular detailing the modus operandi to use the provisions of Section 83. However, as stated earlier, the said guidelines either by Supreme Court or CBIC are not being followed and for all such actions by the tax authorities, the tax payers does not have any option except to invoke the writ jurisdiction and call for interreference of High Courts. In this article, we shall deal with various issues arising qua Section 83. Before proceeding to discuss the issues, we will deal with the guidelines prescribed by Supreme Court in Radha Krishna Industries (supra) and CBIC Circular.

Read more: Various Issues - Provisional Attachment – Section 83 - GST Laws