Income Tax Act,1961; Section 149,151-Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act 2020-a.After 1 April 2021, the Income Tax Act has to be read along with the substituted provisions; b. TOLA will continue to apply to the Income Tax Act after 1 April 2021 if any action or proceeding specified under the substituted provisions of the Income Tax Act falls for completion between 20 March 2020 and 31 March 2021; c. Section 3(1) of TOLA overrides Section 149 of the Income Tax Act only to the extent of relaxing the time limit for issuance of a reassessment notice under Section 148; d. TOLA will extend the time limit for the grant of sanction by the authority specified under Section 151. The test to determine whether TOLA will apply to Section 151 of the new regime is this: if the time limit of three years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under Section 151(i) has extended time till 30 June 2021 to grant approval; e. In the case of Section 151 of the old regime, the test is: if the time limit of four years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under Section 151(2) has extended time till 31 March 2021 to grant approval; f. The directions in Ashish Agarwal (supra) will extend to all the ninety thousand reassessment notices issued under the old regime during the period 1 April 2021 and 30 June 2021; g. The time during which the show cause notices were deemed to be stayed is from the date of issuance of the deemed notice between 1 April 2021 and 30 June 2021 till the supply of relevant information and material by the assessing officers to the assesses in terms of the directions issued by this Court in Ashish Agarwal (supra), and the period of two weeks allowed to the assesses to respond to the show cause notices; and h. The assessing officers were required to issue the reassessment notice under Section 148 of the new regime within the time limit surviving under the Income Tax Act read with TOLA. All notices issued beyond the surviving period are time barred and liable to be set aside. (Para 114)
Constitution of India-Article 265– No tax shall be levied or collected except by authority of law. A taxing statute must be valid and conform to other provisions of the Constitution -Distinction between “levy” and “collection.”- The expression “levy” has a wider connotation. It includes both the imposition of a tax as well as assessment. The quantum of tax levied by a taxing statute, the conditions subject to which it is levied, and how it is sought to be recovered are all matters within the competence of the legislature. In a taxing statute, the charging provisions are generally accompanied by a set of provisions for computing or assessing the levy. The character of assessment provisions bears a relationship to the nature of the charge -The expression “assessment” comprehends the entire procedure for ascertaining and imposing liability upon taxpayers. The process of assessment involves computation of the income of the assessees, determination of tax payable by them, and the procedure for collecting or recovering tax. An assessing officer is concerned with the assessment and collection of revenue. An assessing officer must administer the provisions of the Income Tax Act in the interests of the public revenue and to prevent evasion or escapement of tax legitimately due to the State. (Para 23-24) –Article 142 –Article 142 empowers this Court to pass such decree or make such order as is necessary for doing complete justice in any cause or matter pending before it. The discretionary jurisdiction exercised by this Court under Article 142 is of the widest amplitude. The Constitution has left it to the judicial discretion of this Court to decide the scope and limits of its jurisdiction to render substantial justice in matters coming before it. The expression “any cause or matter” mentioned under Article 142 includes every kind of proceeding pending before this Court. Article 142 allows this Court to give precedence-The exercise of the jurisdiction under Article 142 is meant to supplement the existing legal framework to do complete justice between the parties. In a given circumstance, this Court can supplement a legal framework to craft a just outcome when strict adherence to a source of law and exclusive rulebased theories create inequitable results. – The directions issued by this Court under Article 142 cannot be considered as a ratio because they are issued based on the peculiar facts and circumstances of the cause or matter before this Court- a judgment has two components: (a) declaration of law; and (b) directions- What is binding on all courts under Article 141 is the declaration of law, and not the directions issued under Article 142. (Para 82-87)
Administrative Law – If a statute expressly confers a power or imposes a duty on a particular authority, then such power or duty must be exercised or performed by that authority itself. Further, when a statute vests certain power in an authority to be exercised in a particular manner, then that authority has to exercise its power following the prescribed manner. Any exercise of power by statutory authorities inconsistent with the statutory prescription is invalid. (Para 30) -A statutory authority may lack jurisdiction if it does not fulfil the preliminary conditions laid down under the statute, which are necessary to the exercise of its jurisdiction. There cannot be any waiver of a statutory requirement or provision that goes to the root of the jurisdiction of assessment. An order passed without jurisdiction is a nullity. Any consequential order passed or action taken will also be invalid and without jurisdiction. (Para 32)
Interpretation of Statutes- Principle of harmonious construction . The legislature is presumed to enact a consistent and harmonious body of laws in deference to the rule of law. In case of any apparent conflict within a provision or between two provisions of the same statute, the courts must read the provisions harmoniously- The principle of harmonious construction requires courts to bring about a reconciliation between seemingly conflicting provisions to give effect to both. An interpretation which reduces one of the provisions to a “dead letter” is not a harmonious construction. The principle of harmonious construction also applies to reconcile two seemingly conflicting provisions of different statutes.(Para 39) – Non-obstante clause- A legislature often appends a non obstante clause to a provision to give it an overriding effect over provisions contained in the same statute or a separate statute. The purpose of incorporating a non obstante clause in a provision is to prohibit the operation and effect of all contrary provisions -A non-obstante clause must be given effect to the extent Parliament intended and not beyond. In construing a provision containing a non obstante clause, courts must determine the purpose and object for which the provision was enacted. The courts are also required to find out the extent to which the legislature intended to give one provision overriding effect over another provision. In case of a clear inconsistency between two enactments, a provision containing a non obstante clause can be given an overriding effect over a provision contained in another statute (Para 40-41) – Implied Repeal –When two laws are inconsistent or repugnant, the later legislation is interpreted as having impliedly repealed the earlier legislation. The principle underlying implied repeal is that there is no need for the later enactment to state in express words that the earlier enactment has been repealed if the legislative intent to supersede the earlier law is manifested through the provisions of the later enactment -The following principles applicable to the implied repeal of legislation: a. A subsequent legislation may not be too readily presumed to effectuate a repeal of existing statutory laws in the absence of express or at least unambiguous indication to that effect; b. Courts must lean against implying a repeal unless the two provisions are so plainly repugnant to each other that they cannot stand together and it is not possible on any reasonable hypothesis to give effect to both at the same time; c. It is necessary to closely scrutinise and consider the true meaning and effect of both the earlier and the later statute; and d. If the objects of the two statutory provisions are different and the language of each statute is restricted to its objects or subject, then they are generally intended to rule in parallel lines without meeting and there would be no real conflict-The principle on which the rule of implied repeal rests is that if the subjectmatter of a later legislation is identical to that of an earlier legislation so that they both cannot stand together, then the earlier legislation is impliedly repealed by the later legislation. The courts have to determine whether the legislature intended the two sets of provisions to be applied simultaneously. The presumption against implied repeal is based on the theory that the legislature knows the existing laws and does not intend to create any confusion by retaining two conflicting provisions or statutes. The test to be applied for the construction of implied repeal is whether the new or subsequent law is inconsistent with or repugnant to the old law. The inconsistency or repugnancy should clearly and manifestly reveal an intention to repeal the existing laws. The inconsistency or repugnancy must be such that the two statutes cannot be reconciled on reasonable construction or hypothesis. To determine whether a later statute repeals by implication an earlier statute, it is necessary to examine the scope and object of the two enactments by comparison of their provisions.105 Implied repeal should be avoided, if possible, where both the statutes can stand together. (Para 42-43)
Legislation – Amendment by substitution – The process of substitution of a statutory provision generally involves two steps: first, the existing rule is deleted; and second, the new rule is brought into existence in its place. The deletion effectively repeals the existing provision. Thus, an amendment by substitution results in the repeal of an earlier provision and its replacement by a new provision. The repealed provision will cease to operate from the date of repeal and the substituted provision will commence operation from the date of its substitution. After the substitution, the legislation must be read and construed as if the altered words have been written into the legislation “with pen and ink and the old words scored out.” Therefore, after amendment by substitution any reference to a legislation must be construed as the legislation as amended by substitution. (Para 57) –Legal fiction– A legal fiction is a supposition of law that a thing or event exists even though, in reality, it does not exist. The word “deemed” is used to treat a thing or event as something, which otherwise it may not have been, with all the attendant consequences. The effect of a legal fiction is that “a position which otherwise would not obtain is deemed to obtain under the circumstances.”- A legal fiction is created for a definite purpose and it should be limited to the purpose for which it is enacted or applied. It is a well-established principle of interpretation that the courts must give full effect to a legal fiction by having due regard to the purpose for which the legal fiction is created. The consequences that follow the creation of the legal fiction “have got to be worked out to their logical extent.”158 The court has to assume all the facts and consequences that are incidental or inevitable corollaries to giving effect to the fiction (Para 98-99)
Words and expressions –The expression “any” has been interpreted by this Court to mean “all” or “every”. The context in which the word “any” appears has to be construed after taking into consideration the scheme and the purpose of the enactment. (Para 61)