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The Madras High Court (MHC) on Tuesday stayed the operation of an Income Tax reassessment notice issued after March 31, 2021, under section 148 of the Income Tax Act on the ground that income had ‘escaped assessed’. The Delhi High Court recently issued a stay in a similar case.
Vellore Institute of Technology's (petitioner) grievance pertains to a notice issued on April 12, 2021, apparently under Section 148 of the Income Tax Act, 1961. The relevant notice issued by the Assistant Commissioner of Income Tax (Exemptions), Chennai, claims that the officer has reasons to believe that the petitioning assessee's income chargeable to tax for the assessment year 2015-16 has ‘escaped’ attention within the meaning of Section 147 of the Act.
The petitioner also referred to the amended provisions of the Act and the prerequisites for issuing a notice under Section 148 of the Act. Prima facie , the impugned notice of April 12, 2021 appears not to adhere to at least one of such pre-conditions. Accordingly, the impugned notice dated April 12, 2021, will remain, said an order issued by Chief Justice Sanjib Banerjee and Justice Senthilkumar Ramamoorthy granting a stay of the notice issued by the IT department.
A similar case
In a similar case, the Delhi High Court recently stayed the reassessment proceedings, based on notices issued between April 1 and June 30. Similar orders have been issued by other courts, too.
Advocate Suhrith Parthasarathy representing VIT, argued that the notification was ultra vires because executive orders cannot revive a provision of law substituted by Parliament. Further that from April 1, notices under Section 148 could be issued only under the newly inserted provisions.
The MHC order said that in 2020 the government had extended the due date for notices to June 30, 2020, from March 31. Similarly, during this year, the first date was extended to April 31 and then further to June 30, 2021.
The order would have been passed on July 23, 2021, but sought on behalf of the Department for the time being. However, no submission is made out on behalf of the Department to detract from the prima facie case made out by the petitioner.
The respondents (IT Department) should file their counter-affidavits within four weeks, and the matter has been listed on August 31, the order said.
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