Validity of Notification issued by CBDT dated 31st March 2021

Due to COVID-19, the government issued a relaxation via The Taxation and other laws
(Relaxation and Amendment of Certain Provisions) Act, 2020. Section 3(1) of the said act
provided an extension for issuance of notice under Section 148 of the Income Tax Act,
1961.

Section 3(1):
 Where, any time-limit has been specified in, or prescribed or notified under, the
specified Act
 which falls during the period from the 20th day of March, 2020 to the 31st day of
December, 2020, or such other date after the 31st day of December, 2020, as the
Central Government may, by notification, specify in this behalf,
 for the completion or compliance of such action as—
(a) completion of any proceeding or
passing of any order or
issuance of any notice, intimation, notification, sanction or approval, or
such other action, by whatever name called, by any authority, commission or
tribunal, by whatever name called, under the provisions of the specified Act; or
filing of any appeal, reply or application or furnishing of any report, document,
return or statement or such other record, by whatever name called, under the
provisions of the specified Act; or
(b) …… or
(c) …….

and where completion or compliance of such action has not been made within such time,
then, the time-limit for completion or compliance of such action shall, notwithstanding
anything contained in the specified Act,

stand extended to the 31st day of March, 2021, or such other date after the 31st day of
March, 2021, as the Central Government may, by notification, specify in this behalf.
Thus the time period for issuance of notice under Section 148 of ITA that ended on 31st
March 2020 was extended till 31st March 2021 via the Taxation and Other Laws
(Relaxation and Amendment of Certain Provisions) Act, 2020. In other words, for AY 13-
14 and AY 14-15, the AO could send notice under Section 148 till 31st March 2021.

After the second wave, the government again extended the time period for sending notice
under Section 148 for AY 13-14 and AY 14-15 via a notification issued on 31st March.

S.O. 1432(E).—In exercise of the powers conferred by sub-section (1) of section 3 of the
Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (38
of 2020) (hereinafter referred to as the said Act), and in partial modification of the
notification of the Government of India in the Ministry of Finance, (Department of Revenue)
No.93/2020 dated the 31st December, 2020, published in the Gazette of India, Extraordinary,
Part II, Section 3, Sub-section (ii), vide number S.O. 4805(E), dated the 31st December,
2020, the Central Government hereby specifies that,––

(A) where the specified Act is the Income-tax Act, 1961 (43 of 1961) (hereinafter referred to
as the Income-tax Act) and, —
(a) the completion of any action referred to in clause (a) of sub-section (1) of section
3 of the Act relates to
o passing of an order under sub-section (13) of section 144C or
o issuance of notice under section 148 as per time-limit specified in section 149
or
o sanction under section 151 of the Income-tax Act, —
(i) the 31st day of March, 2021 shall be the end date of the period during which the
time limit, specified in, or prescribed or notified under, the Income-tax Act falls
for the completion of such action; and
(ii) the 30th day of April, 2021 shall be the end date to which the time-limit for the
completion of such action shall stand extended.

Thus, the Central Government extended the date of issuance of notice under Section 148 till
30th April 2021 for AY 13-14 and AY 14-15. However, the explanation of the notification
provided that the issuance of such notice shall be done in accordance with old
provisions of Section 148, even though Finance Act 2021 has come into force.

Explanation.— For the removal of doubts, it is hereby clarified that for the purposes of
 issuance of notice under section 148 as per time-limit specified in section 149 or
 sanction under section 151 of the Income-tax Act, under this sub-clause,

the provisions of section 148, section 149 and section 151 of the Income-tax Act, as the case
may be, as they stood as on the 31st day of March 2021, before the commencement of the
Finance Act, 2021, shall apply.

The validity of the said notification is challenged on the ground that the Central
Government does not have power to decide which Finance Act shall be applicable. The
Government can extend the time limit for issuance of notice bur law existing as on date
has to be followed.

Thus, compliance with Section 148A would be mandatory for AO. As per the new provisions
the limitation period is of three years and thereby the action is beyond the period of
limitation for AY 13-14.