Facts of the Case

  • The petitions concerned Assessment Years 2016-17 and 2017-18.
  • The Revenue issued reassessment notices under Section 148 alleging escaped income.
  • In all cases, the alleged escaped income was below ₹50 lakhs.
  • The notices were issued after 01.04.2021, i.e., after the new reassessment regime under Finance Act 2021 came into force.
  • Petitioners challenged:
    • Notices under Section 148
    • Orders under Section 148A(d)
    • CBDT Instruction dated 11.05.2022

 Issues Involved

  1. Whether reassessment notices issued under Section 148 after 01.04.2021 are barred by limitation under Section 149(1)(a)?
  2. Whether Revenue can invoke extended limitation under Section 149(1)(b) when escaped income is below ₹50 lakhs?
  3. Whether TOLA, CBDT Instruction, and Supreme Court ruling in Ashish Agarwal case allow “travel back in time” for limitation?
  4. Whether reassessment notices issued post Finance Act 2021 must comply with the new regime?

 Petitioner’s Arguments

  • Limitation expired under Section 149(1)(a) (3 years).
  • Since escaped income was below ₹50 lakhs, extended period under Section 149(1)(b) was not applicable.
  • TOLA and CBDT Instruction cannot override statutory limitation.
  • The “travel back in time” theory is unsupported in law.
  • Supreme Court in Ashish Agarwal only converted notices procedurally, not limitation-wise.
  • Finance Act 2021 substituted provisions; hence new law applies strictly

 Respondent’s Arguments (Revenue)

  • Notices are valid based on:
    • Union of India vs Ashish Agarwal
    • TOLA
    • CBDT Instruction dated 11.05.2022
  • Limitation stands extended till 30.06.2021.
  • Notices issued earlier should be treated as valid under new regime.
  • Time exclusion under provisos to Section 149 applies.
  • Supreme Court directions under Article 142 validate reassessment actions.

Court Findings / Analysis

  • The Court examined:
    • Interplay between old and new reassessment regimes
    • Effect of Finance Act 2021 substitution
    • Scope of TOLA and CBDT instructions
  • It emphasized:
    • Substitution of law means old provisions cease to exist
    • New Section 149 must govern all notices issued after 01.04.2021
  • The Court rejected:
    • The “travel back in time” theory
    • Over-reliance on CBDT Instructions
  • It clarified:
    • Supreme Court in Ashish Agarwal did not extend limitation

Court Order / Decision

  • Reassessment notices issued beyond limitation period were held unsustainable in law.
  • Revenue cannot invoke extended limitation unless ₹50 lakh threshold is satisfied.
  • Notices issued post 01.04.2021 must strictly comply with amended provisions

Important Clarifications

  • CBDT Instructions cannot override statute.
  • TOLA does not extend limitation under new Section 149.
  • “Travel back in time” doctrine is legally invalid.
  • New reassessment regime applies retrospectively to notices issued after 01.04.2021.

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/RAS10112023CW115272022_212005.pdf

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.