Facts of the Case

The petitioner, Subhash Bhatia HUF, challenged reassessment proceedings initiated by the Income Tax Department. An assessment order had earlier been framed under Section 147 read with Sections 144 and 144B of the Income Tax Act, 1961 on 30.03.2022.

The reassessment originated from a notice dated 31.03.2021 issued under the unamended Section 148. Subsequently, under the new reassessment regime, the department issued:

  • Notice under Section 148A(b) dated 02.06.2022
  • Order under Section 148A(d) dated 31.07.2022
  • Fresh notice under amended Section 148 dated 31.07.2022

The petitioner challenged the validity of these subsequent proceedings.

Issues Involved

  1. Whether reassessment proceedings initiated under the new regime (Section 148A) are valid when the original notice was issued under the old regime (Section 148) on 31.03.2021.
  2. Whether the date and time of issuance of notice determines applicability of the amended provisions.
  3. Whether subsequent notices and orders under the amended provisions are sustainable in law.

Petitioner’s Arguments

  • The petitioner contended that the reassessment proceedings were initiated under the old regime on 31.03.2021, prior to the enforcement of the new reassessment scheme.
  • Therefore, the department could not switch to the new regime under Section 148A for the same proceedings.
  • The notices and orders issued under the amended provisions were without jurisdiction and legally untenable.

Respondent’s Arguments

  • The Revenue submitted that the applicability of the new regime depended on when the notice was served on the petitioner.
  • Upon obtaining instructions, it was clarified that the notice under Section 148 was issued on 31.03.2021 at 7:32:02 PM, thereby triggering the old regime.

Court’s Findings / Order

The Delhi High Court observed:

  • The reassessment process had already been initiated under the old regime (Section 148) on 31.03.2021.
  • Once the old regime was triggered, the Revenue could not invoke the new provisions under Section 148A for the same assessment.

Accordingly, the Court held:

  • Notice dated 02.06.2022 under Section 148A(b) – invalid
  • Order dated 31.07.2022 under Section 148A(d) – invalid
  • Consequent notice dated 31.07.2022 under amended Section 148 – invalid

Final Order:

All impugned notices and orders were quashed, and the writ petition was allowed.

Important Clarification

  • The cut-off date (31.03.2021) is crucial in determining whether the old or new reassessment regime applies.
  • Once proceedings are initiated under the old regime, the Revenue cannot subsequently apply the new reassessment framework (Section 148A).
  • The exact time of issuance of notice also plays a significant role in determining applicability.

Sections Involved

  • Section 147 – Income escaping assessment
  • Section 148 (Unamended & Amended) – Issue of notice
  • Section 148A – New reassessment procedure
  • Section 144 & 144B – Best judgment assessment & faceless assessment

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/RAS20122022CW149322022_171521.pdf


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