Facts of the Case

The present matter consists of a batch of writ petitions led by Suman Jeet Agarwal vs Income Tax Officer & Ors., along with several connected cases, challenging reassessment notices issued under Section 148 of the Income Tax Act.

The notices were issued after 01.04.2021, i.e., after the new reassessment regime introduced by the Finance Act, 2021 came into force. However, the Revenue authorities issued such notices by relying on the old provisions of Section 148, invoking relaxations provided under certain notifications.

The petitioners contended that once the new law had come into force, any reassessment proceedings must strictly comply with the newly introduced provisions, particularly Section 148A.

Issues Involved

  1. Whether reassessment notices issued after 01.04.2021 under the old provisions of Section 148 are valid in law.
  2. Whether the Revenue can rely on relaxation notifications to bypass the mandatory procedure under Section 148A.
  3. Whether compliance with Section 148A (pre-notice inquiry and opportunity of hearing) is mandatory.

Petitioner’s Arguments

  • The Finance Act, 2021 introduced a completely new reassessment regime, replacing the earlier provisions.
  • After 01.04.2021, the old Section 148 ceased to exist, hence notices issued under the old law are invalid.
  • Section 148A mandates:
    • Conducting inquiry
    • Providing opportunity of hearing
    • Passing a reasoned order before issuing notice
  • The Revenue’s reliance on notifications extending limitation cannot override statutory amendments.
  • Violation of principles of natural justice, as no opportunity was given prior to issuance of notice.

Respondent’s Arguments

  • The Revenue relied on relaxation notifications issued under pandemic-related laws to justify issuance of notices under old provisions.
  • It was argued that such notifications effectively extended the applicability of old reassessment provisions.
  • The Revenue contended that the intent was to protect pending reassessment cases and avoid revenue loss.

Court Findings / Order

  • The Delhi High Court held that:
    • The new reassessment scheme introduced by Finance Act, 2021 is mandatory and overriding.
    • After 01.04.2021, no notice under old Section 148 can be issued.
    • Notifications cannot override or defer statutory amendments enacted by Parliament.
    • Compliance with Section 148A is compulsory before issuing any reassessment notice.
  • Accordingly, the Court:
    • Quashed the reassessment notices issued under the old provisions.
    • Directed that if the Revenue wishes to proceed, it must do so strictly under the new law.

Important Clarifications by Court

  • The judgment clarified that:
    • Substantive law changes cannot be overridden by executive notifications.
    • The reassessment regime post-2021 is a complete code in itself.
    • Procedural safeguards under Section 148A are not optional but mandatory.

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:3964-DB/58927092022CW4712022_164334.pdf

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