Facts of the Case

  • Multiple writ petitions were filed challenging reassessment notices issued by the Income Tax Department.
  • The notices were issued after 01.04.2021, i.e., after the new reassessment regime came into force.
  • However, the Department continued issuing notices under the old provisions of Section 148, relying on relaxation notifications issued under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA).
  • Petitioners contended that once the new law came into force, old provisions ceased to apply.

Issues Involved

  1. Whether reassessment notices issued under the old Section 148 after 01.04.2021 are valid?
  2. Whether TOLA notifications can extend applicability of repealed provisions?
  3. Whether the procedure under Section 148A is mandatory before issuing reassessment notice?

Petitioner’s Arguments

  • The Finance Act, 2021 substituted the entire reassessment scheme effective 01.04.2021.
  • The old provisions of Section 148 stood repealed and could not be invoked thereafter.
  • TOLA only extended time limits and did not save or revive repealed provisions.
  • Mandatory procedure under Section 148A (including opportunity of hearing) was not followed.
  • Therefore, the reassessment notices are without jurisdiction and liable to be quashed.

Respondent’s Arguments

  • The Revenue relied upon TOLA notifications extending time limits due to COVID-19.
  • It was contended that such extensions permitted issuance of notices under the old regime.
  • The Department argued that the notifications had statutory force and protected the notices issued.

Court Order / Findings

    • The Finance Act, 2021 introduced a completely new reassessment regime, effective from 01.04.2021.
    • The old provisions of Section 148 ceased to exist after that date.
    • TOLA cannot override or defer the operation of a substituted statutory provision.
    • Reassessment notices issued under the old law after 01.04.2021 are invalid and without jurisdiction.
    • Compliance with Section 148A procedure is mandatory before issuing any reassessment notice.
  • Result:
    All impugned reassessment notices issued under the old regime post 01.04.2021 were quashed.

Important Clarification

  • The judgment clarified that:
    • Extensions under TOLA apply only to time limits, not to substantive law changes.
    • Once a provision is substituted, it cannot be revived through executive notifications.
    • Procedural safeguards under Section 148A are mandatory and not directory.

Sections Involved

  • Section 147 – Income escaping assessment
  • Section 148 – Issue of notice for reassessment
  • Section 148A – Procedure before issuance of notice
  • Section 149 – Time limit for notice
  • Finance Act, 2021 (Amendment to reassessment provisions)

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:3982-DB/58927092022CW8562022_174605.pdf

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