Facts of the Case

  • Multiple writ petitions (including W.P.(C) 10/2022 and connected matters) were filed before the Delhi High Court.
  • Petitioners challenged reassessment notices issued by the Income Tax Department.
  • These notices were issued after 01.04.2021, when the new reassessment regime (Sections 147–151 substituted) had come into force.
  • However, the Department issued notices under the old Section 148 without following Section 148A procedure.
  • The Revenue relied on certain notifications extending timelines due to COVID-19 (TOLA – Taxation and Other Laws (Relaxation) Act).

Issues Involved

  1. Whether reassessment notices issued after 01.04.2021 under the old Section 148 are valid?
  2. Whether TOLA notifications can override the substituted provisions introduced by the Finance Act, 2021?
  3. Whether compliance with Section 148A procedure is mandatory for reassessment?

Petitioner’s Arguments

  • The Finance Act, 2021 substituted the entire reassessment scheme, making Section 148A mandatory.
  • Notices issued after 01.04.2021 must comply with new law only.
  • TOLA cannot revive or extend a repealed provision.
  • Issuance of notices under the old regime is without jurisdiction and illegal.

Respondent’s Arguments (Income Tax Department)

  • Due to COVID-19, timelines were extended under TOLA, allowing continuation of old provisions.
  • Notifications permitted issuance of reassessment notices under the old regime beyond 01.04.2021.
  • The Department acted in good faith relying on statutory extensions.

Court Findings / Judgment

1. New Law Overrides Old Regime

  • The Court held that Finance Act, 2021 substituted the reassessment provisions completely.
  • After 01.04.2021, only the new regime applies.

2. Section 148A is Mandatory

  • The Court emphasized that Section 148A procedure is compulsory before issuing notice under Section 148.
  • Any notice without following this procedure is invalid.

3. TOLA Cannot Override Substituted Law

  • Notifications issued under TOLA cannot override or defer the operation of a new statutory provision.
  • Delegated legislation cannot supersede parliamentary enactments.

4. Notices Declared Invalid

  • Reassessment notices issued under the old Section 148 after 01.04.2021 were held bad in law and quashed.

Court Order

  • All impugned reassessment notices issued under old provisions post 01.04.2021 were set aside.
  • Liberty may be available to Revenue to proceed in accordance with the new law.

Important Clarifications by Court

  • The judgment clarifies the transition from old to new reassessment regime.
  • It reinforces that:
    • Substituted provisions = complete replacement
    • Procedural safeguards under Section 148A are mandatory
  • It protects taxpayers from arbitrary reopening of assessments.

Sections Involved

  • Section 147 – Income Escaping Assessment
  • Section 148 – Issue of Notice for Reassessment
  • Section 148A – New Procedure (Finance Act, 2021)
  • Section 149 – Time Limit for Notice
  • Section 151 – Sanction for Issue of Notice
  • Finance Act, 2021 (Reassessment Regime Amendment)

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:3981-DB/58927092022CW7952022_174041.pdf


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