FACTS OF THE CASE

  • Multiple assessees received reassessment notices under Section 148 (old regime) after 01 April 2021.
  • The Finance Act, 2021 had already substituted the reassessment provisions, introducing Section 148A (mandatory prior inquiry and opportunity).
  • The Revenue relied on certain notifications extending timelines due to COVID-19 (Relaxation Act).
  • Petitioners challenged these notices as being contrary to the amended statutory provisions.

ISSUES INVOLVED

  1. Whether reassessment notices issued after 01.04.2021 under the old provisions of Section 148 are valid?
  2. Whether the Revenue could rely on extension notifications to bypass the new reassessment scheme?
  3. Whether compliance with Section 148A procedure is mandatory post amendment?

 PETITIONER’S ARGUMENTS

  • The Finance Act, 2021 introduced a completely new reassessment mechanism effective from 01.04.2021.
  • Any notice issued thereafter must comply with Section 148A, including prior inquiry and opportunity of hearing.
  • Notifications issued under relaxation laws cannot override substantive statutory amendments.
  • Issuance of notices under the old regime is ultra vires and void.

RESPONDENT’S ARGUMENTS

  • The Revenue relied on Taxation and Other Laws (Relaxation) Act, 2020 (TOLA).
  • It argued that due to COVID-19 disruptions, timelines for issuing notices were extended.
  • Therefore, old provisions of Section 148 continued to apply during the extended period.
  • The reassessment notices were claimed to be valid under extended timelines.

 COURT ORDER / FINDINGS

  • The Delhi High Court held that:
    • After 01.04.2021, the new reassessment regime is applicable.
    • Notices issued under old Section 148 post this date are invalid and without jurisdiction.
    • TOLA cannot override or defer the operation of amended statutory provisions.
    • Compliance with Section 148A is mandatory before issuing reassessment notices.
  • Accordingly, the Court quashed all such reassessment notices issued under the old regime.

 IMPORTANT CLARIFICATION

  • The judgment clarified that procedural safeguards under Section 148A are mandatory, ensuring principles of natural justice.
  • It emphasized that executive notifications cannot override legislative amendments.
  • This judgment later became subject to consideration by the Supreme Court in Union of India vs Ashish Agarwal (2022), where a balancing approach was adopted.

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:4030-DB/58927092022CW12742022_194414.pdf

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