Facts of the Case

  • Multiple writ petitions were filed by different assessees challenging reassessment notices issued by the Income Tax Department.
  • The impugned notices were issued under Section 148 (old regime) after 01 April 2021, when the new reassessment scheme (Sections 147–151 as amended) had already come into force.
  • The Revenue relied upon certain notifications extending limitation periods due to the COVID-19 pandemic (TOLA).
  • The petitioners contended that the old provisions had ceased to exist, and therefore, any notice issued under them was invalid.

Issues Involved

  1. Whether reassessment notices issued under old Section 148 after 01.04.2021 are legally valid.
  2. Whether the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) permits continuation of the old reassessment regime.
  3. Whether the new procedure under Section 148A is mandatory for reassessment proceedings initiated after the amendment.

Petitioner’s Arguments

  • The Finance Act, 2021 substituted the entire reassessment framework, making the old provisions inoperative from 01.04.2021.
  • Any notice issued post-amendment must comply with Section 148A, which mandates:
    • Inquiry
    • Opportunity of hearing
    • Speaking order before issuance of notice
  • TOLA only extends time limits, not substantive law, hence cannot revive repealed provisions.
  • Notices issued under the old regime are without jurisdiction and liable to be quashed.

Respondent’s Arguments

  • The Revenue argued that due to the pandemic-related relaxations under TOLA, the time limit for issuing notices stood extended.
  • It was contended that the notifications allowed the Department to continue using the old provisions temporarily.
  • The reassessment notices were therefore claimed to be valid and within limitation.

Court Findings / Order

  • The Delhi High Court held that:
    • The Finance Act, 2021 brought into force a completely new reassessment regime w.e.f. 01.04.2021.
    • The old provisions of Section 148 ceased to exist after this date.
    • TOLA cannot override or defer the operation of substituted provisions of law.
  • Consequently:
    • All reassessment notices issued under the old Section 148 after 01.04.2021 were declared invalid.
    • The Court emphasized that compliance with Section 148A is mandatory before initiating reassessment.

Important Clarifications by Court

  • Extension of limitation under TOLA does not validate actions under a repealed statutory provision.
  • The reassessment process must strictly follow the new procedural safeguards introduced to protect taxpayer rights.
  • The ruling reinforced that procedural safeguards are not mere formalities but jurisdictional requirements.

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:3980-DB/58927092022CW9652022_173915.pdf


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