Facts of the Case

The present batch of writ petitions involved multiple assessees challenging reassessment notices issued by the Income Tax Department. The notices were issued after 01.04.2021 under the old regime of Section 148, despite the introduction of a new statutory framework under Section 148A, which mandates prior inquiry, opportunity of hearing, and passing of an order before issuing such notice.

The Revenue authorities relied on extensions granted under TOLA to justify issuance of notices under the old provisions.

Issues Involved

  1. Whether reassessment notices issued after 01.04.2021 under the old Section 148 are valid in law.
  2. Whether the Revenue can rely on TOLA to bypass the newly introduced procedure under Section 148A.
  3. Whether the new reassessment regime applies retrospectively to notices issued after its enforcement date.

Petitioner’s Arguments

  • The petitioners contended that after 01.04.2021, the old provisions of reassessment ceased to exist.
  • Any notice issued without following the mandatory procedure under Section 148A is illegal and void.
  • TOLA only extends time limits and does not revive repealed provisions.
  • The reassessment proceedings violated principles of natural justice, as no opportunity of hearing was provided.

Respondent’s Arguments

  • The Revenue argued that due to COVID-19 extensions under TOLA, the time for issuing notices stood extended.
  • It was contended that such extensions permitted continuation of the old reassessment regime.
  • The Department asserted that notices were validly issued within extended timelines.

Court Order / Findings

  • The Delhi High Court held that after 01.04.2021, the new reassessment regime is mandatory.
  • Notices issued under the old Section 148 are invalid and unsustainable in law.
  • TOLA cannot override or defer the operation of substituted statutory provisions.
  • The Court emphasized that Section 148A procedure is compulsory, including:
    • Inquiry (if required)
    • Show cause notice
    • Consideration of reply
    • Passing of order before issuance of notice

Accordingly, the impugned reassessment notices were quashed, with liberty to the Revenue to proceed afresh in accordance with the new law.

Important Clarification by Court

  • The judgment clarified that:
    • New law applies to all reassessment notices issued after 01.04.2021, irrespective of assessment year.
    • TOLA does not save old provisions, it only extends timelines.
    • Revenue must strictly comply with procedural safeguards under Section 148A.
    • Courts will not permit circumvention of statutory safeguards through administrative extensions.

Sections Involved

  • Section 147 – Income escaping assessment
  • Section 148 – Issue of notice for reassessment
  • Section 148A – Procedure before issuing notice
  • Section 149 – Time limits for notice
  • Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA)

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:4031-DB/58927092022CW13802022_194624.pdf

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