Facts of the Case

The petitioners filed multiple writ petitions before the Delhi High Court challenging reassessment notices issued under Section 148 of the Income Tax Act, 1961. These notices were issued after 01.04.2021, i.e., after the Finance Act, 2021 came into force, which substantially amended the reassessment regime.

Despite the new statutory framework introducing Section 148A (mandatory pre-notice inquiry procedure), the Income Tax Department issued reassessment notices under the old unamended provisions of Section 148.

The petitioners contended that such notices were illegal, being contrary to the new law applicable from 01.04.2021.

Issues Involved

  1. Whether reassessment notices issued under the old Section 148 after 01.04.2021 are valid?
  2. Whether the Revenue could rely on relaxation notifications (COVID extensions) to apply the old law?
  3. Whether compliance with Section 148A procedure is mandatory post amendment?
  4. Whether such notices violate principles of natural justice and statutory mandate?

Petitioner’s Arguments

  • The Finance Act, 2021 introduced a completely new reassessment regime, replacing Sections 147–151.
  • From 01.04.2021, all reassessment proceedings must comply with Section 148A, including:
    • Inquiry,
    • Show cause notice,
    • Opportunity of hearing,
    • Passing of order under Section 148A(d).
  • Notices issued under old law after this date are void ab initio.
  • COVID relaxation notifications cannot override substantive statutory amendments.
  • The impugned notices were issued without jurisdiction.

Respondent’s Arguments

  • The Revenue relied on Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA).
  • It was argued that time limits for issuing notices were extended, and thus old provisions continued to apply.
  • The department contended that notifications permitted issuance of notices under the old regime beyond 01.04.2021.

Court’s Findings / Order

  • The Finance Act, 2021 overrides earlier provisions, and the new reassessment scheme is applicable from 01.04.2021.
  • The old Section 148 cannot be invoked after the new regime came into force.
  • The relaxation notifications cannot defer or override legislative amendments.
  • Compliance with Section 148A is mandatory, not procedural.
  • Notices issued under the old law after 01.04.2021 are:
    • Invalid
    • Without jurisdiction
    • Liable to be quashed

Final Order

  • All impugned reassessment notices issued under the old provisions post 01.04.2021 were set aside.

Important Clarifications

  • The judgment clarified that:
    • Substantive law cannot be extended by executive notifications
    • Section 148A is a jurisdictional requirement
    • Any reassessment must strictly follow new procedural safeguards
  • This decision became a landmark ruling in reassessment jurisprudence post Finance Act, 2021.

Sections Involved

  • Section 147 – Income Escaping Assessment
  • Section 148 – Issue of Notice
  • Section 148A – Pre-notice Inquiry (New Mandatory Provision)
  • Section 149 – Time Limits
  • Section 151 – Sanction for Issue of Notice
  • TOLA, 2020

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:3975-DB/58927092022CW7582022_170236.pdf

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