Facts of the Case

The present matter consists of a batch of writ petitions filed before the Delhi High Court challenging reassessment notices issued under Section 148 of the Income Tax Act.

The petitioners contended that:

  • The reassessment notices were issued after 01.04.2021, when the new reassessment regime introduced by the Finance Act, 2021 came into force.
  • Despite this, the Income Tax Department issued notices under the old provisions of Section 148, without complying with the newly introduced Section 148A procedure.

The Revenue relied on TOLA (COVID relaxation law) to justify issuance of notices under the old regime even after 01.04.2021.

Issues Involved

  1. Whether reassessment notices issued after 01.04.2021 under the old Section 148 are valid?
  2. Whether the benefit of TOLA allows the Revenue to bypass the newly introduced Section 148A procedure?
  3. Whether such notices violate the statutory framework introduced by the Finance Act, 2021?

Petitioner’s Arguments

  • The Finance Act, 2021 substituted the entire reassessment scheme, making Section 148A mandatory before issuing notice.
  • Any notice issued after 01.04.2021 must comply with the new law, not the old regime.
  • The Revenue cannot rely on TOLA to extend the applicability of repealed provisions.
  • Issuing notices without following Section 148A violates principles of natural justice.
  • The notices are therefore void ab initio and without jurisdiction.

Respondent’s Arguments (Revenue)

  • Due to COVID-19 disruptions, TOLA extended time limits, allowing continuation of old reassessment provisions.
  • The notifications issued by the Central Government permitted issuance of notices under the old Section 148 beyond 01.04.2021.
  • The Department argued that such notices are legally valid and protected by statutory extensions.

Court’s Findings / Judgment

  • The reassessment regime introduced by the Finance Act, 2021 is a complete substitution, not merely procedural.
  • After 01.04.2021, the old provisions ceased to exist.
  • The Revenue cannot invoke TOLA to override or defer the operation of the new law.
  • The procedure under Section 148A is mandatory, and non-compliance renders the notice invalid.
  • Notifications issued under TOLA cannot revive a repealed statutory provision.

Important Clarification by the Court

  • TOLA only extends time limits, not substantive law.
  • The Revenue must strictly follow the new reassessment framework.
  • The judgment reinforces that procedural safeguards under Section 148A are mandatory, ensuring taxpayer rights.

Sections Involved

  • Section 147 – Income Escaping Assessment
  • Section 148 – Issue of Notice for Reassessment
  • Section 148A – Procedure before Issue of Notice
  • Section 149 – Time Limit for Notice
  • Section 151 – Sanction for Issue of 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:3973-DB/58927092022CW5762022_165446.pdf

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