Facts of the Case

The petitioners, including Suman Jeet Agarwal and several other assessees, challenged reassessment notices issued by the Income Tax Department under Section 148 of the Income Tax Act.

  • These notices were issued after 01.04.2021, i.e., after the new reassessment regime introduced by the Finance Act, 2021 came into force.
  • However, the Revenue issued notices under the old provisions of Section 148, without following the newly introduced procedure under Section 148A.
  • The Revenue relied upon certain notifications extending timelines due to the pandemic.

The petitioners argued that the old regime stood substituted and could not be invoked 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 Revenue can rely on relaxation notifications (COVID extensions) to bypass the new statutory regime?
  3. Whether compliance with Section 148A procedure is mandatory before issuing reassessment notices?

 Petitioner’s Arguments

  • The Finance Act, 2021 completely replaced the reassessment scheme, making Section 148A mandatory.
  • Any notice issued after 01.04.2021 must comply with the new law, not the old provisions.
  • Notifications extending time limits cannot override substantive statutory amendments.
  • The impugned notices were without jurisdiction and liable to be quashed.

 Respondent’s Arguments (Revenue)

  • The Revenue relied on Taxation and Other Laws (Relaxation) Act, 2020 (TOLA) and related notifications.
  • It was argued that timelines for issuing notices were extended, thereby allowing issuance under the old regime.
  • The Department contended that the reassessment proceedings were valid due to these extensions.

Court Findings / Judgment

  • The Delhi High Court held that the new reassessment regime (effective 01.04.2021) is mandatory.
  • The old provisions of Section 148 ceased to apply after the amendment.
  • Notifications under TOLA cannot override the substituted statutory provisions introduced by Parliament.
  • The requirement under Section 148A (pre-notice inquiry, opportunity of hearing) is mandatory.
  • All reassessment notices issued under the old law after 01.04.2021 were quashed.

Important Clarifications by the Court

  • Delegated legislation (notifications) cannot override primary legislation.
  • The reassessment mechanism post-2021 is procedurally stricter and protects taxpayer rights.
  • Compliance with natural justice (via Section 148A) is essential.

Sections Involved

  • Section 147 – Income Escaping Assessment
  • Section 148 – Issue of Notice for Reassessment
  • Section 148A – Conduct of Inquiry before Issuing Notice
  • Section 149 – Time Limit for Notice
  • Finance Act, 2021 (New Reassessment Scheme)

Link to download the order - https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:3997-DB/58927092022CW10572022_185436.pdf


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