Facts of the Case

The petitioners challenged reassessment notices issued by the Income Tax Department after 1st April 2021, invoking the unamended provisions of Sections 147/148.

The Revenue relied on TOLA (Relaxation Act, 2020) and various notifications extending limitation periods due to COVID-19 to justify issuance of notices under the old regime.

The petitioners contended that with effect from 01.04.2021, a new reassessment framework came into force, mandating compliance with Section 148A procedure, which was not followed.

Issues Involved

  1. Whether reassessment notices issued after 01.04.2021 under the old provisions of Section 148 are valid?
  2. Whether TOLA extensions permit continuation of old reassessment provisions beyond 01.04.2021?
  3. Whether the Revenue can bypass the mandatory procedure under Section 148A introduced by Finance Act, 2021?

Petitioner’s Arguments

  • The Finance Act, 2021 substituted the entire reassessment scheme, making Section 148A mandatory before issuing notice.
  • After 01.04.2021, old provisions ceased to exist and could not be invoked.
  • TOLA only extends time limits, not substantive law.
  • Notices issued without complying with Section 148A are illegal and void ab initio.

Respondent’s Arguments

  • Due to COVID-19, TOLA extended limitation periods, allowing issuance of notices under the old regime.
  • Notifications issued by the Government permitted continuation of earlier provisions.
  • The new provisions could not be operationalized immediately in all cases.

Court’s Findings / Order

The Delhi High Court quashed all reassessment notices issued after 01.04.2021 under the old provisions.

Key Findings:

  • The Finance Act, 2021 substituted Sections 147–151, creating a new legal regime.
  • After 01.04.2021, only the new law applies, and the old provisions are no longer valid.
  • TOLA cannot override or defer the operation of substituted statutory provisions.
  • Issuance of reassessment notice without following Section 148A procedure is invalid.
  • Executive notifications cannot override Parliamentary legislation.

Final Order:

  • All impugned reassessment notices issued under old law set aside.
  • Revenue directed to proceed only in accordance with new provisions.

Important Clarification by Court

  • Extension of limitation ≠ extension of old law.
  • Procedural safeguards under Section 148A are mandatory and not directory.
  • The judgment reinforces rule of law over executive convenience.

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2021:DHC:4181-DB/MMH15122021CW61762021_140533.pdf

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.