Facts of the Case

A batch of writ petitions, including Shree Khetrapal vs ACIT, challenged reassessment notices issued after 01 April 2021.

The petitioners contended that:

  • The impugned notices were issued under the old regime of Section 148.
  • The Finance Act, 2021 introduced a new reassessment scheme effective from 01 April 2021, mandating compliance with Section 148A.
  • Despite this, the Revenue continued issuing notices under the old provisions, relying on extensions granted under TOLA.

The Court also referred to similar interim orders and earlier decisions, including Mon Mohan Kohli vs ACIT, dealing with identical issues.

Issues Involved

  1. Whether reassessment notices issued after 01 April 2021 under old Section 148 are valid?
  2. Whether TOLA permits continuation of old reassessment provisions beyond 31 March 2021?
  3. Whether the new procedure under Section 148A is mandatory?
  4. Whether delegated legislation can override statutory amendments?

Petitioner’s Arguments

  • The reassessment notices are invalid ab initio as they do not comply with Section 148A.
  • The Finance Act, 2021 introduced a complete overhaul of reassessment provisions, applicable from 01 April 2021.
  • TOLA merely extends time limits and cannot revive or extend repealed provisions.
  • The notices violate principles of natural justice, as no prior inquiry or opportunity was given.

Respondent’s Arguments

  • The Revenue argued that due to TOLA, time limits for issuing notices stood extended, allowing issuance under the old provisions.
  • It was contended that administrative notifications permitted continuation of the old reassessment regime.
  • The new provisions should not invalidate actions taken within extended timelines.

Court’s Findings / Order

The Delhi High Court held:

  • The new reassessment regime (Sections 147–151 as amended) is applicable from 01 April 2021.
  • The impugned notices issued under old Section 148 are invalid.
  • TOLA does not override statutory amendments; it only extends time limits.
  • Delegated legislation cannot override or defer the operation of the Finance Act, 2021.
  • The Court observed that continuing old provisions defeats the legislative intent.

Final Order

  • Reassessment notices issued under old Section 148 after 01 April 2021 were stayed/quashed.
  • The Revenue was restrained from proceeding further based on such notices.
  • Matters were listed for further proceedings along with connected petitions.

Important Clarifications

  • Section 148A procedure is mandatory and not optional.
  • Reassessment proceedings must strictly follow the new statutory framework.
  • TOLA cannot be used as a tool to bypass substantive legal changes.
  • Delegated legislation cannot override parent legislation (Finance Act, 2021).

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2021:DHC:4492-DB/MMH06082021CW75092021_155145.pdf

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