Facts of the Case

  • Multiple petitioners received reassessment notices issued after 31 March 2021 under the old provisions of Section 148.
  • The Finance Act, 2021 introduced a new reassessment framework effective from 01 April 2021.
  • Petitioners contended that the notices were issued without following the new mandatory procedure.
  • The Revenue relied upon relaxation provisions extending timelines due to the COVID-19 pandemic.

Issues Involved

  1. Whether reassessment notices issued after 01 April 2021 under the old law are valid.
  2. Whether the Relaxation Act, 2020 extends the applicability of old reassessment provisions.
  3. Whether the new reassessment regime under the Finance Act, 2021 is mandatory from 01 April 2021.

Petitioner’s Arguments

  • The impugned notices are void ab initio as they were issued under provisions no longer in force.
  • The new reassessment scheme mandates prior inquiry, opportunity of hearing, and approval, which were not followed.
  • The Relaxation Act only extends timelines and does not revive repealed provisions.
  • Section 149 (as amended) restricts issuance of notices beyond prescribed timelines.

Respondent’s Arguments

  • The Revenue argued that time limits stood extended under the Relaxation Act, 2020.
  • It was contended that the old provisions continue to apply for notices issued within the extended period.
  • The authorities relied on notifications and circulars issued by the Central Government.

Court’s Findings / Order

  • The Court held that there is a prima facie case in favour of the petitioners.
  • It observed that once the new reassessment regime came into force from 01 April 2021, old provisions cannot be invoked.
  • The Court restrained the Revenue from proceeding further with reassessment pursuant to the impugned notices.
  • Notices were issued to respondents and further proceedings were stayed.

Important Clarification

  • Extension of limitation under the Relaxation Act does not extend the life of repealed statutory provisions.
  • The new law under the Finance Act, 2021 governs reassessment proceedings initiated after 01 April 2021.
  • The judgment reinforces the principle that procedural safeguards introduced by statute are mandatory.

Relevant Sections Involved

  • Section 148, Income Tax Act, 1961
  • Section 149, Income Tax Act, 1961
  • Section 151, Income Tax Act, 1961
  • Section 3(1), Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020
  • Section 6, General Clauses Act, 1897

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2021:DHC:4493-DB/MMH02092021CW93302021_163051.pdf

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