Facts of the Case

  • Multiple writ petitions were filed challenging reassessment notices issued by the Income Tax Department.
  • The notices were issued after 01 April 2021, i.e., after the new reassessment provisions came into force.
  • Petitioners contended that the notices were issued under the old regime, without following the mandatory procedure under Section 148A.
  • The Revenue relied upon TOLA, 2020, to justify extension of time and issuance under old provisions.
  • Earlier interim orders in similar matters had already granted protection to assessees 

Issues Involved

  1. Whether reassessment notices issued after 01.04.2021 under the old provisions of Section 148 are valid?
  2. Whether TOLA, 2020 permits continuation of old reassessment provisions despite statutory amendments?
  3. Whether the new reassessment regime under the Finance Act, 2021 applies retrospectively to pending actions 

Petitioner’s Arguments

  • The impugned notices are void ab initio as they were issued under a repealed legal framework.
  • After 01.04.2021, reassessment must strictly comply with Section 148A procedure.
  • The amended provisions override previous law; hence, old notices cannot survive.
  • Reliance was placed on earlier Delhi High Court orders granting stay in similar matters 

Respondent’s Arguments

  • The Revenue argued that:
    • Time for issuing notices stood extended under TOLA, 2020.
    • Notifications issued under TOLA allow continuation of old reassessment provisions.
    • Section 6 of the General Clauses Act preserves the right to initiate proceedings under the old regime.

Court Order / Findings

  • The Delhi High Court held prima facie that:
    • The impugned notices appear inconsistent with the new statutory scheme introduced by the Finance Act, 2021.
    • Once the law has changed, the procedure prescribed under the amended provisions must be followed.
    • TOLA cannot override substantive amendments to the Act.
  • The Court observed that allowing old procedure would defeat legislative intent.

Important Clarification by the Court

  • The Court clarified that:
    • New law applies to reassessment proceedings initiated after 01.04.2021.
    • Notifications under TOLA cannot revive repealed provisions.
    • Section 6 of the General Clauses Act does not apply where a new regime replaces the old procedure entirely.

Sections Involved

  • Section 147 – Income Escaping Assessment
  • Section 148 – Issue of Notice for Reassessment
  • Section 148A – Procedure for Issuance of Notice (post amendment)
  • Section 149 – Time Limit for Notice
  • Section 151 – Sanction for Issue of Notice
  • Section 6, General Clauses Act, 1897
  • 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/2021:DHC:4493-DB/MMH02092021CW93302021_163051.pdf

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