Facts of the Case

Multiple writ petitions were filed challenging reassessment notices issued under Section 148 of the Income Tax Act after 01 April 2021, without following the newly inserted procedure under Section 148A introduced by the Finance Act, 2021.

The petitioners contended that despite the amendment, the Revenue authorities issued notices under the old regime, relying on extensions provided under TOLA.

The Delhi High Court noted that similar matters had already been considered in earlier writ petitions, where interim protection had been granted.

Issues Involved

  1. Whether reassessment notices issued after 01.04.2021 under the old provisions of Section 148 are valid.
  2. Whether the Revenue can rely on TOLA to bypass the amended reassessment procedure.
  3. Whether the new provisions (Sections 147–151 as amended) apply mandatorily from 01.04.2021.

Petitioner’s Arguments

  • The impugned notices are void ab initio as they were issued under the old law after it stood substituted.
  • The Finance Act, 2021 introduced a completely new reassessment regime, making compliance with Section 148A mandatory.
  • The old provisions ceased to exist post 01.04.2021; hence, notices issued under them are without jurisdiction.
  • TOLA cannot override substantive legislative amendments.

Respondent’s Arguments

  • The Revenue argued that time limits were extended due to TOLA and COVID-19 disruptions.
  • It was contended that the extended timeline allowed issuance of notices under the old regime.
  • Reliance was placed on Section 6 of the General Clauses Act, arguing continuation of old provisions.

Court’s Findings / Order

  • The Court observed a prima facie case in favour of the petitioners.
  • It held that the issue had already been examined in earlier cases granting interim protection.
  • The Court noted that:
    • The new reassessment framework applies from 01.04.2021.
    • The validity of notices issued under the old provisions requires judicial scrutiny.
  • Interim Relief Granted:
    • The respondents were restrained from taking any coercive reassessment action pursuant to the impugned notices.

Important Clarifications

  • The Court emphasized that procedural changes introduced by Finance Act, 2021 are substantive in nature.
  • It expressed doubt on the Revenue’s reliance on TOLA to continue applying old provisions.
  • The matter was listed for further hearing, and counter-affidavits were directed to be filed.
  • The order aligns with earlier interim orders in similar reassessment disputes.

 Sections Involved

  • Section 147 – Income Escaping Assessment
  • Section 148 – Issue of Notice for Reassessment
  • Section 148A – New procedure (Finance Act, 2021)
  • 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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