Facts of the Case

The present batch of writ petitions was filed by multiple assessees challenging reassessment notices issued under Section 148 of the Income Tax Act, 1961.

The impugned notices were issued after 01 April 2021, but were based on the old reassessment regime existing prior to the amendments introduced by the Finance Act, 2021.

The petitioners contended that the notices were issued without following the newly introduced mandatory procedure under Section 148A, which requires prior inquiry, opportunity of hearing, and passing of an order before issuing reassessment notices.

The Court also referred to earlier similar matters where interim protection had been granted, particularly orders dated July 2021 in connected writ petitions 

Issues Involved

  1. Whether reassessment notices issued after 01.04.2021 under the old provisions of Section 148 are valid in law.
  2. Whether the Revenue could rely on extensions granted under the Relaxation Act, 2020 to bypass the new procedure introduced by the Finance Act, 2021.
  3. Whether compliance with Section 148A is mandatory for notices issued after 01.04.2021.

Petitioner’s Arguments

  • The impugned notices are invalid ab initio as they were issued under the old provisions despite the new law coming into force from 01.04.2021.
  • The Finance Act, 2021 substituted the entire reassessment scheme, making Section 148A mandatory.
  • Notices issued without following the new procedure are without jurisdiction.
  • The Relaxation Act, 2020 cannot override substantive amendments brought by Parliament.
  • The old provisions ceased to exist after 31.03.2021, hence cannot be invoked thereafter.

Respondent’s Arguments

  • The Revenue argued that due to the Relaxation Act, 2020, timelines for issuing notices stood extended.
  • It was contended that notices issued during the extended period would still be governed by the old regime.
  • The respondents relied on statutory notifications extending time limits up to June 2021.
  • It was also argued that Section 148 notices were validly issued within extended limitation periods 

Court’s Findings / Order

  • The Court observed a prima facie case in favour of the petitioners.
  • It held that once the new reassessment provisions came into force from 01 April 2021, the old provisions could not be invoked.
  • The Court noted that the new procedure under Section 148A must be followed.
  • The argument that the Relaxation Act allowed continuation of old provisions was not accepted at the interim stage.

Interim Directions:

  1. The respondents were restrained from taking any coercive steps pursuant to the impugned reassessment notices.
  2. The reassessment proceedings were kept in abeyance.
  3. Respondents were directed to file counter affidavits.
  4. Matter was listed for further hearing.

Important Clarifications by the Court

  • The Court emphasized that procedural safeguards introduced by Finance Act, 2021 cannot be bypassed.
  • Section 6 of the General Clauses Act cannot be used to revive repealed provisions where a complete substitution of law has occurred.
  • The Court acknowledged consistency with earlier interim orders passed in similar matters.

 Sections Involved

  • Section 147 – Income Escaping Assessment
  • Section 148 – Issue of Notice for Reassessment
  • Section 148A – Procedure for Reassessment (Inserted by Finance Act, 2021)
  • Section 149 – Time Limit for Notice
  • Section 151 – Sanction for Issue of Notice
  • Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020

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

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