Facts of the Case

  • The petitioners challenged reassessment notices issued after 01 April 2021 under the unamended Section 148 of the Income Tax Act.
  • The Finance Act, 2021 introduced a new reassessment regime, including Section 148A mandating prior inquiry and opportunity of hearing.
  • Despite this, the Revenue continued issuing notices under the old provisions citing extensions under the Relaxation Act, 2020.
  • Petitioners argued such notices were invalid and contrary to the amended law.

Issues Involved

  1. Whether reassessment notices issued after 01.04.2021 under old Section 148 are valid?
  2. Whether the Relaxation Act, 2020 allows continuation of old reassessment provisions?
  3. Whether procedural amendments under Finance Act, 2021 are mandatory?

Petitioner’s Arguments

  • Notices issued under old Section 148 are void ab initio as the new law came into force from 01.04.2021.
  • Section 148A mandates prior inquiry and opportunity, which was not followed.
  • Relaxation Act only extends time limits, not the applicability of repealed provisions.
  • Delegated legislation cannot override statutory amendments.
  • Reliance placed on similar interim orders including Bombay High Court and earlier Delhi High Court decisions.

Respondent’s Arguments

  • The Revenue contended that due to COVID-19, time limits were extended till 30.06.2021.
  • Notifications issued under the Relaxation Act permitted issuance of notices under the old regime.
  • Argued that reassessment proceedings were valid under extended timelines.

Court’s Findings / Observations

  • The Court held that post 01.04.2021, the new reassessment procedure is mandatory.
  • Relaxation Act cannot override substantive amendments introduced by the Finance Act.
  • Any notice issued under old Section 148 after amendment is prima facie invalid.
  • Delegated legislation cannot modify or defeat statutory provisions.
  • Section 6 of the General Clauses Act does not apply to procedural changes where a new mechanism is introduced.

Court Order

  • The Court granted interim stay on reassessment proceedings pursuant to impugned notices.
  • Respondents were restrained from taking further action.
  • Matter listed for further hearing along with connected petitions.

Important Clarifications

  • New reassessment regime under Finance Act, 2021 is prospective but mandatory from 01.04.2021.
  • Procedural safeguards under Section 148A cannot be bypassed.
  • Extensions under Relaxation Act do not revive repealed provisions.
  • This case forms part of a series of rulings shaping reassessment law post-2021 amendment.

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

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