Facts of the Case

The present batch of writ petitions challenged reassessment notices issued under Section 148 of the Income Tax Act after 01 April 2021.

The petitioners contended that the impugned notices were issued under the old reassessment regime, despite the introduction of a new reassessment framework effective from 01 April 2021 through amendments to Sections 147 to 151.

The Court noted that similar matters had earlier been considered, and interim protection had been granted. The impugned notices were alleged to have been issued without complying with the newly introduced mandatory procedural safeguards 

Issues Involved

  1. Whether reassessment notices issued after 01 April 2021 under the unamended provisions of the Income Tax Act are valid.
  2. Whether the benefit of extended timelines under TOLA permits issuance of notices under the old regime.
  3. Whether Section 6 of the General Clauses Act can save such notices.

Petitioner’s Arguments

  • The impugned notices are invalid ab initio as they were issued under the repealed provisions post 01 April 2021.
  • The new reassessment provisions mandate compliance with procedural safeguards, including prior inquiry and opportunity of hearing.
  • TOLA only extends timelines and does not permit continuation of the old law beyond its repeal.
  • Reliance was placed on earlier Division Bench rulings where similar notices were stayed.

Respondent’s Arguments

  • The Revenue argued that the limitation period stood extended by virtue of TOLA until 30 June 2021.
  • It was contended that notices issued under the old regime remain valid due to saving provisions and Section 6 of the General Clauses Act.
  • The respondents submitted that the amendments do not invalidate actions initiated within the extended time period. 

Court’s Findings / Order

  • The Court observed a prima facie case in favour of the petitioners.
  • It held that:
    • The impugned notices appear to have been issued under a non-existent legal regime.
    • The new reassessment scheme introduced from 01 April 2021 is applicable.
  • The Court issued notice and granted interim protection, restraining the Revenue from taking further steps pursuant to the impugned reassessment notices.
  • The respondents were directed to file counter affidavits, and the matter was listed for further hearing.

 

Important Clarifications

  • The Court emphasized that:
    • TOLA extends time limits, not the applicability of repealed provisions.
    • Prima facie, reassessment must comply with the new statutory framework.
  • The issue of validity of such notices was kept open for final adjudication.

Sections Involved

  • Section 147, Income Tax Act, 1961
  • Section 148, Income Tax Act, 1961
  • Section 149, Income Tax Act, 1961
  • Section 151, Income Tax Act, 1961
  • Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA)
  • 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

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.