Facts of the Case

  • Multiple writ petitions (lead case: ATS Infrastructure Pvt. Ltd.) were filed before the Delhi High Court challenging reassessment notices issued by the Income Tax Department.
  • The impugned notices were issued after 01.04.2021, i.e., after the new reassessment regime came into force.
  • Petitioners contended that the notices were issued under the old provisions of Section 148, without following the newly inserted Section 148A procedure.
  • The Revenue relied upon extensions granted under TOLA (2020) to justify issuance under the old regime.

Issues Involved

  1. Whether reassessment notices issued after 01.04.2021 under the old provisions of Section 148 are valid?
  2. Whether the new reassessment regime (Sections 147–151 as amended) is mandatory post 01.04.2021?
  3. Whether TOLA extends applicability of the old law beyond 31.03.2021?
  4. Whether failure to follow Section 148A invalidates the notices?


Petitioner’s Arguments

  • The impugned notices are void ab initio, as they were issued under the pre-amended provisions, which are no longer applicable after 01.04.2021.
  • Section 148A mandates prior inquiry, opportunity of hearing, and reasoned order, which was not followed.
  • TOLA only extends time limits, not the applicability of the old reassessment procedure.
  • Issuance of notice without complying with new statutory safeguards violates principles of natural justice.
  • Reliance placed on earlier interim orders of the Delhi High Court granting stay in similar matters.

 

Respondent’s Arguments (Income Tax Department)

  • The Department argued that TOLA (2020) extended the time limit for issuing notices under the old regime.
  • It was contended that the old provisions continue to apply for notices issued within the extended timeline.
  • The Department relied upon Section 6 of the General Clauses Act to argue continuity of proceedings.
  • It was submitted that reassessment proceedings were validly initiated within extended limitation periods.

Court’s Findings / Order

  • The Delhi High Court took prima facie view that the new reassessment regime is applicable from 01.04.2021.
  • The Court observed that:
    • The impugned notices appear to have been issued without following the mandatory procedure under Section 148A.
    • The old provisions cannot be invoked after the new law came into force.
  • The Court relied on earlier Division Bench decisions granting interim protection.
  • Interim Relief Granted:
    • Respondents were restrained from taking further steps pursuant to the impugned reassessment notices.
    • Notices were issued and counter-affidavits were directed to be filed.

Important Clarification

  • The Court clarified that:
    • The matter is under consideration and not finally adjudicated.
    • The issue revolves around transition from old to new reassessment regime.
    • The applicability of TOLA vs amended provisions is a central legal conflict.

Sections Involved

  • Section 147 – Income Escaping Assessment
  • Section 148 – Issue of Notice for Reassessment
  • Section 148A – Conducting Inquiry before Issue 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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