Facts of the Case

The petitioners challenged reassessment notices issued under Section 148 of the Income Tax Act, alleging that such notices were issued after 01 April 2021 under the old regime, without complying with the newly introduced provisions.

The petitioners contended that despite the enforcement of the amended reassessment scheme, the respondents issued notices based on the pre-amended provisions, thereby rendering them invalid.

The Court referred to similar matters decided earlier and considered the legality of reassessment notices issued during the transition period post-amendment.

Issues Involved

  1. Whether reassessment notices issued after 01 April 2021 under the old provisions of Section 148 are valid?
  2. Whether the amended provisions (Sections 147 to 151) introduced by Finance Act, 2021 are applicable to such notices?
  3. Whether TOLA, 2020 extends the applicability of old provisions beyond 31 March 2021?

Petitioner’s Arguments

  • The impugned notices are void ab initio as they were issued under repealed provisions.
  • After 01 April 2021, reassessment must follow the new procedure under Section 148A, including prior inquiry and opportunity of hearing.
  • The respondents cannot rely on TOLA to extend the life of old provisions.
  • The notices violate principles of natural justice as no prior hearing was granted.

Respondent’s Arguments

  • The Revenue argued that TOLA, 2020 extended the time limit for issuing reassessment notices.
  • It was contended that the old provisions continue to apply due to such extensions.
  • The department relied on administrative relaxations and notifications issued during COVID-19.

Court’s Findings / Order

  • The Court held that the amended provisions introduced by Finance Act, 2021 are applicable from 01 April 2021.
  • Reassessment notices issued under the old law after this date are prima facie invalid.
  • The Court rejected the argument that TOLA extends the applicability of old provisions, clarifying that it only extends time limits, not substantive law.
  • It was observed that the new reassessment framework mandates compliance with Section 148A, which was not followed.
  • The respondents were restrained from taking any coercive action pursuant to the impugned notices.
  • Reassessment proceedings were effectively stayed until further hearing.

 

Important Clarification by the Court

  • Delegated legislation cannot override statutory amendments.
  • The introduction of a new reassessment regime replaces the old one entirely.
  • Section 6 of the General Clauses Act does not save reassessment actions initiated under the old law post amendment.
  • The Court emphasized that procedural safeguards under the new regime are mandatory, not optional.

Sections Involved

  • Section 147, Income Tax Act, 1961
  • Section 148, Income Tax Act, 1961
  • Section 148A (New Regime)
  • Section 149 (Time Limit for Reassessment)
  • Section 151 (Sanction for Issue of Notice)
  • Section 3 & 6, 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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