Facts of the Case

  • Multiple petitioners, including ATS Infrastructure Private Limited and other assessees, received reassessment notices under Section 148 after 01.04.2021.
  • The Finance Act, 2021 had already substituted the reassessment provisions, introducing a new mandatory procedure under Section 148A before issuing reassessment notices.
  • Petitioners challenged the notices on the ground that the Revenue was bound by the amended statutory framework.
  • Similar issues had already arisen in earlier writ petitions where interim protection had been granted by the Delhi High Court.
  • The Revenue defended the notices by relying on TOLA and extension notifications.

Issues Involved

1. Whether reassessment notices issued after 01.04.2021 under the old Section 148 were legally sustainable?

2. Whether TOLA could extend the operation of the old reassessment provisions beyond 31.03.2021?

3. Whether the amended reassessment regime under Finance Act, 2021 had overriding application from 01.04.2021?

4. Whether the mandatory procedural safeguard under Section 148A could be bypassed?

 Petitioner’s Arguments

  • The impugned notices were issued under a statutory regime that ceased to operate from 01.04.2021.
  • Parliament substituted the reassessment provisions entirely through Finance Act, 2021.
  • The Revenue was mandatorily required to follow the new procedural safeguards under Section 148A.
  • TOLA only extended limitation periods and could not extend the life of repealed provisions.
  • Issuing notices under the old law after substitution was without jurisdiction and contrary to legislative intent.
  • The Department could not use executive notifications to override statutory amendments enacted by Parliament.

 Respondent’s Arguments

  • The time limit for issuing notices stood extended by virtue of TOLA and related notifications.
  • The benefit of extended timelines preserved the power to issue reassessment notices under the earlier provisions.
  • The notifications issued by the Central Government validly extended the applicability of the old reassessment framework.
  • The impugned notices were within limitation and legally valid.

Court Findings / Observations

  • The Court noted that the Finance Act, 2021 had brought into force a new reassessment framework effective from 01.04.2021.
  • The Court observed that delegated legislation (notifications) cannot override Parliamentary enactments.
  • Prima facie, the impugned notifications extending the old reassessment regime appeared inconsistent with the amended law.
  • The Court emphasized that once a statute is substituted, the old machinery ordinarily ceases to operate unless specifically preserved.
  • The Court considered that the petitioners had established a prima facie case warranting interim protection.

 Court Order / Final Direction

 Issued notice to the respondents.

 Granted time to file counter-affidavits.

 Permitted rejoinders by petitioners.

 Restrained the respondents from continuing reassessment proceedings pursuant to the impugned notices until further orders.

 Important Clarification

This order forms part of the judicial controversy concerning reassessment notices issued during the transition from the old regime to the amended regime under Finance Act, 2021.

This issue was subsequently considered in related jurisprudence, including:

  • Mon Mohan Kohli v. Assistant Commissioner of Income Tax
  • Ashok Kumar Agarwal v. Union of India
  • Union of India v. Ashish Agarwal (Supreme Court)

These decisions shaped the law regarding reassessment notices issued during the transition period.

Sections Involved

Income-tax Act, 1961

  • Section 147
  • Section 148
  • Section 148A
  • Section 149
  • Section 151

Finance Act, 2021

  • Reassessment amendment provisions

Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA)

General Clauses Act, 1897

  • Section 6

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

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