Facts of the Case

The petitioner, Twylight Infrastructure Pvt. Ltd., challenged reassessment proceedings initiated by the Income Tax Department. The dispute arose after the Revenue issued a notice under Section 148A(b) of the Income-tax Act, 1961 alleging that certain income had escaped assessment.

The petitioner submitted a reply to the notice, contesting the allegations and questioning the validity of the reassessment process. Subsequently, the Revenue passed an order under Section 148A(d) and proceeded to issue a notice under Section 148 for reassessment.

The petitioner approached the Delhi High Court through a writ petition under Article 226 of the Constitution of India, challenging the legality of the proceedings and particularly raising objections regarding the competent sanctioning authority under Section 151 of the Income-tax Act in the context of the changes introduced by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA).

Issues Involved

  1. Whether the reassessment proceedings initiated under Sections 148A and 148 of the Income-tax Act, 1961 were legally sustainable.
  2. Whether the sanction for issuing reassessment notice was obtained from the appropriate authority under Section 151 of the Act.
  3. Whether the provisions of TOLA altered the requirement relating to the competent sanctioning authority for reassessment proceedings.
  4. Whether the impugned notices and orders were liable to be set aside due to procedural irregularities.

 

Petitioner’s Arguments

  • The reassessment proceedings were initiated without proper sanction from the competent authority as required under Section 151 of the Income-tax Act.
  • The Revenue incorrectly relied on the relaxation provisions under TOLA, which, according to the petitioner, did not change the statutory requirement regarding the authority competent to grant sanction.
  • The impugned order under Section 148A(d) and the subsequent notice under Section 148 were therefore illegal and liable to be quashed.
  • The reassessment action was taken without following the mandatory safeguards introduced under the amended reassessment framework.

 

Respondent’s Arguments

  • The reassessment proceedings were initiated strictly in accordance with the statutory framework under the Income-tax Act, 1961.
  • The relaxation provisions introduced through TOLA permitted certain procedural flexibility regarding timelines and reassessment notices.
  • The sanction granted by the concerned authority was valid and the reassessment proceedings were legally justified.
  • The writ petition was premature as the petitioner had adequate statutory remedies available under the Act.

 

Court Order / Findings

The Delhi High Court examined the provisions governing reassessment proceedings, particularly Sections 148A and 151 of the Income-tax Act.

The Court observed that the issue concerning the appropriate sanctioning authority for reassessment notices required detailed examination in light of the statutory framework and the transitional provisions introduced by TOLA.

The Court emphasized that TOLA did not necessarily alter the statutory requirement regarding the competent authority for granting sanction under Section 151 of the Income-tax Act.

Considering the legal questions involved, the Court directed that the matter required further examination and passed appropriate orders in relation to the reassessment proceedings.

 

Important Clarification by the Court

  • The relaxation provisions under TOLA do not automatically modify the statutory requirement regarding which authority must grant sanction under Section 151 of the Income-tax Act.
  • Compliance with the statutory provisions governing reassessment proceedings remains mandatory even when relaxation laws apply.

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/RAS05012024CW165242022_114311.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.