Facts of the Case

  • Multiple writ petitions were filed before the Delhi High Court challenging reassessment notices issued by the Income Tax Department.
  • The impugned notices were issued after 01 April 2021 but allegedly followed the old reassessment provisions instead of the amended provisions.
  • Petitioners argued that the Finance Act, 2021 introduced a new reassessment scheme, including Section 148A, which mandates prior inquiry and opportunity of hearing.
  • The Revenue relied upon extensions granted under the Relaxation Act, 2020 to justify issuance under the old regime.

Issues Involved

  1. Whether reassessment notices issued after 01 April 2021 under the old provisions of Section 148 are legally sustainable.
  2. Whether the Relaxation Act, 2020 permits continuation of the old reassessment regime beyond 01 April 2021.
  3. Whether compliance with newly inserted Section 148A is mandatory for notices issued post-amendment.

Petitioner’s Arguments

  • The impugned notices are invalid in law as they were issued without following the mandatory procedure under Section 148A.
  • After 01 April 2021, the old provisions ceased to exist, and any action must conform to the amended law.
  • The Relaxation Act only extends time limits, not the substantive provisions of law.
  • Notices issued without prior inquiry and opportunity violate principles of natural justice.

Respondent’s Arguments

  • The Revenue contended that due to the Relaxation Act, the time limit for issuing notices was extended, thereby validating the notices.
  • It was argued that the notifications allowed continuation of proceedings under the old provisions.
  • The department maintained that procedural changes should not invalidate actions taken within extended timelines.

Court Order / Findings

  • The Delhi High Court observed that post 01 April 2021, reassessment proceedings must comply with the amended provisions.
  • The Court held that:
    • The Relaxation Act does not override substantive statutory amendments.
    • The new procedure under Section 148A is mandatory.
  • The Court relied on earlier judicial precedents including similar interim relief granted by the Bombay High Court.
  • Interim protection was granted:
    • Respondents were restrained from taking coercive reassessment actions.
    • Notices were kept in abeyance pending further hearing.

Important Clarification by Court

  • Delegated legislation (notifications) cannot override statutory provisions enacted by Parliament.
  • Any reassessment action after amendment must strictly follow the new statutory framework.
  • Extension of time does not imply extension of obsolete legal provisions.

Relevant Sections Involved

  • Section 147 – Income Escaping Assessment
  • Section 148 – Issue of Notice for Reassessment
  • Section 148A – Procedure before issuing notice (post-amendment)
  • Section 149 – Time Limit for Notice
  • Section 151 – Sanction for Issue of Notice
  • Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2021:DHC:4501-DB/MMH03092021CW93552021_160120.pdf

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