VISHAL KHANDELWAL vs. INCOME TAX OFFICER & ANR.

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W.P.(C)/10436/2021HC DelhiDLHC01029048202128 April 2022Bench: HON'BLE THE ACTING CHIEF JUSTICE,HON'BLE MR. JUSTICE NAVIN CHAWLA4 pages
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What did the High Court hold?

The Delhi High Court held that the Explanation incorporated in the impugned notifications was ultra vires the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. The Court reasoned that Section 3(1) of the Relaxation Act empowers the government to extend time limits but does not delegate the power to legislate on the provisions to be followed for initiating reassessment proceedings. The Court found that the Legislature introduced new provisions for Sections 147 to 151 of the Income Tax Act, 1961, by way of the Finance Act, 2021, with effect from April 1, 2021. The Court clarified that while the power of reassessment existed prior to March 31, 2021, and continued till June 30, 2021, the Finance Act, 2021, changed the procedure to be followed from April 1, 2021. The Court disagreed with the Chhattisgarh High Court in Palak Khatuja but agreed with the Allahabad and Rajasthan High Courts in Ashok Kumar Agarwal and Bpip Infra Private Limited, respectively. The Court found the revenue's reliance on Section 6 of the General Clauses Act untenable as the repeal was followed by fresh legislation on the same subject, manifesting an intention to destroy the old procedure. The Court also rejected the revenue's arguments regarding the applicability to past Assessment Years, Covid-19, the non-obstante clause, legal fiction, and stop-the-clock provisions. Consequently, the impugned reassessment notices were quashed. The Court allowed the revenue to take further steps if the law permitted.

What were the facts?

The petitioner, Vishal Khandelwal, filed a writ petition before the Delhi High Court challenging the Explanation incorporated in notifications dated March 31, 2021, and April 27, 2021. These notifications were issued under the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. The petitioner also sought to quash reassessment notices issued under Section 148 of the Income Tax Act, 1961, for Assessment Years 2016-17 and 2017-18. The Income Tax Officer and another respondent were the opposing parties. The core of the dispute revolved around the validity of these notifications and the subsequent notices in light of the newly amended Sections 148 to 151 of the Income Tax Act, 1961, which came into effect from April 1, 2021.

What were the issues?

1. Whether the Explanation incorporated in notification No. S.O. 1432(E) dated 31.03.2021 and notification No. S.O. 1703(E) dated 27.04.2021 are null and void and ultra vires the provisions of the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, and violative of the newly amended Sections 148 to 151 of the Income Tax Act, 1961? Assessee's Contention: The petitioner argued that the impugned notifications and the explanations therein were beyond the scope of the delegated power under the Relaxation Act and were ultra vires the parent statute. They contended that the Relaxation Act only empowered the extension of time limits and not the delegation of legislative power to alter the provisions for initiating reassessment proceedings. The petitioner also argued that the new provisions of Sections 147 to 151, substituted by the Finance Act, 2021, had to be complied with for reassessment notices issued after March 31, 2021. Revenue's Contention: The revenue contended that Section 6 of the General Clauses Act saved notices issued under Section 148 post-March 31, 2021. They also argued that the substitution made by the Finance Act, 2021, was not applicable to past Assessment Years as it was substantial in nature. The revenue further relied on the pandemic to argue that the new provisions should not operate during the period April 1, 2021, to June 30, 2021.

Which sections of the Income-tax Act were involved?

Section 148,Section 147,Section 151,Section 3(1)

AI-generated summary — verify with the full judgment below

$~13 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 10436/2021 & CM No. 32095/2021

VISHAL KHANDELWAL

..... Petitioner Through: Mr.Anil Kumar Chunduru & Mr.Neeraj Kumar Jha, Advs

versus

INCOME TAX OFFICER & ANR.

..... Respondents Through: Mr.Ajit Sharma, Sr. St. Counsel with Mr.Shahrukh Ejaz, Adv.

CORAM:

HON'BLE THE ACTING CHIEF JUSTICE

HON'BLE MR. JUSTICE NAVIN CHAWLA

O R D E R % 28.04.2022 1. The present petition has been filed praying for the following reliefs:

“a) Quashing the Explanation incorporated in the notification bearing No. notification No. S.O. 1432(E) dated 31.03.2021 and notification No. S.O. 1703(E) dated 27.04.2021 as null & void and ultra vires the provisions of the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 and for being violative of the newly amended sections 148 to 151 of the Income Tax Act, 1961;

b) Quash and set aside the Impugned notices bearing DIN & Notice No. ITBA/AST/S/148/2021-22/ 1033828137(1) dated 29.06.2021 in respect of the - Assessment year 2016-17 and bearing DIN & Notice No. ITBA/AST/S/148/2021-22/1033216760(1) dated 01.06.2021 in respect of the Assessment year 2017-18 pertaining to the petitioner.”

2.

The learned counsels for the parties admit that the issues raised in the This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 17/06/2026 at 11:51:42

present petition are squarely covered by the judgment dated 15th December, 2021 passed by a Division Bench of this Court (of which one of us, Justice Navin Chawla, was a member) in the case of Mon Mohan Kohli v. Assistant Commissioner of Income Tax & Anr., W.P.(C) No.6176/2021. 3. The conclusion reached by this Court in Mon Mohan Kohli (supra) is reproduced hereinbelow:- “CONCLUSION 97. This Court is of the view that as the Legislature has introduced the new provisions, Sections 147 to 151 of the Income Tax Act, 1961 by way of the Finance Act, 2021 with effect from 1st April, 2021 and as the said Section 147 is not even mentioned in the impugned Explanations, the reassessment notices relating to any Assessment Year issued under Section 148 after 31st March, 2021 had to comply with the substituted Sections.

98.

It is clarified that the power of reassessment that existed prior to 31st March, 2021 continued to exist till the extended period i.e. till 30th June, 2021; however, the Finance Act, 2021 has merely changed the procedure to be followed prior to issuance of notice with effect from 1st April, 2021.

99.

This Court is of the opinion that Section 3(1) of Relaxation Act empowers the Government/Executive to extend only the time limits and it does not delegate the power to legislate on provisions to be followed for initiation of reassessment proceedings. In fact, the Relaxation Act does not give power to Government to extend the erstwhile Sections 147 to 151 beyond 31st March, 2021 and/or defer the operation of substituted provisions enacted by the Finance Act, 2021. Consequently, the impugned Explanations in the Notifications dated 31st March, 2021 and 27th April, 2021 are not conditional legislation and are beyond the power delegated to the Government as well as ultra vires the parent statute i.e. the Relaxation Act. Accordingly, this Court is respectfully not in This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 17/06/2026 at 11:51:42

agreement with the view of the Chhattisgarh High Court in Palak Khatuja (supra), but with the views of the Allahabad High Court and Rajasthan High Court in Ashok Kumar Agarwal (supra) and Bpip Infra Private Limited (supra) respectively.

100.

The submission of the Revenue that Section 6 of the General Clauses Act saves notices issued under Section 148 post 31st March, 2021 is untenable in law, as in the present case, the repeal is followed by a fresh legislation on the same subject and the new Act manifests an intention to destroy the old procedure. Consequently, if the Legislature has permitted reassessment to be made in a particular manner, it can only be in this manner, or not at all.

101.

The argument of the respondents that the substitution made by the Finance Act, 2021 is not applicable to past Assessment Years, as it is substantial in nature is contradicted by Respondents‟ own Circular 549 of 1989 and its own submission that from 1st July, 2021, the substitution made by the Finance Act, 2021 will be applicable.

102.

Revenue cannot rely on Covid-19 for contending that the new provisions Sections 147 to 151 of the Income Tax Act, 1961 should not operate during the period 1st April, 2021 to 30th June, 2021 as Parliament was fully aware of Covid-19 Pandemic when it passed the Finance Act, 2021. Also, the arguments of the respondents qua non-obstante clause in Section 3(1) of the Relaxation Act, „legal fiction‟ and „stop the clock provision‟ are contrary to facts and untenable in law. 103. Consequently, this Court is of the view that the Executive/Respondents/Revenue cannot use the administrative power to issue Notifications under Section 3(1) of the Relaxation Act, 2020 to undermine the expression of Parliamentary supremacy in the form of an Act of Parliament, namely, the Finance Act, 2021. This Court is also of the opinion that the Executive/Respondents/Revenue cannot frustrate the purpose of substituted statutory provisions, like Sections 147 to 151 of Income Tax Act, 1961 in the present instance, by emptying it of content or This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 17/06/2026 at 11:51:42

impeding or postponing their effectual operation.”

4.

Consequently, the present petition is disposed of in terms of the above judgment and the impugned reassessment notices issued under Section 148 of the Income Tax Act, 1961 are quashed and the present writ petition is allowed. If the law permits the respondents/revenue to take further steps in the matter, they shall be at liberty to do so. Needless to state that if and when such steps are taken and if the petitioner has a grievance, he shall be at liberty to take remedies in accordance with law.

VIPIN SANGHI, ACJ

NAVIN CHAWLA, J APRIL 28, 2022/Arya This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 17/06/2026 at 11:51:42

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