PEMBROKE AIRCRAFT LEASING 3 LIMITED vs. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 2 (2) (2), INTERNATIONAL TAXATION, NEW DELHI AND ORS

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W.P.(C)/6185/2022HC DelhiDLHC01014824202219 April 2022Bench: HON'BLE MR. JUSTICE MANMOHAN,HON'BLE MR. JUSTICE DINESH KUMAR SHARMA8 pages
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What did the High Court hold?

The Delhi High Court held that the reassessment notices issued under Section 148 of the Income Tax Act, 1961, post March 31, 2021, without following the procedure prescribed in the substituted Sections 147 to 151 (effective from April 1, 2021) were invalid. The Court declared the Explanations A(a)(ii)/A(b) to the Notifications dated March 31, 2021, and April 27, 2021, as ultra vires the Relaxation Act, 2020, and consequently, bad in law and void. The Court reasoned that the Legislature's introduction of new provisions by the Finance Act, 2021, mandated compliance with the substituted Sections for any reassessment proceedings initiated after March 31, 2021. The Court rejected the Revenue's arguments regarding the General Clauses Act, the applicability to past assessment years, and the impact of the COVID-19 pandemic, stating that the executive cannot undermine parliamentary supremacy. The ratio decidendi is that procedural changes enacted by Parliament must be followed, and administrative actions cannot override legislative intent. Consequently, all impugned reassessment notices were quashed. The Revenue was granted liberty to take further steps if permitted by law, and petitioners could pursue remedies if aggrieved.

What were the facts?

The petitioners, including Mulakh Raj Ramesh Kumar and Co., Pembroke Aircraft Leasing 3 Limited, Real Value Foods Private Limited, Archana Dalmia, Diamond Piston and Rings Ltd, Prakash Agrawal, Vishvanidhi Dalmia, Vikas Sehgal, Kamal Goyal, and Manoj And Sons HUF, filed writ petitions before the Delhi High Court. The common issue in these petitions was the validity of reassessment notices issued under Section 148 of the Income Tax Act, 1961, after March 31, 2021. The Revenue had issued these notices without adhering to the procedure prescribed in the substituted Sections 147 to 151 of the Income Tax Act, 1961, which became effective from April 1, 2021. The petitions challenged the legality of these notices and the Explanations appended to notifications issued by the government.

What were the issues?

1. Whether reassessment notices issued under Section 148 of the Income Tax Act, 1961, post March 31, 2021, are valid if they do not comply with the substituted Sections 147 to 151 of the Act, effective from April 1, 2021? (Question of law) Assessee's Contentions: The assessee argued that the Finance Act, 2021, introduced new procedural requirements for reassessment proceedings from April 1, 2021. Notices issued after this date must adhere to these new provisions. They contended that the Explanations to the Notifications dated March 31, 2021, and April 27, 2021, which sought to extend the old procedure, were ultra vires the Relaxation Act, 2020, and beyond the delegated power of the executive, thereby frustrating the parliamentary intent of the Finance Act, 2021. Revenue's Contentions: The Revenue contended that the power of reassessment existed until June 30, 2021, and 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 and that the COVID-19 pandemic justified the extended operation of old provisions.

Which sections of the Income-tax Act were involved?

Section 148,Section 147,Section 151

AI-generated summary — verify with the full judgment below

Heard together (2 matters)

W.P.(C) 6184/2022
W.P.(C) 6185/2022

Read from the judgment's own cause title. This page is filed under one of them.

$~77 to 83, 86, 87, 89 to 91 * IN THE HIGH COURT OF DELHI AT NEW DELHI 77 + W.P.(C) 6184/2022 & CM APPL.18640/2022, CM APPL.18641/2022 MULAKH RAJ RAMESH KU MAR AND CO. ..... Petitioner Through: Mr. Ruchesh Sinha, Advocate. versus INCOME TAX OFFICER WARD- 47(1), NEW DELHI & ANR. ..... Respondents Through: Mr. Shailendra Singh with Mr. Udit Sharma and Mr. Ekansh Dubey, Advocates for Revenue. Mr. Sanjib Kumar Mohanty with Mr. Subesh Kumar Sahoo, Advocates for respondent No.2. 78 + W.P.(C) 6185/2022 & CM APPL.18642/2022, CM APPL.18643/2022 PEMBROKE AIRCRAFT LEASING 3 LIMITED ..... Petitioner Through: Ms. Anuradha Dutt with Mr. Sachit Jolly, Mr. Rohit Garg, Ms. Disha Jham, Ms. Mehak Sachdeva and Mr. Sohum Dua, Advocates. versus DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 2 (2) (2), INTERNATIONAL TAXATION, NEW DELHI AND ORS ..... Respondents Through: Mr. Kunal Sharma, Sr. Standing Counsel for respondent No.1 with Mr. Zehra Khan, Jr. Standing Counsel. 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 07:22:25

79 + W.P.(C) 6186/2022 & CM APPL.18644/2022, CM APPL.18645/2022 MULAKH RAJ RAMESH KUMAR AND CO. ..... Petitioner Through: Mr. Ruchesh Sinha, Advocate. versus INCOME TAX OFFICER WARD- 47(1), NEW DELHI & ANR. ..... Respondents Through: Mr. Shailendra Singh with Mr. Udit Sharma and Mr. Ekansh Dubey, Advocates for Revenue. Mr. Sanjib Kumar Mohanty with Mr. Subesh Kumar Sahoo, Advocates for respondent No.2. 80 + W.P.(C) 6187/2022 & CM APPL.18646/2022, CM APPL.18647/2022 REAL VALUE FOODS PRIVATE LIMITED ..... Petitioner Through: Mr. Ruchesh Sinha, Advocate. versus INCOME TAX OFFICER WARD- 21(1), NEW DELHI & ANR. ..... Respondents Through: Mr. Sunil Agarwal, Sr. Standing Counsel with Mr. Tushar Gupta, Jr. Standing Counsel for respondent No.1. Mr. Prasanta Varma with Ms. Prativa Rani Varma, Advocates for respondent No.2. 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 07:22:25

81 + W.P.(C) 6188/2022 & CM APPL.18648/2022, CM APPL.18649/2022 ARCHANA DALMIA ..... Petitioner Through: Mr. Saksham Singhania, Advocate. versus ASSISTANT COMMISSIONER OF INCOME TAX & ORS. ..... Respondents Through: Mr. Zoeb Hossain, Sr. Standing Counsel for Revenue with Mr. Vipul Agrawa and Mr. Parth Semwal, Jr. Standing Counsel. Mr. Anil Kumar Saxena, Sr. Panel Counsel for UOI/respondent No.3. 82 + W.P.(C) 6189/2022 & CM APPL.18650/2022, CM APPL.18651/2022 DIAMOND PISTON AND RINGS LTD ..... Petitioner Through: Mr. Saksham Singhania, Advocate. versus ASSISTANT COMMISSIONER OF INCOME TAX & ORS. ..... Respondents Through: Mr. Kunal Sharma, Sr. Standing Counsel for respondent No.1 with Mr. Zehra Khan, Jr. Standing Mr. Ankur Yadav, Sr. Panel Counsel for UOI/respondent No.3. 83 + W.P.(C) 6202/2022 & CM APPL.18666/2022, CM APPL.18667/2022 PRAKASH AGRAWAL ..... Petitioner Through: Mr. Ashvini Kumar, Advocate. 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 07:22:25

versus ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 43(1), DELHI & ANR. ..... Respondents Through: Mr. Ruchir Bhatia, Advocate. 86 + W.P.(C) 6227/2022 & CM APPL.18721/2022, CM APPL.18722/2022 VISHVANIDHI DALMIA ..... Petitioner Through: Mr. Saksham Singhania, Advocate. versus ASSISTANT COMMISSIONER OF INCOME TAX & ORS. ..... Respondents Through: Mr. Zoeb Hossain, Sr. Standing Counsel for Revenue with Mr. Vipul Agrawa and Mr. Parth Semwal, Jr. Standing Counsel. Ms. Jatinder Kaur, Advocate for UOI/respondent No.3. 87 + W.P.(C) 6228/2022 & CM APPL.18724/2022, CM APPL.18725/2022 MULAKH RAJ RAMESH KUMAR AND CO. ..... Petitioner Through: Mr. Ruchesh Sinha, Advocate. versus INCOME TAX OFFICER WARD- 47(1), NEW DELHI & ANR. ..... Respondents Through: Mr. Shailendra Singh with Mr. Udit Sharma and Mr. Ekansh Dubey, Advocates for Revenue. Mr. Sanjib Kumar Mohanty with Mr. Subesh Kumar Sahoo, Advocates for respondent No.2. 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 07:22:25

89 + W.P.(C) 6230/2022 & CM APPL.18729/2022, CM APPL.18730/2022 VIKAS SEHGAL ..... Petitioner Through: Ms. Ananya Kapoor, Advocate. versus ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 34(1) DELHI & ANR. ..... Respondents Through: Mr. Zoeb Hossain, Sr. Standing Counsel for Revenue with Mr. Vipul Agrawa and Mr. Parth Semwal, Jr. Standing Counsel. 90 + W.P.(C) 6243/2022 & CM APPL.18756/2022 KAMAL GOYAL ..... Petitioner Through: Mr. Akshat Gupta, Advocate. versus UNION OF INDIA & ORS. ..... Respondents Through: Mr. Ajit Sharma, Sr. Panel Counsel for respondent. Ms. Anju Bhushan Gupta, Advocate for respondent No.1/UOI. 91 + W.P.(C) 6249/2022 & CM APPL.18772/2022, CM APPL.18773/2022 MANOJ AND SONS HUF ..... Petitioner Through: Mr. Sandeep Khurana with Mr. Shiven Khurana, Advocates. versus 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 07:22:25

INCOME TAX OFFICER, WARD 34(1) DELHI & ANR. ..... Respondents Through: Mr. Zoeb Hossain, Sr. Standing Counsel for Revenue with Mr. Vipul Agrawa and Mr. Parth Semwal, Jr. Standing Counsel. CORAM: HON'BLE MR. JUSTICE MANMOHAN HON'BLE MR. JUSTICE DINESH KUMAR SHARMA O R D E R % 19.04.2022 1. Learned counsel for the parties admit that as the impugned notices in the present matters have been issued post 31st March, 2021 without following the procedure prescribed in the substituted Sections 147 to 151 w.e.f. 01st April, 2021, the present matters are covered by the judgment dated 15th December, 2021 passed by this Court in the case of Mon Mohan Kohli vs. Assistant Commissioner of Income Tax & Anr., W.P.(C) No.6176/2021. 2. 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 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 07:22:25

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 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 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 07:22:25

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 impeding or postponing their effectual operation.” 3. Keeping in view the aforesaid, Explanations A(a)(ii)/A(b) to the Notifications dated 31st March, 2021 and 27th April, 2021 are declared to be ultra vires the Relaxation Act, 2020 and are therefore bad in law and null and void. 4. Consequently, the impugned reassessment notices issued under Section 148 of the Income Tax Act, 1961 are quashed and the present writ petitions are 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 petitioners have a grievance, they shall be at liberty to take their remedies in accordance with law. MANMOHAN, J DINESH KUMAR SHARMA, J APRIL 19, 2022/st 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 07:22:25

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