REAL VALUE FOODS PRIVATE LIMITED vs. INCOME TAX OFFICER WARD- 21(1), NEW DELHI & ANR.

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W.P.(C)/6265/2022HC DelhiDLHC01015060202220 April 2022Bench: HON'BLE MR. JUSTICE MANMOHAN,HON'BLE MR. JUSTICE DINESH KUMAR SHARMA6 pages
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What did the High Court hold?

The Delhi High Court held that reassessment notices issued under Section 148 of the Income Tax Act, 1961, post March 31, 2021, must comply with the substituted Sections 147 to 151 of the Act, effective from April 1, 2021. The Court found that the Legislature introduced new provisions for reassessment via the Finance Act, 2021, and Section 147 was not mentioned in the impugned Explanations. The Court clarified that while the power of reassessment existed until June 30, 2021, the Finance Act, 2021, changed the procedure to be followed from April 1, 2021. The Court ruled that Section 3(1) of the Relaxation Act, 2020, empowers the extension of time limits only and not the delegation of power to legislate on provisions for initiating reassessment proceedings. Consequently, the Explanations A(a)(ii)/A(b) to the Notifications dated March 31, 2021, and April 27, 2021, were declared ultra vires the Relaxation Act, 2020, and thus void. The Court disagreed with the Chhattisgarh High Court's view in Palak Khatuja but agreed with the Allahabad and Rajasthan High Courts in Ashok Kumar Agarwal and Bpip Infra Private Limited, respectively. The revenue's reliance on Section 6 of the General Clauses Act was deemed untenable as the repeal was followed by fresh legislation on the same subject, manifesting an intention to destroy the old procedure. The Court rejected the revenue's arguments regarding Covid-19, non-obstante clause, legal fiction, and stop-the-clock provision. The operative direction was to quash the impugned reassessment notices and allow the writ petitions, with liberty to the revenue to take further steps if permitted by law, and for petitioners to seek remedies if aggrieved.

What were the facts?

The judgment consolidated multiple writ petitions filed by various assessees (Raj Laxmi Gaur, Mulakh Raj Ramesh Kumar and Co., SD Global Impex Private Limited, Real Value Foods Private Limited, Ritu Dalmia, and Rajesh Kumar Aggarwal) against the Income Tax Officer and other revenue authorities. The core issue in all these petitions revolved around reassessment notices issued under Section 148 of the Income Tax Act, 1961. The petitioners contended that these notices were issued post March 31, 2021, without adhering to the newly substituted Sections 147 to 151 of the Act, which became effective from April 1, 2021. The revenue authorities had issued these notices based on Explanations appended to notifications dated March 31, 2021, and April 27, 2021.

What were the issues?

1. Whether reassessment notices issued under Section 148 of the Income Tax Act, 1961, after March 31, 2021, are required to comply with the substituted Sections 147 to 151 of the Act, which came into effect from April 1, 2021? (Question of law, concerning Sections 147-151 of the Income Tax Act, 1961 and Section 3(1) of the Relaxation Act, 2020). Assessee's Contention: The assessees argued that since the notices were issued after March 31, 2021, they must comply with the new procedure prescribed by the Finance Act, 2021, for Sections 147 to 151. They relied on the judgment in Mon Mohan Kohli vs. Assistant Commissioner of Income Tax & Anr. They also contended that the Explanations in the notifications were ultra vires the Relaxation Act, 2020, as they attempted to extend the old provisions beyond their prescribed period or defer the operation of new provisions. Revenue's Contention: The revenue contended that the power of reassessment existing prior to March 31, 2021, continued to exist till 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 Covid-19 necessitated the approach taken.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

Heard together (3 matters)

W.P.(C) 6260/2022
W.P.(C) 6262/2022
W.P.(C) 6263/2022

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

$~302, 304-307, 309 & 313 (covered 148 matters) * IN THE HIGH COURT OF DELHI AT NEW DELHI 302 + W.P.(C) 6260/2022, CM APPL. 18886/2022 RAJ LAXMI GAUR ..... Petitioner Through: Mr. Amit Sood, Mr. Rishabh Nangia, Advs. versus INCOME TAX OFFICER WARD 58 (1) NEW DELHI & ANR. ..... Respondents Through: Mr. Abhishek Maratha, Adv. 304 + W.P.(C) 6262/2022, CM APPL. 18889/2022, CM APPL. 18890/2022 MULAKH RAJ RAMESH KUMAR AND CO. ..... Petitioner Through: Mr. Ruchesh Sinha, Adv. versus INCOME TAX OFFICER WARD- 47(1), NEW DELHI & ANR. ..... Respondent Through: Ms. Vibhooti Malhotra and Mr. Shailendra Singh, Advs. 305 + W.P.(C) 6263/2022, CM APPL. 18891/2022, CM APPL. 18892/2022 MULAKH RAJ RAMESH KUMAR AND CO. ..... Petitioner Through: Mr. Ruchesh Sinha, Adv. versus INCOME TAX OFFICER WARD- 47(1) NEW DELHI & ANR. ..... Respondents Through: Ms. Vibhooti Malhotra and Mr. Shailendra Singh, Advs. 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 07:30:06

306 + W.P.(C) 6264/2022, CM APPL. 18893/2022, CM APPL. 18894/2022 SD GLOBAL IMPEX PRIVATE LIMITED ..... Petitioner Through: Mr. Abhinav Arya and Mr.Ashvini Kumar, Advs. versus INCOME TAX OFFICER, WARD 22(3), DELHI & ANR. ..... Respondents Through: Mr. Puneet Rai and Ms. Adeeba Mujahid, Advs. 307 + W.P.(C) 6265/2022, CM APPL.18895/2022, CM APPL. 18896/2022 REAL VALUE FOODS PRIVATE LIMITED ..... Petitioner Through: Mr. Ruchesh Sinha, Adv. versus INCOME TAX OFFICER WARD- 21(1), NEW DELHI & ANR. ..... Respondents Through: Mr. Sunil Kumar Agarwal, Mr. Tushar Gupta, Mr. Samarth Chaudhari, Advs. Mr. Prashanta Varma, Sr. CGC for UOI. 309 + W.P.(C) 6303/2022, CM APPL. 18985/2022, CM APPL. 18986/2022 RITU DALMIA ..... Petitioner Through: Mr. Saksham Singhal, Adv. 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 07:30:06

INCOME TAX OFFICER & ORS. ..... Respondents Through: Mr. Zoheb Hossain, Mr.Parth Semwal, Mr.Aditya Chhajed and Mr.Vipul Agrawal, Advs. Mr. Piyush Beriwal, Sr. Panel Counsel for R-3. 313 + W.P.(C) 6309/2022, CM APPL. 18999/2022, CM APPL.19000/2022 RAJESH KUMAR AGGARWAL ..... Petitioner Through: Mr. Abhinav Arya and Mr.Ashvini Kumar, Advs. versus ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 52(1), DELHI & ANR. ..... Respondents Through: Mr. Kunal Sharma, Adv. CORAM: HON'BLE MR. JUSTICE MANMOHAN HON'BLE MR. JUSTICE DINESH KUMAR SHARMA O R D E R % 20.04.2022 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:- 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 07:30:06

“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 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 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 07:30:06

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 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 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 07:30:06

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 20, 2022 Pallavi 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 07:30:06

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