VAIBHAV JAIN vs. INCOME TAX OFFICER & ORS.

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W.P.(C)/6386/2022HC DelhiDLHC01015359202221 April 2022Bench: HON'BLE MR. JUSTICE MANMOHAN,HON'BLE MR. JUSTICE DINESH KUMAR SHARMA7 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, which came into effect from April 1, 2021. The Court found that the Legislature introduced new provisions by way of the Finance Act, 2021, and any reassessment notices issued after March 31, 2021, had to adhere to these substituted sections. 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 procedural requirements for issuing notices from April 1, 2021. The Court ruled that Section 3(1) of the Relaxation Act, 2020, empowers the government to extend only time limits and not to legislate on provisions for initiating reassessment proceedings. Consequently, the impugned 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 bad in law and void. The Court quashed the impugned reassessment notices and allowed the writ petitions. The Revenue was granted liberty to take further steps if permitted by law, and petitioners were free to pursue remedies if aggrieved by such steps.

What were the facts?

The petitioners in these writ petitions challenged reassessment notices issued under Section 148 of the Income Tax Act, 1961. The primary contention was that these notices were issued post-March 31, 2021, 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 Revenue argued that certain explanations in notifications issued by the government, particularly those dated March 31, 2021, and April 27, 2021, allowed for the continuation of the old procedure. The assessment years are not explicitly stated for all petitioners, but the challenge pertains to the validity of notices issued after the transition period.

What were the issues?

1. Whether reassessment notices issued under Section 148 of the Income Tax Act, 1961, post-March 31, 2021, are required to comply with the substituted Sections 147 to 151 of the Act, effective from April 1, 2021? (Question of law) 2. Whether Explanations A(a)(ii)/A(b) to the Notifications dated March 31, 2021, and April 27, 2021, which purportedly allowed the continuation of the old reassessment procedure, are ultra vires the Relaxation Act, 2020 and the parent statute? Assessee's Contentions: The petitioners argued that the Finance Act, 2021, introduced new provisions for reassessment (Sections 147-151) effective April 1, 2021. Notices issued after this date must follow these new procedures. They relied on the Delhi High Court's judgment in Mon Mohan Kohli vs. Assistant Commissioner of Income Tax & Anr. The petitioners contended that the executive power under the Relaxation Act, 2020, does not permit overriding parliamentary legislation and that the impugned explanations are beyond the delegated power and ultra vires. Revenue's Contentions: The Revenue contended that the power of reassessment that existed prior to March 31, 2021, continued to exist till June 30, 2021, and that the Finance Act, 2021, merely changed the procedure. They argued that Section 6 of the General Clauses Act saves notices issued under Section 148 post-March 31, 2021. The Revenue also argued that the substitution made by the Finance Act, 2021, is not applicable to past Assessment Years as it is substantial in nature and that Covid-19 necessitated the continuation of the old procedure.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 151

AI-generated summary — verify with the full judgment below

Heard together (2 matters)

W.P.(C) 6346/2022
W.P.(C) 6356/2022

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

$~66, 71, 73 to 76, 78 to 80 * IN THE HIGH COURT OF DELHI AT NEW DELHI 66 + W.P.(C) 6346/2022 & CM APPL. 19187/2022, CM APPL. 19188/2022 BOP PRIVATE LIMITED ..... Petitioner Through: Mr. Sanat Kapoor with Mr. Siddharth Mehta and Ms. Dikshita Kapoor, Advocates. versus INCOME TAX DEPARTMENT, CIRCLE 4-2, DELHI & ANR. ..... Respondents Through: Mr. Kunal Sharma, Sr. Standing Counsel with Mr. Zehra Khan, Jr. Standing Counsel and Mr. Shubhendu Bhattacharya, Advocates. 71 + W.P.(C) 6356/2022 & CM APPL. 19208/2022, CM APPL. 19209/2022 RAMESH ARORA (EARLIER KNOWN AS RAMESH KUMAR) ..... Petitioner Through: Ms. Divya with Mr. Ruchesh Sinha, Advocates. versus INCOME TAX OFFICER, WARD 47(1), DELHI & ANR. ..... Respondents Through: Mr. Kunal Sharma, Sr. Standing Counsel with Mr. Zehra Khan, Jr. Standing Counsel and Mr. Shubhendu Bhattacharya, Advocates. Mr. Akash Vajpai with Mr. Akshay Ravi, 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 08:06:39

73 + W.P.(C) 6360/2022 & CM APPL. 19217/2022, CM APPL. 19218/2022 RAMESH ARORA (EARLIER KNOWN AS RAMESH KUMAR) ..... Petitioner Through: Ms. Divya with Mr. Ruchesh Sinha, Advocates. versus INCOME TAX OFFICER WARD- 47(1), DELHI & ANR. ..... Respondents Through: Mr. Kunal Sharma, Sr. Standing Counsel with Mr. Zehra Khan, Jr. Standing Counsel and Mr. Shubhendu Bhattacharya, Advocates. Mr. Akash Vajpai with Mr. Akshay Ravi, Advocates for respondent No.2. 74 + W.P.(C) 6361/2022 & CM APPL. 19220/2022, CM APPL. 19221/2022 RAJESH KUMAR AGGARWAL ..... Petitioner Through: Mr. Ashvini Kumar with Mr. Abhinav Arya, Advocates. versus ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 52(1), DELHI & ANR. ..... Respondents Through: Mr. Kunal Sharma, Sr. Standing Counsel with Mr. Zehra Khan, Jr. Standing Counsel and Mr. Shubhendu Bhattacharya, Advocates. 75 + W.P.(C) 6362/2022 & CM APPL. 19222/2022, CM APPL. 19223/2022 M/S KMG ROLLING (P) LTD. ..... Petitioner Through: Mr. Shubhankar Jha, Advocate. 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 08:06:39

INCOME TAX OFFICER, WARD 14(3) DELHI ..... Respondent Through: Mr. Ajit Sharma, Advocate. 76 + W.P.(C) 6363/2022 & CM APPL. 19224/2022, CM APPL. 19225/2022 RAMESH ARORA (EARLIER KNOWN AS RAMESH KUMAR) ..... Petitioner Through: Ms. Divya with Mr. Ruchesh Sinha, Advocates. versus INCOME TAX OFFICER WARD- 47(1), NEW DELHI & ANR. ..... Respondents Through: Mr. Kunal Sharma, Sr. Standing Counsel with Mr. Zehra Khan, Jr. Standing Counsel and Mr. Shubhendu Bhattacharya, Advocates. Mr. Akash Vajpai with Mr. Akshay Ravi, Advocates for respondent No.2. 78 + W.P.(C) 6367/2022 & CM APPL. 19230/2022, CM APPL. 19231/2022 MOHD AMAAN KHAN ..... Petitioner Through: Mr. Sanat Kapoor, Advocate. versus INCOME TAX OFFICER, WARD 28-1, DELHI & ANR. ..... Respondents Through: Ms. Vibhooti Malhotra with Mr. Shailendra Singh and Mr. Ekansh Dubey, Advocates. 79 + W.P.(C) 6369/2022 & CM APPL. 19232/2022, CM APPL. 19233/2022 BOP PROJECTS PRIVATE LIMITED ..... Petitioner Through: Mr. Sanat Kapoor, 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 08:06:39

versus INCOME TAX OFFICER, WARD 5(1 ) DELHI & ANR. ..... Respondents Through: Mr. Kunal Sharma, Sr. Standing Counsel with Mr. Zehra Khan, Jr. Standing Counsel and Mr. Shubhendu Bhattacharya, Advocates. 80 + W.P.(C) 6386/2022 & CM APPL. 19295/2022, CM APPL. 19296/2022 VAIBHAV JAIN ..... Petitioner Through: Mr. Asheesh Jain with Mr. Adarsh Kumar Gupta, Advocates. versus INCOME TAX OFFICER & ORS. ..... Respondents Through: Mr. Sunil Kumar Agarwal, Sr. Standing Counsel with Mr. Tushar Gupta, Jr. Standing Counsel and Mr. Samarth Chaudhari, Advocates. CORAM: HON'BLE MR. JUSTICE MANMOHAN HON'BLE MR. JUSTICE DINESH KUMAR SHARMA O R D E R % 21.04.2022 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. 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 08:06:39

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 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 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 08:06:39

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 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. 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 08:06:39

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 21, 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 08:06:39

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