PRABH SIMRAN JUNEJA vs. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 43(1)

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W.P.(C)/6770/2022HC DelhiDLHC01016453202229 April 2022Bench: HON'BLE MR. JUSTICE MANMOHAN,HON'BLE MR. JUSTICE DINESH KUMAR SHARMA4 pages
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What did the High Court hold?

The High Court held that reassessment notices issued under Section 148 of the Income Tax Act, 1961, after March 31, 2021, must comply with the substituted Sections 147 to 151 of the Act, as amended by the Finance Act, 2021. The Court found that the Legislature introduced new provisions (Sections 147 to 151) with effect from April 1, 2021, and these substituted sections had to be followed for notices issued after that date. The Court rejected the revenue's argument that Section 6 of the General Clauses Act applied, stating that a repeal followed by fresh legislation on the same subject manifests an intention to destroy the old procedure. The Court also held that the Executive/Revenue could not use administrative power under Section 3(1) of the Relaxation Act, 2020, to undermine Parliamentary supremacy or frustrate the purpose of substituted statutory provisions. Consequently, 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 impugned reassessment notices were quashed, and the writ petitions were allowed.

What were the facts?

The petitioners, Prabh Simran Juneja, Blue Chip Fincaserve Pvt Ltd, and Ram Lakhan, challenged reassessment notices issued under Section 148 of the Income Tax Act, 1961. The notices were issued after March 31, 2021, without adhering to the procedure prescribed in the substituted Sections 147 to 151 of the Income Tax Act, 1961, which came into effect from April 1, 2021. The revenue contended that the notices were valid. The High Court considered these petitions together, as they involved a common legal issue regarding the applicability of the new reassessment provisions.

What were the issues?

1. Whether reassessment notices issued under Section 148 of the Income Tax Act, 1961, after March 31, 2021, must comply with the substituted Sections 147 to 151 of the Act, as amended by the Finance Act, 2021? (Question of law) Assessee's Contention: The assessee argued that since the notices were issued post-March 31, 2021, they must follow the new procedure laid down in the substituted Sections 147 to 151, which came into effect from April 1, 2021. They relied on the judgment in Mon Mohan Kohli vs. Assistant Commissioner of Income Tax & Anr. Revenue's Contention: The revenue contended that the notices were valid. They argued that Section 6 of the General Clauses Act saves notices issued under Section 148 post-March 31, 2021. They also argued that the substitution made by the Finance Act, 2021, is not applicable to past Assessment Years as it is substantial in nature. Further, they contended that the Covid-19 pandemic justified the operation of new provisions during the period April 1, 2021, to June 30, 2021, and that the non-obstante clause in Section 3(1) of the Relaxation Act, 'legal fiction', and 'stop the clock provision' were applicable.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 149,Section 151

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Heard together (3 matters)

W.P.(C) 6770/2022
W.P.(C) 6780/2022
W.P.(C) 6785/2022

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

$~145, 147 & 149 * IN THE HIGH COURT OF DELHI AT NEW DELHI 145 + W.P.(C) 6770/2022 & CM APPL. 20575/2022, CM APPL. 20576/2022 PRABH SIMRAN JUNEJA ..... Petitioner Through: Mr. Jaspal Singh Sethi with Mr. Davinder Singh Sodhi, Advocates. versus ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 43(1) ..... Respondent Through: Mr. Ruchir Bhatia, Sr. Standing Counsel with Ms. Mansie Jain, Advocates. 147 + W.P.(C) 6780/2022 & CM APPL. 20609/2022, CM APPL. 20742/2022 BLUE CHIP FINCAPSERVE PVT LTD ..... Petitioner Through: Ms. Princy Kakkar, Advocate. versus INCOME TAX OFFICER & ANR. ..... Respondents Through: Mr. Kunal Sharma, Sr. Standing Counsel with Ms. Zehra Khan, Jr. Standing Counsel and Mr. Sandeep Kumar, Advocate for Revenue. 149 + W.P.(C) 6785/2022 RAM LAKHAN ..... Petitioner Through: Ms. Tanya Minocha with Mr. Rishi Jaiswal and Mr. Divyansh Jain, Advocates. 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 26/06/2026 at 06:59:13

versus ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 17,DELHI ..... Respondent Through: Mr. Sanjay Kumar with Ms. Easha Kadian, Advocates. CORAM: HON'BLE MR. JUSTICE MANMOHAN HON'BLE MR. JUSTICE DINESH KUMAR SHARMA O R D E R % 29.04.2022 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 changed the procedure to be followed prior to issuance of notice with effect from 1st April, 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 26/06/2026 at 06:59:13

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 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 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 26/06/2026 at 06:59:13

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 29, 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 26/06/2026 at 06:59:13

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