M/S MOOZ ENTERTAINMENT PVT. LTD. vs. INCOME TAX OFFICER DCIT CIRCLE 16(1) , DELHI AND ANR.

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W.P.(C)/6835/2022HC DelhiDLHC01016652202202 May 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 Delhi 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 Income Tax Act, 1961, which became effective from April 1, 2021. The Court found that the Explanations A(a)(ii)/A(b) to the Notifications dated March 31, 2021, and April 27, 2021, were ultra vires the Relaxation Act, 2020, and therefore, bad in law and void. The Court reasoned that the Relaxation Act empowers the government to extend time limits but not to legislate on the procedure for initiating reassessment proceedings, nor could it defer the operation of provisions enacted by Parliament. The Court disagreed with the revenue's reliance on Section 6 of the General Clauses Act, stating that a repeal followed by a fresh legislation on the same subject with an intention to destroy the old procedure means the new procedure must be followed. The Court also rejected the revenue's arguments regarding the COVID-19 pandemic and the non-obstante clause of the Relaxation Act. Consequently, the impugned reassessment notices were quashed, and the writ petitions were allowed. The revenue was granted liberty to take further steps if permitted by law.

What were the facts?

The petitioners, M/s Mooz Entertainment Pvt. Ltd., MEC Electric Contracts Private Limited, and Ramsons Organics Limited, filed writ petitions before the Delhi High Court. The challenge was to reassessment notices issued under Section 148 of the Income Tax Act, 1961. The core of the dispute was that these 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 authorities had relied on Explanations to Notifications dated March 31, 2021, and April 27, 2021, to issue these notices.

What were the issues?

1. Whether reassessment notices issued under Section 148 of the Income Tax Act, 1961, after March 31, 2021, are valid if they do not comply with the procedure prescribed in the substituted Sections 147 to 151 of the Income Tax Act, 1961, effective from April 1, 2021? (Question of law turning on Sections 147-151 of the Income Tax Act, 1961 and Finance Act, 2021). Assessee's Contention: The petitioners argued that since the impugned notices were issued post-March 31, 2021, they must comply with the newly substituted Sections 147 to 151 of the Income Tax Act, 1961. They contended that the Explanations in the Notifications dated March 31, 2021, and April 27, 2021, were ultra vires the Relaxation Act, 2020, and could not override the parliamentary intent behind the Finance Act, 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 and that the COVID-19 pandemic necessitated the continued operation of old provisions. They relied on the non-obstante clause in Section 3(1) of the Relaxation Act.

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 (3 matters)

W.P.(C) 6835/2022
W.P.(C) 6836/2022
W.P.(C) 6878/2022

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

$~105, 106 & 111 * IN THE HIGH COURT OF DELHI AT NEW DELHI 105 + W.P.(C) 6835/2022 & CM APPL. 20816/2022, CM APPL. 20817/2022 M/S MOOZ ENTERTAINMENT PVT. LTD. ..... Petitioner Through: Ms. Ritika Jhurani, Advocate and Mr. Akshay Chitkara, Advocate. versus INCOME TAX OFFICER DCIT CIRCLE 16(1) , DELHI AND ANR. ..... Respondents Through: Mr. Ajit Sharma, Advocate. 106 + W.P.(C) 6836/2022 & CM APPL. 20818/2022, CM APPL. 20819/2022 MEC ELECTRIC CONTRACTS PRIVATE LIMITED ..... Petitioner Through: Ms. Bhawna Piplani with Mr. Abhishek Kaushik and Mr. Vishav B. Gupta, Advocates. versus DCIT CIRCLE-16(1) DELHI AND ANR. ..... Respondents Through: Mr. Abhishek Maratha, Advocate. 111 + W.P.(C) 6878/2022 & CM APPL. 20944/2022, CM APPL. 20945/2022 RAMSONS ORGANICS LIMITED ..... Petitioner Through: Ms. Bhawna Piplani with Mr. Abhishek Kaushik and Mr. Vishav B. Gupta, 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 09:00:34

ITO, WARD-21(1) DELHI AND ANR ..... Respondents Through: Mr. Sunil Kumar Aggarwal, Advocate. CORAM: HON'BLE MR. JUSTICE MANMOHAN HON'BLE MR. JUSTICE DINESH KUMAR SHARMA O R D E R % 02.05.2022 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 17/06/2026 at 09:00:34

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 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 09:00:34

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 MAY 2, 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 09:00:34

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