MANISH KUMAR AGGARWAL vs. ASSISTANT COMMISSIONER OF INCOME TAX & ANR.

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W.P.(C)/5725/2022HC DelhiDLHC01013587202206 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 became effective from April 1, 2021. The Court found that the Legislature introduced new provisions by way of the Finance Act, 2021, and these had to be followed. The Court clarified that while the power of reassessment existed until June 30, 2021, the procedure changed from April 1, 2021. The Court ruled that Section 3(1) of the Relaxation Act empowers the government only to extend time limits, not to legislate on procedural provisions for reassessment. 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 bad in law and void. The Court disagreed with the Chhattisgarh High Court's view in Palak Khatuja but agreed with the Allahabad and Rajasthan High Courts. The Court rejected the Revenue's reliance on Section 6 of the General Clauses Act, arguing that a repeal followed by fresh legislation on the same subject with an intention to destroy the old procedure means the new procedure must be followed. The Court also dismissed arguments based on COVID-19, the non-obstante clause, legal fiction, and stop-the-clock provisions. The impugned reassessment notices were quashed, and the writ petitions were allowed. The Revenue was given liberty to take further steps if permitted by law, and petitioners could seek remedies if aggrieved.

What were the facts?

The petitioners, including HUFs and private limited companies, filed writ petitions before the Delhi High Court challenging reassessment notices issued under Section 148 of the Income Tax Act, 1961. These notices were issued post-March 31, 2021. The core issue revolved around whether these notices were validly issued, considering the substitution of Sections 147 to 151 of the Income Tax Act by the Finance Act, 2021, effective from April 1, 2021. The Revenue contended that certain explanations in notifications issued by the government, particularly those dated March 31, 2021, and April 27, 2021, allowed for the continued application of the old procedure or extended timelines. The High Court was asked to decide on the validity of these notices and the underlying notifications.

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, concerning 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 after March 31, 2021, they must adhere to the newly substituted Sections 147 to 151 of the Income Tax Act, 1961, which came into effect from April 1, 2021. They contended that the procedure prescribed by the Finance Act, 2021, was mandatory. Revenue's Contention: The Revenue argued that the power of reassessment that existed prior to March 31, 2021, continued to exist until June 30, 2021. They relied on Explanations A(a)(ii)/A(b) to the Notifications dated March 31, 2021, and April 27, 2021, which they believed permitted the issuance of notices under the old procedure or extended timelines. They also argued that Section 6 of the General Clauses Act saved notices issued under Section 148 post-March 31, 2021, and that the substitution by the Finance Act, 2021, was not applicable to past Assessment Years as it was substantial in nature. They further contended that the COVID-19 pandemic justified the operation of the new provisions being deferred.

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) 5711/2022
W.P.(C) 5718/2022
W.P.(C) 5721/2022

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

$~40, 42-48, 50 & 51 * IN THE HIGH COURT OF DELHI AT NEW DELHI 40 + W.P.(C) 5711/2022 & CM APPL.17077/2022, CM APPL.17078/2022

SUBHASH SHARMA HUF (THROUGH VIKRAM SHARMA,

KARTA) AND ORS.

..... Petitioners

Through: Md. Farman with Mr. Salman Khan,

Advocates.

versus

INCOME TAX OFFICER AND ORS.

..... Respondents

Through: Ms. Vibhooti Malhotra, Sr. Standing

Counsel with Mr. Shailendra Singh,

Jr. Standing Counsel and Mr. Udit

Sharma, Advocate. 42 + W.P.(C) 5718/2022 & CM APPL.17085/2022, CM APPL.17086/2022

M.R. OVERSEAS PRIVATE LIMITED

..... Petitioner

Through: Ms. Divya with Mr. Ruchesh Sinha,

Advocates.

versus

DEPUTY COMMISSIONER OF INCOME TAX CIRCLE- 16(1),

DELHI & ANR.

..... Respondents

Through: Mr. Ajit Sharma, Advocate.

Mr. Luqman S. Hasan, Advocate. 43 + W.P.(C) 5721/2022 & CM APPL.17090/2022, CM APPL.17091/2022

M.R. OVERSEAS PRIVATE LIMITED

..... Petitioner

Through: Ms. Divya with Mr. Ruchesh Sinha,

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 18/06/2026 at 10:15:54

DEPUTY COMMISSIONER OF INCOME TAX CIRCLE- 16(1),

DELHI & ANR.

..... Respondents

Through: Mr. Ajit Sharma, Advocate.

Mr. Luqman S. Hasan, Advocate. 44 + W.P.(C) 5722/2022 & CM APPL.17092/2022, CM APPL.17093/2022

ARICENT TECHNOLOGIES -HOLDINGS- LIMITED ..... Petitioner

Through: Ms. Ananya Kapoor with Mr. Tarun

Chanana and Mr. Sanat Kapoor,

Advocates.

versus

ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1-1 &

ANR.

..... Respondents

Through: Mr. Sanjay Kumar with Ms. Easha

Kadian, Advocates.

45 + W.P.(C) 5725/2022 & CM APPL.17138/2022, CM APPL.17139/2022

MANISH KUMAR AGGARWAL

..... Petitioner

Through: Mr. Sachin Kaushik, Advocate.

versus

ASSISTANT COMMISSIONER OF INCOME TAX & ANR. ..... Respondents

Through: Ms. Vibhooti Malhotra, Sr. Standing

Counsel with Mr. Shailendra Singh,

Jr. Standing Counsel and Mr. Udit

Sharma, 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 18/06/2026 at 10:15:54

46 + W.P.(C) 5730/2022 & CM APPL.17144/2022

IPHITO REAL ESTATE PRIVATE LIMITED ..... Petitioner

Through: Mr. Sagar Sharma with Ms. Surbhi

Bhatia, Advocates.

versus

OFFICE OF THE ASSITANT COMMISSIONER OF INCOME TAX

& ANR.

..... Respondents

Through: Ms. Vibhooti Malhotra, Sr. Standing

Counsel with Mr. Shailendra Singh,

Jr. Standing Counsel and Mr. Udit

Sharma, Advocate.

Mr. Jivesh Kumar Tiwari with

Ms. Samiksha, Advocate for

respondent No.2

47 + W.P.(C) 5731/2022 & CM APPL.17145/2022

IPHITO REAL ESTATE PRIVATE LIMITED ..... Petitioner

Through: Mr. Sagar Sharma with Ms. Surbhi

Bhatia, Advocates.

versus

OFFICE OF THE ASSITANT COMMISSIONER OF INCOME TAX

& ANR.

..... Respondents

Through: Ms. Vibhooti Malhotra, Sr. Standing

Counsel with Mr. Shailendra Singh,

Jr. Standing Counsel and Mr. Udit

Sharma, Advocate.

Mr. Jivesh Kumar Tiwari with

Ms. Samiksha, Advocate 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 18/06/2026 at 10:15:54

48 + W.P.(C) 5733/2022 & CM APPL.17148/2022

SAIKAT KUMAR RAY

..... Petitioner

Through: Mr. P. Roychaudhuri with Mr. Gagan

Gupta, Advocates.

versus

ITO WARD 70 -1, DELHI & ANR

..... Respondents

Through: Mr. Sunil Kumar Agarwal, Sr.

Standing Counsel with Mr. Tushar

Gupta, Jr. Standing Counsel and

Mr. Samarth Chaudharii, Advocate. 50 + W.P.(C) 5739/2022 & CM APPL.17161/2022

BISWAL & SONS(HUF)

..... Petitioner

Through: Mr. Ishan Garg, Advocate.

versus

ITO WARD 28(5), DELHI & ORS.

..... Respondents

Through: Mr. Abhishek Maratha, Advocate. 51 + W.P.(C) 5747/2022 & CM APPL.17185/2022

PAWAN SHARMA

..... Petitioner

Through: Mr. Rajat Vaishnaw with Mr. Mudit

Bansal, Advocates.

versus

THE ITO, WARD 23(1), DELHI

..... Respondent

Through: Mr. Puneet Rai, Sr. Standing Counsel

with Ms. Adeeba Mujahid, Jr.

Standing Counsel and Mr. Karan

Pandey, 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 18/06/2026 at 10:15:54

CORAM:

HON'BLE MR. JUSTICE MANMOHAN

HON'BLE MR. JUSTICE DINESH KUMAR SHARMA

06.04.2022 O R D E R

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 2. The conclusion reached by this Court in Mon Mohan Kohli (supra) is reproduced hereinbelow:- 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. “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 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 18/06/2026 at 10:15:54

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 18/06/2026 at 10:15:54

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 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. April, 2021 are declared to be ultra vires the Relaxation Act, 2020 and are therefore bad in law and null and void.

MANMOHAN, J

DINESH KUMAR SHARMA, J APRIL 6, 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 18/06/2026 at 10:15:54

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