ILLUMINATE TRADEX PRIVATE LIMITED vs. INCOME TAX OFFICER & ORS.

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W.P.(C)/5852/2022HC DelhiDLHC01013941202208 April 2022Bench: HON'BLE MR. JUSTICE MANMOHAN,HON'BLE MR. JUSTICE DINESH KUMAR SHARMA5 pages
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What did the High Court hold?

The High Court held that the reassessment notices issued under Section 148 of the Income Tax Act, 1961, post March 31, 2021, are invalid if they do not comply with the substituted Sections 147 to 151 of the Act. The Court followed its previous judgment in Mon Mohan Kohli vs. Assistant Commissioner of Income Tax & Anr. The Court reasoned that the Legislature introduced new provisions (Sections 147 to 151) by the Finance Act, 2021, effective from April 1, 2021, and any reassessment notices issued after this date must comply with these substituted provisions. The Court found the Explanations A(a)(ii)/A(b) to the Notifications dated March 31, 2021, and April 27, 2021, to be ultra vires the Relaxation Act, 2020, and thus void. The Court rejected the revenue's arguments regarding the General Clauses Act, the applicability to past assessment years, and the impact of the Covid-19 pandemic. 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?

These five writ petitions (W.P.(C) 5827/2022, 5852/2022, 5853/2022, 5854/2022, and 5881/2022) were filed by different assessees (Pooja Jain, Illuminate Tradex Private Limited, Narula Chemist Agencies, SRKK Associates Private Limited, and Sutlej Textiles and Industries Limited) against the Income Tax Department. The common issue in all petitions pertains to 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 procedural history involves the issuance of these notices by various income tax authorities, which are now under challenge.

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 substituted Sections 147 to 151 of the Act, effective from April 1, 2021? Assessee's Contention: The assessees argued that the impugned notices were issued post March 31, 2021, without following the mandatory procedure prescribed in the substituted Sections 147 to 151 of the Income Tax Act, 1961. They relied on the judgment of this Court in Mon Mohan Kohli vs. Assistant Commissioner of Income Tax & Anr. (W.P.(C) No.6176/2021). Revenue's Contention: The revenue contended that the power of reassessment that existed prior to March 31, 2021, continued to exist till June 30, 2021. They also argued that Section 6 of the General Clauses Act saves notices issued under Section 148 post March 31, 2021, and that the substitution made by the Finance Act, 2021, is not applicable to past Assessment Years as it is substantial in nature. They further argued that Covid-19 pandemic necessitated certain relaxations.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 150,Section 151

AI-generated summary — verify with the full judgment below

Heard together (3 matters)

W.P.(C) 5827/2022
W.P.(C) 5852/2022
W.P.(C) 5853/2022

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

$~61, 66, 67, 68 & 71 * IN THE HIGH COURT OF DELHI AT NEW DELHI 61 + W.P.(C) 5827/2022 & CM APPL.17499/2022, CM APPL.17500/2022

POOJA JAIN

..... Petitioner

Through: Mr. Abhishek Kaushik with

Mr. Vishav B. Gupta and

Ms. Bhawna Piplani, Advocates.

versus

ITO, WARD 29 (1) & ANR.

..... Respondents

Through Mr. Ajit Kumar, Advocate.

66 + W.P.(C) 5852/2022 & CM APPL.17563/2022

ILLUMINATE TRADEX PRIVATE LIMITED ..... Petitioner

Through: Mr. Pranay Mohan Govil with

Ms. Ritambhara Narang, Advocates.

versus

INCOME TAX OFFICER & ORS.

..... Respondents

Through: Mr. Abhishek Maratha, Advocate for

respondent No.1.

Ms. Archana Sharma, Advocate for

respondent No.3.

67 + W.P.(C) 5853/2022 & CM APPL.17568/2022

NARULA CHEMIST AGENCIES

..... Petitioner

Through: Mr. P. Roychaudhuri with Mr. Gagan

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 26/06/2026 at 19:53:45

ACIT, CIRCLE 34(1), DELHI AND ANR ..... Respondents

Through: Mr. Sanjay Kumar with Ms. Easha

Kadiyan, Advocates.

68 + W.P.(C) 5854/2022 & CM APPL.17569/2022, CM APPL.17570/2022

SRKK ASSOCIATES PRIVATE LIMITED ..... Petitioner

Through: Mr. Ved Jain with Mr. Nischay K.,

Advocates.

versus

DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 22(2),

DELHI AND ORS

..... Respondents

Through: Mr. Puneet Rai, Advocate for

respondent No.1.

Mr. N.K. Aggarwal, Advocate for

respondent No.5.

71 + W.P.(C) 5881/2022 & CM APPL.17617/2022, CM APPL.17618/2022

SUTLEJ TEXTILES AND INDUSTRIES LIMITED ..... Petitioner

Through: Mr. Saksham Singh, Advocate.

versus

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

Through: Mr. Sunil Agarwal, Sr. Standing

Counsel with Mr. Tushar Gupta, Jr.

Standing Counsel for respondent

No.1.

CORAM:

HON'BLE MR. JUSTICE MANMOHAN

HON'BLE MR. JUSTICE DINESH KUMAR SHARMA 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 19:53:45

08.04.2022

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 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, 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 19:53:45

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 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 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 19:53:45

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 8, 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 19:53:45

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