Delhi HC strikes down Explanation to CBDT Notifications for Re-Assessment after 31st March 2021, Quashes Notices [Read Order]

In a significant ruling, a division bench of the Delhi High Court comprising Mr. Justice Manmohan and Mr. Justice Dinesh Kumar Sharma has struck down the Explanations A(a)(ii)/A(b) to the Notifications dated 31st March, 2021 and 27^th April, 2021 declaring the same as ultravires.

The Finance Act, 2021 introduced a new set of reassessment proceedings from 01.04.21. The Central Board of Direct Taxes (CBDT)  by way of various notifications had extended the time limit of issuing the notice U/s 148 of the Act up to  30th June, 2021. The Income-tax department has issued many Section 148 notices for several assessment years (A.Y. 2013-14 onwards) after 31st March 2021. Many writ petitions have been filed across the country challenging the notices issued u/s 148 after 31st march 2021 and notifications issued by CBDT to extend the time limits for issuing such notices, various courts have also stayed the reassessment proceedings.

The bench was considering a bunch of petitions challenging the notices issued post 31st March, 2021 without following the procedure prescribed in the substituted Sections 147 to 151 w.e.f. 01st April, 2021.

The bench observed that the matter is covered by the decision of the Court in Mon Mohan Kohli vs. Assistant Commissioner of Income Tax & Anr wherein it was held that “the 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.”

Allowing the writ petitions, the bench held that “Keeping in view the aforesaid, Explanations A(a)(ii)/A(b) to the Notifications dated 31st March, 2021 and 27^th April, 2021 are declared to be ultra vires the Relaxation Act, 2020 and are therefore bad in law and null and void.”

“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,” the bench said.

To Read the full text of the Order CLICK HERE

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