Over 1300 time-barred Income Tax reassessment notices u/s 148 quashed by Delhi High Court

Over 1300 time-barred Income Tax reassessment notices u/s 148 quashed by Delhi High Court The Delhi High Court (HC) has invalidated over 1300 reassessment letters of tax liability- for years anterior to three assessment years, ruling that the new tax regime does not give the revenue agency the authority to review proceedings beyond March 31. Between April 1 and June 30, 2021, these alerts were issued. According to a senior tax official, the decision may affect 1.33 lakh reassessment notifications issued during the period. The I-T department may file a special leave appeal in the Supreme Court against the HC ruling or seek revision to the Finance Act. In the Union Budget 2021, the finance ministry revised the law for reassessment actions under Section 148 from this year onwards. Section 148 of the Income Tax Act addresses the issuance of a notification in cases where income has escaped recomputation or assessment. According to the new rule, an assessing officer cannot issue a notice if three years have passed since the end of the relevant assessment year. The time restriction was previously set at six years. However, in the case of substantial tax evasion, the assessment can be reopened for up to ten years, but only if the concealing of income exceeds 50 lakh. The legislative change was planned to take effect on April 1, 2021, hence notices were to be issued by March 31, 2021. However, due to the constraints imposed by the second wave, income tax authorities have extended the time limit to June 30, 2021, resulting in a swarm of notices to firms and businesses wherever the need for reassessment has been determined. According to the cited official, the ruling will not affect cases where the assessing officer has evidence revealing income escaping assessment in the form of an asset that amounts to or is likely to amount to Rs 50 lakhs or more, as in such cases, a notice can be issued beyond the three-year limiting period but not beyond 10 years from the end of the relevant assessment year. A dozen reassessment notices were issued to global fund houses and private equity funds for under-reporting income over the fiscal year 2013-16. Those are, however, for incomes of more than Rs 50 lakhs. On Wednesday, the High Court granted over 1300 writ petitions filed by assessees challenging the legitimacy of reassessment notices issued under the old reassessment scheme. The Chhattisgarh High Court also rejected the idea of conditional legislation, agreeing with the Allahabad High Court and the Rajasthan High Court. The court ruled that the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA), "does not empower the Revenue to extend the application of the old reassessment regime beyond March 31 because the Finance Act, 2021 introduced a new scheme of reassessment with effect from April," the HC noted. To Read the Judgment Download PDF Given Below :