Notice under Section 148 served after amendment requires reassessment under new Section 148A rules, old order void ab initio

The ITAT Delhi held that a notice issued under Section 148 on 31-3-2021 but served on 1-4-2021 mandates reassessment under the amended provisions of Section 148A. The AO framed reassessment under the old provisions, which was contrary to the Supreme Court ruling in Ashish Agarwal and Delhi HC decision in Rajeev Chopra. Consequently, the reassessment order dated 28-3-2022 was quashed as void ab initio. The assessee's appeals were allowed.

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ISSUES:

Whether the Assessing Officer was justified in framing reassessment under section 147 of the Income-tax Act by applying the old provisions as they stood prior to 1-4-2021, despite the notice under section 148 being issued on or after 1-4-2021.Whether a notice under section 148 of the Act issued on or after 1-4-2021 without following the mandatory provisions under section 148A of the Act is valid or liable to be quashed as bad in law.The legal effect of issuance date and mode of dispatch of notice under section 148 for purposes of limitation and validity of reassessment proceedings.

RULINGS / HOLDINGS:

Reassessment framed under section 147 using the old provisions of the Act, when the notice under section 148 was issued on 1-4-2021 (post-amendment), is invalid. The reassessment order dated 28-3-2022 framed under the old provisions is quashed as "bad in law and void ab initio."A notice under section 148 of the Act issued on or after 1-4-2021 without following the procedure prescribed under section 148A is "non-est and unenforceable." The Assessing Officer must comply with the new reassessment scheme under section 148A.The date of issuance of a notice under section 148 is determined by the date of dispatch of the notice (including electronic dispatch), not merely by generation or drafting in the Income Tax Business Application portal. The dispatch date is vital for determining limitation and jurisdiction.

RATIONALE:

The legal framework is based on the amendments introduced by the Finance Act 2021 effective from 1-4-2021, which amended sections 147 to 151 of the Income-tax Act and inserted a new section 148A prescribing a new reassessment procedure.The Supreme Court in Union of India vs Ashish Agarwal held that notices issued under the old law on or after 1-4-2021 are invalid and must be treated as show-cause notices under section 148A(b), requiring compliance with the new procedure.The Delhi High Court in Rajesh Chopra vs ITO clarified that "issue" of notice requires an overt act of dispatch, including electronic dispatch, and mere generation or digital signing on the portal does not constitute issuance for limitation purposes.The reassessment order framed without adherence to the amended provisions and procedure violates the jurisdictional requirement, rendering the reassessment void ab initio.No dissent or doctrinal shift was noted; the Court strictly followed the binding precedents and statutory amendments.

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