Delhi ITAT Invalidates Reassessment Based on Section 148 Notice Emailed on 01.04.2021

Background and Case Snapshot

The Delhi Bench of the Income Tax Appellate Tribunal, in Chitra Lekha Gupta Vs ITO (ITA 6147/DEL/2026, order dated 25/08/2026, AY 2013-14), examined the validity of a reassessment completed under Section 147 based on a notice under Section 148 that, although dated 31.03.2021, was actually dispatched by email to the assessee on 01.04.2021 at 07:12:11 A.M.

The key question before the Tribunal was whether the reassessment order dated 25.03.2022, framed under the unamended provisions of Sections 147 to 151, could stand, given that by the date the notice was issued (i.e., dispatched by email), the substituted reassessment framework introduced by the Finance Act, 2021 had already come into operation from 01.04.2021.

The Tribunal ultimately held that:

  • The relevant law to be applied is as on the date of issuance of the notice, not merely its printed date.
  • Since the notice under Section 148 was issued on 01.04.2021, the amended reassessment regime, including the mandatory prior procedure under Section 148A, applied.
  • The Assessing Officer (AO) could not validly complete reassessment under the old provisions after 01.04.2021 in disregard of the substituted statutory scheme.
  • Consequently, the reassessment order dated 25.03.2022 was declared void ab initio and quashed.

Statutory Framework: Old vs. New Reassessment Regime

Amendments by Finance Act, 2021

With effect from 01.04.2021, the Finance Act, 2021:

  • Substituted Sections 147 to 151 of the Income Tax Act, 1961; and
  • Inserted Section 148A, providing a pre-notice inquiry and show-cause mechanism before the AO can issue a valid notice under Section 148.

Under the substituted regime:

  • The AO must conduct an inquiry (if required),
  • Provide an opportunity of being heard through a show-cause notice under Section 148A(b),
  • Consider the assessee’s response, and
  • Pass an order under Section 148A(d) deciding whether or not to issue a notice under Section 148.

This framework is mandatory for all notices issued on or after 01.04.2021.

Impact of Supreme Court Ruling in Union of India vs Ashish Agarwal

In Union of India vs Ashish Agarwal, reported in 444 ITR 1 (SC), the Supreme Court:

  • Addressed the status of reassessment notices that had been issued under the old regime around the time the newly substituted provisions took effect.
  • Held that all such notices, where issued after 01.04.2021 but using the old format and provisions, would be treated as show-cause notices under Section 148A(b) under the new law.
  • Clarified that the AO must necessarily follow the procedure prescribed in the amended Sections 147 to 151, including Section 148A.

The Delhi ITAT has applied this ratio to determine that post-01.04.2021, reassessment can only proceed in accordance with the substituted provisions.

Key Facts Considered by the Tribunal

Chronology of Events

  1. Notice under Section 148

    • Dated: 31.03.2021
    • Mode of service: Email
    • Actual time of dispatch to the assessee: 01.04.2021 at 07:12:11 A.M.

  2. Assessment under Section 147 r.w.s. 144B

    • Reassessment order passed by the AO: 25.03.2022
    • The AO treated the original notice as having been validly issued under the old reassessment regime, applying the unamended Sections 147 to 151.

  3. Subsequent Proceedings under Section 148A

    • Notice under Section 148A(b): Issued on 31.05.2022
    • Assessee’s response: Filed on 13.06.2022
    • Order under Section 148A(d): Dated 20.07.2022, wherein:
      • The AO recorded that the alleged escaped income was less than Rs 50 lakhs; and
      • On that basis, dropped the reopening proceedings under the amended provisions, noting that the statutory conditions for reopening (post-amendment) were not satisfied.