Delhi High Court on Transitional Reassessment: Pre-September 2024 Search Allows Direct Section 148 Notice

The Delhi High Court in Garima Vikas Vs Union of India (Delhi High Court) has clarified how the reassessment framework applies where a search takes place between 01.04.2021 and 31.08.2024, but the reassessment notice is issued later, after the Finance (No. 2) Act, 2024 has come into force.

The ruling addresses a common post-amendment controversy: whether the law applicable to reassessment is determined by the date of search or the date of issuance of notice under Section 148. The Court has held that, in cases covered by Section 152(3), the earlier reassessment regime under Sections 147 to 151 (as they existed prior to the Finance (No. 2) Act, 2024) continues to govern, regardless of when the Section 148 notice is actually issued.

Background of the Dispute

Core Facts

  • Case: Garima Vikas Vs Union of India (Delhi High Court)
  • Writ Petition: W.P.(C) 5278/2026, CM APPL. 25949/2026 & CM APPL. 25950/2026
  • Assessment Year: 2021-22
  • Date of search in third-party case (Bhutani Group): 04.01.2024
  • Date of notice under Section 148: 24.03.2025
  • Date of assessment order: 21.03.2026
  • Date of judgment: 14.09.2026

The assessee challenged:

  • The reassessment notice dated 24.03.2025 issued under Section 148 of the Income Tax Act 1961, and
  • The consequential assessment order dated 21.03.2026 framed for AY 2021-22.

The reassessment was based on information allegedly found during a search on the Bhutani Group on 04.01.2024. The Assessing Officer (AO) did not follow the procedure under Section 148A and directly issued a notice under Section 148.

Assessee’s Objections

Challenge to Jurisdiction

The assessee argued that the entire reassessment exercise was without jurisdiction because:

  • The AO had not issued a show-cause notice under Section 148A(b);
  • No order had been passed under Section 148A(d);
  • The statutory pre-condition under Section 148A was therefore not fulfilled before issuing a notice under Section 148.

According to the assessee, compliance with Section 148A(b), Section 148A(c) and Section 148A(d) was a mandatory jurisdictional requirement. Consequently:

  • The notice under Section 148 dated 24.03.2025 stood vitiated; and
  • The assessment order dated 21.03.2026, being a product of an invalid initiation, was also liable to be set aside.

Maintainability of Writ Despite Appellate Remedy

Although an appeal against the assessment order lay before the Commissioner of Income Tax (Appeals), the assessee invoked writ jurisdiction directly, contending that:

  • The defect was not merely procedural, but went to the root of jurisdiction;
  • Once the very initiation under Section 148 was void, the reassessment proceedings could not be cured through regular appellate channels; and
  • Hence, the existence of an alternative remedy should not operate as a bar to the writ petition.

The High Court, while noting that ordinarily the assessee should have approached the Court at the notice stage or pursued the appellate remedy after completion of assessment, chose to examine the jurisdictional question since a pure issue of law was raised.

Revenue’s Defence: Reliance on Third-Party Search Provision

Invocation of Explanation 2(iv) to Section 148

The Revenue relied heavily on clause (iv) of Explanation 2 to Section 148, as it existed prior to its omission by the Finance (No. 2) Act, 2024.