Reassessment Notice Can Be Issued Without Section 148A Procedure For Pre-Sept 2024 Searches: Delhi High Court

The Delhi High Court has held that where a search was conducted between April 1, 2021 and September 1, 2024, the reassessment provisions under Sections 147 to 151 of the Income Tax Act, 1961, as they stood before the Finance Act, 2024 amendment, would continue to apply.

The Division Bench of Justices Dinesh Mehta and Rajneesh Kumar Gupta accordingly upheld the issuance of a notice under Section 148 of the Income Tax Act without first following the procedure under Section 148A(b), (c) and (d).

The Court was dealing with a petition challenging an assessment order dated March 21, 2026, as well as the proceedings initiated against her pursuant to a notice dated March 24, 2025 under Section 148 of the Income Tax Act.

Petitioner argued that the Section 148 notice for Assessment Year 2021-22 was issued directly without following the procedure prescribed under Section 148A(b), (c) and (d) of the Act.

It was contended that the failure to follow this procedure rendered the Section 148 notice fundamentally contrary to the statutory scheme and consequently invalidated the assessment order passed pursuant to it.

Revenue however relied upon Explanation 2 to Section 148 and submitted that where a search is conducted against a third party and documents or information pertaining to an assessee are found during such search, a Section 148 notice could be issued directly.

In the present case, the Revenue pointed to a search conducted in the case of the Bhutani Group, from which information relating to the Petitioner had allegedly emerged.

Petitioner however argued that Explanation 2 had been omitted by the Finance Act, 2024 before the impugned notice was issued on March 24, 2025. Therefore, Revenue could not rely upon the deleted provision.

Rejecting this contention, the High Court noted that Section 152(3) specifically provides that where a search is initiated under Section 132, a requisition is made under Section 132A, or a survey is conducted under Section 133A between April 1, 2021 and September 1, 2024, Sections 147 to 151 would apply as they stood immediately before the commencement of the Finance (No. 2) Act, 2024.

The Court observed that the search in the Bhutani Group's case was conducted on January 4, 2024, i.e. before September 1, 2024.

Therefore, by virtue of Section 152(3), the provisions of Sections 147 to 151 as they stood before the Finance Act, 2024 amendment would apply.

As such, it held that the Assessing Officer was “fully justified” in issuing the Section 148 notice without first issuing a notice under Section 148A(b), the Court held.

Before parting, the Court also noted that Petitioner had approached it after the assessment order had already been passed.

It observed that if the petitioner had any grievance concerning the Section 148 notice issued on March 24, 2025, she ought to have approached the Court soon after receiving the notice and, at least, before the assessment order was passed. Ordinarily, once an assessment order has been passed, the assessee should avail the statutory appellate remedy, it said.

For Petitioner: Advocates. Bipindra N.C. and Akshay Ravi,

For Respondents: Advocates Kshitij Chhabra, SPC along with shita Kumar, Advocate for R-1/UoI. Shlok Chandra, SSC with Naincy Jain and Madhavi Shukla, JSCs alongwith Udit Dad and Ujjwal Jain