Court Rules Pre-Amendment Provisions Apply to Notices Issued for Searches Between April 2021 and September 2024, Rejecting Petitioner's Challenge on Jurisdictional Grounds
In a significant ruling delivered on September 14, 2026, the Delhi High Court (Division Bench comprising Justices Dinesh Mehta and Rajneesh Kumar Gupta) dismissed a writ petition filed by Garima Vikas challenging the issuance of an Income Tax notice under Section 148 of the Income Tax Act, 1961, and the subsequent assessment order for Assessment Year 2021-22. The petitioner contended that the notice issued on March 24, 2025, was invalid as it was not preceded by the mandatory notice under Section 148A(b) of the Act, following the amendments introduced by the Finance Act, 2024.
The petitioner argued that the procedure prescribed under Section 148A(b), 148A(c), and 148A(d) must be strictly followed before issuing a notice under Section 148. Since the Finance Act, 2024 had omitted Explanation 2 from Section 148, which allowed direct issuance of Section 148 notices following a third-party search or seizure, the petitioner contended that the Revenue's reliance on this Explanation was misplaced and the notice was thus void.
The Income Tax Department, represented by Senior Panel Counsel and other advocates, countered that the search in the instant case was conducted on January 4, 2024, in respect of the Bhutani Group-well within the period from April 1, 2021, to September 1, 2024. Under Section 152(3) of the Income Tax Act, the pre-amendment provisions of Sections 147 to 151 would apply to such searches, thereby validating the issuance of the Section 148 notice without adherence to the Section 148A procedure. They relied on Explanation 2 of Section 148 as it stood before its omission by the Finance Act, 2024, which allowed the Assessing Officer to act on information obtained from searches or seizures related to other persons.
The Court, while acknowledging that the petitioner should have availed statutory remedies at the appropriate stage instead of approaching the High Court post-assessment, proceeded to decide the legal issue on merit. The Court observed that Section 152(3) explicitly provides that where a search is initiated on or after April 1, 2021, but before September 1, 2024, the pre-amendment provisions of Sections 147 to 151 apply. Since the search in this case occurred on January 4, 2024, the Assessing Officer was justified in issuing the notice under Section 148 without issuing any prior notice under Section 148A(b).
Accordingly, the Court dismissed the petition, holding that the issuance of the notice and the consequent assessment order were valid. The petitioner was advised to pursue any grievances related to the merits of the assessment through the prescribed appellate authorities and was precluded from raising jurisdictional objections already decided against her. The Court further allowed the petitioner to file an appeal against the additions made in the assessment within one month without objections on limitation grounds.
This judgment clarifies the applicability of the transitional provisions under Section 152(3) of the Income Tax Act and affirms the validity of notices issued without prior Section 148A notices when the underlying search falls within the stipulated period before the Finance Act, 2024 amendments came into force.
Bottom Line:
Income Tax Act, 1961 - Issuance of notice under Section 148 without following the procedure outlined in Section 148A is valid if the search was conducted between 01.04.2021 and 01.09.2024, as per Section 152(3) of the Act, applying pre-amendment provisions introduced by Finance Act, 2024.
Statutory provision(s):
Income Tax Act, 1961 - Sections 148, 148A, 152(3); Finance Act, 2024 (amendments affecting Sections 147 to 151)
Garima Vikas v. Union of India, (Delhi)(DB) : Law Finder Doc Id # 2982055
