Written By: Bhanukaran Singh Jodha & Muskaan Goel
The judgment delivered by the Hon’ble Delhi High Court in Genpact India Private Limited v. Assistant Commissioner of Income Tax[1] marks an important reaffirmation of both procedural and substantive safeguards governing reassessment proceedings under the Income Tax Act, 1961 (“the Act”). In particular, it highlights the interplay between the Finance Act, 2021[2],and the Supreme Court’s landmark ruling in Union of India v. Ashish Agarwal[3] By clarifying the scope of the amended provisions and underscoring the importance of statutory limitations, the Court reinforced that reassessment powers must be exercised strictly within legislative bounds and cannot be expanded through judicial directions.
Reassessments and the Amended Legal Framework
The Finance Act, 2021 brought a transformative shift to the reassessment regime under the Income Tax Act, 1961. Section 148A mandated that no reassessment could be initiated without first granting the assessee an opportunity to be heard, thereby embedding procedural fairness into the process. Likewise, Section 149, as amended, imposed stricter limitation periods for issuing notices, significantly curtailing the unbridled discretion earlier available to the Revenue. These provisions, aptly described by the Delhi High Court as “remedial and benevolent,” were intended to safeguard taxpayers from arbitrary action and to reinforce the principle of legal certainty.
The Court observed that these amendments were not to be treated as empty formalities but as substantive rights forming part of the statutory architecture. In essence, compliance with the Finance Act, 2021 was not optional but mandatory. The judgment thus reinforced the proposition that legislative reforms, though remedial, must be applied with rigour to maintain a fair balance between state authority and taxpayer protection.
The Union of India v. Ashish Agarwal Decision
The Supreme Court’s ruling in Union of India v. Ashish Agarwal (supra) was central to the framework within which the present judgment was decided.¹ In Ashish Agarwal (supra), the Court was confronted with reassessment notices issued after the coming into force of the Finance Act, 2021, but under the provisions of the unamended regime, thereby creating serious procedural incongruities. To resolve this anomaly, the Court fashioned an equitable solution: notices issued between 1 April 2021 and 30 June 2021 under the erstwhile provisions were to be treated as deemed notices under Section 148A(b), subject to compliance with the safeguards introduced by the Finance Act, 2021.
The Delhi High Court in Genpact India Pvt. Ltd. v. Assistant Commissioner of Income Tax (supra), however, carefully circumscribed the scope of this ruling.² It clarified that Ashish Agarwal (supra) was intended only to salvage reassessment notices which had already been struck down by various High Courts on procedural grounds. The Supreme Court’s directions were thus curative, not constitutive—they preserved certain reassessments but did not extend substantive rights to those notices which had never been questioned before any forum. Accordingly, the Court in Genpact India (supra) held that Ashish Agarwal (supra) could not be construed as a blanket mandate reviving all reassessment proceedings initiated under the unamended law.
The First Proviso to Section 149(1) of the Act
One of the principal contentions in Genpact India Pvt. Ltd. (supra) concerned the validity of the reassessment notice issued under Section 148A(b) of the Income Tax Act, 1961 in May 2022. The assessee argued that the notice was barred by limitation under the First Proviso to Section 149(1). The Court carefully examined the statutory scheme and concluded that for assessment years prior to 1 April 2021, the unamended Section 149 continued to govern limitation.
Under the pre-amendment regime, reassessment notices under Section 148 could be issued only up to six years from the end of the relevant assessment year, provided that the escaped income exceeded ₹1,00,000. Applying this framework, the Court held that the impugned notice for Assessment Year 2015–16, issued in May 2022, was clearly beyond the prescribed six-year period and, therefore, time-barred. The Court emphasised that limitation provisions are not procedural niceties but substantive safeguards that condition jurisdiction. Any notice issued contrary to the express statutory timeline is void ab initio and incapable of sustaining reassessment proceedings.
Continuation of Reassessment Notices issued after the Amendment but under the Old Regime:
Another critical issue before the Court was whether the reassessment notice issued under Section 148A(b) of the Act in May 2022 could be construed as a continuation of the original notice issued in June 2021 under the unamended regime. The Revenue contended that the subsequent notice was a procedural measure designed to bring the earlier notice in conformity with the directions in Ashish Agarwal (supra).
The Court, however, firmly rejected this submission. It held that since the June 2021 notice had neither been quashed, invalidated, nor challenged before any court, there was no occasion for revival. Consequently, the May 2022 notice constituted a fresh proceeding, which, being beyond the limitation period, was unsustainable. This reinforced the principle that reassessment proceedings under the old regime cannot automatically transition into the new regime unless explicitly authorised by statute or revived pursuant to judicial direction.
Impact of the Hon’ble Supreme Court’s Judgment in Union of India & Ors. v. Rajeev Bansal
However, the precedent set by Genpact (supra)—which held that the law as laid down in Ashish Agarwal (supra) could not be invoked to automatically revive reassessment proceedings that were never challenged before the Hon’ble Supreme Court—proved to be short-lived. On 3 October 2024, the Hon’ble Supreme Court in Union of India & Ors. v. Rajeev Bansal[4], after examining the amended provisions introduced by the Finance Act, 2021 read with the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 [5], categorically held that “the directions in Ashish Agarwal (supra) will extend to all ninety thousand reassessment notices issued under the old regime during the period 1 April 2021 to 30 June 2021.” Consequently, the judgment of the Hon’ble Delhi High Court in Genpact (supra) stood set aside to the extent of the contrary observations made therein.
Legal Principles Emerging from Genpact:
Despite its subsequent curtailment by the Hon’ble Supreme Court in Rajeev Bansal, the decision in Genpact India Pvt. Ltd. v. ACIT continues to hold instructive value in crystallising critical principles of reassessment law.
First, the Court reaffirmed that strict adherence to limitation is jurisdictional. Limitation provisions are not procedural niceties but substantive conditions that go to the very root of jurisdiction. The unamended Section 149, which restricted reassessment notices to six years from the end of the relevant assessment year, had to be applied rigorously. This approach is consistent with the long standing principle laid down in CIT v. Calcutta Discount Co. Ltd[6]. (1961), where the Supreme Court held that failure to comply with statutory preconditions for reopening assessments vitiates jurisdiction altogether.
Second, Genpact underscores that procedural safeguards are substantive rights. The Finance Act, 2021, through Section 148A, was enacted as a remedial and benevolent measure to ensure transparency and fairness in reassessment proceedings. These protections condition the very assumption of jurisdiction by the Assessing Officer. This reasoning resonates with the ruling in GKN Driveshafts (India) Ltd. v. ITO (2003), [7]where the Supreme Court mandated compliance with procedural safeguards, treating them as integral to the fairness of the process rather than mere technicalities.
Third, the judgment reaffirms the preservation of taxpayer rights within the constitutional framework. While Ashish Agarwal (2022) provided equitable relief by treating certain old notices as deemed notices under Section 148A, the Delhi High Court clarified in Genpact that such curative directions could not be stretched to create substantive rights or override statutory limitation. The later pronouncement in Union of India v. Rajeev Bansal (2024)[8], which expanded the reach of Ashish Agarwal to nearly ninety thousand reassessment notices, illustrates how judicial oversight ultimately calibrates the balance between revenue imperatives and taxpayer protections.
Together, these principles affirm that while reassessment powers are undoubtedly wide, they remain strictly bounded by legislative mandate and judicial scrutiny. In doing so, Genpact stands as a reminder that the legitimacy of tax administration rests not on expediency but on fidelity to the rule of law.
Conclusion:
The ruling in Genpact India Pvt. Ltd. v. ACIT reaffirmed the principle that reassessment powers under the Income Tax Act must be exercised strictly within the boundaries of statutory authority. By insisting on adherence to the limitation periods under the unamended Section 149 and recognising Section 148A as a substantive safeguard, the Delhi High Court emphasised that taxpayer rights cannot be compromised by procedural shortcuts or administrative expediency.
Though subsequently curtailed by the Supreme Court in Union of India v. Rajeev Bansal, Genpact continues to hold relevance for its articulation of core principles—strict compliance with limitation, the substantive nature of procedural protections, and the preservation of taxpayer remedies. Taken together with Ashish Agarwal and Rajeev Bansal, the case highlights the evolving jurisprudence on reassessment, balancing the State’s revenue
[1]Genpact India Pvt. Ltd. v. Assistant Commissioner of Income Tax, Delhi High Court, 2024 SCC OnLine Del 6329
https://www.verdictum.in/pdf_upload/genpact-india-private-limited-v-assistant-commissioner-of-income-taxwatermark-1654267.pdf
[2]https://gstcouncil.gov.in/sites/default/files/2024-04/finance_act_2021.pdf
[3]https://api.sci.gov.in/supremecourt/2021/32623/32623_2021_12_1502_35515_Judgement_04-May-2022.pdf (2023) 1 SCC 617
[4]Civil Appeal No. 8629 of 2024
[5]The Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance 2020
[6]CIT v. Calcutta Discount Co. Ltd., AIR 1961 SC 372.
[7]GKN Driveshafts (India) Ltd. v. ITO, (2003) 1 SCC 72.
[8]Union of India v. Ashish Agarwal, (2022) 444 ITR 1 (SC); Union of India v. Rajeev Bansal, Civil Appeal Nos. 6520–6523 of 2023, decided 3 Oct. 2024 (SC).
