2025 (3) TMI 1501 - AT - Income Tax

Reopening of assessment u/s 147 - Period of limitation - HELD THAT - A perusal of the assessment order clearly shows that notice u/s.148 of the Act has been issued on 23.07.2022 and in view of the decision of the Hon ble Supreme Court in the case of Ashish Agarwal 2022 (5) TMI 240 - SUPREME COURT read with CBDT Instruction No. 1 of 2022 dated 11.05.2022 it is clear that the assessment has been done on the basis of the notice issued u/s.148 on 23.07.2022. The assessment order also refers to a notice issued u/s.148 on 28.04.2021. Such notice would not have a play in view of the decision of the Hon ble Supreme Court in the case of Ashish Agrawal 2022 (5) TMI 240 - SUPREME COURT in Civil Appeal No. 3005 of 2022. The notice issued u/s. 148 on 23.07.2022 becomes the foundation of the assessment order which is impugned. A perusal of the decision of Rajeev Bansal (supra) and more specifically at para 19 sub-paras (e) and (f) as extracted above clearly show that the notice u/s.148 of the Act was to be issued at the outer limit of 31.03.2022. In the present case the notice has been issued much after 31.03.2022. In view of the principles laid down in the case of Rajeev Bansal (supra) it is held that the notice issued u/s. 148 is barred by limitation and consequently stands quashed. Consequently the impugned assessment order which was reopened u/s. 147 also stands quashed. Assessee appeal allowed.

Summary

1. ISSUES PRESENTED and CONSIDERED

- Whether the notice issued under section 148 of the Income Tax Act, 1961 on 23.07.2022 for reopening the assessment for AY 2015-16 was barred by limitation?

- Whether the assessment order passed under sections 147/144 read with section 144B of the Act on 22.05.2023, based on the said notice, is valid or liable to be quashed?

- Whether the principles laid down by the Hon'ble Supreme Court in the case of Union of India Vs. Rajeev Bansal (2024) apply to the facts of the present case?

- Whether the assessment proceedings should be restored to the Assessing Officer for fresh examination in light of the Supreme Court's directions in ITO Vs. Alpesh Hasmukh Sheth (2025)?

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Limitation on issuance of notice under section 148 of the Income Tax Act

Relevant legal framework and precedents: Section 148 of the Income Tax Act empowers the Assessing Officer to reopen an assessment if there is reason to believe that income chargeable to tax has escaped assessment. The limitation period for issuance of such notice is prescribed by the Act and interpreted by courts. The Hon'ble Supreme Court in Union of India Vs. Rajeev Bansal [2024] 167 taxmann.com 70 (SC) clarified the outer time limit for issuance of notice under section 148, specifically emphasizing that notices issued beyond 31.03.2022 for AY 2015-16 are barred by limitation.

Court's interpretation and reasoning: The Tribunal examined the notice issued on 23.07.2022 and noted that it was issued well beyond the outer limit of 31.03.2022 as prescribed by the Supreme Court in Rajeev Bansal. The Tribunal relied heavily on paragraph 19, sub-paras (e) and (f) of the Rajeev Bansal judgment, which explicitly held that any notice under section 148 beyond the prescribed date would be invalid.

Key evidence and findings: The assessment record showed two notices under section 148: one dated 28.04.2021 and the other dated 23.07.2022. The Tribunal noted that the earlier notice of 28.04.2021 was not the basis for the assessment order, which was founded on the later notice. The Tribunal further relied on the Supreme Court decision in Asish Agarwal (Civil Appeal No. 3005 of 2022) and CBDT Instruction No. 1 of 2022, which clarified the non-applicability of the earlier notice for reopening.

Application of law to facts: Since the operative notice was issued after the cutoff date of 31.03.2022, the Tribunal held that the notice was barred by limitation as per the binding precedent of Rajeev Bansal. Consequently, the reopening was invalid.

Treatment of competing arguments: The Revenue relied on Supreme Court decisions in ACIT Vs. Deekay Pine Board (2024) and ITO Vs. Alpesh Hasmukh Sheth (2025), arguing for restoration of the issue to the Assessing Officer for fact verification. The Tribunal acknowledged these precedents but distinguished them on facts, noting that the Supreme Court in Alpesh Hasmukh Sheth had directed that objections be examined afresh by the Assessing Officer only where facts differ from Rajeev Bansal. Since the facts here aligned with Rajeev Bansal, the limitation bar applied directly.

Conclusions: The notice under section 148 issued on 23.07.2022 is barred by limitation and is quashed.

Issue 2: Validity of the assessment order passed under sections 147/144 read with section 144B

Relevant legal framework and precedents: Section 147 empowers reassessment where income has escaped assessment, subject to valid issuance of notice under section 148. Section 144B provides for summary assessments in certain cases. The validity of assessment orders depends on the validity of the notice initiating reassessment.

Court's interpretation and reasoning: Since the foundational notice under section 148 was quashed as barred by limitation, the assessment order passed on 22.05.2023 based on that notice was also invalid. The Tribunal held that the assessment order must necessarily fall if the notice is invalid.

Key evidence and findings: The assessment order itself referred to the notice dated 23.07.2022 as the basis of reassessment. The Tribunal found no independent basis for the assessment order beyond the invalid notice.

Application of law to facts: The invalidity of the notice under section 148 directly vitiates the assessment order passed under sections 147/144/144B. Therefore, the assessment order stands quashed.

Treatment of competing arguments: The Revenue did not dispute this legal principle but sought restoration to the Assessing Officer for fact verification. The Tribunal declined this since the facts did not warrant reopening beyond limitation.

Conclusions: The assessment order dated 22.05.2023 is quashed as it is based on a notice barred by limitation.

Issue 3: Applicability of Supreme Court directions in ITO Vs. Alpesh Hasmukh Sheth and restoration to Assessing Officer

Relevant legal framework and precedents: In Alpesh Hasmukh Sheth (2025), the Supreme Court directed that Assessing Officers should examine objections in light of the law laid down, and if facts differ from Rajeev Bansal, reassessment may proceed. The Court emphasized procedural fairness and fact-based examination.

Court's interpretation and reasoning: The Tribunal noted the direction in Alpesh Hasmukh Sheth but found that the facts of the present case did not warrant restoration for fresh examination since the notice was clearly barred by limitation as per Rajeev Bansal. The Tribunal thereby declined to remit the matter to the Assessing Officer.

Key evidence and findings: The Tribunal carefully compared the facts of the present case with those in Rajeev Bansal and Alpesh Hasmukh Sheth and found no distinguishing features to justify restoration.

Application of law to facts: Since the facts aligned with Rajeev Bansal, the limitation bar applied directly without need for further fact-finding.

Treatment of competing arguments: The Revenue's request for restoration was considered but rejected due to absence of factual distinction.

Conclusions: No restoration to the Assessing Officer is warranted; the appeal is allowed outright.

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