2025 (6) TMI 220 - AT - Income Tax

Re-assessment proceedings u/s 147 beyond period of limitation - procedural requirements u/s 148A - scope of period prescribed under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act 2020 ( the TOLA ) - HELD THAT - It is evident that the Hon ble Courts consistently considering the submissions made by the Revenue before the Hon ble Supreme Court in Rajeev Bansal 2024 (10) TMI 264 - SUPREME COURT (LB) have held that the re-assessment notice issued under section 148 of the Act for the assessment year 2015-16 is barred by limitation. Thus on this limited basis alone the notice dated 29/07/2022 issued under section 148 of the Act in the present case is liable to be quashed being time-barred under the provisions of the Act. We order accordingly. Consequently the entire re-assessment proceedings and final assessment order passed u/s 147 read with section 144C(13) read with section 144B of the Act are also quashed. Assessee appeal allowed.

Summary

The core legal issue considered in this judgment is whether the initiation of re-assessment proceedings under section 147 of the Income Tax Act, 1961, for the assessment year 2015-16, was valid in view of the limitation period prescribed under section 149(1) of the Act. Specifically, the question was whether the notice under section 148 issued on 29/07/2022 was barred by limitation and hence void ab initio.

Regarding this principal issue, the Tribunal examined the relevant statutory provisions, judicial precedents, and submissions of the parties. The limitation period for issuance of a notice under section 148 for assessment year 2015-16 expired on 31/03/2022 as per section 149(1). The assessee contended that the notice issued after this date was time-barred, rendering the reassessment order void. The Revenue opposed this, relying on the order of lower authorities upholding the reassessment.

The Tribunal referred extensively to the recent Supreme Court decision in Union of India vs. Rajeev Bansal, which clarified the applicability of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 ("TOLA") to limitation periods under the Income Tax Act. The Court noted that for assessment year 2015-16, TOLA did not extend the limitation period beyond 31/03/2022, and consequently, all notices issued on or after 1 April 2021 that would not result in completion within the TOLA-prescribed period must be dropped. The Revenue had conceded this position before the Supreme Court.

Supporting this legal framework, the Tribunal cited decisions of the Delhi High Court and coordinate benches of the Tribunal, which had quashed reassessment notices issued beyond the limitation period for AY 2015-16. For instance, the Delhi High Court in Pratishtha Garg vs. ACIT held that notices issued under section 148 for AY 2015-16 after the limitation period were invalid, relying on the Supreme Court's concession in Rajeev Bansal. Similarly, the Tribunal bench in cases such as ACIT vs. Manish Financials and ITO vs. Pushpak Realities Pvt. Ltd. had quashed such notices.

The Tribunal also referred to a recent Supreme Court order in ACIT vs. Nehal Ashit Shah, which upheld the quashing of reassessment proceedings for AY 2015-16 on the same limitation grounds, explicitly relying on the submissions recorded in Rajeev Bansal.

Applying this legal framework to the facts, the Tribunal found that the notice under section 148 dated 29/07/2022 was issued well after the expiry of the limitation period on 31/03/2022, and was therefore barred by limitation. The reassessment proceedings initiated on this basis and the final assessment order passed under section 147 read with sections 144C(13) and 144B of the Act were consequently held to be void ab initio.

The Tribunal acknowledged the Revenue's arguments but found them unpersuasive in light of the binding Supreme Court precedent and the consistent judicial trend. The Tribunal emphasized the jurisdictional nature of the limitation issue, which goes to the root of the reassessment proceedings, and hence must be decided at the outset.

In conclusion, the Tribunal quashed the notice under section 148 dated 29/07/2022 and set aside the entire reassessment proceedings and final assessment order for AY 2015-16 as time-barred. Since the jurisdictional issue was determinative, the Tribunal declined to consider other grounds raised by the assessee.

Significant holdings include the following verbatim excerpt from the Delhi High Court decision cited by the Tribunal:

"The Revenue concedes that for the assessment year 2015-2016, all notices issued on or after April 1, 2021 will have to be dropped as they will not fall for completion during the period prescribed under the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020."

This principle was reiterated by the Supreme Court and followed by the Tribunal, establishing that the limitation period under section 149(1) read with TOLA cannot be extended for AY 2015-16 beyond 31/03/2022, and notices issued thereafter are invalid.

The core principle established is that limitation under section 149(1) is jurisdictional and cannot be circumvented by subsequent reassessment notices issued beyond the prescribed period. The TOLA Act's provisions apply to limitation periods but do not extend the limitation for AY 2015-16 beyond the statutory expiry date. Revenue's concession before the Supreme Court is binding on lower authorities.

The final determination on the issue is that the reassessment notice dated 29/07/2022 under section 148 for AY 2015-16 is barred by limitation and void ab initio, and all consequential proceedings and orders based on it are quashed.