Reassessment Notice Under Section 148 After 1 April 2021 Held Time-Barred; Subsequent Order Declared Void Ab Initio

ITAT Delhi held that reassessment proceedings for AY 2015-16 initiated under s.148 on or after 1.4.2021 are barred by limitation under the new reassessment regime and inapplicable extension provisions of TOLA. The notice issued on 30.07.2022 was therefore invalid, rendering the consequential reassessment order void ab initio. The Tribunal quashed the impugned reassessment order in entirety, holding it bad in law. All grounds raised by the assessee challenging the validity of the reopening and reassessment were allowed.

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1. ISSUES PRESENTED AND CONSIDERED

1.1 Whether a notice issued under section 148 on 30.07.2022, under the amended reassessment regime, for assessment year 2015-16 is barred by limitation in view of section 149 and the non-applicability of relaxation under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA).

1.2 Consequentially, whether the reassessment order passed under section 147 pursuant to such notice for assessment year 2015-16 is bad in law and liable to be quashed.

1.3 Whether, upon quashing the reassessment on limitation/jurisdictional grounds, the remaining grounds of appeal on merits and other jurisdictional defects require adjudication.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity and limitation of notice under section 148 dated 30.07.2022 for AY 2015-16

Legal framework (as discussed by the Tribunal)

2.1 The Tribunal examined the validity of a notice issued under section 148 on 30.07.2022 for assessment year 2015-16 under the amended reassessment provisions, with reference to section 149(1) and the relaxation regime under TOLA.

2.2 The Tribunal relied on the jurisdictional High Court's decision holding that, for assessment year 2015-16, reassessment notices issued under section 148 on or after 01.04.2021 are beyond limitation as the relaxation under TOLA does not extend the permissible period for such year.

2.3 The Tribunal further relied on the Supreme Court's decisions where, based on a recorded concession of the Revenue in an earlier three-judge bench decision, it was held that for assessment year 2015-16 all notices under section 148 issued on or after 01.04.2021 must be dropped as they cannot be completed within the period prescribed under TOLA.

Interpretation and reasoning

2.4 The Tribunal noted as an admitted fact that the impugned notice under section 148 was issued on 30.07.2022 under the new law for assessment year 2015-16 and that the reassessment order was framed on 31.05.2023 pursuant to this notice.

2.5 Referring to the jurisdictional High Court decision, the Tribunal observed that it had specifically considered reassessments for assessment year 2015-16 based on notices issued under section 148 vis-à-vis the applicability of TOLA and, on the Revenue's concession that all such notices issued on or after 01.04.2021 must be dropped, held such notices to be beyond limitation and liable to be set aside.

2.6 The Tribunal then considered the Supreme Court's ruling where, after reproducing paragraph 19(f) of an earlier three-judge bench decision recording the Revenue's concession that for assessment year 2015-16 all notices issued on or after 01.04.2021 must be dropped, the Court quashed the impugned notices issued under section 148 for that assessment year as nothing further was required to be adjudicated.

2.7 Applying the above judicial pronouncements, the Tribunal held that the ratio squarely covers notices issued under section 148 on or after 01.04.2021 for assessment year 2015-16, and that such notices are barred by limitation as they cannot be sustained either under section 149(1) or by invoking TOLA.

Conclusions

2.8 The Tribunal held that the notice under section 148 dated 30.07.2022, issued for assessment year 2015-16, is barred by limitation.

2.9 Consequently, the reassessment proceedings initiated on the basis of such notice are without jurisdiction, bad in law, and void ab initio.

2.10 Ground Nos. B, C and D of the appeal, challenging the validity of the notice under section 148 and the reassessment on limitation grounds, were allowed.

Issue 2: Validity of reassessment order and need to adjudicate remaining grounds

Interpretation and reasoning

2.11 Having held that the foundational notice under section 148 for assessment year 2015-16 was time-barred and invalid, the Tribunal found that the reassessment order framed under section 147/148 pursuant to such notice could not survive in law.

2.12 The Tribunal therefore quashed the impugned reassessment order as being bad in law and void ab initio.

2.13 In view of this dispositive finding on limitation and jurisdiction, the Tribunal considered that adjudication of the remaining grounds-relating to validity of sanction, order under section 148A(d), applicability of CBDT instructions, alleged violations of natural justice, lack of enquiry, and the merits of addition under section 68-would be purely academic.

Conclusions

2.14 The reassessment order passed for assessment year 2015-16 pursuant to the notice under section 148 dated 30.07.2022 was quashed as invalid.

2.15 All other grounds of appeal, including those challenging the reassessment on additional jurisdictional, procedural, and merits-based grounds, were not adjudicated as they had become academic.

2.16 The appeal was partly allowed to the extent of quashing the reassessment on limitation and jurisdictional grounds.

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