Reassessment for AY 2015-16 Quashed as Time-Barred; TOLA Not Extending Limitation for Section 148 Notices

ITAT Delhi allowed the assessee's appeal, holding the reassessment proceedings for AY 2015-16 to be barred by limitation. Relying on SC and coordinate bench precedent, the Tribunal held that TOLA did not extend the limitation period for issuance of reassessment notices for AY 2015-16. Consequently, any notice issued on or after 1.4.2021, including the impugned notice dated 25.6.2021, was invalid and liable to be dropped. With the jurisdictional defect being fatal, no adjudication on merits was required and the reassessment was quashed.

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1. ISSUES PRESENTED AND CONSIDERED

1.1 Validity of reassessment proceedings for assessment year 2015-16 initiated under section 147 pursuant to notices under section 148 issued in July 2022, in view of limitation and the inapplicability of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA).

1.2 Consequential status of additions on merits where the reassessment itself is held to be invalid.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity of reassessment proceedings for AY 2015-16 initiated by notices under section 148 issued in July 2022

Legal framework (as discussed)

2.1 The Court considered the limitation for issuance of notice under section 148 for AY 2015-16 under the "new law", and whether the relaxation under TOLA could extend such limitation for that assessment year.

2.2 The Court referred to and relied upon: (i) the decision of the jurisdictional High Court in Make My Trip (India) Pvt. Ltd. concerning the non-applicability of TOLA to AY 2015-16; (ii) the decision of the Supreme Court in Union of India v. Rajiv Bansal, particularly paragraph 19(f) recording the Revenue's concession that for AY 2015-16 all notices issued on or after 1.4.2021 would have to be dropped as they would not fall for completion during the period prescribed under TOLA; (iii) the Supreme Court's subsequent application of the said concession in Deepak Steel & Power Ltd. v. CBDT & Others and ACIT v. Nehal Rashid Shah.

Interpretation and reasoning

2.3 The Court noted that in the present appeals, the impugned reassessment proceedings for AY 2015-16 had been initiated on the basis of notices under section 148 issued on 20.07.2022 and 21.07.2022, i.e., on or after 1.4.2021.

2.4 The Court observed that the issue of limitation for such notices for AY 2015-16 is no longer res integra in light of the jurisdictional High Court's decision in Make My Trip (India) Pvt. Ltd. and the Supreme Court's decisions referred to in the coordinate bench order in ITA No. 2307/Del/2025.

2.5 The coordinate bench in ITA No. 2307/Del/2025 had held, after considering Make My Trip (India) Pvt. Ltd. and the Supreme Court's decisions in Deepak Steel & Power Ltd. and Nehal Rashid Shah, that: (a) TOLA does not apply for AY 2015-16 so as to extend limitation for issuance of notice under section 148; (b) in view of the Revenue's concession recorded in Rajiv Bansal, all notices issued on or after 1.4.2021 for AY 2015-16 are barred by limitation; and (c) consequently, reassessments based on such notices are void ab initio.

2.6 The Court expressly adopted the "above extracted detailed reasoning mutatis mutandis" from the said coordinate bench order to the present twin appeals, holding that the factual matrix is identical insofar as AY 2015-16 and post-1.4.2021 notices under section 148 are concerned.

2.7 The Court, therefore, rejected all contentions of the Revenue in support of the validity of the impugned reopenings.

Conclusions

2.8 The Court held that for AY 2015-16, in light of the Revenue's concession recorded in Rajiv Bansal and the binding precedents referred to, notices under section 148 issued on or after 1.4.2021 are barred by limitation and not saved by TOLA.

2.9 Since the impugned notices under section 148 in these appeals were issued in July 2022, they were held to be time-barred and invalid.

2.10 Consequently, the reassessment orders framed under section 147 read with section 144, pursuant to such invalid notices, were held to be bad in law and were quashed.

Issue 2: Consequential status of additions on merits

Interpretation and reasoning

2.11 Having quashed the reassessment proceedings themselves as being barred by limitation, the Court held that all other pleadings on merits between the parties stood rendered academic.

Conclusions

2.12 No adjudication was undertaken on the merits of the additions or other grounds; the appeals were allowed solely on the ground of invalidity of the reassessment and consequential quashing of the reassessment orders.

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