2025 (11) TMI 1959 - AT - Income Tax

Reassessment notice validity reversed where revenue undertaking and TOLA precluded reassessment, resulting in quashing and appeal allowed.

ITAT Delhi examined whether reassessment proceedings for AY 2015-16 could proceed given the Revenue's recorded undertaking before the Supreme Court and ... Validity of reassessment notices issued on or after 1 April 2021 for Ay 2015-16 - period of limitation - Application of TOLA and limitation under the pre-2021 u/s 149 for Assessment Year 2015-16 - scope of new regime law Whether reassessment proceedings initiated by notices under section 148 issued on and after 1 April 2021 for Assessment Year 2015-16 were legally sustainable? - HELD THAT: - The Tribunal applied the Supreme Court's observations in Rajiv Bansal [2024 (10) TMI 264 - SUPREME COURT (LB)] that the Revenue conceded no notice would be issued for Assessment Year 2015-16 and that TOLA does not extend the limitation for AY 2015-16. Noting that the first notice in this case fell on 06.04.2021 and a subsequent notice on 29.07.2022, the Tribunal held that reassessment proceedings for AY 2015-16 could not be sustained: the Revenue's undertaking recorded before the Supreme Court required notices for that year issued on or after 1 April 2021 to be dropped, and in any event the six-year limitation under the old regime had expired for AY 2015-16 so the later notice of 29/07/2022 was barred by limitation. The Tribunal therefore quashed the notice dated 29/07/2022 and allowed the legal ground raised by the assessee. [Paras 8, 9, 10] Final Conclusion: The Tribunal allowed the appeal, quashed the reassessment notice issued on 29/07/2022 for Assessment Year 2015-16 as unsustainable in view of the Revenue's undertaking and limitation considerations, and set aside the reassessment proceedings. Issues: (i) Whether the reassessment notice issued under Section 148 of the Income-tax Act, 1961 for Assessment Year 2015-16 (originally issued on 06.04.2021 and again on 29.07.2022) is valid or liable to be quashed in view of the undertaking given by the Revenue before the Hon'ble Supreme Court and the applicability of TOLA/limitation.Analysis: The Tribunal examined the chronology of notices (06.04.2021 treated as notice under Section 148A(b) and subsequent notice dated 29.07.2022), the undertaking recorded before the Hon'ble Supreme Court in Rajiv Bansal regarding notices for Assessment Year 2015-16, and the effect of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Order (TOLA) and limitation under Section 149 of the Income-tax Act, 1961. Considering that the first notice and the subsequent notice fall on or after 1 April 2021 and that the Revenue conceded before the Supreme Court that notices for AY 2015-16 issued on or after 1 April 2021 would have to be dropped, the Tribunal found that reassessment proceedings could not be validly continued. The Tribunal further noted that the six-year limitation for AY 2015-16 expired on 31 March 2022, and that notices issued thereafter would be barred by limitation under the old regime as held in Rajiv Bansal.Conclusion: The notice issued under Section 148 of the Income-tax Act, 1961 dated 29.07.2022 for Assessment Year 2015-16 is quashed and the legal ground raised by the assessee is allowed; the assessee's appeal is allowed.