2025 (11) TMI 1960 - AT - Income Tax

Limitation on reassessment and mandatory procedural compliance determine validity; failure to comply renders reassessment and additions void.

Reassessment under Section 148 is invalid if issued beyond the surviving limitation period or without compliance with mandatory pre-reassessment ... Validity of reopening of assessment - Survival of reassessment notice beyond the surviving period pursuant to Ashish Agarwal [2022 (5) TMI 240 - SUPREME COURT] and Rajeev Bansal [2024 (10) TMI 264 - SUPREME COURT (LB)] - scope of new regime - TOLA - mandatory compliance with Section 148A(b) before issuance of notice under Section 148 - assumption of jurisdiction and requirement of sanction under Section 151 for reassessment HELD THAT: - The Tribunal examined the chronological record it is crystal clear that notice under Section 148 of the Act is dated 24.05.2021. TOLA period ended on 30.06.2021. Show-cause-notice under Section 148 of the Act dated 28.05.2022 and date of reply of assessee is 09.06.2022. The valid date of notice under Section 148 of the Act was 17.07.2022. Therefore, notice under Section 148 dated 28.07.2022 as per of Hon'ble Supreme Court in the case of Ashish Aggarwal [Supra]. Reference to judgment in 'GSM Auto Spares Private Ltd. vs. Assessment Unit', is important. In view of above material facts, impugned orders dated 29.05.2023 of Ld. AO dated 02.12.2024 of Ld. CIT(A) are set aside. Final Conclusion: The appeal is allowed: the impugned assessment order and the appellate order upholding it are set aside because the reassessment notice did not survive the applicable period and requisite procedural and jurisdictional preconditions under Section 148A(b) and Section 151 were not met. Issues: (i) Whether the reassessment notice under Section 148 (and consequent proceedings) was barred by limitation and liable to be set aside; (ii) Whether reassessment proceedings and order are without jurisdiction/void for non-compliance with the procedural requirements of Section 148A and failure to obtain sanction under Section 151; (iii) Whether consequential additions and demands require adjudication in view of findings on (i) and (ii).Issue (i): Whether the reassessment notice under Section 148 was barred by the surviving limitation period and therefore invalid.Analysis: The timelines of initial notice dates, the show-cause/148A communications, the assessee's replies, and the dates relied upon to compute the surviving period were examined in the light of applicable Supreme Court and High Court directions regarding notices issued in the period after 01.04.2021 and the operation of the Ashish Agarwal / Rajeev Bansal line of decisions. The sequence of notices and the assessee's replies were compared with the surviving period rules established by the said precedents to determine whether the Section 148 notice issued later fell within the surviving period.Conclusion: The reassessment notice under Section 148 was barred by limitation and does not survive; it is invalid.Issue (ii): Whether reassessment proceedings and the assessment order are without jurisdiction because mandatory procedures under Section 148A (including provision of material relied upon) and sanction under Section 151 were not complied with.Analysis: The procedural record was assessed for compliance with Section 148A(b)/148A(d) requirements and for evidence of sanction under Section 151. The effect of judicial directions requiring provision of materials and reasoned orders on the validity of subsequent reassessment actions was applied to the facts to ascertain whether jurisdiction was properly assumed.Conclusion: The reassessment proceedings and assessment order are without jurisdiction for failure to comply with the mandatory procedural requirements and sanction conditions and are therefore liable to be set aside.Issue (iii): Whether the additions and consequential demands require separate adjudication in view of the setting aside of the reassessment.Analysis: The impact of the invalidation of reassessment proceedings on the additions and demands was considered; where reassessment is set aside for limitation and jurisdictional defects, consequential additions cannot stand without a valid reassessment basis.Conclusion: The additions and consequential demands are quashed as they rest on the invalid reassessment.Final Conclusion: The impugned assessment order and the appellate order upholding it are set aside on grounds of limitation and non-compliance with mandatory reassessment procedures; the appeal is allowed and the assessment proceedings are quashed.Ratio Decidendi: A reassessment notice and consequent assessment are invalid if issued beyond the surviving limitation period or in breach of mandatory procedural requirements under Sections 148A and 151 of the Income-tax Act, 1961, and material non-compliance with those provisions renders the reassessment and resultant additions void.