Reassessment limitation and overlapping rectification proceedings barred reopening where Section 148 notice was already time-barred.

A notice under Section 148 for AY 2017-18 was held time-barred because the first proviso to amended Section 149 barred reopening where the notice could not have been issued within the pre-amendment limitation period; the extended-procedure provisos did not revive an already barred notice. The Court also held that reassessment could not be initiated on matters already subject to pending rectification proceedings under Section 154, where the grounds substantially overlapped, including provident fund disallowance and depreciation issues. On both limitation and overlapping proceedings, the reopening was unsustainable and was set aside.

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Issues: (i) Whether the notice under Section 148 of the Income-tax Act, 1961 for Assessment Year 2017-18 was barred by limitation under Section 149 of the Income-tax Act, 1961. (ii) Whether reassessment could be initiated while rectification proceedings under Section 154 of the Income-tax Act, 1961 on the same matters were pending.

Issue (i): Whether the notice under Section 148 of the Income-tax Act, 1961 for Assessment Year 2017-18 was barred by limitation under Section 149 of the Income-tax Act, 1961.

Analysis: The relevant notice was issued on 22.04.2024 for Assessment Year 2017-18. The first proviso to amended Section 149 of the Income-tax Act, 1961 prohibits issuance of a notice under Section 148 where, for an assessment year beginning on or before 01.04.2021, such notice could not have been issued under the pre-amendment time limit. The Court applied the amended and unamended limitation scheme and held that the five and sixth provisos do not revive a notice already barred under the first proviso. On the dates material to the case, the six-year period from the end of Assessment Year 2017-18 had expired.

Conclusion: The notice under Section 148 of the Income-tax Act, 1961 was time-barred and invalid.

Issue (ii): Whether reassessment could be initiated while rectification proceedings under Section 154 of the Income-tax Act, 1961 on the same matters were pending.

Analysis: The grounds in the reassessment notice substantially overlapped with the grounds already taken in the rectification notice under Section 154, including disallowance of employees' contribution to provident fund and depreciation on additions to fixed assets. The Court held that reopening on the same matters, while rectification proceedings remained undisclosed as concluded, was impermissible. It treated the initiation of reassessment in these circumstances as not sustainable in law.

Conclusion: Reassessment could not be validly initiated during the pendency of the rectification proceedings on the same issues.

Final Conclusion: The reassessment proceedings were unsustainable both on limitation and on the ground that the same issues were already the subject of rectification proceedings; the writ petition succeeded and the impugned reopening was set aside.

Ratio Decidendi: For assessment years covered by the amended reassessment regime, a notice under Section 148 of the Income-tax Act, 1961 cannot be saved by the extended-procedure provisos once it is barred by the first proviso to Section 149, and reassessment on issues already under pending rectification is impermissible.

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