Reassessment notices issued beyond surviving limitation periods cannot support valid proceedings or consequential assessments

Reassessment notices under Sections 147, 148, 148A and 149 of the Income-tax Act, 1961 must comply with the applicable limitation framework during the transition from the former reassessment regime to Section 148A. The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 could preserve only the surviving limitation period and could not validate a notice that was already time-barred when issued. For notices issued under the deemed Section 148A(b) framework, the Assessing Officer had to complete proceedings within the balance period available on 30 June 2021. Notices issued after those applicable periods, together with consequential reassessment proceedings, were therefore described as invalid and without jurisdiction.

---

---

Issues: (i) Whether reassessment proceedings for Assessment Year 2015-16 initiated through a notice under Section 148 of the Income-tax Act, 1961 issued after 1 April 2021 were barred by limitation and without jurisdiction. (ii) Whether notices under Section 148 of the Income-tax Act, 1961 issued for Assessment Years 2016-17 and 2017-18 beyond the surviving limitation period were invalid.

Issue (i): Whether reassessment proceedings for Assessment Year 2015-16 initiated through a notice under Section 148 of the Income-tax Act, 1961 issued after 1 April 2021 were barred by limitation and without jurisdiction.

Analysis: Applying the limitation framework under Sections 147, 148 and 149 of the Income-tax Act, 1961, read with the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 and the legal principles governing the transition from the old reassessment regime to the regime under Section 148A, a notice for Assessment Year 2015-16 issued on 7 June 2021 was outside the permissible period. The deeming framework could not revive or validate a notice that was time-barred at inception. The subsequent proceedings under Sections 148A(b), 148A(d), 148 and 147 were founded on that invalid notice.

Conclusion: The notice under Section 148 and all consequential reassessment proceedings for Assessment Year 2015-16 were time-barred and without jurisdiction.

Issue (ii): Whether notices under Section 148 of the Income-tax Act, 1961 issued for Assessment Years 2016-17 and 2017-18 beyond the surviving limitation period were invalid.

Analysis: Under the framework governing deemed notices under Section 148A(b) and the surviving period preserved by the Income-tax Act, 1961 read with the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, the Assessing Officer was required to complete the remaining proceedings within the balance period available as on 30 June 2021. The surviving period was 68 days for each assessment year. The last permissible dates for issuance of notices under Section 148 were 22 August 2022 and 24 August 2022, whereas the notices were issued on 27 August 2022. The notices were therefore beyond the surviving limitation period.

Conclusion: The notices under Section 148 and the consequential reassessment proceedings for Assessment Years 2016-17 and 2017-18 were invalid and time-barred.

Final Conclusion: The reassessment proceedings and consequential assessment orders for all three assessment years could not be sustained, while the remaining grounds became infructuous.

Ratio Decidendi: A reassessment notice issued beyond the limitation period surviving under the Income-tax Act, 1961 read with the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 is invalid and without jurisdiction, and all consequential proceedings founded on it cannot survive.

---