Assessment reopening notices under section 147 for AY 2015-16 held time-barred despite government assurances

The ITAT Delhi allowed the assessee's appeal against reopening of assessment u/s 147 for AY 2015-16. The tribunal held that notices u/s 148 issued on 30/06/2021 and 25/07/2022 were both barred by limitation. Revenue's Additional Solicitor General had categorically stated before SC in Rajiv Bansal case that all notices for AY 2015-16 issued on or after 1st April 2021 would be dropped, but no such action was taken. The six-year limitation period expired on 31st March 2022, making the notice dated 25/07/2022 time-barred. SC held TOLA was not applicable for AY 2015-16, confirming limitation under old provisions of section 149.

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ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment include:

• Whether the notice issued under Section 148 of the Income Tax Act, 1961, was barred by limitation and thus invalid.
• Whether the reassessment proceedings initiated based on such a notice were valid.
• Whether the principles of natural justice were violated by not providing the appellant with a proper opportunity to be heard.
• Whether the additions made to the appellant's income were justified.
• Whether the notices and orders issued by the Jurisdictional Assessing Officer (JAO) instead of the Faceless Assessing Officer (FAO) were valid under the amended provisions of the Income Tax Act.

ISSUE-WISE DETAILED ANALYSIS

1. Validity of Notice under Section 148

• Relevant legal framework and precedents: The legal framework involves Section 148 of the Income Tax Act, which allows for reopening assessments, and Section 149, which sets the time limits for issuing such notices. The Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (TOLA), and the Supreme Court's decision in Union of India vs. Ashish Agarwal are also pertinent.
• Court's interpretation and reasoning: The Tribunal noted that the notice issued on 25/07/2022 was beyond the limitation period as per the old provisions of Section 149, which expired on 31/03/2022. The Tribunal referenced the Supreme Court's observation in the Rajiv Bansal case, where it was stated that notices issued for the Assessment Year 2015-16 on or after 1 April 2021 should be dropped.
• Application of law to facts: The Tribunal concluded that the notice dated 25/07/2022 was barred by limitation and thus invalid, as the six-year limitation period had expired.
• Conclusions: The Tribunal quashed the notice issued under Section 148 dated 25/07/2022, allowing the legal ground raised by the assessee.

2. Principles of Natural Justice

• Relevant legal framework: The principles of natural justice require that parties be given a fair opportunity to present their case.
• Court's interpretation and reasoning: The Tribunal noted that the CIT(A) dismissed the appeal ex-parte due to non-compliance by the assessee. However, it decided to address the legal issue concerning the validity of the notice.
• Conclusions: Since the legal issue was decided in favor of the assessee, the Tribunal did not delve into the merits of whether the principles of natural justice were violated.

3. Validity of Additions Made

• Relevant legal framework: The additions were made under Sections 69C and 10(38) of the Income Tax Act.
• Court's interpretation and reasoning: The Tribunal did not address the merits of the additions due to the resolution of the legal issue regarding the notice's validity.
• Conclusions: The Tribunal found the matter academic, given the quashing of the notice, and did not adjudicate this issue further.

4. Jurisdictional Authority of Notices

• Relevant legal framework: The amended provisions of Section 151A read with Section 144B of the Income Tax Act require that notices be issued by the FAO.
• Court's interpretation and reasoning: The Tribunal did not explicitly address this issue, as the primary legal ground concerning the notice's validity was resolved in favor of the assessee.
• Conclusions: The issue was rendered moot by the decision on the notice's validity.

SIGNIFICANT HOLDINGS

• Core principles established: The Tribunal reinforced the principle that notices issued beyond the statutory limitation period are invalid. It also highlighted the binding nature of statements made by the Revenue before the Supreme Court regarding the dropping of certain notices.
• Final determinations on each issue: The Tribunal quashed the notice issued under Section 148 dated 25/07/2022, rendering the reassessment proceedings invalid. Consequently, other issues became academic and were not adjudicated.

Order Pronouncement

The appeal of the assessee was allowed, and the order was pronounced on 12/02/2025.

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