Reassessment notice under Section 148 for AY 2015-16 quashed as time-barred under Section 149(1) and TOLA

HC quashed the reassessment notice issued u/s 148 for AY 2015-16 as barred by limitation. The notice, dated 27.07.2022, was based on the pre-31.03.2021 reassessment regime and exceeded the time limit under s.149(1). Relying on its earlier ruling in Makemytrip India Pvt. Ltd., the HC held that TOLA did not extend limitation for such notices for AY 2015-16. This position stood confirmed by the Revenue's concession before SC in Union of India v. Rajeev Bansal. Consequently, the impugned notice was set aside.

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ISSUES:

• Whether notices issued under Section 148 of the Income Tax Act, 1961, after 31.03.2021 but without following the procedure prescribed under Section 148A, are valid.
• Whether reassessment proceedings initiated pursuant to notices issued on or after 01.04.2021 for AY 2015-16 are maintainable in light of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) and related Supreme Court decisions.
• Whether the concession made by the Revenue before the Supreme Court in Union of India & Ors. v. Rajeev Bansal affects the validity of reassessment notices issued for AY 2015-16 after 01.04.2021.
• Whether the reassessment order passed under Section 147 read with Section 144B of the Income Tax Act, 1961, for AY 2015-16 pursuant to the impugned notices is sustainable.

RULINGS / HOLDINGS:

• The notices dated 30.06.2021 and 22.07.2022 issued under Section 148 of the Income Tax Act, 1961, without following the procedure under Section 148A post 31.03.2021, are invalid as the procedure prescribed under Section 148A must be followed for notices issued after that date.
• The reassessment notices issued on or after 01.04.2021 for AY 2015-16 are required to be dropped as per the Revenue's concession in Union of India & Ors. v. Rajeev Bansal, since such notices "will not fall for completion during the period prescribed under TOLA."
• The impugned reassessment order dated 15.05.2023 passed under Section 147 read with Section 144B of the Act is set aside as it is predicated on invalid notices and proceedings.
• The reassessment proceedings initiated pursuant to the impugned notices for AY 2015-16 are quashed in view of the binding Supreme Court concession and consistent judicial precedent, including this Court's decision in Makemytrip India Pvt. Ltd. v. Deputy Commissioner of Income Tax.

RATIONALE:

• The Court applied the statutory framework under the Income Tax Act, 1961, specifically Sections 147, 148, 148A, and 144B, as amended by the Finance Act 2021 and interpreted in light of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA).
• The Supreme Court's decision in Union of India & Ors. v. Rajeev Bansal clarified that for AY 2015-16, reassessment notices issued on or after 01.04.2021 must be dropped as they do not fall within the limitation period prescribed under TOLA, and this concession was binding on the Revenue.
• The Court relied on the principle that the procedure under Section 148A is mandatory for notices issued after 31.03.2021, and failure to comply renders such notices invalid.
• The decision in Deepak Steel and Power Ltd. v. Central Board of Direct Taxes reaffirmed the binding nature of the Revenue's concession and the necessity to quash reassessment notices issued beyond the permissible limitation period under TOLA.
• The Court noted no dissent or doctrinal shift but followed the binding precedents and concessions by the Revenue to uphold the petitioner's challenge.

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