Validity of reassessment proceedings under section 148: Notices dated July 2022 held barred by limitation; reassessment set aside.

Validity of reassessment proceedings focused on whether notices to reopen were time-barred. The tribunal relied on higher court precedents holding identical notices issued in July 2022 barred by limitation; consequently, reassessment actions founded on those notices were invalidated. The reasoning applied limitation principles to the reopening notices and treated the assessments completed thereon as void for being beyond the statutory period, resulting in allowance of the taxpayer's appeal.

---

---

1. ISSUES PRESENTED AND CONSIDERED

(i) Whether the reassessment notice issued under section 148 dated 26.07.2022 for Assessment Year 2015-16 was barred by limitation, including on the applicability of the time-extension regime under TOLA.

(ii) If the section 148 notice dated 26.07.2022 was time-barred, whether the reassessment order passed under section 147 read with section 144B (pursuant to such notice) was liable to be set aside as invalid.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (i): Limitation for issuance of notice under section 148 dated 26.07.2022 (AY 2015-16) and non-applicability of TOLA

Legal framework (as discussed by the Court): The Tribunal considered the statutory time limit governing issuance of notice under section 148 for reopening, and examined whether the extended timelines under TOLA could apply after 01.04.2021. It proceeded on the basis that for cases involving escapement beyond the specified threshold, the permissible outer limit for issuance of notice for AY 2015-16 would run up to 31.03.2022 (computed from the end of the relevant assessment year), unless saved by TOLA. The Tribunal applied the principle that TOLA would apply after 01.04.2021 only if the relevant action "falls for completion" within the period 20.03.2020 to 31.03.2021.

Interpretation and reasoning: On the admitted chronology, the reassessment culminating in the impugned order was founded on the second notice under section 148 dated 26.07.2022. The Tribunal accepted that for AY 2015-16, the normal limitation for issuance of notice under section 148 expired on 31.03.2022. It further held that this case did not qualify for extension under TOLA because the relevant limitation did not fall for completion between 20.03.2020 and 31.03.2021. The Tribunal also treated it as settled that, for AY 2015-16, notices issued on or after 01.04.2021 were not protected by TOLA. The Tribunal noted that identical notices issued on 26.07.2022 for AY 2015-16 had been held to be barred by limitation, and the Revenue could not controvert the applicability of that position to the present facts.

Conclusion: The Tribunal conclusively held that the notice issued under section 148 dated 26.07.2022 for AY 2015-16 was barred by limitation.

Issue (ii): Validity of reassessment order where foundational section 148 notice is time-barred

Legal framework (as discussed by the Court): The reassessment order was passed under section 147 read with section 144B and was expressly stated to be based on the second notice under section 148 dated 26.07.2022 (issued after the section 148A(d) order).

Interpretation and reasoning: Since the Tribunal found the very notice initiating reassessment (the section 148 notice dated 26.07.2022) to be time-barred, the reassessment proceedings and the resultant reassessment order could not survive. The Tribunal treated the limitation defect as fatal to the reassessment.

Conclusion: The reassessment order dated 25.05.2023, having been completed on the basis of the time-barred notice under section 148 dated 26.07.2022, was held to be barred by limitation and was set aside, resulting in the appeal being allowed.

---