Limitation preservation under the pre 2021 regime bars reassessment and mechanical approvals vitiate consequent assessments for multiple years.

For assessment years beginning on or before 1 April 2021, notices issued under the post 2021 reassessment regime must be tested against the limitation rules preserved by the first proviso to section 149(1)(b); applying the pre 2021 computation rules, the reopening for AY 2012 13 was time barred and invalid. Separately, prior approvals required under section 148B must show independent application of mind to the seized material for each assessment year; consolidated or omnibus approvals without examination of seized material are mechanical, invalidate the approvals, and vitiate consequent assessments.

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Issues: (i) Whether the reassessment notice for assessment year 2012-13 issued under section 148 after a search conducted on 09.02.2022 was barred by time in view of the first proviso to section 149(1)(b) and applicable older regime time limits; (ii) Whether the prior approvals granted under section 148B (comparative to erstwhile section 153D) for multiple assessment years were valid or were mechanical/omnibus approvals lacking independent application of mind, thereby vitiating the consequent assessment orders.

Issue (i): Whether the notice under section 148 for AY 2012-13 was within limitation given the first proviso to section 149(1)(b) and the Supreme Court authority on grandfathering.

Analysis: The first proviso to section 149(1)(b) preserves the limitation regime as it stood prior to the Finance Act, 2021 for assessment years beginning on or before 1 April 2021; therefore, validity of a notice under the amended section must be tested against the old regime time-limits for those years. The cited Supreme Court decision in Union of India v. Rajiv Bansal interprets the proviso to require that, for assessments prior to AY 2021-22, reassessment can only proceed if it would have been within time under the earlier law; subordinate decisions and High Court authorities apply the computation rules in Explanation 1 to section 153A and related provisions to determine the ten-year block reckoning from the end of the assessment year relevant to the year of search or as directed by the legal fiction where applicable.

Conclusion: The notice under section 148 for AY 2012-13 was barred by limitation and the reopening for AY 2012-13 was invalid. This conclusion is in favour of the assessee.

Issue (ii): Whether the approvals under section 148B for multiple assessment years were valid or were mechanical/omnibus approvals lacking independent application of mind.

Analysis: Section 148B requires prior approval by the specified higher authority before passing assessments in cases covered by Explanation 2 to section 148. The provision is pari materia with the erstwhile section 153D in purpose and effect; approving authority must have the material and apply independent judgment for each assessment year. The record showed consolidated approvals granted on the same day without furnishing seized material or evidence of independent scrutiny; consistent authority and tribunal and High Court precedents hold that omnibus or rubber-stamp approvals and approvals given without examination of seized materials amount to mechanical approvals and vitiate ensuing assessments.

Conclusion: The approvals under section 148B were mechanical and invalid, and assessments passed pursuant to such invalid approvals are quashed. This conclusion is in favour of the assessee.

Final Conclusion: The limitation-based challenge to reopening for AY 2012-13 succeeds and the challenge to the validity of approvals under section 148B succeeds; accordingly, the revenue appeals are dismissed and the assessee appeals are allowed to the extent stated in the order, resulting in quashing of the impugned assessment orders covered by invalid reopenings or invalid approvals.

Ratio Decidendi: For assessment years beginning on or before 1 April 2021, validity of notices issued under the post-2021 reassessment regime must be tested against the limitation rules of the pre-2021 regime as preserved by the first proviso to section 149(1)(b); and prior approvals under section 148B must reflect independent application of mind on the relevant seized material for each assessment year, failing which assessments founded on such mechanical approvals are void.

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