Limitation for reassessment notice under section 148: ITAT held the notice time-barred and quashed the proceedings.

A reassessment notice must satisfy the limitation regime in force on the date of issue, and a notice issued beyond the permissible period under section 149 cannot be sustained. Here, the ITAT held that the notice dated 04.04.2022 for A.Y. 2015-16 was time-barred, and the time given to respond under section 148A(b) could not be excluded to cure an already invalid notice. As the notice failed the threshold test of limitation, the reassessment proceedings could not survive and the addition made in those proceedings was deleted, with the merits left open.

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Issues: Whether the notice issued under section 148 of the Income-tax Act, 1961 for the assessment year 2015-16 was barred by limitation and whether the reassessment proceedings founded on such notice were liable to be quashed.

Analysis: The Tribunal followed the view that, for an assessment year falling outside the extended time frame, the validity of a reassessment notice must be tested with reference to the limitation regime applicable on the date of issue. It held that the notice dated 04.04.2022 for assessment year 2015-16 was beyond the permissible period under section 149 of the Income-tax Act, 1961. The Tribunal also rejected the contention that the time granted to reply to the notice under section 148A(b) could be excluded for computing limitation, since that exclusion could not save a notice that had already failed the threshold test of limitation. Once the notice was held invalid, the reassessment proceedings could not survive.

Conclusion: The notice under section 148 was held to be time-barred, and the reassessment proceedings based on it were quashed. The addition made in such proceedings was deleted, while the merits were left open.

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