Failure to Adhere to Surviving Time Limit under TOLA Renders Reassessment Proceedings u/s 148 Void: ITAT Quashes Assessment Orders [Read Order]

The Income Tax Appellate Tribunal (ITAT) Bench at Ahmedabad has quashed reassessment proceedings for Assessment Years 2015-16, 2016-17 and 2017-18 after holding that the notices were issued beyond the surviving period of limitation and were therefore without jurisdiction.

The appeals were filed by Waves Tradeline Private Limited against separate orders passed by the National Faceless Appeal Centre, wherein reassessment proceedings initiated under Section 147 of the Income-tax Act, 1961 were upheld.

The core issue before the Tribunal was the validity of reassessment notices issued under Section 148 after the introduction of the new reassessment regime w.e.f April 1, 2021, read with the extensions granted under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020.

For Assessment Year 2015-16, the Tribunal comprising Suchitra Kamble (Judicial Member) and Narendra Prasad Sinha (Accountant Member), noted that the original notice under Section 148 was issued on June 7, 2021. Relying on the Supreme Court’s decisions in Union of India v. Rajeev Bansal, Union of India v. Ashish Agarwal, and Deepak Steel and Power Ltd., the Tribunal held that all notices issued on or after April 1, 2021 for AY 2015-16 were required to be dropped, as they did not fall within the permissible limitation period.

Consequently, the original notice itself was held to be time-barred, rendering all subsequent proceedings invalid.

The Tribunal further observed that the deeming fiction created by the Supreme Court in Union of India v. Ashish Agarwal could not extend or revive the statutory limitation prescribed under Section 149. Since the jurisdictional notice itself was invalid, the reassessment order passed under Section 147 read with Section 144B was quashed.

With respect to Assessment Years 2016-17 and 2017-18, the Tribunal examined whether the fresh notices issued under Section 148 in August 2022 were within the surviving period of limitation. It noted that the original notices under the old regime had been issued on April 23, 2021, leaving sixty-eight days up to June 30, 2021.

The bench rejected the Revenue’s contention that the limitation period should be computed from the actual date of reply rather than the due date. The reasoning supplied was a Supreme Court precedent restricting the exclusion granted for filing a response. Any action taken beyond the surviving limitation period was held to be invalid.

Accordingly, the Tribunal quashed the reassessment proceedings for all three assessment years, holding that notices issued beyond the surviving limitation period were void ab initio and without authority of law.

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