Notice u/s 148 Held Time-Barred: ITAT quashes Income Tax Reassessment Proceedings as Void [Read Order]
The Tribunal observing that the statutory deadline under Section 149 had already lapsed on March 31, 2022, found the reassessment notice issued on July 29, 2022, to be invalid.
ITAT - quashes - Income Tax - Reassessment - taxscan
ITAT - quashes - Income Tax - Reassessment - taxscan
The Income Tax Appellate Tribunal (ITAT), Delhi has held that a reassessment notice issued under Section 148 of the Income Tax Act, 1961, beyond the statutory limitation period is unsustainable. Accordingly, the Tribunal quashed a July 29, 2022 notice for Assessment Year 2015–16 and held the resulting reassessment proceedings to be void ab initio.
The assessee, Harish Kumar had originally filed his return of income for Assessment Year 2015–16 declaring income of ₹11,86,80,770. The case was subsequently reopened for reassessment on the basis of information flagged under the Central Board of Direct Taxes’ (CBDT) Risk Management Strategy.
The Assessing Officer (AO), vide order under Section 147 read with Section 144B dated 29.05.2023, determined income at ₹36,24,74,243after disallowing short-term capital loss under Section 94(7) of the Income Tax Act, 1961.
When challenged, the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [ CIT(A) ], partly allowed the appeal. Both the assessee and the revenue approached the Tribunal in cross appeals.
The appellant, represented by Sanjay Agarwal and Sumaksh Mahajan, argued that the notice issued on July 29, 2022, under Section 148 of the Income Tax Act, 1961, was barred by limitation as per the proviso to Section 149(1). It was submitted that the limitation for issuance of notice expired on 31.03.2022, and any notice issued thereafter was void ab initio.
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Reliance was placed on Delhi High Court’s ruling in Ibibo Group Private Limited v. Assistant Commissioner of Income Tax (2022) and the Supreme Court’s judgment in Union of India v. Rajeev Bansal (2024), wherein it was clarified that for Assessment Year 2015–16, any notices issued after 01.04.2021 would not survive. Accordingly, they prayed for quashing of the reassessment proceedings and the resultant order.
The revenue authorities, represented by Surender Pal, argued that the order of the CIT(A) was correct in dismissing the limitation plea raised by the assessee. It was contended that the notice and reassessment were validly issued within the framework of the Finance Act, 2021 and the Supreme Court ruling in Union of India v. Ashish Agarwal (2022).
The Bench comprising of Mahavir Singh, Vice President and Manish Agarwal, Accountant Member observed that the limitation period had expired on March 31, 2022, and that the subsequent issuance of notice on July 29, 2022, was clearly beyond the permissible timeframe under Section 149 of the Act.
The Tribunal quashed the reassessment proceedings and held that the notice was barred by limitation. Consequently, the assessment order passed on May 29, 2023, was also declared void ab initio.
Thus, the assessee’s appeal was partly allowed.
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