Relief to Aditya Birla Sun Life Insurance: ITAT Quashes Reassessment Notice u/s 148 Issued Beyond Statutory Time Limit Under New Regime [Read Order]

In a recent ruling in the case of Aditya Birla Sun Life Insurance Co. Ltd., the Mumbai Bench of the Income Tax Appellate Tribunal has held that reassessment proceedings initiated beyond the statutory limitation period and without approval from the correct specified authority are invalid in law under the post–Finance Act, 2021 regime.

The Tribunal reiterated that compliance with sections 148, 148A and 151 of the Income Tax Act, 1961 is a requirement and not a mere procedural formality.

The ruling arose from cross appeals filed by the assessee and the Revenue against a consolidated order of the Commissioner of Income Tax (Appeals) for the assessment years 2015-16 and 2016-17. The assessee challenged the initiation of reassessment proceedings on the ground that the notices were barred by limitation and lacked valid sanction, while also contesting the additions made on merits.

The Revenue, on the other hand, contended that the reassessment notices were validly issued under the new regime and that the appellate authority had erred in quashing the proceedings on technical grounds.

The decision was rendered by the Bench comprising Saktijit Dey (Vice-President) and Padmavathy S (Accountant Member), who examined whether the jurisdictional conditions prescribed under the amended reassessment framework had been met.

For assessment year 2015-16, the assessee argued that the notice issued under Section 148 on July 28, 2022, was ex facie barred by limitation, as reassessment for that year could not be initiated on or after April 1, 2021, under the new regime. The Revenue sought to justify the notice by placing reliance on the extended timelines and the transition mechanism upheld in Union of India v. Ashish Agarwal.

The Tribunal rejected the Revenue’s contention, citing the legal position settled by the Supreme Court in Union of India v. Rajeev Bansal and subsequent Bombay High Court decisions, which clarified that notices for AY 2015-16 issued after April 1, 2021, are time-barred.

In respect of assessment year 2016-17, the assessee contended that the reassessment proceedings were vitiated as approval had been obtained from the Principal Commissioner of Income Tax instead of the Principal Chief Commissioner or Chief Commissioner, as mandated under Section 151(ii). The Revenue argued that the sanction was sufficient and if any defect was found, it was merely procedural.

The Tribunal rejected this plea and held that sanction from the correct authority is a substantive requirement, and approval from an authority lower than that prescribed in law cannot confer jurisdiction. The Bench further emphasised that the sanction requirement under section 151 serves a safeguard and any deviation from the statutory mandate renders the reassessment proceedings void ab initio.

Accordingly, the Bench dismissed the appeals filed by both the Revenue and the assessee for assessment years 2015-16 and 2016-17.

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