ITAT Quashes Reassessment for AY 2015-16 as Section 148 Notice Issued After 1 April 2021 Was Time-Barred

The Income Tax Appellate Tribunal (ITAT) has quashed a reassessment order for the Assessment Year (AY) 2015-16 in the case of Akash Shah v. ACIT. The Tribunal found that the notice for reassessment, issued under Section 148 on 8 April 2021, was time-barred. This decision aligns with Supreme Court rulings stating that such notices issued on or after 1 April 2021 for AY 2015-16 are invalid due to limitations under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. Consequently, the Assessing Officer lacked the jurisdiction to proceed with the reassessment.

In the case of Akash Shah v. ACIT, the assessee had originally filed the income tax return declaring a total income of Rs. 5.51 lakh. The assessment was subsequently reopened based on information alleging that the assessee had obtained accommodation entries of Rs. 19.35 lakh and had provided an unsecured loan of Rs. 62 lakh for obtaining alleged bogus long-term capital gains. The reassessment was completed under Sections 147 read with 144B, and the total income was assessed at Rs. 86.87 lakh.

Before the ITAT, the assessee raised an additional legal ground challenging the validity of the reopening proceedings. It was contended that the notice issued under Section 148 on 8 April 2021 for AY 2015-16 was beyond the permissible period and, therefore, the reassessment proceedings were invalid.

The Tribunal relied on the Supreme Court’s decisions in Union of India v. Rajeev Bansal and Deepak Steel and Power Ltd. v. CBDT. The Supreme Court had recognised that, for AY 2015-16, notices issued on or after 1 April 2021 were required to be dropped as they could not be completed within the period prescribed under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA).

The ITAT also noted that the jurisdictional Gujarat High Court had followed the same principle and held that such notices were without authority of law.

Since the notice in the present case was issued on 8 April 2021, the Tribunal held that it was time-barred and that the Assessing Officer lacked jurisdiction to initiate reassessment proceedings. Consequently, the reassessment order dated 28 May 2023 was quashed.

As the reassessment itself was held to be invalid, the Tribunal did not consider the other grounds relating to the additions made in the assessment.

Key Takeaway: For AY 2015-16, a notice issued under Section 148 on or after 1 April 2021 is invalid in light of the applicable limitation period under TOLA. Where the reassessment notice is time-barred, the consequential reassessment order cannot survive.

Disclaimer: This AI-generated summary is for informational purposes only. Please view the attached original judgment for the complete text and authoritative interpretation.