The Principal Commissioner of Income tax- 1, vs. M/s.Clan Laboratories Private Limited,

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TCA/23/2026HC Madras30 September 2026Bench: Honourable The CHIEF JUSTICE6 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the reassessment notice issued to the assessee for Assessment Year 2015-2016 was barred by time. The Court's reasoning was based on its previous judgment in W.A.No.1925 of 2026, which dealt with a similar issue for the same assessment year. In that case, it was held that if reassessment steps, including notices, are taken after the cut-off date of 01.04.2021, the entire reassessment exercise is out of time and unsustainable in law. The Court noted that in the present case, a notice was issued on 01.04.2021 under the old regime, and the impugned order was passed on 30.05.2023 under the new regime, which is well after the cut-off date. Therefore, the issue was squarely covered by the precedent. The appeal was dismissed, and the impugned order of the Tribunal was set aside, quashing the notices and the order. No costs were awarded.

What were the facts?

The Principal Commissioner of Income Tax-1, Chennai (Revenue) filed an appeal against the order of the Income Tax Appellate Tribunal, Madras B Bench, Chennai, dated 11.08.2025, in ITA No.2303/Chny/2024, pertaining to Assessment Year 2015-2016. The appeal challenges the validity of a re-assessment notice issued to M/s.Clan Laboratories Private Limited (Assessee). The core of the dispute revolves around whether this re-assessment notice was issued within the prescribed time limits. The High Court noted that a similar issue was previously decided by it in W.A.No.1925 of 2026, which dealt with reassessment notices for the same Assessment Year 2015-2016.

What were the issues?

1. Whether the re-assessment notice issued to the respondent for the Assessment Year 2015-16 is barred by time, turning on the provisions related to reassessment timelines under the Income Tax Act, 1961, as amended by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. Assessee's Contention: The judgment does not explicitly record the assessee's arguments. However, the context implies the assessee argued that the reassessment proceedings were time-barred. Revenue's Contention: The Revenue, through its counsel, relied on the Supreme Court's decision in Union of India v. Rajeev Bansal (2024 SCC Online SC 2693), specifically paragraph 19(f), which acknowledged that for Assessment Year 2015-2016, any notice issued on or after 01.04.2021 should be dropped as such actions would not fall within the period prescribed by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA). The Revenue conceded that the controversy was squarely governed by this decision.

Which sections of the Income-tax Act were involved?

Section 260A,Section 148A(b)

AI-generated summary — verify with the full judgment below

T.C.A.No.23 of 2026 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 30.09.2026 CORAM THE HONOURABLE MR. SUSHRUT ARVIND DHARMADHIKARI, CHIEF JUSTICE AND THE HONOURABLE MR.JUSTICE G.ARUL MURUGAN T.C.A.No.23 of 2026 CNR:{HCMA010064122026} The Principal Commissioner of Income Tax- 1, Chennai -600 034. Appellant(s) Vs M/s.Clan Laboratories Private Limited, No.5/A5, Third Cross Road, IT Park, Siruseri, Chennai -603 103. Respondent(s) Prayer :Appeal filed under Section 260A of the Income Tax Act, 1961, against the order of Income Tax Appellate Tribunal, Madras B Bench, Chennai, dated 11.08.2025, passed in I.T.A.No.2303/Chny/2024. _________ Page 1 of 6 https://www.mhc.tn.gov.in/judis ( Uploaded on: 14/10/2026 12:36:41 pm ) T.C.A.No.23 of 2026 For Appellant(s): Mr.T.Ravi Kumar Senior Standing Counsel & Mr.Umesh Rao Junior Standing Counsel For Respondent(s): Mr.A.K.Sriraman JUDGMENT (Judgment of the Court was delivered by the Hon'ble Chief Justice) The present tax appeal is directed against the order dated 11.08.2025 in ITA No.2303/CHNY/2024 for the assessment year 2015- 2016. 2. The issue raised in this appeal is whether the re-assessment notice issued to respondent for the Assessment Year 2015-16 is barred by time. 3. Similar issue was considered by this Court in W.A.No.1925 of 2026 (between Shanmugha Arts, Science Technology and Research Academy, rep. by its Trustee and Vice-Chancellor and ACIT (Exemptions) and ors.). Vide judgment dated 16.07.2026, the writ appeal was allowed on the ground that when the first notice was _________ Page 2 of 6 https://www.mhc.tn.gov.in/judis ( Uploaded on: 14/10/2026 12:36:41 pm ) T.C.A.No.23 of 2026 issued on 12.04.2021 and the subsequent notice under Section 148A(b) was issued on 31.03.2022 culminating in the order dated 02.05.2022 and since all these steps pertaining to the Assessment Year 2015-16 were taken well after the cut-off date of 01.04.2021, the entire re-assessment exercise is clearly out of time and completely unsustainable in law. The said judgment in W.A.No.1925 of 2026 is reproduced below: “This appeal is directed against the order dated 3.6.2026, passed by the learned Single Judge in W.P.No.29752 of 2023. By the impugned order, the learned Single Judge dismissed the appellant’s challenge to the reassessment notices and the consequential order issued under the Income Tax Act, 1961, holding that the proceedings were initiated within the period of limitation. 2. The issue raised before us is whether the reassessment notices issued to the appellant for the Assessment Year 2015-2016 are barred by time. 3. At the threshold, learned Additional Solicitor General submitted that the statutory boundary lines for reopening past assessments were comprehensively examined by the Supreme Court in Union of India v. Rajeev Bansal1. He drew our attention to paragraph 19(f) of the decision in Rajeev Bansal (supra), wherein 1 2024 SCC Online SC 2693 _________ Page 3 of 6 https://www.mhc.tn.gov.in/judis ( Uploaded on: 14/10/2026 12:36:41 pm ) T.C.A.No.23 of 2026 the Supreme Court explicitly recorded the stance of the Revenue regarding the specific timeline applicable to the Assessment Year 2015-2016. It was acknowledged that for the Assessment Year 2015-2016, any notice issued on or after 1.4.2021 must be dropped, as such actions would not fall for completion during the period prescribed under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA). 4. Learned Additional Solicitor General fairly conceded that the controversy in the present appeal is squarely governed by the aforesaid decision of the Supreme Court. It is admitted that since the underlying dispute relates to the Assessment Year 2015-2016 and all notices were issued after 1.4.2021, the same will not survive the test of limitation and must be dropped. 5. In the present case, the first notice was issued on 12.4.2021, and the subsequent notice under Section 148A(b) of the Act was issued on 31.3.2022, culminating in the order dated 2.5.2022. Since all these steps pertaining to the Assessment Year 2015- 2016 were taken well after the cut-off date of 1.4.2021, the entire reassessment exercise is clearly out of time and completely unsustainable in law. 6. As a sequel, the appeal is allowed. The impugned order passed by the learned Single Judge dated 3.6.2026 is set aside. The notices dated _________ Page 4 of 6 https://www.mhc.tn.gov.in/judis ( Uploaded on: 14/10/2026 12:36:41 pm ) T.C.A.No.23 of 2026 12.4.2021 and 31.3.2022 as well as the order dated 2.5.2022 are hereby quashed. There shall be no order as to costs. Connected interim application stands closed.” 4. In the present case, the notice was issued on 01.04.2021 under the old regime and thereafter, the impugned order was passed on 30.05.2023 under the new regime, which is well after the cut-off date of 01.04.2021. Therefore, the issue is squarely covered by the aforesaid decision of this Court in W.A.No.1925 of 2026. 5. In view of the above, this tax case appeal is dismissed. There shall be no order as to costs. (SUSHRUT ARVIND DHARMADHIKARI,CJ) (G.ARUL MURUGAN,J)

30.09.2026 Index : Yes/No Neutral Citation : Yes/No kpl

_________ Page 5 of 6 https://www.mhc.tn.gov.in/judis ( Uploaded on: 14/10/2026 12:36:41 pm ) T.C.A.No.23 of 2026 THE HON'BLE CHIEF JUSTICE AND G.ARUL MURUGAN,J. (kpl) T.C.A.No.23 of 2026

30.09.2026 _________ Page 6 of 6 https://www.mhc.tn.gov.in/judis ( Uploaded on: 14/10/2026 12:36:41 pm )

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