Loading judgment…
Facts
The assessee filed an appeal against an order of the National Faceless Appeal Centre. The core issue was the validity of the reassessment order passed under Section 147 of the Income Tax Act, challenged on grounds of limitation.
Held
The Tribunal held that the notice for reopening the assessment under Section 148 was issued beyond the six-year limitation period applicable under the old regime, rendering the reassessment order void ab initio.
Key Issues
Whether the reassessment notice issued under Section 148 of the Income Tax Act for AY 2015-16, after the expiry of six years from the end of the assessment year, is barred by limitation.
Sections Cited
147, 144B, 148, 143(3), 149, 151
AI-generated summary — verify with the full judgment below
Detected automatically from the text. The count shows how many other judgments on BharatTax rely on the same authority.
Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
O R D E R
Per Saktijit Dey, Vice President:
This is an appeal by the assessee against order dated 30.04.2025 passed by National Faceless Appeal Centre (NFAC), Delhi for the Assessment Year (AY) 2015-16.
In Ground No.1, the assessee has raised a crucial legal and jurisdictional issue challenging the validity of the assessment order dated 26.05.2023 passed under Section (u/s.) 147 r.w.s. 144B of the Income Tax Act, 1961 (in short the ‘Act’).
We have heard the parties and perused the materials on record. It is the say of the assessee that the impugned assessment order is barred by limitation as the Assessing Officer (AO) had no power to reopen the assessment u/s. 147 of the Act after expiry of six years from the end of the relevant assessment year i.e. A.Y. 2015- 16. In support of such contention, learned counsel relied upon the following decisions: -
1. 1. Union of India vs. Rajeev Bansal [2024] 167 taxmann.com 70 (SC).
2. Income Tax Officer vs. Warasgaon Lake View Hotels Ltd., dated 20.06.2025.
3. SKF India Ltd. Vs. DCIT, dated 16.05.2025.
Per contra, learned Departmental Representative (DR) submitted that under the new regime of Section 147 of the Act introduced by Finance Act, 2021 w.e.f. 01.04.2021, the AO has power to reopen the assessment before expiry of 10 years from the end of the relevant assessment year. Thus, he submitted, the notice issued u/s. 148 of the Act is within the period of limitation, hence, the assessment order cannot be held as invalid.
We have considered rival submissions and perused materials on record. Before proceeding to decide the specific issue arising for consideration, it is necessary to bear in mind the following chronological events: -
1. 1. 29.09.2015-return of income filed for Assessment Year 2015-16. 2. 29.07.2022-assessment order passed u/s. 143(3) of the Act. 3. 29.07.2022-notice u/s. 148 issued.
6. Keeping in perspective, the aforesaid chronological events, the issue that needs to be decided is whether, the impugned assessment order passed is barred by limitation. It is the case of the assessee that the notice u/s. 148 of the Act ought to have been issued prior to expiry of six years from the end of the relevant assessment year as assessee’s case is covered under the old regime of Section 147 of the Act hence, six years limitation would apply. Whereas, it is the case of the Department that the AO has power to reopen the assessment before expiry of ten years from the end of the relevant assessment year as per the new regime of Section 147 of the Act.
In our view, the issue is no more res integra in view of the ratio laid down by the Hon’ble Supreme Court in case of Union of India vs. Rajeev Bansal (supra). While dealing with identical issue as is under consideration now before us, the Hon’ble Supreme Court has held as under:-
“18. The present batch of appeals gives rise to the following issues: a. Whether TOLA and notifications issued under it will also apply to reassessment notices issued after 1 April 2021; and b. Whether the reassessment notices issued under Section 148 of the new regime between July and September 2022 are valid. C. Submissions 19. Mr N Venkataraman, learned Additional Solicitor General of India, made the following submissions on behalf of the Revenue: a. Parliament enacted TOLA as a free-standing legislation to provide relief and relaxation to both the assesses and the Revenue during the time of COVID-19. TOLA seeks to relax actions and proceedings that could not be completed or complied with within the original time limits specified under the Income Tax Act; b. Section 149 of the new regime provides three crucial benefits to the assesses: (i) the four-year time limit for all situations has been reduced to three years; (ii) the first proviso to Section 149 ensures that re-assessment for previous assessment years cannot be undertaken beyond six years; and (iii) the monetary threshold of Rupees fifty lakhs will apply to the re- assessment for previous assessment years; c. The relaxations provided under Section 3(1) of TOLA apply “notwithstanding anything contained in the specified Act.” Section 3(1), therefore, overrides the time limits for issuing a notice under Section 148 read with Section 149 of the Income Tax Act; d. TOLA does not extend the life of the old regime. It merely provides a relaxation for the completion or compliance of actions following the procedure laid down under the new regime; e. The Finance Act 2021 substituted the old regime for re-assessment with a new regime. The first proviso to Section 149 does not expressly bar the application of TOLA. Section 3 of TOLA applies to the entire Income Tax Act, PART C including Sections 149 and 151 of the new regime. Once the first proviso to Section 149(1)(b) is read with TOLA, then all the notices issued between 1 April 2021 and 30 June 2021 pertaining to assessment years 2013-2014, 2014- 2015, 2015-2016, 2016-2017, and 2017-2018 will be within the period of limitation as explained in the tabulation below: Assessment Within 3 years Expiry of Within six years Expiry of Year Limitation read Limitation with TOLA for (2) read with TOLA for (4) (1) (2) (3) (4) (5)_ 2013-2014 31.03.2017 31.03.2020 30.06.2021 TOLA not applicable 2014-2015 31.03.2018 TOLA not 31.03.2021 30.06.2021 applicable 2015-2016 31.03.2019 TOLA not 31.03.2022 TOLA not applicable applicable 2016-2017 31.03.2020 30.06.2021 31.03.2023 TOLA not applicable 2017-2018 31.03.2021 30.06.2021 31.03.2024 TOLA not applicable f. The Revenue concedes that for the assessment year 2015-16, all notices issued on or after 1 April 2021 will have to be dropped as they will not fall for completion during the period prescribed under TOLA; g. Section 2 of TOLA defines “specified Act” to mean and include the Income Tax Act. The new regime, which came into effect on 1 April 2021, is now part of the Income Tax Act. Therefore, TOLA continues to apply to the Income Tax Act even after 1 April 2021; and h. Ashish Agarwal (supra) treated Section 148 notices issued by the Revenue between 1 April 2021 and 30 June 2021 as show-cause notices in terms of Section 148A(b). Thereafter, the Revenue issued notices under Section 148 PART C of the new regime between July and August 2022. Invalidation of the Section 148 notices issued under the new regime on the ground that they were issued beyond the time limit specified under the Income Tax Act read with TOLA will completely frustrate the judicial exercise undertaken by this Court in Ashish Agarwal (supra).”
As could be seen from the aforesaid observations of Hon’ble Supreme Court, learned Additional Solicitor General of India (ASG) appearing for the Revenue had conceded that in so far as Assessment Years (AYs) 2013-14 to 2015-16 are concerned, the period of limitation of six years provided under the old regime would apply and Taxation and Other Laws (Relaxation of Certain Provisions) [Ordinance 2020] (in short ‘TOLA’) would not extend the limitation beyond the period of six years. That being the legal position, the period of limitation for reopening of assessment for A.Y. 2015-16 expired on 31.03.2022. Even, the other decisions of the Coordinate Benches cited by learned counsel for the assessee (Supra) express similar view. In the facts of the present case, admittedly, the notice u/s. 148 of the Act was issued on 29.07.2022 after expiry of six years from the end of the impugned assessment year. That being the case, the proceedings are evidently barred by limitation, hence void ab initio. In view of the aforesaid, we are inclined to quash the impugned assessment order. Consequently, the order passed by learned First Appellate Authority is set aside.
In view of our decision above, the other issues raised by the assessee, having become redundant for the purpose of present appeal, are kept upon.
In the result, appeal is allowed as indicated above.
Order pronounced in the open court on 04/09/2025.