The Income Tax Appellate Tribunal, Delhi, has definitively held that reassessment notices issued under Section 148 of the Income Tax Act for Assessment Year 2015-16 after 01.04.2021 are legally invalid, reinforcing the Supreme Court’s interpretation that the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) does not extend limitation periods under the old regime. This ruling provides critical clarity for taxpayers and revenue authorities alike on the temporal boundaries of reassessment powers.
Background & Facts
The Dispute
The appellant, Shailesh Kumar, filed his return of income for Assessment Year 2015-16 declaring an income of Rs. 18,18,380. The Assessing Officer (AO) initiated reassessment proceedings under Section 147 of the Income Tax Act, 1961, and passed an order on 30.05.2023, computing the income at Rs. 72,84,905. The appellant challenged this order before the Commissioner of Income Tax (Appeals)-29, who upheld the reassessment. The appellant then filed an appeal before the Income Tax Appellate Tribunal (ITAT), Delhi, contesting the validity of the reassessment proceedings on grounds of limitation.
Key Facts
- Assessment Year in question: 2015-16
- Original return filed with income of Rs. 18,18,380
- First notice under Section 148 issued on 05.04.2021
- Notice under Section 148A(b) issued on 02.06.2022
- Order under Section 148A(d) passed on 29.07.2022
- Second notice under Section 148 issued on 30.07.2022
- Assessment order passed on 30.05.2023
- Order of Ld. CIT(A) dated 28.03.2025 upholding reassessment
- Appeal filed before ITAT on grounds of limitation
Procedural History
- 05.04.2021: First notice under Section 148 issued
- 02.06.2022: Notice under Section 148A(b) issued following Supreme Court judgment in Union of India v. Ashish Agarwal
- 29.07.2022: Order under Section 148A(d) passed
- 30.07.2022: Second notice under Section 148 issued
- 30.05.2023: Reassessment order passed by AO
- 28.03.2025: Ld. CIT(A) dismissed appeal
- 26.02.2026: Hearing before ITAT
- 18.03.2026: ITAT judgment pronounced
The Parties' Positions
For the Appellant
The appellant contended that the reassessment proceedings were initiated beyond the statutory limitation period prescribed under Section 149(1)(b) of the Income Tax Act, which allowed six years from the end of the relevant assessment year for reassessment in cases involving income escaping assessment. For AY 2015-16, the limitation expired on 31.03.2021. The notice issued on 05.04.2021 was therefore time-barred. The appellant relied on the Supreme Court’s judgment in Union of India v. Rajeev Bansal (2024 SCC OnLine SC 2693), which held that TOLA does not extend limitation periods for reassessment notices issued under the old regime for AY 2015-16, as the original limitation had already expired before the TOLA period (20.03.2020 to 31.03.2021).
For the Respondent
The Departmental Representative argued that the reassessment proceedings were validly initiated and that the notices were issued within the extended time frame under TOLA. The Department relied on the orders of the lower authorities and contended that the issuance of notices under Section 148A and subsequent Section 148 notice on 30.07.2022 cured any procedural defect.
Relief Sought
The appellant sought quashing of the reassessment order dated 30.05.2023 and the order of the Ld. CIT(A) dated 28.03.2025, on the ground that the entire reassessment proceedings were void ab initio due to the time-barred issuance of the notice under Section 148.
The Legal Issue
The central question was whether a reassessment notice issued under Section 148 of the Income Tax Act for Assessment Year 2015-16 on or after 01.04.2021 is valid, given that the limitation period under Section 149(1)(b) had expired on 31.03.2021, and whether the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) could extend this limitation.
Arguments Presented
For the Appellant
The appellant relied on the binding precedent of the Supreme Court in Union of India v. Rajeev Bansal (2024 SCC OnLine SC 2693), which held that TOLA applies only to actions whose limitation period expired between 20.03.2020 and 31.03.2021. For AY 2015-16, the six-year limitation under Section 149(1)(b) expired on 31.03.2021, meaning any notice issued after that date, including on 05.04.2021, was beyond the statutory period. The appellant further cited Deepak Steel and Power Ltd. v. CBDT [2025] 174 taxmann.com 144 (SC), where the Supreme Court reiterated the Revenue’s concession that notices for AY 2015-16 issued on or after 01.04.2021 must be dropped. The Delhi High Court in MakeMyTrip India (P.) Ltd. v. DCIT [2025] 173 taxmann.com 497 also confirmed that notices issued after 31.03.2021 for AY 2015-16 are invalid.
For the Respondent
The Department contended that the issuance of notices under Section 148A and the subsequent notice on 30.07.2022 demonstrated procedural compliance and that the reassessment was initiated in good faith. It argued that TOLA’s non-obstante clause under Section 3(1) could be interpreted to extend the limitation period, even for AY 2015-16, given the administrative disruptions caused by the pandemic. However, it did not dispute the applicability of Rajeev Bansal but sought to distinguish the facts on procedural grounds.
The Court's Analysis
The Tribunal meticulously examined the Supreme Court’s judgment in Union of India v. Rajeev Bansal and found that the Revenue itself had conceded in paragraph 19(f) that for Assessment Year 2015-16, all notices issued on or after 01.04.2021 must be dropped, as they fall outside the scope of TOLA. The Court in Rajeev Bansal held that Section 3(1) of TOLA operates only where the original limitation expired between 20.03.2020 and 31.03.2021. For AY 2015-16, the limitation expired on 31.03.2021, meaning the notice issued on 05.04.2021 was beyond the statutory period.
"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 Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020."
The Tribunal further noted that the subsequent notice issued on 30.07.2022 could not cure the initial invalidity, as the jurisdiction to initiate reassessment was lost upon the expiry of limitation. The Tribunal emphasized that TOLA does not revive or extend the original limitation period under Section 149(1)(b) for old regime cases; it merely provides a grace period for actions whose deadlines fell within the pandemic window. The Delhi High Court’s decision in MakeMyTrip India was also cited as authoritative confirmation of this principle.
The Tribunal rejected the Department’s argument that procedural compliance under Section 148A validated the notice, holding that jurisdictional defects cannot be cured by subsequent steps. The entire reassessment proceedings, including the order dated 30.05.2023, were therefore void.
The Verdict
The appeal of the assessee was allowed. The ITAT quashed the reassessment order dated 30.05.2023 and the order of the Ld. CIT(A) dated 28.03.2025. The Tribunal held that the notice under Section 148 issued on 05.04.2021 was time-barred and that the entire reassessment proceedings were without jurisdiction. The assessment for AY 2015-16 stands restored to the original return filed by the assessee declaring income of Rs. 18,18,380.
What This Means For Similar Cases
Reassessment Notices After 01.04.2021 for AY 2015-16 Are Per Se Invalid
- Practitioners must immediately challenge any reassessment notice issued for AY 2015-16 on or after 01.04.2021 on grounds of limitation
- The Revenue cannot rely on Section 148A compliance to validate an otherwise time-barred notice
- Any assessment order based on such a notice is void ab initio and must be quashed
TOLA Does Not Extend Old Regime Limitations
- TOLA’s relaxation under Section 3(1) applies only to limitations expiring between 20.03.2020 and 31.03.2021
- For AY 2015-16, the six-year limitation expired on 31.03.2021 - no extension is permissible
- The Revenue’s concession in Rajeev Bansal is binding and cannot be circumvented by procedural arguments
Jurisdictional Defects Cannot Be Curated
- A notice issued without jurisdiction cannot be cured by subsequent steps such as Section 148A proceedings
- The doctrine of curative jurisdiction does not apply to fundamental jurisdictional defects
- Taxpayers should file writ petitions or appeals at the earliest to avoid estoppel or laches
