The Income Tax Appellate Tribunal, Delhi Bench 'A', has held that a notice issued under Section 148 of the Income Tax Act for Assessment Year 2015-16 on 5 April 2022 is time-barred under the Taxation and Other Laws (Relaxation of Certain Provisions) Act, 2021 (TOLA). The Tribunal followed the Supreme Court's ruling in Union of India v. Rajeev Bansal, which clarified that notices issued between 1 April 2021 and 30 June 2021 for assessment years 2013-14 to 2017-18 are governed by the revised three-year limitation period under TOLA. Since the notice in this case was issued after the expiry of this window, the entire assessment proceedings were set aside.
The Verdict
The appellant won. The core legal holding is that a notice under Section 148 of the Income Tax Act issued on or after 1 April 2021 for Assessment Year 2015-16 is time-barred under the three-year limitation prescribed by TOLA. The Tribunal quashed the notice and all consequential proceedings, rendering the assessment void. No further adjudication on other grounds was required.
Background & Facts
The assessee, an agriculturist, did not file an income tax return for Assessment Year 2015-16. Based on cash deposit information available on the department's insight portal, a notice under Section 148 was issued on 5 April 2022. The Assessing Officer proceeded to complete the assessment ex-parte under Section 144 read with Section 147, adding Rs. 68,22,990 as unexplained income under Sections 69A and 69. The assessee filed an appeal before the Commissioner of Income Tax (Appeals), but the appeal was also dismissed ex-parte due to non-compliance. The assessee then approached the Income Tax Appellate Tribunal.
Before the Tribunal, the assessee's counsel argued that the Section 148 notice was issued beyond the statutory limitation period. The Revenue did not dispute the date of issuance but relied on the lower authorities' orders. The Tribunal noted that the notice was issued after the expiry of the three-year window under TOLA, which had replaced the previous six-year limitation for reassessment in respect of the relevant assessment years.
The Legal Issue
The central question was whether a notice issued under Section 148 of the Income Tax Act on 5 April 2022 for Assessment Year 2015-16 falls within the permissible time limit under the amended provisions of the Act, as modified by TOLA, or whether it is time-barred.
Arguments Presented
For the Petitioner
The petitioner's counsel relied on the Supreme Court's judgment in Union of India v. Rajeev Bansal, which held that TOLA's three-year limitation under Section 149, as modified by Section 3(1) of TOLA, applies to notices issued between 1 April 2021 and 30 June 2021 for assessment years 2013-14 to 2017-18. The notice in this case was issued on 5 April 2022, which is beyond the extended period. The petitioner argued that the Revenue's reliance on the old regime was misplaced, as the new regime under the Finance Act 2021 had superseded it, and TOLA's relaxations were mandatory and not optional.
For the Respondent
The Revenue did not contest the timing of the notice but sought to uphold the lower authorities' orders on the basis of procedural non-compliance by the assessee. The Department's representative did not present any legal argument to counter the applicability of TOLA or the Supreme Court's precedent. The reliance was solely on the ex-parte assessments and the absence of submissions by the assessee, which the Tribunal found legally insufficient to override statutory limitation.
The Court's Analysis
The Tribunal conducted a statutory interpretation of Section 149 of the Income Tax Act as amended by the Finance Act 2021, read with Section 3(1) of TOLA. It emphasized that TOLA is a free-standing legislation that overrides any inconsistent provision in the Income Tax Act, including time limits for reassessment. The Supreme Court in Rajeev Bansal had explicitly held that for Assessment Year 2015-16, the last date for issuing a valid notice under the new regime was 30 June 2021. Any notice issued after that date, including on 5 April 2022, falls outside the limitation 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 TOLA."
The Tribunal noted that the Revenue's concession in the Supreme Court case was binding and that the Tribunal was bound to follow it. The fact that the assessee had not filed a return or submitted documents did not cure the jurisdictional defect of a time-barred notice. The principles of natural justice and fair opportunity cannot override the statutory bar on initiation of reassessment proceedings.
The Tribunal further held that once the notice is invalid, the entire assessment proceedings, including additions under Sections 69, 69A, and the application of Section 115BBE, are void ab initio. The Tribunal declined to examine the other grounds of appeal as they were rendered infructuous by the quashing of the notice.
What This Means For Similar Cases
This decision reinforces that the three-year limitation under TOLA is absolute and jurisdictional. Practitioners must now verify the date of issuance of any Section 148 notice against the TOLA timeline for assessment years 2013-14 to 2017-18. Notices issued after 30 June 2021 for these years are invalid, regardless of whether the assessee complied with procedural requirements. This provides a clear ground for challenging reassessments initiated beyond the TOLA window.
The ruling also clarifies that procedural defaults by the assessee, such as non-filing of returns or non-submission of documents, cannot validate a jurisdictionally defective notice. This shifts the burden squarely onto the Revenue to establish timely issuance. Practitioners should now routinely raise limitation as a preliminary objection in reassessment cases, even where the assessee appears to have been non-compliant.
The decision does not extend to assessment years prior to 2013-14 or after 2017-18, nor does it affect notices issued before 1 April 2021. However, for the five assessment years covered by TOLA, this judgment sets a definitive precedent.
