ITAT Quashes Reassessment as Section 148 Notice Issued Beyond Six-Year Limitation:

The assessee is Ramashish Rajbali Yadav who is an individual engaged in dairy farming through his proprietary concern R.R. Dairy Farm, had not filed a return of income for AY 2015-16. Information received through the INSIGHT Portal indicated financial transactions including purchase of immovable property of Rs.45 lakh, cash deposits of Rs.39 lakh and interest income of Rs.7,527. Based on the information, notice under Section 148 was issued in April 2022.

During reassessment proceedings, he explained that the bank account containing the cash deposits was held jointly with his wife and that the deposits were attributable to her. He also submitted that the Rs.45 lakh property investment was funded from the sale of livestock by his dairy business The AO, however, treated the bank-account credits aggregating to Rs.84,35,406 as unexplained money under Section 69A read with Section 115BBE. The Rs.45 lakh property investment was treated as unexplained investment under Section 69 read with Section 115BBE, while Rs.25 lakh was initially added under Section 68 in respect of an unsecured loan and Rs.7,527 was assessed as income from other sources under Section 56. 

The CIT(A) partly deleted the Rs.25 lakh addition under Section 68 but sustained the other additions.

Before the Tribunal, the assessee raised a preliminary objection to the validity of the reassessment itself. He submitted that the notice under Section 148 had been issued on 18 April 2022, whereas AY 2015-16 ended on 31 March 2016. Thus, the notice was issued after expiry of six years from the end of the relevant assessment year. The assessee relied upon the Supreme Court's decision in Union of India v. Rajiv Bansal Case  and argued that the first proviso to Section 149(1) preserved the limitation under the erstwhile Section 149(1)(b) for earlier assessment years. 

The Tribunal noted that the notice under Section 148 was admittedly issued on 18 April 2022 for AY 2015-16, more than six years after the end of the relevant assessment year. It examined Section 149 as applicable from 1 April 2021 and particularly the first proviso to Section 149(1), which requires limitation for earlier assessment years to be tested with reference to the provisions as they stood immediately before the Finance Act, 2021.

Accordingly, the Tribunal held that the notice dated 18 April 2022 was issued beyond the prescribed six-year limitation. Therefore, the notice was barred by limitation and could not validly confer jurisdiction upon the AO. The appeal filed by the assessee was accordingly allowed.