ITAT Quashes Reassessment Notices Without Following Section 148A Procedure

M/s. Desu Enterprises and Shri Thalla Srisailam Goud challenged reassessment orders for AYs 2015-16 and 2013-14 passed under Section 147 pursuant to notices under Section 148 dated 31.03.2021. However, Income Tax portal records and email logs showed that the notices were actually issued and communicated on 01.04.2021.

The Assessing Officer did not follow the mandatory pre-notice procedure under Section 148A, which became effective from 01.04.2021 under the Finance Act, 2021.

Main Issue: Whether a reassessment notice communicated on 01.04.2021, though dated 31.03.2021, is governed by the amended reassessment regime requiring compliance with Section 148A.

ITAT’s Order: The Hon’ble ITAT held that for the purposes of Sections 148 and 149, the decisive date is the date on which the notice is actually issued or communicated electronically to the assessee, and not the date printed on the notice or its internal generation on the ITBA portal. Since the notices in question were communicated on 01.04.2021, they were governed by the substituted reassessment provisions introduced by the Finance Act, 2021.

The Tribunal observed that compliance with Section 148A is mandatory under the new regime and that the Assessing Officer had admittedly not followed the prescribed procedure before issuing the reassessment notices. This non-compliance rendered the notices invalid in law.

Thus, the Tribunal held that the notices under Section 148 were void ab initio and quashed the later reassessment orders passed under Section 147. Having decided the appeals on the jurisdictional issue, the Tribunal left all other grounds, including those on the merits of the additions, open.

Both appeals were allowed in full.

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