ITAT Quashes Time-Barred Reassessment Notice Issued Beyond Limitation Period:

ITAT Quashes Time-Barred Reassessment Notice Issued Beyond Limitation Period

The ITAT Delhi held that the reassessment proceedings initiated for AY 2013-14 were without jurisdiction as the notice issued under Section 148 on 21 July 2022 was barred by limitation in view of the Supreme Court's ruling in Union of India v. Rajeev Bansal, and accordingly quashed the reassessment.

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has quashed the reassessment proceedings initiated against Attractive Impex Pvt. Ltd. for Assessment Year 2013-14 after holding that the notice issued under Section 148 was time-barred and, therefore, without jurisdiction.

The assessee had originally filed its return declaring nil income. The case was reopened on the basis of information that the company had advanced an unsecured loan of Rs 1.74 crore to another company. Following proceedings under Sections 148A(b) and 148A(d), the Assessing Officer issued a notice under Section 148 on 21 July 2022 and completed the reassessment by making an addition of Rs 74 crore under Section 68. The CIT(A) upheld the reassessment and the addition.

Before the Tribunal, the assessee raised an additional legal ground challenging the very validity of the reassessment on the ground that the notice under Section 148 was issued beyond the limitation period prescribed under Section 149 of the Income-tax Act. Relying on the Supreme Court's judgement in Union of India v. Rajeev Bansal, the assessee argued that the reassessment proceedings initiated under the amended provisions could not survive once the limitation had expired.

The Tribunal admitted the additional legal ground, observing that it was a pure question of law requiring no further investigation of facts. It noted that, in light of the Supreme Court's interpretation of the amended reassessment provisions and the operation of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA), the six-year limitation applicable to AY 2013-14 had already expired before the notice under Section 148 was issued on 21 July 2022.

The Tribunal also referred to its earlier decision in Deepak Agarwal v. DCIT, where reassessment notices issued after the permissible limitation period were similarly quashed following the Supreme Court's ruling in Rajeev Bansal.

Holding that the notice under Section 148 dated 21 July 2022 was issued beyond the statutory period prescribed under Section 149, the Tribunal concluded that the reassessment proceedings were void ab initio and liable to be quashed. Since the reassessment itself was held to be invalid, the Tribunal did not consider it necessary to examine the merits of the addition made under Section 68.

Accordingly, the appeal of the assessee was allowed.