ITAT Bangalore Quashes Reassessment for AY 2015–16 as Time-Barred Despite Section 148A Compliance

Background

The Income Tax Appellate Tribunal has set aside reassessment proceedings initiated against Arun Duraiswamy for Assessment Year 2015–16, holding that the notice issued under Section 148 of the Income Tax Act was barred by limitation and void ab initio. The assessee, a non-resident employed overseas, had not filed a return for the relevant year, citing absence of taxable income in India. The Assessing Officer reopened the assessment in April 2022 after following the procedure under Section 148A, alleging unexplained investment in a residential property and credit card expenditure. Additions were made under Sections 69 and 69C aggregating over ₹9.4 lakh, largely relating to amounts received from the assessee’s mother-in-law and alleged unexplained spending.

Outcome

Before the Tribunal, the assessee raised a jurisdictional challenge, contending that the reassessment notice dated 29 April 2022 was issued after expiry of the six-year limitation period applicable under the pre-Finance Act 2021 regime, which ended on 31 March 2022 for AY 2015–16. Accepting the plea, the Bench relied extensively on the Supreme Court’s ruling in Union of India v. Rajeev Bansal, which clarified that reassessment notices for past assessment years can survive under the new regime only if they were still within the limitation period prescribed under the old law. Once the earlier six-year window had expired, the first proviso to Section 149(1) operates as a complete bar.

The Tribunal further held that procedural compliance with Section 148A — including issuance of show cause notice and passing of order under Section 148A(d) — cannot cure a fundamental defect of limitation.

Accordingly, the reassessment notice and consequential assessment order were quashed, rendering all additions academic.