ITAT Mumbai Quashes Reassessment as Time-Barred; Applies ‘Surviving Time’ Principle Under Section 148

Key Facts and Tribunal Findings

The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, allowed the cross-objection of the assessee, Kumar Ishwarlal Doshi, and held that reassessment proceedings initiated under Sections 147/148 for Assessment Year 2013–14 were time-barred.

The Revenue had challenged deletion of an addition of ₹2.15 crore made under Section 69A on account of alleged unexplained money received from entities linked to the Gautam Jain Group. However, the Tribunal first addressed the legal issue raised in the assessee’s cross-objection regarding validity of reassessment.

The assessee contended that the notice under Section 148 dated 21 July 2022 was issued beyond the permissible limitation period, applying the principles laid down by the Supreme Court in Union of India v. Rajeev Bansal. It was argued that after accounting for the extended timelines under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act (TOLA) and the legal fiction created in Ashish Agarwal, only a limited “surviving period” remained for issuance of notice.

The Tribunal noted that the original notice under the old regime was issued on 25 June 2021, leaving only five days of limitation. After excluding periods as mandated under law and considering the date of reply filed by the assessee on 6 July 2022, the Tribunal held that the notice under Section 148 ought to have been issued by 11 July 2022.

Since the notice was issued on 21 July 2022, beyond the permissible timeframe, the Tribunal held it to be barred by limitation.

Accordingly, the reassessment proceedings were quashed, rendering the Revenue’s grounds on merits academic.

Legal Analysis

The Tribunal reaffirmed that reassessment proceedings under the new regime must strictly comply with limitation provisions under Section 149, as interpreted by the Supreme Court in Rajeev Bansal. It emphasised that the concept of “surviving time” post-TOLA and Ashish Agarwal must be carefully computed, and any notice issued beyond such period is jurisdictionally invalid.