Reassessment Fails on Jurisdictional Clock: ITAT Bangalore Holds Limitation Overrides Section 148A Procedure

Background

The case concerned reassessment for Assessment Year 2015–16 against a non-resident individual who had invested in a Mumbai residential property. The tax department alleged that ₹76.70 lakh used for reinvestment represented unexplained income under Section 69, rejecting the assessee’s explanation that the amount was received as a gift from his sister. The Dispute Resolution Panel endorsed the addition, leading to a final assessment enhancing income to over ₹79 lakh. However, before examining the merits, the Tribunal addressed a foundational jurisdictional issue — whether the reassessment notice itself was legally sustainable. The notice under Section 148 was issued on 8 April 2022, after the six-year limitation period under the pre-Finance Act 2021 framework had expired on 31 March 2022. The Revenue argued that since the show-cause notice under Section 148A had been issued prior to that date, and time spent in the 148A process stood excluded, the reassessment remained valid.

The Tribunal decisively rejected this reasoning.

Relying on the Supreme Court’s interpretation in Rajeev Bansal, the Bench held that the first proviso to Section 149(1) operates as a jurisdictional barrier. If a reassessment was already time-barred under the old law, the new regime — including exclusions for 148A proceedings — cannot revive it. Limitation, the Tribunal observed, is not a procedural formality but a substantive condition precedent to reopening assessments. Since the statutory window had closed before issuance of the Section 148 notice, the entire reassessment collapsed, irrespective of the allegations on unexplained investment.

Accordingly, the Tribunal quashed the notice and the consequential assessment order, rendering all additions legally irrelevant.