ITAT Delhi on Time-Barred Reassessment: Notice under Section 148 Issued Beyond Limitation Period Invalid.

Headnote:

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) quashed reassessment proceedings initiated under Section 148 of the Income Tax Act, 1961, holding that the notice issued on 28/29 June 2022 was beyond the limitation period prescribed under Section 149, as interpreted by the Supreme Court in Union of India v. Rajeev Bansal (2024). The Tribunal held that reassessment based solely on DRI information and issued beyond statutory time limits was invalid and void ab initio.

Background:

1. The assessee, Genesis Associates Pvt. Ltd., engaged in furniture trading, filed a return declaring a loss of ₹2.87 lakh for AY 2013–14.
2. Based on a DRI show cause notice alleging undervaluation of imports and customs duty evasion of ₹10.05 crore, the Assessing Officer reopened assessment under Section 147 and added ₹10.05 crore as unexplained expenditure under Section 69C r.w.s. 115BBE.
3. The CIT(A)/NFAC deleted the addition, finding that the reassessment relied solely on a DRI notice rendered invalid after Canon India Pvt. Ltd. v. Commissioner of Customs (2021) and that no independent material existed.

Court’s Observations:

1. The ITAT examined whether the Section 148 notice dated 28/29 June 2022 was within limitation for AY 2013–14.
2. Referring to Union of India v. Rajeev Bansal (2024) and Ram Balram Buildhome Pvt. Ltd. v. ITO (Delhi HC, 2024), it held that the outer limit for reopening AY 2013–14 assessments expired on 5 June 2022.
3. Thus, the notice issued after that date was time-barred under the amended Section 149(1).
4. The Tribunal further held that since reassessment was founded solely on DRI proceedings, which were themselves invalid, there was no live link between the information and alleged income escapement.
5. Consequently, the reassessment proceedings were void ab initio.

Legal Provisions Discussed:

1. Section 147, Income Tax Act, 1961 – Income escaping assessment.
2. Section 148, Income Tax Act, 1961 – Issue of notice for reassessment.
3. Section 149, Income Tax Act, 1961 – Time limit for issuance of notice.
4. Section 69C, Income Tax Act, 1961 – Unexplained expenditure.
5. Section 115BBE, Income Tax Act, 1961 – Tax on income referred under certain sections.

Final Order

1. Assessee’s Appeal (ITA No. 952/Del/2024): Allowed.
2. Revenue’s Appeal (ITA No. 1084/Del/2024): Dismissed as infructuous.
3. Held that the reassessment notice was time-barred, rendering the proceedings invalid and unsustainable in law.

Citation: 2025:ITAT:DEL:1113

Case: Genesis Associates Pvt. Ltd. v. Assessment Unit, Income Tax Department

Court: Income Tax Appellate Tribunal, Delhi Bench “B”

Coram: Ms. Madhumita Roy (Judicial Member) & Shri Naveen Chandra (Accountant Member)

Date of Decision: 13 November 2025

ITA Nos.: 952 & 1084/Del/2024 (AY 2013–14)