ITAT Delhi on Time-Barred Reopening: Reassessment Proceedings Quashed

Headnote:

The Income Tax Appellate Tribunal (ITAT), Delhi, quashed reassessment proceedings against Genesis Associates Pvt. Ltd., holding that the notice issued under Section 148 of the Income Tax Act, 1961 was time-barred. The Tribunal observed that the notice dated 28.06.2022 was beyond the permissible limitation period under Section 149, as clarified by the Supreme Court in Union of India v. Ashish Agarwal and Union of India v. Rajeev Bansal. Consequently, the reassessment proceedings under Section 147 were declared void ab initio.

Background:

• The assessee, engaged in trading and import of furniture, filed its return of income declaring a loss of ₹2,87,246 for AY 2013–14.

• Based on information from the Directorate of Revenue Intelligence (DRI) regarding alleged misdeclaration and customs duty evasion, the Assessing Officer (AO) reopened the case under Section 147, adding ₹10.05 crore as unexplained expenditure under Section 69C read with Section 115BBE.

• The CIT(A)/NFAC deleted the addition, noting that the DRI’s show cause notice had been invalidated by the Supreme Court in Canon India Pvt. Ltd. v. Commissioner of Customs (2021), as the DRI lacked jurisdiction.

• Both the Revenue and the assessee filed appeals before the Tribunal.

Tribunal’s Observations:

• The Tribunal analyzed the limitation provisions post Ashish Agarwal and Rajeev Bansal. It held that the extended timeline for issuing a reassessment notice expired on 05.06.2022.

• The impugned notice under Section 148 was issued on 28.06.2022 (DIN dated 29.06.2022), i.e., beyond the limitation period, rendering it time-barred.

• It reiterated that the reassessment framework post-2021 amendments strictly limits the reopening window, even after transitional relaxations under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA).

• As the foundation notice itself was invalid, the entire reassessment was quashed.

Held:

• The reassessment notice issued beyond the permissible time limit was invalid.

• The assessee’s appeal (ITA No. 952/Del/2024) was allowed.

• The Revenue’s appeal (ITA No. 1084/Del/2024) was dismissed as infructuous.

Legal Provisions Discussed:

• Section 147, Income Tax Act, 1961 – Income escaping assessment.

• Section 148 & 149, Income Tax Act, 1961 – Issue of notice and limitation for reopening.

• Section 69C & 115BBE, Income Tax Act, 1961 – Unexplained expenditure and taxation thereof.

Judgments referred:

– Union of India v. Ashish Agarwal (2023) 1 SCC 617

– Union of India v. Rajeev Bansal (2024 SCC OnLine SC 2693)

– Canon India Pvt. Ltd. v. Commissioner of Customs (2021) 3 SCC 684

Citation: ITA Nos. 952 & 1084/Del/2024

Case: Genesis Associates Pvt. Ltd. v. Assessment Unit, EL-W-(42)(1)

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

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

Date of Decision: 13 November 2025

Assessment Year: 2013–14