Introduction
The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT), comprising Judicial Member Shri Sanjay Garg and Accountant Member Shri Narendra Prasad Sinha, delivered a significant ruling in Hasmukhbhai Babulal Patel v. Income Tax Officer (ITA No. 658/Ahd/2026) for Assessment Year 2015-16. The Tribunal allowed the assessee’s appeal and quashed the reassessment order passed under Section 147 read with Section 144B of the Income Tax Act, 1961.
The central question was whether a notice under Section 148 issued for A.Y. 2015-16 on 31.03.2022 — after 01.04.2021 — was barred by limitation in light of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA). Applying the binding principles laid down by the Supreme Court in Union of India v. Rajeev Bansal and Deepak Steel and Power Limited v. CBDT, and the jurisdictional Gujarat High Court in Narendra Maganlal Purohit v. DCIT, the ITAT held that the notice was time-barred and void ab initio. Consequently, the Assessment Order dated 15.03.2023 could not survive.
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Facts
The assessee, Hasmukhbhai Babulal Patel, had not filed his return of income for A.Y. 2015-16. The Assessing Officer received information that the assessee had sold an immovable property for a consideration of Rs. 62,00,000 during the relevant previous year, and that the capital gains arising from the sale had not been offered to tax. Based on this information, the Assessing Officer reopened the assessment under Section 147 of the Act by issuing a notice under Section 148.
The reassessment proceeding was completed on 15.03.2023 under Section 147 read with Section 144B of the Act, determining the total income at Rs. 62,00,000. Aggrieved by the Assessment Order, the assessee filed an appeal before the National Faceless Appeal Centre (NFAC), which is referred to as the CIT(A) in the order. The CIT(A) dismissed the appeal. The assessee then preferred a second appeal before the ITAT. There was a delay of two days in filing the appeal before the Tribunal, which the assessee explained as a mistake in the computation of the limitation period. The ITAT condoned the delay.
Before the Tribunal, the assessee raised several grounds, including that the CIT(A) erred in passing an ex parte order without adjudicating the merits, and that the Assessing Officer grossly erred in issuing the reopening notice after the prescribed time limits. Specifically, the assessee contended that the notice for A.Y. 2015-16 issued after 31.03.2021, and in any event after 01.04.2021, was barred by limitation and deserved to be quashed.
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Reasoning
The ITAT’s reasoning forms the core of this commentary, as it resolves the jurisdictional validity of reassessment notices for A.Y. 2015-16 issued after 01.04.2021.
The assessee’s Authorized Representative submitted that the reopening was bad in law because the notice under Section 148 was barred by limitation. Reliance was placed on the Supreme Court’s judgment in Deepak Steel and Power Limited v. CBDT, reported at 174 taxmann.com 144 (SC). In that case, the Supreme Court held that for A.Y. 2015-16, all notices issued on or after 01.04.2021 must be dropped because they would not fall for completion during the period prescribed under TOLA. The assessee also relied on the decision of the jurisdictional Gujarat High Court in Narendra Maganlal Purohit & Others v. DCIT, 182 taxmann.com 786 (Gujarat), which followed the same principle.
The assessee drew the Tribunal’s attention to the notice under Section 148AB of the Act issued by the Assessing Officer on 21.03.2022, as well as the order under Section 148A(d) passed on 31.03.2022. It was contended that the Assessment Order passed in pursuance of such an invalid notice was ab initio null and void.
On the other hand, the Senior Departmental Representative for the Revenue supported the Assessing Officer’s action and pointed out that the assessee had not made any compliance before the Assessing Officer.
The Tribunal carefully considered the rival submissions and the material on record. It noted that there was no dispute regarding the fact that the notice under Section 148 of the Act for A.Y. 2015-16 was issued on 31.03.2022. This factual finding became the decisive trigger for the legal analysis.
The ITAT then referred to the Supreme Court’s decision in Deepak Steel and Power Limited (supra). In that case, the Court recorded the concession made by the Revenue in Union of India v. Rajeev Bansal, 167 taxmann.com 70 (SC), at paragraph 19(f):
> “The Revenue concedes that for the assessment year 2015-2016, all notices issued on or after April 1, 2021 will have to be dropped as they will not fall for completion during the period prescribed under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020.”
The Supreme Court further observed that since the Revenue had made this concession, nothing further was required to be adjudicated. The ratio was clear: for A.Y. 2015-16, any notice issued on or after 01.04.2021 falls outside the protective umbrella of TOLA and cannot sustain a valid reassessment.
The ITAT also placed reliance on decisions of the Delhi High Court in H.A. Share and Brokers (P.) Ltd. v. ITO, 176 taxmann.com 665 (Delhi), and the Bombay High Court in Cherian Nallathu Abraham Annamma v. ITO, 179 taxmann.com 433 (Bom.). Both High Courts applied the same principle: any notice issued under Section 148, or deemed to be issued under Section 148A(b), for A.Y. 2015-16 after 01.04.2021 is void ab initio. The jurisdictional Gujarat High Court in Narendra Maganlal Purohit (supra) also followed the ratio of Rajeev Bansal and held that such notices are without authority of law.
Applying these precedents to the facts of the present case, the ITAT observed that the notice under Section 148 for A.Y. 2015-16 was issued on 31.03.2022, i.e., after 01.04.2021. In view of the binding position of law declared by the Supreme Court and followed by the jurisdictional High Court, the notice was time-barred and without jurisdiction. Since the Assessment Order dated 15.03.2023 was founded on an invalid notice, it could not survive. The ITAT accordingly quashed the Assessment Order passed under Section 147 read with Section 144B of the Act.
The Tribunal further held that since the appeal was allowed on the ground of jurisdiction, the other grounds raised by the assessee became infructuous. This is a sound approach: a jurisdictional defect strikes at the root of the assessment, and once the foundational notice is invalid, no further examination of the merits is necessary. The assessee’s non-compliance before the Assessing Officer is irrelevant to the question of limitation, as a proceeding initiated without valid jurisdiction is a nullity at law.
The decision reinforces that limitation is not a mere procedural technicality but a substantive jurisdictional condition. The Tribunal’s order is a clear application of the Supreme Court’s authoritative interpretation of TOLA, providing taxpayers with a strong ground to challenge reassessment notices for A.Y. 2015-16 issued after 01.04.2021.
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Conclusion
In Hasmukhbhai Babulal Patel v. ITO, the ITAT, Ahmedabad Bench, allowed the assessee’s appeal and quashed the reassessment order for A.Y. 2015-16. The Tribunal held that the notice under Section 148 issued on 31.03.2022 was barred by limitation in view of the Supreme Court’s decisions in Rajeev Bansal and Deepak Steel and Power Limited, as well as the Gujarat High Court’s decision in Narendra Maganlal Purohit. The Assessment Order dated 15.03.2023, being based on a void notice, was held to be unsustainable and was quashed.
The ruling is a significant restatement of the law on reassessment limitation. It protects assessees from reopenings initiated beyond the statutory period and reinforces that notices issued after 01.04.2021 for A.Y. 2015-16 must be dropped. The other grounds of appeal were not adjudicated, as they had become infructuous in light of the finding on jurisdiction.
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