2025 (1) TMI 238 - AT - Income Tax

Validity of reassessment proceedings initiated as time-barred under the amended provisions u/s 149(1) - HELD THAT - The notices issued to the assessee in present case are barred by limitation under the new provision of Section 149(1) of the Act is not covered under TOLA. Accordingly, all the notices are quashed being barred by limitation.Appeal of the assessee is allowed.

1. ISSUES PRESENTED and CONSIDERED

The legal judgment involves several core issues:

Whether the reassessment proceedings initiated by the Assessing Officer (AO) against the assessee were time-barred under the amended provisions of the Income Tax Act, 1961, specifically under Section 149(1) as amended from April 1, 2021.
Whether the notices issued under Sections 148A(b) and 148A(d) and the subsequent reassessment order were valid and within the permissible time limit.
Whether the principles established by the Supreme Court in relevant cases apply to the present case, thereby affecting the validity of the reassessment proceedings.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity of Reassessment Proceedings

Relevant Legal Framework and Precedents: The reassessment proceedings are governed by Section 147 of the Income Tax Act, with time limits for issuing notices under Section 148 as specified in Section 149. The amendments effective from April 1, 2021, altered these provisions, and the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) also impacted these timelines.
Court's Interpretation and Reasoning: The court examined the timing of the notices issued under both the unamended and amended provisions. It noted that the amended Section 149(1) set a deadline of March 31, 2022, for issuing notices for the Assessment Year 2015-16. Notices issued after this date were considered time-barred.
Key Evidence and Findings: The court found that the initial notice under Section 148 was issued on June 29, 2021, under the unamended provisions. Subsequent notices under the amended provisions were issued on May 25, 2022, and July 21, 2022, which were beyond the permissible time limit.
Application of Law to Facts: The court applied the amended provisions of Section 149(1) and the relevant precedents, concluding that the notices were issued beyond the statutory time limit, rendering them invalid.
Treatment of Competing Arguments: The assessee relied on precedents, including a Supreme Court decision, to argue that the notices were time-barred. The Revenue's reliance on the Mumbai Tribunal's order was considered but ultimately not persuasive.
Conclusions: The court concluded that the reassessment proceedings were initiated beyond the permissible time limit, and therefore, the notices and subsequent reassessment order were invalid.

3. SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning: The court held, "Accordingly, all the notices are quashed being barred by limitation on the reasons given above and we are not going on the reasons given by the ld. CIT (A) for quashing the notice."
Core Principles Established: The judgment reinforces the principle that reassessment notices must strictly adhere to statutory time limits, and any deviation renders the proceedings invalid.
Final Determinations on Each Issue: The court determined that the reassessment notices were time-barred, quashing all notices and the final reassessment order. The appeal of the assessee was allowed, rendering other grounds of appeal academic and left open.

The judgment emphasizes the importance of adhering to statutory timelines in reassessment proceedings and the applicability of amended provisions to ongoing cases. The decision aligns with established precedents, reinforcing the legal framework governing reassessment under the Income Tax Act.

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