Appnell Holdings Limited Vs DCIT (Madras High Court)
Summary: Madras High Court allowed the writ appeal filed by Appnell Holdings Limited and quashed the reassessment proceedings relating to Assessment Year 2015-16 after holding that the issue was squarely covered by its earlier decision in Shanmugha Arts, Science Technology and Research Academy. The assessee had challenged the reassessment notice, consequential order under Section 148A(d) of the Income Tax Act, 1961 and the CBDT Instruction dated 11.05.2022. The Single Judge had dismissed the writ petition on the ground that the proceedings had been initiated within limitation.
The Division Bench noted that in Shanmugha Arts, Science Technology and Research Academy, the first notice for AY 2015-16 had been issued on 12.04.2021 and the subsequent notice under Section 148A(b) on 31.03.2022, culminating in an order dated 02.05.2022. That reassessment exercise was held to be time-barred because all the relevant steps had been taken after the cut-off date of 01.04.2021.
The earlier Division Bench ruling had considered Union of India v. Rajeev Bansal, 2024 SCC OnLine SC 2693, particularly the Revenue’s position recorded therein concerning AY 2015-16. It was acknowledged that notices issued on or after 01.04.2021 for AY 2015-16 would have to be dropped as they would not fall for completion during the period prescribed under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020.
In Appnell Holdings Limited’s case, the first notice was issued on 30.06.2021 under the old regime and the impugned order was subsequently passed on 28.07.2022 under the new regime. The High Court held that these events occurred after the cut-off date of 01.04.2021 and that the controversy was therefore squarely governed by its judgment in Shanmugha Arts, Science Technology and Research Academy.
Accordingly, the Division Bench allowed the writ appeal, set aside the Single Judge’s order dated 13.07.2026 and quashed the notice issued pursuant to the reassessment proceedings. There was no order as to costs and the connected interim application was closed.
Cases Discussed
- Shanmugha Arts, Science Technology and Research Academy Vs ACIT (Exemptions) & Ors. — Madras High Court, W.A. No.1925 of 2026, judgment dated 16.07.2026 — Followed; reassessment proceedings for AY 2015-16 initiated after the cut-off date of 01.04.2021 were held time-barred.
- Union of India & Ors. Vs Rajeev Bansal — Supreme Court, 2024 SCC OnLine SC 2693 — Considered through Shanmugha Arts; Revenue’s position regarding limitation for AY 2015-16 was relied upon.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
The present appeal is directed against the order dated 13.07.2026 passed in W.P.No.1513 of 2023.
2. By the impugned order, the learned Single Judge dismissed the appellant’s challenge to the re-assessment notice for the Assessment Year 2015-16 and the consequential order issued under Section 148A(d) of the Income Tax Act, 1961 as also the Instruction of the Central Board of Direct Taxes dated 11.05.2022, holding that the proceedings were initiated within the period of limitation.
3. The issue raised in this writ appeal is whether the reassessment notice issued to the appellant for the Assessment Year 2015-16 is barred by time.
4. Similar issue was considered by this Court in W.A.No.1925 of 2026 (between Shanmugha Arts, Science Technology and Research Academy, rep. By its Trustee and Vice-Chancellor and ACIT (Exemptions) and ors.). Vide judgment dated 16.07.2026, the writ appeal was allowed on the ground that when the first notice was issued on 12.04.2021 and the subsequent notice under Section 148A(b) was issued on 31.03.2022 culminating in the order dated 02.05.2022 and since all these steps pertaining to the Assessment Year 2015-16 were taken well after the cut-off date of 01.04.2021, the entire re-assessment exercise is clearly out of time and completely unsustainable in law. The said judgment in W.A.No.1925 of 2026 is reproduced below:
“This appeal is directed against the order dated 3.6.2026, passed by the learned Single Judge in W.P.No.29752 of 2023. By the impugned order, the learned Single Judge dismissed the appellant’s challenge to the reassessment notices and the consequential order issued under the Income Tax Act, 1961, holding that the proceedings were initiated within the period of limitation.
2. The issue raised before us is whether the reassessment notices issued to the appellant for the Assessment Year 2015-2016 are barred by time.
3. At the threshold, learned Additional Solicitor General submitted that the statutory boundary lines for Page 3 of 6 reopening past assessments were comprehensively examined by the Supreme Court in Union of India v. Rajeev Bansal1. He drew our attention to paragraph 19(f) of the decision in Rajeev Bansal (supra), wherein the Supreme Court explicitly recorded the stance of the Revenue regarding the specific timeline applicable to the Assessment Year 2015-2016. It was acknowledged that for the Assessment Year 2015-2016, any notice issued on or after 1.4.2021 must be dropped, as such actions would not fall for completion during the period prescribed under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA).
4. Learned Additional Solicitor General fairly conceded that the controversy in the present appeal is squarely governed by the aforesaid decision of the Supreme Court. It is admitted that since the underlying dispute relates to the Assessment Year 2015-2016 and all notices were issued after 1.4.2021, the same will not survive the test of limitation and must be dropped.
5. In the present case, the first notice was issued on 12.4.2021, and the subsequent notice under Section 148A(b) of the Act was issued on 31.3.2022, culminating in the order dated 2.5.2022. Since all these steps pertaining to the Assessment Year 2015-2016 were taken well after the cut-off date of 1.4.2021, the entire reassessment exercise is clearly out of time and completely unsustainable in law.
6. As a sequel, the appeal is allowed. The impugned order passed by the learned Single Judge dated 3.6.2026 is set aside. The notices dated 12.4.2021 and 31.3.2022 as well as the order dated 2.5.2022 are hereby quashed.
There shall be no order as to costs. Connected interim application stands closed.”
5. In the present case, the first notice was issued on 30.06.2021 under the old regime and thereafter, the impugned order under Section 148(1)(d) was passed on 28.07.2022 under the new regime, which is well after the cut-off date of 01.04.2021. Therefore, the issue is squarely covered by the aforesaid decision of this Court in W.A.No.1925 of 2026.
In view of the above, this writ appeal is allowed and the impugned order of the learned Single Judge dated 13.07.2026 is set aside. The notice issued pursuant to the aforesaid proceedings also stands quashed. There shall be no order as to costs. Consequently, the interim application stands closed.
Notes:
1 2024 SCC Online SC 2693
