Neo Structo Construction Pvt. Ltd. Vs PCIT (ITAT Ahmedabad)
Section 263 cannot revise a void reassessment order founded on a time-barred notice: ITAT
Legal principle and decision
The Income Tax Appellate Tribunal, Ahmedabad, held that the Principal Commissioner cannot invoke section 263 to revise a reassessment order that is itself void because the reopening notice was time-barred.
Applying the Supreme Court’s decisions in Union of India Vs Rajeev Bansal and Deepak Steel and Power Ltd. Vs CBDT, the Tribunal found that the reassessment notice issued on 30.06.2021 for AY 2015-16 was barred by limitation. The resulting reassessment was therefore void ab initio, leaving no valid order capable of revision. The Tribunal quashed the revision order and allowed the assessee’s appeal.
Revision initiated for failure to commence penalty
The assessee challenged the Principal Commissioner’s order dated 27.02.2026, passed under section 263 of the Income Tax Act, 1961.
The revision concerned a reassessment completed under section 147 read with section 144B. The Principal Commissioner considered the reassessment defective because the AO had failed to initiate penalty proceedings under section 271(1)(c).
The dispute before the Tribunal therefore originated from the proposed revision of the AO’s omission concerning penalty initiation. However, the assessee raised a more fundamental objection: whether the reassessment order possessed legal validity in the first place.
Additional ground questioned the foundational notice
At the hearing, the assessee raised an additional ground challenging the validity of the underlying reassessment. It pointed out that the proceedings related to AY 2015-16 and that the section 148 notice had been issued on 30.06.2021.
According to the assessee, the Supreme Court’s ruling in Rajeev Bansal rendered that notice time-barred. Consequently, the assessment made pursuant to it could not survive.
The assessee argued that an invalid reassessment cannot become the foundation for a valid revision proceeding. If the original reassessment was legally non-existent, the Principal Commissioner lacked jurisdiction to review it under section 263, irrespective of the alleged failure to initiate penalty.
Notice date emerged from existing orders
The Tribunal examined the Principal Commissioner’s order and the underlying reassessment order. It found that the relevant notice date was evident from those records.
There was therefore a clear factual basis for considering the limitation objection: AY 2015-16 was reopened through a notice issued on 30.06.2021.
The assessee relied on both Rajeev Bansal [2024] 469 ITR 46 (SC) and the subsequent decision in Deepak Steel and Power Ltd. [2025] 476 ITR 369 (SC). The Tribunal considered these authorities decisive for the validity of the reopening in the case before it.
Supreme Court decisions governed limitation
The Tribunal reproduced the relevant passage from Deepak Steel and Power Ltd., which referred to the Revenue’s concession recorded in Rajeev Bansal.
That concession concerned notices for AY 2015-16 issued on or after 01.04.2021, which were required to be dropped in the context of the period prescribed under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020.
In Deepak Steel and Power Ltd., the notice under consideration was dated 25.06.2021. The Supreme Court concluded that, given the concession, nothing further required adjudication.
The Tribunal applied that reasoning to the assessee’s notice dated 30.06.2021, holding that no valid reassessment could have been made on its basis.
Time-barred notice rendered reassessment void
The Tribunal held that the reopening notice was bad in law because it was barred by limitation. Since the reassessment depended upon that notice, the entire reassessment order was void from inception.
This was not merely a finding that the AO had committed an error while completing an otherwise valid assessment. It concerned the jurisdictional foundation of the reassessment itself.
The Tribunal accordingly treated the underlying order as non-est. That conclusion directly affected the Principal Commissioner’s ability to exercise revisionary jurisdiction over it. The proposed correction concerning penalty could not overcome the invalidity of the proceedings from which it arose.
Section 263 could not operate on non-est order
The Tribunal concluded that the Principal Commissioner could not assume jurisdiction under section 263 to revise the invalid reassessment on the ground that the AO had omitted penalty initiation.
The alleged omission did not provide an independent basis for sustaining revision once the assessment itself lacked legal existence.
The appeal was therefore decided on this foundational jurisdictional point. The Tribunal did not need to determine whether failure to initiate section 271(1)(c) proceedings could otherwise justify revision in a case involving a valid assessment order.
Final outcome and scope of ruling
The Tribunal quashed the section 263 order and allowed the assessee’s appeal. The revision concerning non-initiation of penalty consequently did not survive.
The ruling affirms that revisionary jurisdiction cannot repair or proceed upon a reassessment founded on a time-barred notice. Its limitation conclusion follows the Supreme Court authorities applied to the particular AY 2015-16 notice. It does not establish that every dispute concerning penalty initiation must independently result in cancellation of a section 263 order.
Cases Discussed
- Union of India Vs Rajeev Bansal, [2024] 469 ITR 46 (SC) — relied upon for limitation.
- Deepak Steel and Power Ltd. Vs CBDT, [2025] 476 ITR 369 (SC) — followed.
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT AHMEDABAD
The present appeal has been filed by the Assessee against the order of the Ld. Principal Commissioner of Income Tax Ahmedabad-3 (hereinafter referred to as “PCIT”), dated 27.02.2026 passed under Section 263 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) and relates to Assessment Year (A.Y.) 2015-16.
2. The Ld. PCIT sought to revise the reassessment order passed u/s 147 r.w.s 144B of the Act on the ground that the A.O. had failed to initiate penalty proceedings u/s 271(1)(c) of the Act.
3. The assessee has raised an additional ground of appeal at the time of hearing challenging the validity of the underlying reassessment order u/s 147 itself. The said ground reads as under:
“The learned Principal Commissioner of Income-tax-3. Ahmedabad. (the Ld. PCIT) has erred in invoking jurisdiction under section 263 of the Income-tax Act, 1961 (the “Act”) inasmuch as the proceedings pertain to assessment year 2015-16 for which the notice under section 148 was issued on 30th June 2021 which is time-barred as per the decision of Hon’ble Supreme Court in the case of Union of India vs. Rajeev Bansal [2024] 167 taxmann.com 70 (SC) [03-10-2024] and accordingly void, and the consequential order passed under section 147 of the Act also does not survive; and therefore the Id. PCIT does not have jurisdiction to review such invalid order.”
4. From a perusal of the impugned order of the Ld. PCIT and also the underlying assessment order u/s 147, it is self-evident that the reassessment notice for the Asst. Year 2015-16 was issued on 30- 06-2021. The assessee has submitted, with reference to the decision of the Hon’ble Supreme Court in the case of Union of India vs. Rajeev Bansal: [2024] 469 ITR 46 (SC) and subsequent decision in the case of Deepak Steel and Power Ltd. vs. CBDT: [2025] 476 ITR 369 (SC), that the reopening of assessment for Asst. Year 2015-16 was clearly barred by limitation and the assessment order itself does not survive for consideration. For this reason, it is stated that the CIT(A) cannot exercise power u/s 263 to revise the non-est assessment order.
5. The Hon’ble Supreme Court had held in the case of Deepak Steel and Power Ltd. (supra) held as under: “
4. The learned counsel appearing for the revenue with his usual fairness invited the attention of this Court to a three judge bench decision of this Court in Union of India v. Rajeev Bansal 2024 SCC OnLine SC 2693/[2024] 167 taxmann.com 70/301 Taxman 238/469 ITR 46 (SC), more particularly, paragraph 19(1) which reads thus:-
“19. (1) 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.”
5. As the revenue made a concession in the aforesaid decision that is for the assessment year 2015-2016, all notices issued on or after 1st April, 2021 will 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). Nothing further is required to be adjudicated in this matter as the notices so far as the present litigation is concerned is dated 25.6.2021.”
6. In view of the aforesaid decisions of the Hon’ble Supreme Court, it is evident that the notice u/s 148A issued for the assessment year under consideration i.e. Asst. year 2015-16 was clearly barred by limitation and no valid reassessment could have been made on the basis of such a notice. The underlying order u/s 147 in the assessee’s case is thus based on a notice that is bad in law and therefore the entire assessment order is void ab initio. Under the circumstances, the Ld. PCIT could not have assumed jurisdiction u/s 263 of the Act for revision of non-est order on the ground that the A.O. had erred to initiate penalty proceedings. On this short point, we quash the impugned order of the CIT(A) u/s 263 and allow the assessee’s appeal.
7. In the result, the appeal of the assessee is allowed.
This Order is pronounced on 16/10/2026
This Order is pronounced on 16/10/2026
