AY 2015-16 Reassessment Notices Issued After 1 April 2021 Must Be Dropped: Karnataka HC

ITO Vs Mohammed Hayath Miskeen (Karnataka High Court)

AY 2015-16 Reassessment Notices Issued After 1 April 2021 Must Be Dropped: Karnataka HC

Revenue Concedes That Reassessment Appeal Cannot Survive

The Karnataka High Court has dismissed the Revenue’s writ appeal challenging the quashing of reassessment proceedings for Assessment Year 2015-16, holding that the issue stood covered by the Revenue’s concession recorded by the Supreme Court in Union of India v. Rajeev Bansal.

The Division Bench reiterated that all reassessment notices issued on or after April 1, 2021, for Assessment Year 2015-16 are required to be dropped, as such proceedings do not fall within the extended limitation contemplated under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020.

The Revenue fairly conceded before the High Court that, in view of the Supreme Court’s ruling and the concession recorded therein, its appeal did not survive.

Reassessment Notice Issued on June 30, 2021

The assessee, Mohammed Hayath Miskeen, was subjected to reassessment proceedings for Assessment Year 2015-16.

The original notice under Section 148 of the Income-tax Act was issued on June 30, 2021. Thereafter, following the legal developments concerning reassessment notices issued under the old regime, the Department issued a notice dated May 17, 2022, under Section 148A(b).

An order was subsequently passed on July 20, 2022, under Section 148A(d), treating the case as fit for reopening. An assessment order under Section 147 was also passed pursuant to the notices.

The assessee challenged the original notice, the Section 148A(b) notice, the Section 148A(d) order and the consequential reassessment order before the Karnataka High Court.

The learned Single Judge allowed the writ petition by an order dated November 24, 2025. The reassessment proceedings were quashed in view of the concession made by the Revenue and recorded by the Supreme Court in Union of India v. Rajeev Bansal, 469 ITR 46.

The Department challenged the Single Judge’s order before the Division Bench.

Supreme Court’s Decision in Rajeev Bansal

The controversy arose from the transition between the old reassessment regime and the substituted provisions introduced by the Finance Act, 2021, with effect from April 1, 2021.

In Union of India v. Rajeev Bansal, the Supreme Court examined the interaction between the new reassessment provisions, the limitation prescribed under Section 149 and the extensions granted under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020.

While dealing with different assessment years, the Supreme Court recorded the Revenue’s specific concession that for Assessment Year 2015-16, all notices issued on or after April 1, 2021, would have to be dropped because they would not fall for completion within the period prescribed under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020.

For Assessment Year 2015-16, the ordinary six-year limitation under the old Section 149 expired on March 31, 2022. However, the TOLA extension did not operate in the same manner for this assessment year as it did for certain earlier or later assessment years.

Consequently, the Revenue accepted before the Supreme Court that notices issued after March 31, 2021, for Assessment Year 2015-16 could not be sustained.

Karnataka HC’s Earlier Decision in Venkatal Iyyappa Rajanna

The Division Bench observed that the present issue was also squarely covered by its earlier decision in Income Tax Officer v. Venkatal Iyyappa Rajanna, 178 taxmann.com 410.

In that case also, the reassessment notice related to Assessment Year 2015-16 and had been issued after April 1, 2021. The Karnataka High Court relied upon the Revenue’s concession in Rajeev Bansal and held that the reassessment proceedings were required to be dropped.

The Court had also referred to the Supreme Court’s subsequent decision in Deepak Steel and Power Ltd. v. CBDT, 476 ITR 369.

In Deepak Steel, the Supreme Court noticed the Revenue’s concession in Rajeev Bansal and allowed the writ petitions challenging notices issued on June 25, 2021, for Assessment Year 2015-16. The Supreme Court held that nothing further remained to be adjudicated once the Department itself had accepted that such notices were required to be dropped.

A similar approach was followed by the Supreme Court while dismissing the Department’s special leave petition in the case of Income Tax Officer v. R.K. Build Creations Pvt. Ltd.

Revenue’s Writ Appeal Dismissed

In the present case, the impugned notice was issued on June 30, 2021, and related to Assessment Year 2015-16.

The Revenue’s counsel fairly conceded that the decisions of the Supreme Court and the Karnataka High Court applied to the assessee’s case. Therefore, the appeal against the Single Judge’s order did not survive.

The Division Bench accordingly dismissed the Revenue’s writ appeal. As a result, the quashing of the Section 148 notice, the subsequent proceedings under Section 148A and the consequential reassessment order remained undisturbed.

Author’s Comments

The legal position emerging from the judgment is direct and assessment-year specific. For Assessment Year 2015-16, a reassessment notice issued on or after April 1, 2021, cannot survive in view of the Revenue’s concession recorded in Rajeev Bansal.

The principle applies not merely to the original notice issued under the old Section 148 during the period from April 1 to June 30, 2021. The subsequent notices and orders issued under Sections 148A(b), 148A(d) and 148, as well as the consequential reassessment order, would also fall when the foundational notice itself is unsustainable.

The Department cannot cure the limitation defect in the original notice merely by following the procedure prescribed under the new reassessment regime at a later stage. Once the Revenue accepted before the Supreme Court that such notices for Assessment Year 2015-16 must be dropped, the concession binds the Department in similarly situated cases.

However, the conclusion should not be mechanically extended to every reassessment notice issued between April and June 2021. The limitation position differs from one assessment year to another. The applicable time limit, the amount of alleged escaped income and the first proviso to Section 149 must be separately examined.

For Assessment Year 2015-16, however, the Karnataka High Court has now repeatedly affirmed that reassessment notices issued on or after April 1, 2021, are liable to be quashed.

Cases Discussed

• Union of India v. Rajeev Bansal, 2024 SCC OnLine SC 2693.
• Income-tax Officer v. Venkatal Iyyappa Rajanna, [2025] 178 taxmann.com 410 (Karnataka).
• Deepak Steel And Power Limited Vs Central Board of Direct Taxes & Ors., 476 ITR 369 (SC).
• ITO Vs R.K. Build Creations Private Limited, Special Leave Petition (Civil) Diary No.59625 of 2024.

FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT

1. For the reasons stated in the application – I.A No.1/2026, the same is allowed. The delay of 52 days in filing the appeal is condoned.

2. The Revenue has filed the present appeal impugning an order dated 24.11.2025 passed by the learned Single Judge in Writ Petition No.4855/2025 [T-IT]. The respondent [Assessee] had filed the said petition impugning a notice dated 30.06.2021 issued under Section 148 of the Income Tax Act, 1961 [Act] in respect of the Assessment Year [AY] 2015-16. The Assessee had also impugned the notice dated 17.05.2022 issued under Section 148A(b) and the order dated 20.07.2022 passed under Section 148A(d) of the Act. The Assessee had also impugned the assessment order passed under Section 147 of the Act for the AY 2015-16 pursuant to the aforesaid notices.

3. The learned Single Judge allowed the said petition in view of the concession made by the Revenue and as recorded by the Supreme Court in Union of India and Others vs Rajeev Bansal¹.

4. Concededly, the said issue is covered by the earlier decision of this court in Income-tax Officer vs Venkatal Iyyappa Rajanna². The relevant facts of the said decision is set out below:

“7. In addition to the above, it is also relevant to note that the impugned notice was issued in respect of AY 2015-2016. Pursuant to the impugned notice, an order dated 31.03.2022 was passed under Section 148(d) of the Act, holding that it was a fit case for issuance of notice under Section 148 of the Act. The question, whether such notices issued in respect of the Assessment Year, 2015-2016 were sustainable was a subject matter of observation by the Supreme Court of India, in Union of India v. Rajeev Bansal [2024] 167 taxmann.com 70/301 Taxman 238/469 ITR 46/2024 INSC 754. During the said proceedings, it was readily conceded by the Revenue that all such notices issued on or after 01.04.2021 in respect of Assessment Year 2015-2016 were liable to be dropped. Paragraph 19 (e) and 19 (f) of the said decision are reproduced below:

“e. The Finance Act 2021 substituted the old regime for re-assessment with a new regime. The first proviso to Section 149 does not expressly bar the application of TOLA. Section 3 of TOLA applies to the entire Income-tax Act, including Sections 149 and 151 of the new regime. Once the first proviso to Section 149(1)(b) is read with TOLA, then all the notices issued between 1 April 2021 and 30 June 2021 pertaining to assessment years 2013-14, 2014-15, 2015-16, 2016-17, and 2017-18 will be within the period of limitation as explained in the tabulation below:

f. The Revenue concedes that for the assessment year 2015-16, all notices issued on or after 1 April 2021 will have to be dropped as they will not fall for completion during the period prescribed under TOLA.”

8. In view of the concession made by the Revenue in Rajeev Bansal (supra), the reassessment proceedings in the present case would also require to be dropped.

9. It is also relevant to note that in the subsequent decision in Deepak Steel and Power Limited v. CBDT [2025] 174 taxmann.com 144/305 Taxman 169/476 ITR 369 (SC)/Civil Appeal No. 5177/2025 decided on 02.04.2025, the attention of the Supreme Court was also drawn to the concession made by the Revenue in Rajeev Bansal (supra). The said appeal emanated from the orders passed by the Hon’ble High Court of Orissa at Cuttack, declining to entertain a batch of petitions. The Supreme Court noted the concession made on behalf of the Revenue and accordingly, allowed the writ petitions, which were filed before the High Court of Orissa. The relevant extract of the said decision of the Supreme Court is set out below:

“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 and Ors. v. Rajeev Bansal, reported in 2024 SCC Online SC 2693, more particularly, paragraph 19(f) which reads thus:-

“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.”

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, in such circumstances referred to above the original writ petition Nos. 2446 of 2023, 2543 of 2023 and 2544 of 2023 respectively filed before the High Court of Orissa at Cuttack stands allowed.”

10. Similarly, in ITO v. R.K. Build Creations (P) Ltd. [Special Leave Petition (Civil) Diary No.59625 of 2024], the Supreme Court dismissed the Special Leave Petition arising out of a decision rendered by the Hon’ble Rajasthan High Court in DBC WP No.14414/2022/R.K. Buildcreations (P.) Ltd. v. Income-tax Officer [2024] 159 taxmann.com 475/298 Taxman 166/462 ITR 478 (Rajasthan). It would be equally relevant to refer to the said order passed by the Supreme Court, which is reproduced below:

“Delay condoned.

Having regard to the concession made by the petitioner Department in the case of Union of India v. Rajeev Bansal, Civil Appeal No. 8629 of 2024 on 03.10.2024 (2024 SCC ONLINE 754), this Special Leave Petition would not survive for further consideration.

Hence, the Special Leave Petition is dismissed.

Pending application(s), if any, shall stand disposed of.”

11. The learned counsel appearing for the Revenue fairly states that the said decisions of the Supreme Court will be applicable in this case as well.

5. The learned counsel for the Revenue fairly concedes that having regard to the concession made in Union of India and Others vs Rajeev Bansal (supra), the present appeal would not survive.

6. In view of the above, the present appeal is dismissed.