Shanmugha Arts Vs ACIT (Exemptions) (Madras High Court)
Summary: The appeal concerned the validity of reassessment proceedings for Assessment Year 2015-2016. Shanmugha Arts, Science Technology and Research Academy challenged the order dated 3.6.2026 of the learned Single Judge in W.P.No.29752 of 2023, by which the challenge to the reassessment notices and consequential order under the Income Tax Act, 1961 had been dismissed on the view that the proceedings were initiated within the period of limitation.
The Division Bench identified the issue as whether the reassessment notices issued for AY 2015-2016 were barred by time. Before the Bench, the Additional Solicitor General relied on the Supreme Court decision in Union of India v. Rajeev Bansal, reported as 2024 SCC Online SC 2693. Particular reliance was placed on paragraph 19(f), in which the Revenue’s position regarding the timeline applicable to AY 2015-2016 had been recorded. The Revenue acknowledged that, for AY 2015-2016, any notice issued on or after 1.4.2021 must be dropped because such action would not fall for completion within the period prescribed under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA).
The Additional Solicitor General fairly conceded that the controversy was squarely governed by Rajeev Bansal. It was admitted that the dispute related to AY 2015-2016 and that all the notices had been issued after 1.4.2021. Accordingly, the proceedings could not survive the test of limitation and had to be dropped.
The Bench recorded that the first notice had been issued on 12.4.2021. A subsequent notice under Section 148A(b) was issued on 31.3.2022, culminating in the order dated 2.5.2022. Since these steps relating to AY 2015-2016 were taken after the cut-off date of 1.4.2021, the Division Bench held that the entire reassessment exercise was out of time and unsustainable in law.
The appeal was therefore allowed. The order dated 3.6.2026 passed by the learned Single Judge was set aside. The notices dated 12.4.2021 and 31.3.2022 and the order dated 2.5.2022 were quashed. There was no order as to costs and the connected interim application was closed.
Cases Discussed
- Union of India v. Rajeev Bansal, 2024 SCC Online SC 2693.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
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 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.
Notes:-
1 2024 SCC Online SC 2693
