DCIT Vs Larsen & Toubro Limited (ITAT Mumbai)
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has quashed reassessment proceedings initiated against Larsen & Toubro Limited (L&T) for the assessment years (AY) 2014-15 and 2015-16. The tribunal held that the reassessment notices issued by the Assessing Officer (AO) were barred by limitation, rendering the entire proceedings invalid. The ruling heavily relied on recent Supreme Court judgments that clarified the complex transitional issues arising from the amendment of tax laws in 2021.
The case centered on reassessment notices issued to L&T on June 30, 2021, under the old tax regime, for alleged income escapement. These notices were issued after the Finance Act, 2021, introduced a new, more stringent reassessment procedure effective April 1, 2021, which required a preliminary inquiry under Section 148A before any notice could be sent. The notices were issued during an extension period granted by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act (TOLA) due to the COVID-19 pandemic.
Judicial Precedents and the ‘Legal Fiction’
The core of the dispute revolved around the interpretation of two landmark Supreme Court rulings: Union of India vs. Ashish Agarwal (2022)and Union of India vs. Rajeev Bansal (2024).
