Pune ITAT: Reassessment Notice for AY 2015-16 Issued After 31 March 2022 Is Time-Barred

Vishal Shankar Chavan Vs ITO (ITAT Pune)

Pune ITAT: Reassessment Notice for AY 2015-16 Issued After 31 March 2022 Is Time-Barred

The Pune ITAT quashed the reassessment proceedings, holding that a notice under section 148 issued on 5 April 2022 for Assessment Year 2015-16 is barred by limitation under the first proviso to section 149(1). The Tribunal observed that, following the Supreme Court’s decision in Union of India v. Rajeev Bansal and the subsequent decisions in Sri Sai Kumar Mateti, as well as the Bombay High Court’s ruling in Selvakumar Nadar, all reassessment notices issued on or after 1 April 2021 for AY 2015-16 are liable to be dropped.

The Tribunal rejected the Revenue’s contention that the fifth proviso to section 149(1) extended the limitation period by excluding the time granted to the assessee for responding to the notice under section 148A(b). It held that the exclusion provision comes into play only if the notice first survives the limitation test under the first proviso, which was not the case here.

Accordingly, the Tribunal set aside the CIT(A)’s order, held that the notice under section 148 and the consequential reassessment order were void and bad in law, and allowed the assessee’s appeal. Having quashed the reassessment on the legal issue of limitation, the Tribunal declined to adjudicate the remaining grounds on merits as they had become academic.

 Cases Discussed

• ITO and Another Vs. Sri Sai Kumar Mateti (SC), judgment dated 04.05.2026 (arising out of SLP (Civil) No. 8682/2024)
• Selvakumar Nadar Vs. ITO (Bombay HC), (2026) 182 taxmann.com 683 (Bom HC)
• Deepak Steel and Power Ltd. (SC)
• Verjinia Foods Limited (Bombay HC)
• Nehal Ashit Shah (SC)
• Babu Hasan Shaikh Vs. ITO (ITAT Mumbai), ITA No.926/Mum/2025, order dated 28.04.2025
• Union of India v. Rajeev Bansal (SC), 2024 SCC OnLine SC 2693

FULL TEXT OF THE ORDER OF ITAT PUNE

The appeal is filed by the assessee against the separate order of NFAC/CIT(A) passed u/sec 147 r.w.s. 144 and u/sec 250 of the Income Tax Act. The assessee has raised the allowing grounds of appeal:

1. On the facts and circumstances of the case and in law, the learned CIT(A)-HFAC red in confirming completed under section 147 144 of Income Tax Act, 1961 on the basis of notice issued under section 148 by JAO instead of PAO as required by section 151A of the Income Tax Act, 1961. The appellant submit that nation issued under section 148 of IT Act, 1961 Jurvediction and assessment completed quashed without said notice is bad in law and liable to appellant prays for just, fair and appropriate relief.

2. On the facts and circumstances of the case and in law, the notice under section 148 of IT Act, 1961 was insond the on 05/04/2022 Le beyond the period of six years. The appellant submit that notice issued under section 148 is time barred. Acmedingly, anansament completed basis of said notice is bad in law and liable to be quashed.

3. The appellant prays for just fair and appropriate relie On the facts and circumstances of the case and in law, the learned CITIA) erred in confirming reopening of assessment under section 148 of Income Tax Act, 1961 when there is no escapement of income in the form of asset of Rs 50 lakh or more. The appellant prays for funt fair and appropriate relief.

4. On the facts and circumstances of the case and in law, the learned CIT(A) erred in setting aside assessment order for fresh verification. The appellant prays for just fair and appropriate relief

5. On facts and circumstances of case and in law, learned CIT(A) erred in mot quashing the assessment order passed under section 147 cows 144 of Income Tax Act, 1961 in so far as it is against the appellant is opposed to law, equity and weight of evidence, probabilities. The appellant prays for just fair and appropriate relief.

6. the appellant craves leave to add, alter and or delete any of the above grounds of appeal.

At the time of hearing, the Ld.AR has not pressed the ground of appeal No. 1 and is treated as withdrawn and is dismissed.

2. The brief facts of the case are that, the income tax department based on the Risk Management Strategy (NMS) portal found that the assessee has made investment of Rs.62,84,337/-in time deposits and made cash deposits of Rs.11,66,500/- in the bank account during the F.Y. 2014-15 and the assessee has not filed return of income for A.Y.2015-16. . The Assessing Officer (A.O) with the approval of the specific authorities has issued notice u/sec 148A(b) of the Act and the assessee has not filed any reply in lieu of the notice. Therefore, AO based on the information of the non-filler find that the income has escaped assessment and the fit case for issue of notice u/sec 148 of the Act and passed the order u/sec 148A(d) of the Act. Subsequently, notice u/sec 148 of the Act was issued on 05.04.2022 . Further the A.O has issued notice u/sec 142(1) of the Act to explain with evidences the sources of cash deposits and time deposits. The A.O find that the assessee has not made submissions on the disputed issue in spite of providing adequate opportunities of hearing and finally the A.O considering the information available on record has invoked the provisions of section 144 of the Act and made addition u/sec69A of the Act of Rs.74,50,837/- and passed the order u/sec 147 r.w.s.144 r.w.s 144B of the Act dated 19.03.2024.

3. Aggrieved by the order, the assessee has filed an appeal with the CIT(A). Whereas the CIT(A) has considered the grounds of appeal, statements of facts, submissions of the assessee and finding of the Ld. Ld.AO and CIT(A) has restored the issues to the file of the assessing officer and allowed the assessee appeal for statistical purpose. Aggrieved by the order of the CIT(A), the assessee has filed appeal before the Hon’ble Tribunal.

4. At the time of hearing, the Ld. A.R. has restricted the submissions only on the validity of issue of notice u/sec 148 of the Act is barred as per provisions of Section 149 of the Act as the notice u/sec 148 of the Act was issued on 05.04.2022 beyond the period of six years from the end of the assessment year and consequential reassessment proceedings are invalid and prayed for allowing the appeal. The Ld.AR substantiated the submissions with factual paper book and judicial decisions. Per contra, the Ld. DR relied on the order of the CIT(A) and submissions.

5. We heard the rival submissions and perused the material on The sole crux of the disputed issue envisaged by Ld.AR that the income tax department based on the Risk Management Strategy (NMS) portal found that assessee has made investment for the time deposit and also made time deposits and cash deposit in the bank for the A.Y. 2014-15 and the assessee has not filed the return of income. The Assessing Officer (A.O) with the approval of the specific authorities has issued notice u/sec 148A(b) of the Act and the assessee has not filed any reply in lieu of the notice. Therefore, AO based on the information of the non-filler find that the income has escaped assessment and the fit case for issue of notice u/sec 148 of the Act and passed the order u/sec 148A(d) of the Act. Subsequently, notice u/sec 148 of the Act was issued on 05.04.2022 Whereas the time limit for issue of issue of notice for the reassessment proceedings for A.Y. 2015-16 is six years from the end of assessment year and notice u/s.148 of the Act as per the provisions of old regime and taking into consideration first proviso to section 149(1)(b) of the Act, the notice has to be issued on or before 31.03.2022. The Ld.AR mentioned that in the present case, notice u/s.148A(d) of the Act& Notice u/sec148 of the Act is issued on 5.04.2022 which is beyond the period of six years from the end of the relevant assessment year.

6. We find the Hon’ble Jurisdictional High Court in the case of Selvakumar Nadar Vs. ITO (2026) 182 com683 ((Bom HC) has dealt on the similar issue and held as under:

: “6. We have heard the learned counsel for the parties. It is not in dispute that the present petition relates to A.Y.2015-16. Further, it is also undisputed that the notice under Section 148 has been issued on 23rd April 2022 which is at page 109 of the paper book. Once these are the facts, paragraphs 19 (e) and (f) of the judgment of the Hon’ble Supreme Court in the case of Rajeev Bansal (supra) become relevant. They read as under:-

“19. Mr. N Venkataraman, learned Additional Solicitor General of India, made the following submissions on behalf of the Revenue:- a. …

e. The Finance Act 2021 substituted the old regime for reassessment 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 1st April 2021 and 30th June 2021 pertaining to assessment years 2013-2014, 2014-2015, 2015-2016, 2016-2017, and 2017-2018 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 1st April 2021 will have to be dropped as they will not fall for completion during the period prescribed under TOLA;” (emphasis supplied)

7. From the above it is clear, that the Department has conceded before the Hon’ble Supreme Court that all the notices issued under Section 148 after 1st April 2021 for A.Y.2015-16 have to be dropped. In the present case, the Notice under Section 148 is dated 23 rd April 2022 and therefore, has to be dropped.

8. The decision in Rajeev Bansal (supra) has been subsequently followed by the Hon’ble Supreme Court in Deepak Steel and Power Ltd. (supra). Paragraphs 4 and 5 of the said order is reproduced hereunder:-

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(1) 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. (emphasis supplied)

9. Similarly, even in the matter of Nehal Ashit Shah (supra), the Hon’ble Supreme Court, relying upon paragraphs 19 (e) and (f) of the decision in case of Rajeev Bansal (supra), dismissed the SLP filed by the Revenue. Paragraph 5 of the said order is reproduced hereunder:-

“5. In this regard, reference could also be made to paragraph 19(e) and (f) in the case of Union of India v. Rajeev Bansal, Civil Appeal No. 8629 of 2024 on 03.10.2024 (2024 SCC ONLINE 754) 5 under which the Learned Additional Solicitor General for India has made a concession insofar as the Assessment Year 2015-16 is concerned.”

10. Lastly, this very Bench on 6th October 2025, in the matter of Verjinia Foods Limited (supra), has allowed the petition filed by the Petitioner therein by noting that since, the notice under Section 148 was issued after 1st April 2021, the same was required to be set aside in light of the concession made by the Revenue before the Hon’ble Supreme Court in the case of Rajeev Bansal (supra).

11. In light of the above discussion, we find merit in the submissions as canvassed by the Petitioner. The Revenue has categorically made a concession that for A.Y.2015-16 they would drop all notices issued under Section 148 after 1st April 2021. Once this is the position, it is appropriate that the notice under Section 148 dated 23 rd April 2022, and the consequential assessment order, notice of demand, penalty notices/orders as well as the recovery notices be quashed and set aside. It is accordingly so ordered.”

7. The Hon’ble Supreme Court in the case of ITO and Another Vs. Sri Sai Kumar Mateti, judgment dated 04.05.2026 (arising out of SLP (Civil) No. 8682/2024) the Hon’ble Apex held that

“as observed above, the High Courts shall firstly determine whether the matters pertain to Assessment Year 2015-16. If it is found to be so, no further adjudicatory exercise shall be required to be undertaken by the High Court, except to declare the notices as being time-barred in light of Rajeev Bansal (supra). However, if it is found that the case does not pertain to Assessment Year 2015-16, then all the issues shall be resolved in terms of the order dated 10.04.2026 passed in Civil Appeal No. 4716 of 2026”. The relevant portion of the judgment is read as under:

“3. This batch of civil appeals comprising 103 cases is slightly different than those cases which came to be disposed of by a three Judge Bench of this Court, including both of us (Surya Kant, CJI. and Joymalya Bagchi, J.), vide order dated 10.04.2026 passed in Civil Appeal No. 4716 of 2026 and connected matters.

4. The instant cases were segregated through the above-mentioned order on the premise that they may be pertaining to Assessment Year 2015-16. It is fairly conceded by Mr. N. Venkataraman, learned ITA No.2573/PUN/2025 Vivek Prasad 6 Additional Solicitor General of India, representing the Revenue, that in the assessment cases pertaining to the year 2015-16, the notices issued/proposed to be issued for reassessment would stand barred by time in light of the view taken by this Court in Union of India & Ors. v. Rajeev Bansal, 2024 SCC OnLine SC 2693.

5. There is no quarrel that if the instant cases are found to pertain to Assessment Year 2015-16, then the impugned notices are liable to be struck down outrightly in terms of the concession on behalf of the Department recorded in paragraph 19(f) of Rajeev Bansal (supra) and reiterated before us by the learned Additional Solicitor General of India.

6. However, if it is found that these cases pertain to an assessment year other than 2015-16, the respondent-assessees shall be entitled to raise all the contentions that have been permitted by this Court vide order dated 10.04.2026. Ordered accordingly.

7. Consequently, keeping in mind the reasons set out in order dated 10.04.2026, the impugned judgment in each appeal is set aside and the instant appeals are disposed of by remitting the matters to the jurisdictional High Courts for redetermination of the issues. As observed above, the High Courts shall firstly determine whether the matters pertain to Assessment Year 2015-16. If it is found to be so, no further adjudicatory exercise shall be required to be undertaken by the High Court, except to declare the notices as being time-barred in light of Rajeev Bansal (supra). However, if it is found that the case does not pertain to Assessment Year 2015-16, then all the issues shall be resolved in terms of the order dated 10.04.2026 passed in Civil Appeal No. 4716 of 2026.

8. Pending application(s), if any, including application(s) for substitution and impleadment/intervention stand closed.”

8. Further the Coordinate bench of Honble Tribunal Mumbai Bench in the case of Babu Hasan Shaikh Vs. ITO in ITA No.926/Mum/2025 order dated 28.04.2025. Where similar issue on the validity of the reopening proceedings for A.Y. 2015-16 were under consideration where the notice u/s.148 of the Act was issued after six years and the applicability of First and Fifth proviso to section 149(1) of the Act has been examined and proceedings were held to be invalid and barred by limitation read as under:

“6. We heard the parties and perused the material on record. In order to examine the whether in assessee’s case the notice under section 148 is time barred or not, we need to first look at the relevant provisions of the Act and the legal position as per judicial precedence. Section 149(1) of the Act contain the provisions with regard to the time limit for issue of notice under section 148 of the Act and the same reads as under –

149 – Time limit for notice. (1) No notice under section 148 shall be issued for the relevant assessment year,—

(a) if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b);

(b) if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of—

(i) an asset;

(ii) expenditure in respect of a transaction or in relation to an event or occasion; or

(iii) an entry or entries in the books of account, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more:

Provided that no notice under section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April, 2021, if a notice under section 148 or section 153A or section 153C could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause (b) of sub-section (1) of this section or section 153A or section 153C, as the case may be], as they stood immediately before the commencement of the Finance Act,

Provided further that the provisions of this sub-section shall not apply in a case, where a notice under section 153A, or section 153C read with section 153A, is required to be issued in relation to a search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A, on or before the 31st day of March, 2021:

Provided also that for cases referred to in clauses (i), (iii) and (iv) of Explanation 2 to section 148, where,—

(a) a search is initiated under section 132; or

(b) a search under section 132 for which the last of authorisations is executed; or

(c) requisition is made under section 132A, after the 15th day of March of any financial year and the period for issue of notice under section 148 expires on the 31st day of March of such financial year, a period of fifteen days shall be excluded for the purpose of computing the period of limitation as per this section and the notice issued under section 148 in such case shall be deemed to have been issued on the 31st day of March of such financial year:

Provided also that where the information as referred to in Explanation 1 to section 148 emanates from a statement recorded or documents impounded under section 131 or section 133A, as the case may be, on or before the 31st day of March of a financial year, in consequence of,— (a) a search under section 132 which is initiated; or

(b) a search under section 132 for which the last of authorisations is executed; or

(c) a requisition made under section 132A, after the 15th day of March of such financial year, a period of fifteen days shall be excluded for the purpose of computing the period of limitation as per this section and the notice issued under clause (b) of section 148A in such case shall be deemed to have been issued on the 31st day of March of such financial year

Provided also that for the purposes of computing the period of limitation as per this section, the time or extended time allowed to the assessee, as per show-cause notice issued under clause (b) of section 148A or the period during which the proceeding under section 148A is stayed by an order or injunction of any court, shall be excluded:

Provided also that where immediately after the exclusion of the period referred to in the immediately preceding proviso, the period of limitation available to the Assessing Officer for passing an order under clause (d) of section 148A 30[does not exceed seven days], such remaining period shall be extended to seven days and the period of limitation under this sub-section shall be deemed to be extended accordingly.

Explanation.—For the purposes of clause (b) of this sub-section, “asset” shall include immovable property, being land or building or both, shares and securities, loans and advances, deposits in bank account. (1A) & (2) *****

7. The time limits for issue of notice under section 148 of the Act were amended as above w.e.f. 01.04.2021. Prior to the amendment the relevant provisions of section 149(1) of the Act read as under –

149 – Time limit for notice.

(1) No notice under section 148 shall be issued for the relevant assessment year,—

(a) if four years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b) or clause (c);

(b) if four years, but not more than six years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to one lakh rupees or more for that year;

(c) ****

Explanation.—In determining income chargeable to tax which has escaped assessment for the purposes of this sub-section, the provisions of Explanation 2 of section 147 shall apply as they apply for the purposes of that section.

(2) & (3) ****

8. The time limit for issue of notice under section 148 of the Act was revised with effect from 01.04.2021 and the legislature in order to make the amendment prospective introduced the first proviso to section 149(1). The intent of the first proviso is that the revenue does not get the extended time of ten years where the notices were not issued within a period of six years for AYs prior to 2021-22. The said legislative intent has been clearly explained by the Hon’ble Supreme Court in the case of UOI vs Rajiv Bansal [2024] 167 taxmann.com70 (SC). The relevant of observations of the Apex Court is extracted below –

46. The ingredients of the proviso could be broken down for analysis as follows: (i) no notice under section 148 of the new regime can be issued at any time for an assessment year beginning on or before 1 April 2021; (ii) if it is barred at the time when the notice is sought to be issued because of the “time limits specified under the provisions of” 149(1)(b) of the old regime. Thus, a notice could be issued under section 148 of the new regime for assessment year 2021-2022 and before only if the time limit for issuance of such notice continued to exist under section 149(1)(b) of the old regime.

47. ****

48. Notices have to be judged according to the law existing on the date the notice is issued. Section 149 of the old regime primarily provided two time limits: (i) four years for all situations and (ii) beyond four years and within six years if the income chargeable to tax which escaped assessment amounted to Rupees one lakh or more. After 1 April 2021, the time limits prescribed under the new regime came into force. The ordinary time limit of four years was reduced to three years. Therefore, in all situations, reassessment notices could be issued under the new regime if not more than three years have elapsed from the end of the relevant assessment year. For example, for assessment year 2018-2019, the four year period would have expired on 31 March 2023 under the old regime. However, if the notice is issued after 1 April 2021, the three year time limit prescribed under the new regime will be applicable. The three year time limit will expire on 31 March 2022.

49. The first proviso to Section 149(1)(b) requires the determination of whether the time limit prescribed under section 149(1)(b) of the old regime continues to exist for the assessment year 2021-2022 and before. Resultantly, a notice under Section 148 of the new regime cannot be issued if the period of six years from the end of the relevant assessment year has expired at the time of issuance of the notice. This also ensures that the new time limit of ten years prescribed under section 149(1)(b) of the new regime applies prospectively. For example, for the assessment year 2012-2013, the ten year period would have expired on 31 March 2023, while the six year period expired on 31 March 2019. Without the proviso to Section 149(1)(b) of the new regime, the Revenue could have had the power to reopen assessments for the year 2012-2013 if the escaped assessment amounted to Rupees fifty lakhs or more. The proviso limits the retrospective operation of Section 149(1)(b) to protect the interests of the assesses. 50. to 52. ***

53. The position of law which can be derived based on the above discussion may be summarized thus: (i) Section 149(1) of the new regime is not prospective. It also applies to past assessment years; (ii) The time limit of four years is now reduced to three years for all situations. The Revenue can issue notices under section 148 of the new regime only if three years or less have elapsed from the end of the relevant assessment year; (iii) the proviso to Section 149(1)(b) of the new regime stipulates that the Revenue can issue reassessment notices for past assessment years only if the time limit survives according to Section 149(1)(b) of the old regime, that is, six years from the end of the relevant assessment year; and (iv) all notices issued invoking the time limit under section 149(1)(b) of the old regime will have to be dropped if the income chargeable to tax which has escaped assessment is less than Rupees fifty lakhs.

9. From the perusal of the legislative intent of the first proviso to section 149(1) as laid down by the Hon’ble Supreme Court it is clear that Revenue can not issue notice under section 148 for assessment years prior to AY 2021-22 if six years from the end of the relevant assessment year has expired on the date of issue of such notice. In the light of the above legal position we will now examine the facts in assessee’s case. The year under consideration here is AY 2015-16 and therefore the time limit as per the first proviso is applicable. Therefore the time limit as per the old regime, for issue of notice for AY 2015-16 under section 148 of the Act six years from the end of the relevant assessment year i.e. 31.03.2022. Accordingly the notice dated 18.04.2022 issued in assessee’s case beyond the time limit and not valid.

10. The argument of the ld DR is that the time allowed to the assessee to respond to the notice issued under section 148A(b) i.e. from 24.03.2022 to 08.03.2022 should be excluded as per the fifth proviso to section 149(1). We are of the considered view, for the purpose applying the exclusion period, the notice should first survive the test of being issued either under section 149(1)(a) or 149(1)(b) under the new regime. In the given case the notice under section 148 of the Act for AY 2015-16 does not survive the test by virtue of the first proviso and therefore the question of applying the fifth proviso for calculating the time limit does not arise.

11. In view of these discussions and considering the provisions of the Act r.w. the ratio laid down by the Hon’ble Supreme Court we hold that the notice issued under section 148 of the Act dated 18.04.2022 is barred by limitation. Accordingly the reassessment proceedings based ITA No.2573/PUN/2025 Vivek Prasad 11 on the invalid notice does not survive and the additions made therein are liable to be deleted.

12. Since we have deleted the addition considering the legal issue of notice under section 148 of the Act being time barred, the other legal arguments and contentions on merits have become academic not warranting any adjudication.

13. In result the appeal of the assessee is allowed.”

9. We considering the facts, circumstances, submissions and the ratio of the judicial decisions dealt and follow the judicial precedence and in the present appeal, the notice u/sec148 of the Act was issued on 5.04.2022 which is beyond the period of six years from the end of the relevant assessment year. Accordingly, We set aside the order of the CIT(A) and hold that the notice issued u/sec148 of the Act and the consequential reassessment order is bad in law and the ground of appeal is allowed in favour of the assessee.

Since the ground of appeal no .2 is allowed in favour of the assessee. We are not inclined to adjudicate the other grounds of appeal as they become academic and are dismissed as infructuous.

10. In the result, the appeal filed by the assessee is allowed.

Order pronounced in the open Court on 31^st July 2026