Devendra Jaswantrai Shah Vs ITO (Bombay High Court)
Whether a reassessment notice issued under Section 148 on 18.04.2022 for A.Y. 2015–16 is valid in law, considering the limitation period and the scope of extension under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA), especially in light of the Supreme Court ruling in Union of India vs. Rajeev Bansal.
Facts: The petitioner was issued a show cause notice dated 24.03.2022 alleging escapement of income arising from an immovable property transaction. Due to oversight, the petitioner failed to respond to the said notice. Thereafter, an order was passed on 18.04.2022 holding that it was a fit case for reopening, and accordingly, a notice for reassessment was issued on the same date for A.Y. 2015–16. The petitioner complied by filing a return in response to the notice. Subsequently, the assessment was completed on 04.12.2023, and consequential demand and penalty proceedings were initiated. Aggrieved, the petitioner approached the High Court challenging the validity of the reassessment notice and all consequential proceedings on the ground that the notice itself was time-barred and without jurisdiction.
High Court Findings and Decision: The High Court held that the issue was no longer res integra in view of the Supreme Court’s judgment in Union of India vs. Rajeev Bansal, wherein the Revenue had categorically conceded that for A.Y. 2015–16, all reassessment notices issued on or after 01.04.2021 are liable to be dropped as they fall outside the permissible time limit. Applying the said binding precedent, the Court observed that the impugned notice dated 18.04.2022 was clearly time-barred and therefore invalid in law. The Court further held that the mere fact that the petitioner had filed a return in response to the notice or that the assessment was completed would not cure the inherent lack of jurisdiction, as a void notice cannot be validated by participation of the assessee. Addressing the contention of delay, the Court ruled that such delay cannot legitimize an otherwise illegal notice, particularly when the issue stands concluded by the Supreme Court and when consequential penalties had been imposed. The Court also relied on its earlier decisions holding that proceedings which are void ab initio cannot be sustained on technical grounds such as laches. Accordingly, the Court quashed the reassessment notice dated 18.04.2022 along with the assessment order and all consequential demand and penalty proceedings, holding them to be bad in law. The writ petition was allowed and rule was made absolute.
