Case Note & Summary
The petitioner, Narayan Industries, challenged a reassessment notice dated 09.06.2021 issued under Section 148 of the Income Tax Act, 1961 for Assessment Year 2015-2016. The notice was issued after 01.04.2021, when the new reassessment regime under Section 148A came into force, but without issuing a prior notice under Section 148A(b) or providing an opportunity of hearing. The Assessing Officer relied on the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (TOLA) to extend the time limit for issuance. Following the Supreme Court's decision in Union of India v. Ashish Agarwal (2022) 444 ITR 1 (SC), the department treated the original Section 148 notice as a notice under Section 148A(b) and subsequently issued a fresh Section 148 notice in July/August 2022 after complying with Section 148A(d). The petitioner argued that the entire reassessment was invalid due to non-compliance with Section 148A and lack of valid sanction under Section 151. The Gujarat High Court, relying on its earlier decision in Keenara Industries (P.) Ltd. v. ITO [2023] 147 taxmann.com 585 (Guj) and the Supreme Court's ruling in Union of India v. Rajeev Bansal (2024) 469 ITR 46 (SC), held that the reassessment notice was invalid. The court found that the notice was issued beyond the limitation period under Section 149 without fresh tangible material, and the sanction under Section 151 was granted by an authority not competent under the amended provisions. Consequently, the court quashed the reassessment notice and all subsequent proceedings.
Headnote
A) Income Tax - Reassessment - Section 148, 148A, 149, 151, Income Tax Act, 1961 - TOLA - Notice issued on 09.06.2021 for AY 2015-2016 without prior notice under Section 148A(b) - Held that after 01.04.2021, reassessment must follow new procedure under Section 148A; TOLA cannot be used to bypass substantive requirements; notice deemed invalid (Paras 2-4). B) Income Tax - Sanction - Section 151, Income Tax Act, 1961 - Sanction for reassessment must be granted by specified authority as per amended provisions - Held that sanction granted by Joint Commissioner instead of Principal Commissioner or Commissioner is invalid; reassessment proceedings quashed (Paras 6-8). C) Income Tax - Limitation - Section 149, Income Tax Act, 1961 - Reassessment notice for AY 2015-2016 issued beyond four years from end of relevant assessment year - Held that without fresh tangible material, notice is barred by limitation; delay cannot be condoned under TOLA (Paras 5-7).
Issue of Consideration
Whether the reassessment notice issued under Section 148 of the Income Tax Act, 1961 for Assessment Year 2015-2016 after 01.04.2021 without complying with Section 148A(b) and without valid sanction under Section 151 is valid in law
Final Decision
The Gujarat High Court allowed the petition and quashed the reassessment notice dated 09.06.2021 and all subsequent proceedings for Assessment Year 2015-2016, holding that the notice was invalid for non-compliance with Section 148A(b) and lack of valid sanction under Section 151.
Law Points
- Reassessment notice under Section 148 of Income Tax Act
- 1961 issued after 01.04.2021 must comply with Section 148A procedure
- TOLA cannot override substantive provisions
- sanction under Section 151 must be by specified authority
- delay in issuing notice beyond time limit invalidates reassessment
