Reassessment proceedings initiated after April 1, 2021

Reassessment proceedings initiated after April 1, 2021 for AY 2015-16 are barred by limitation.

Issue

Whether reassessment proceedings initiated after April 1, 2021, for Assessment Year 2015-16—including notices issued under Section 148 and Section 148A(b) along with the consequential order—are barred by limitation under Section 148A read with TOLA, 2020.

Facts

The case pertains to Assessment Year 2015-16.
The Assessing Officer issued the initial reassessment notice under Section 148 on April 12, 2021.
Subsequently, a notice under Section 148A(b) was issued to the assessee on March 31, 2022.
A consequential order under Section 148A(d) was passed on May 2, 2022.
All statutory steps for reopening the assessment were undertaken after the cut-off date of April 1, 2021.
The assessee challenged the reassessment exercise as time-barred and legally unsustainable under the amended provisions read with TOLA.

Decision

The High Court held that since all procedural steps for reassessment were executed after the threshold date of April 1, 2021, the proceedings were barred by limitation.
The entire reassessment exercise was declared unsustainable in law under Section 148A read with TOLA.
The impugned notices and consequential order were quashed, deciding the issue in favor of the assessee.

Key Takeaways

Strict Cut-Off Date: Reassessment actions for AY 2015-16 initiated after April 1, 2021, must strictly conform to the new regime under Section 148A and applicable limitation periods.
TOLA Limitations: Extension benefits under TOLA cannot validate reassessment notices or orders for AY 2015-16 if the statutory timeframe prescribed under the amended law has elapsed.
Jurisdictional Sustainability: Proceedings initiated beyond the permissible statutory limitation period render the entire reassessment mechanism void ab initio.

HIGH COURT OF MADRAS

Shanmugha Arts, Science Technology and Research Academy

ACIT (Exemptions)^*

SUSHRUT ARVIND DHARMADHIKARI, CJ.
and G. Arul Murugan, J.

W.A.No.1925 of 2026
C.M.P. No.17129 of 2026^†

JULY 16, 2026

Shankaranarayanan, Sr. Counsel for the Appellant. N. Venkataraman, Additional Solicitor General and V.J.Arul Raj, Senior Standing Counsel for the Respondent.

JUDGMENT

Sushrut Arvind Dharmadhikari, CJ.- This appeal is directed against the order dated 3.6.2026, passed by the learned Single Judge in Shanmugha Arts and Science Technology & Research Academy v. ACIT (Exemptions) (Madras)/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 Bansal (SC)/2024 SCC Online SC 2693 . 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.

7. There shall be no order as to costs. Connected interim application stands closed.