ITAT Delhi Quashes AY 2015-16 Reassessment; Section 148 Notice Issued in April 2022 Held Time-Barred

Time-Barred and Void: ITAT Delhi Quashes Reassessment for AY 2015-16 Notice Issued in April 2022
Ravindra v. ITO, Charkhi Dadri | ITA Nos. 161 & 162/Del/2026 | ITAT Delhi "B" Bench (Shri M. Balaganesh, AM and Shri Sudhir Kumar, JM) | Pronounced on 19.08.2026

Introduction

Reassessment litigation under the Finance Act, 2021 regime has produced a lot of case law. The Supreme Court's ruling in Union of India v. Rajeev Bansal 469 ITR 46 (SC) settled how the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) works with the new Sections 148 to 151. Some issues remain open, but one point is now settled, partly because of a concession by the Revenue itself: for AY 2015-16, notices issued on or after 01.04.2021 cannot survive.

The Delhi Bench's decision in Ravindra applies that position firmly. It is also useful on a second point that comes up often in practice: what should happen when the first appeal was dismissed only for delay, but the assessment is void for lack of jurisdiction?

Background Facts

The assessee had not filed a return of income for AY 2015-16.The case was reopened on information that he had deposited ₹90,00,000 in cash in his bank account.A notice under Section 148 was issued on 03.04.2022.The assessee did not respond to the statutory notices. The AO passed an assessment order under Section 147 on 27.02.2024, adding ₹90,00,000 as unexplained money under Section 69A.Penalty proceedings followed. Again there was no reply, and a penalty of ₹27,81,000 was levied under Section 271(1)(c) by order dated 05.08.2024.The assessee appealed to the NFAC, but the appeals were late by 543 days (quantum) and 381 days (penalty). On 02.12.2025 the NFAC dismissed both appeals without condoning the delay and without deciding the merits.

Additional Grounds Admitted Before the Tribunal, the assessee raised two additional grounds:

Limitation: A notice's validity must be judged by the law in force on the date it was issued. Under the first proviso to Section 149(1), as substituted by the Finance Act, 2021, no notice for AY 2015-16 could be issued on or after 01.04.2022. The notice dated 03.04.2022 was therefore time-barred.

Monetary threshold: The cash deposit was actually ₹45,00,000, wrongly taken as ₹90,00,000. That is below the ₹50 lakh threshold needed to reopen an assessment beyond three years.

Both grounds were purely legal and went to the root of the matter. The Tribunal admitted them under the principle in National Thermal Power Co. Ltd. v. CIT (1998) 229 ITR 383 (SC).

Legal Framework: Why AY 2015-16 Is Different

Under the old Section 149(1)(b), the outer limit for reopening was six years from the end of the relevant assessment year. For AY 2015-16, that period ended on 31.03.2022.

The new regime increased the outer limit to ten years for escaped income of ₹50 lakh or more. However, the first proviso to Section 149(1) protects taxpayers for earlier years. No notice can be issued for an assessment year beginning before 01.04.2021 if it would have been time-barred under the old six-year rule.

In Rajeev Bansal, the Additional Solicitor General presented a table of limitation periods under TOLA. For AY 2015-16, the six-year limit expired on 31.03.2022, and TOLA's extension did not apply. Para 19(f) of the judgment records the Revenue's concession:

"The Revenue concedes that for the assessment year 2015-16, all notices issued on or after 1 April 2021 will have to be dropped as they will not fall for completion during the period prescribed under TOLA."

So for AY 2015-16, TOLA gives the Revenue no extra time, and the Ashish Agarwal deeming fiction does not save the notice either.

Arguments Before the Tribunal

Assessee: The authorised representative argued that the notice dated 03.04.2022 was issued after the six-year limit and was time-barred. He relied on:

Rajeev Bansal (SC), especially the concession in para 19(f);

Himanshu Sharma v. ITO (ITA No. 820/Del/2026), where a coordinate bench quashed a similar notice for the same year on the basis of para 19(f);

Gharthoon Agriculture Services Society v. ITO (ITA Nos. 925–928/CHD/2025, dated 13.11.2025), where the Chandigarh Bench held that once the Tribunal finds the AO assumed jurisdiction after the time limit, there is no need to send the matter back to the CIT(A)/NFAC after condoning the delay.

He also argued that the assessee had shown sufficient cause for the delay.

Revenue: The Sr. DR relied on the lower authorities' orders. He stressed that the assessee had not taken part in the assessment proceedings and had not filed the appeals on time.

Findings of the Tribunal Quantum Appeal (ITA No. 161/Del/2026)

No jurisdiction: The Tribunal held that the notice dated 03.04.2022 was without jurisdiction. Following Rajeev Bansal, an assessment could not be based on a time-barred notice.

Delay condoned: The NFAC should have recognised the jurisdictional defect and condoned the 543-day delay, which arose, if at all, from the assessee's bona fide error. The Tribunal condoned the delay itself.

No remand: Normally, when the first appellate authority has not decided the merits, the case would go back to it after the delay is condoned. The Tribunal declined to do this because it "would unnecessarily multiply the litigation." Once the AO had wrongly assumed jurisdiction after the time limit, there was nothing left for the NFAC to decide.

Result: The assessment order was quashed and the appeal allowed.

Penalty Appeal (ITA No. 162/Del/2026)

The 381-day delay was condoned, consistent with the quantum appeal.

Since the assessment was quashed, no income remained assessable in the assessee's hands. The ₹27,81,000 penalty under Section 271(1)(c) therefore had no basis and was deleted.

Both appeals were allowed.

Analysis and Key Takeaways

1. The Revenue's concession in Rajeev Bansal is a strong defence for AY 2015-16.Para 19(f) is not just an observation. It is a concession recorded by the Supreme Court. Delhi Benches have now applied it consistently in Himanshu Sharma and Ravindra. Any reassessment for AY 2015-16 based on a notice issued on or after 01.04.2021 is open to challenge.

2. Limitation goes to jurisdiction and can be raised at any stage.The limitation ground was raised for the first time before the Tribunal and was admitted under NTPC. Not raising it earlier does not prevent relief when the defect goes to the root of the proceedings.

3. The merits of the case matter when deciding condonation of delay.The Tribunal effectively treated the jurisdictional defect as a reason to condone a delay of over 500 days. Where the impugned order is void, refusing condonation would keep alive an order that should never have been passed.

4. Remand is not automatic.Following Gharthoon, the Tribunal decided the legal issue itself rather than sending the case back. This saves time and costs for both sides.

5. The penalty falls with the assessment.Penalty depends on the assessment. When the assessment is quashed, the penalty under Section 271(1)(c) cannot survive.

6. The threshold ground remains open. The assessee also argued that the deposit was ₹45 lakh, below the ₹50 lakh threshold. Since the case was decided on limitation, the Tribunal did not rule on this point. Practitioners can still use it in suitable cases, particularly where the AO's figure for escaped income is overstated.

Practical Checklist for Practitioners For AY 2015-16 reassessments:

Check the actual date of issue of the Section 148 notice, including its DIN and the digital signature timestamp.

If it was issued on or after 01.04.2021, rely on para 19(f) of Rajeev Bansal.

Raise limitation as an additional legal ground even if it was not taken earlier.

In delayed appeals, show that the order is void for lack of jurisdiction to support the condonation application.

Ask the Tribunal to decide the jurisdictional issue itself rather than remand it, citing Gharthoon and Ravindra.

Challenge any related penalty as falling with the assessment.

Disclaimer: This article is for informational purposes only and does not constitute legal advice. Readers should refer to the full text of the order and seek professional advice on specific facts.

#IncomeTax #ITAT #Reassessment #Section148 #Section149 #RajeevBansal #TOLA #TaxLitigation #CondonationOfDelay #DirectTax

CA Shilpa Gupta

shilpa@saaca.in

Income Tax Case Law Ravindra  C/o CA MR Sahu Versus ITO

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