Calcutta High Court Stays Reassessment Notice for AY 2015–16 Over Section 151 Approval and Limitation Concerns

Background of the Dispute

The case of Babylon Trading & Investment Pvt. Ltd. Vs Union of India & Ors. (Calcutta High Court) deals with a challenge to a reopening of assessment for Assessment Year (AY) 2015–16 under the Income Tax Act 1961.

The assessee questioned:

  • An order dated December 30, 2024 passed under Section 148A(d)
  • The consequent notice issued the same day under Section 148 for AY 2015–16

The writ petition was filed on the ground that the entire reassessment exercise was vitiated by jurisdictional defects, non-compliance with mandatory statutory safeguards and bar of limitation.

Core Grievances Raised by the Assessee

1. Non-supply of Approval under Section 151

The primary objection was that although the reopening notice under Section 148 requires prior approval under Section 151, the order granting such approval was never served on the assessee.

The assessee’s counsel argued that:

  • The approval under Section 151 forms the very foundation of jurisdiction for issuance of a reopening notice under Section 148.
  • Non-supply of such approval order denies the assessee an effective opportunity to challenge the validity of the reopening.
  • This procedural lapse goes to the root of jurisdiction and renders the reopening unsustainable.

In support of this proposition, reliance was placed on:

  • A Coordinate Bench of the Calcutta High Court in:
    • WPA 1690 of 2025 (Parveen Jhawar v. Union of India & Ors.)
    • WPA 20316 of 2025 (Asif Ahmed v. Union of India & Ors.)
  • Wherein the Bench had already stayed similar reopening notices after referring to:
    • Tia Enterprises Pvt. Ltd. v. Income Tax Officer, reported in (2024) 468 ITR 5: (2023) SCC OnLine Delhi 6835 (Delhi High Court)
    • Income Tax Officer v. Tia Enterprises Pvt. Ltd., reported in (2024) 468 ITR 10 : 2024 SCC OnLine SC 2947 (Supreme Court)

These decisions were cited to highlight that non-furnishing of the approval order under Section 151 has been treated as a serious legal infirmity in reassessment proceedings.

2. Limitation Under Section 149 for AY 2015–16

The assessee also assailed the reassessment on the ground of time-barred initiation:

  • For AY 2015–16, reassessment proceedings are governed by the timelines prescribed under Section 149.
  • According to the assessee, any valid reassessment action should have been initiated on or before March 31, 2022.
  • Contrary to this, the sequence of events was as follows:
    • Show-cause notice under Section 148A(b) issued on November 6, 2024
    • Order under Section 148A(d) passed on December 30, 2024
    • Reopening notice under Section 148 also issued on December 30, 2024

All the above steps were contended to be beyond the permissible statutory time limit, thereby hitting the reassessment with the bar of limitation under Section 149.