Time-Limit Breach Under Section 149 Invalidates Reopening in Amba Shakti Ispat Ltd. Vs DCIT (ITAT Delhi)

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) in Amba Shakti Ispat Ltd. Vs DCIT (ITAT Delhi) has annulled a reassessment framed for AY 2014-15, where an addition of ₹6,11,25,229 had been made under Section 69A read with Section 115BBE. The Tribunal held that the fresh reassessment notice dated 29.07.2022 issued under Section 148 was barred by limitation prescribed in Section 149, as interpreted by the Supreme Court in Union of India v. Rajeev Bansal, (2024) 469 ITR 46 (SC).

The ruling emphasizes that reassessment proceedings, even when rooted in information about alleged accommodation entries, cannot survive if the foundational Section 148 notice is issued beyond the statutory time frame.

Factual Matrix: Return Filing and Information on Alleged Accommodation Entries

Original Return and Investigation Inputs

• The assessee, Amba Shakti Ispat Ltd., filed its return of income for AY 2014-15, declaring a total income of Rs. 74,20,160.
• Subsequently, the Investigation Wing provided information alleging that the assessee had obtained accommodation entries from M/s Kamakhya Enterprises, said to be managed by Shri Pawan Mishra.
• Relying on this material, the Assessing Officer (AO) initiated reassessment proceedings under Section 147 / Section 148 of the Income Tax Act 1961.

Initial Notice Under Old Law and Transition to New Regime

• An initial notice under the erstwhile Section 148 was issued on 29.06.2021.
• In the meantime, the reassessment regime was substantially overhauled with effect from 01.04.2021 via the Finance Act 2021, and several notices issued under the old law during the transitional period came to be dealt with by the Supreme Court in Union of India v. Ashish Agarwal, (2022) 444 ITR 1 (SC).
• Pursuant to Ashish Agarwal, the existing notice was treated as a show cause notice, and the reassessment had to proceed under the amended framework (Section 148A, Section 148, Section 149).

Proceedings Under Section 148A

• In line with Ashish Agarwal, the AO:
  • Issued a Section 148A(b) notice on 25.05.2022, along with the underlying material.
  • Granted time up to 09.06.2022 to the assessee to file its response.
  • The assessee submitted its reply on 09.06.2022.
• Thereafter:
  • An order under Section 148A(d) was passed.
  • A fresh notice under Section 148 was issued, bearing date 29.07.2022.
  • According to the assessee’s submissions recorded in the ITAT order, the ITBA portal reflected the actual issue date as 30.07.2022.

Reassessment Order and First Appellate Proceedings

Best-Judgment Reassessment

• The AO concluded that the assessee had received accommodation entries which represented unexplained money.
• He therefore:
  • Treated the sum of ₹6,11,25,229 as unexplained under Section 69A.
  • Applied Section 115BBE to tax the amount.
• A reassessment order dated 29.05.2023 was passed as a best judgment assessment under Section 147 read with Section 144B.
• This reassessment determined the total income at Rs. 6,85,45,389.

Order of the CIT(A)

• The assessee carried the matter in appeal before the CIT(A)-24, New Delhi.
• The CIT(A), by order dated 13.04.2026 under Section 250, dismissed the appeal and upheld the addition.
• The first appellate authority did not accept the assessee’s challenges, including those on jurisdiction, limitation, and procedural compliance.

Grounds Raised Before the ITAT

Before the Tribunal, the assessee assailed both the jurisdictional validity of the reopening and the merits of the addition. The key planks of attack included: