ITAT Ahmedabad Invalidates Reassessment Proceeding Due to Time-Barred Notice Under Section 148

The Income Tax Appellate Tribunal (ITAT), Ahmedabad, has delivered a highly significant ruling concerning the jurisdictional time limits applicable to reassessment proceedings. In the case of Yogeshkumar Kasturji Prapapati Vs ITO, the Tribunal categorically established that procedural timeframes provided for passing an order cannot artificially extend the strict outer limitation period mandated by the statute for issuing a reassessment notice.

The judicial authority concluded that any approval procured from the Principal Commissioner of Income Tax (PCIT) after the expiration of the legally surviving limitation period is fundamentally defective and cannot breathe life into a time-barred assessment. By placing heavy reliance on the apex court's jurisprudence, specifically the landmark rulings in Union of India vs Rajeev Bansal and Union of India vs. Ashish Agarwal, the Tribunal quashed the reassessment proceedings for Assessment Year 2017-18.

This comprehensive analysis delves into the factual matrix, the procedural transition under the substituted reassessment regime, and the critical legal principles regarding the "surviving period of limitation" as interpreted by the ITAT.

Factual Matrix of the Dispute

The genesis of the dispute traces back to the assessee's tax filings for the Assessment Year (AY) 2017-18. Initially, the assessee had not submitted an original return of income for the aforementioned assessment year.

Following the initiation of reassessment proceedings, the assessee was served with a notice. Complying with this statutory requirement, the assessee subsequently filed a return of income declaring a total income of ₹2,87,588.

The Assessing Officer (AO) proceeded with the scrutiny and ultimately finalized the reassessment order on 28 May 2023. In this order, the AO made a substantial addition of ₹5,90,000 to the assessee's income, categorizing it as unexplained money under the provisions of Section 69A of the Income Tax Act 1961.

Aggrieved by the AO's determination, the assessee escalated the matter by filing an appeal before the Commissioner of Income Tax (Appeals) at the National Faceless Appeal Centre (NFAC). However, the appellate authority did not find merit in the assessee's submissions and proceeded to dismiss the appeal via an order dated 26 February 2026.

Determined to seek relief, the assessee approached the ITAT Ahmedabad. The primary grounds of appeal challenged both the jurisdictional validity of the reopening of the assessment and the substantive merits of the ₹5,90,000 addition. The assessee raised several critical objections, including:

• The expiration of the statutory limitation period.
• The AO's reliance on unverified third-party records.
• The lack of legally acceptable evidentiary backing for the alleged cash transactions.
• The denial of an opportunity for cross-examination.
• The failure of the lower authorities to properly evaluate the documentary material submitted during the proceedings.