ITAT Hyderabad Quashes Time-Barred Reassessment Under Section 148 for AY 2015-16 Despite Escaped Income Exceeding Rs. 50 Lakhs

In a pivotal ruling that reinforces the sanctity of statutory limitation periods, the Income Tax Appellate Tribunal (ITAT), Hyderabad Bench, has invalidated a reassessment proceeding initiated against an assessee for the Assessment Year (AY) 2015-16. The judicial pronouncement in the case of Afreed Mohammad Vs ACIT serves as a crucial reminder that the extended ten-year reopening window introduced by the recent legislative amendments cannot be weaponized to resurrect cases that have already attained finality under the erstwhile six-year limitation regime.

The Tribunal categorically ruled that a substantive notice issued under Section 148 of the Income Tax Act 1961 must strictly adhere to the limitation timelines, and merely issuing a preliminary show-cause notice within the permissible timeframe does not cure the defect of a belated jurisdictional notice.

Factual Matrix of the Dispute

The controversy stems from the Revenue's attempt to reopen the assessment of the assessee for AY 2015-16. The procedural timeline executed by the Assessing Officer (AO) unfolded as follows:

  1. A preliminary show-cause notice under Section 148A(b) was dispatched to the assessee on 24.03.2022.
  2. The assessee did not submit a response to this preliminary notice within the stipulated timeframe.
  3. Consequently, the AO proceeded to pass an order under Section 148A(d) on 05.04.2022, concluding that income had indeed escaped assessment.
  4. Following this order, the substantive jurisdictional notice under Section 148 was issued on 06.04.2022.

The core grievance raised by the assessee was that the final notice under Section 148 was issued on 06.04.2022, which mathematically falls beyond the expiry of six years from the end of AY 2015-16. According to the assessee's legal counsel, the maximum permissible time limit to reopen the assessment for the said year expired on 31.03.2022.

Arguments Advanced by the Revenue

The Revenue strongly defended its jurisdiction to reopen the assessment, anchoring its arguments on the revamped reassessment framework introduced by the Finance Act 2021, which took effect from 01.04.2021.