ITAT Mumbai Invalidates AY 2015-16 Reassessment: Revenue's Concession in Rajeev Bansal Case Proves Fatal to Time-Barred Notices

The intersection of the Income Tax Act, 1961 and the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 has generated substantial litigation, particularly concerning the validity of reassessment notices issued during the transition to the new reassessment regime. In a decisive ruling, the Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) recently quashed a reassessment order for the Assessment Year (AY) 2015-16.

The Tribunal concluded that the reassessment proceedings initiated against the assessee were fundamentally barred by limitation under Section 149 of the Income Tax Act, 1961. The judgment in the case of Vinod Shyamsunder Pasari Vs DCIT heavily relied on the explicit concession made by the Income Tax Department before the Hon'ble Supreme Court in the landmark case of Union of India vs. Rajeev Bansal.

Factual Matrix of the Dispute

The legal controversy stems from the financial affairs of the assessee, an individual who originally submitted his income tax return for AY 2015-16 on 30/10/2015. In this initial filing, the assessee disclosed a total income of Rs. 28,32,250.

Subsequently, the tax authorities conducted survey operations at the business premises of an entity named M/s Dayal Tours and Travels (I) Pvt. Ltd. During this investigative process, the department allegedly uncovered intelligence suggesting that the assessee was engaged in the distribution of cash loans to multiple recipients, utilizing an intermediary identified as Shri Gauri Shankar Chaudhary.

Relying on this gathered intelligence, the jurisdictional tax authorities triggered the reassessment mechanism. The chronological sequence of the proceedings unfolded as follows:

  1. Initial Notice: The tax department issued the first notice under Section 148 of the Income Tax Act, 1961 on 21/06/2021.
  2. Impact of Supreme Court Ruling: Following the apex court's directive in Union of India vs. Ashish Agrawal, this initial communication was legally repurposed and treated as a show-cause notice under Section 148A(b).
  3. Information Disclosure: On 25/05/2022, the department supplied the underlying material to the assessee, granting a two-week window to submit a defense.
  4. Final Order and Fresh Notice: The Assessing Officer dismissed the assessee's objections and formalized an order under Section 148A(d) on 31/07/2022. Concurrently, a fresh notice under Section 148 was issued on the exact same date—31/07/2022.
  5. Assessment Order: The proceedings culminated in an assessment order passed on 24/05/2023 under Section 147 read with Section 144B. The Assessing Officer executed a massive addition of Rs. 7.50 crore under Section 69A.