ITAT Visakhapatnam Invalidates Reassessment: Section 148 Notice Barred by Limitation Under Pre-Amended Section 149(1)(b)

Case Reference

Srinivasa Rao Sirivuri Vs ITO (ITAT Visakhapatnam)

Overview of the Dispute

The Income Tax Appellate Tribunal, Visakhapatnam Bench, delivered a significant ruling by annulling reassessment proceedings for Assessment Year 2015-16 on the ground that the notice issued under Section 148 of the Income-tax Act, 1961, dated 03.04.2022, was issued beyond the permissible limitation period under Section 149(1)(b) as it existed prior to the amendment introduced by the Finance Act, 2021.

The Tribunal determined that the six-year limitation window for reopening assessments pertaining to AY 2015-16 conclusively ended on 31.03.2022, rendering the notice dated a day later — 03.04.2022 — legally infirm and jurisdictionally invalid. Drawing upon the authoritative pronouncement of the Supreme Court in Union of India & Ors. v. Rajeev Bansal (2024) 340 CTR 865 (SC), the Tribunal affirmed that the first proviso to Section 149 operates as a statutory bar against reviving reassessment proceedings that had already become time-barred under the pre-amendment legal framework. The extended limitation window introduced through the Finance Act, 2021 cannot be applied retrospectively to breathe life into such concluded matters.

Since the Assessing Officer lacked jurisdictional authority to initiate reassessment proceedings, the consequential assessment order dated 21.02.2024 passed under Section 147 read with Section 144 and Section 144B — wherein cash deposits of Rs. 89,57,554/- were treated as unexplained money under Section 69A — was quashed in its entirety, without the Tribunal venturing into the merits of the additions.

Background and Factual Matrix

Initiation of Reassessment Proceedings

The Assessing Officer, acting on intelligence derived from the Risk Management Strategy framework formulated by the CBDT, observed that the assessee had made substantial cash deposits of Rs. 72,85,010/- in his current account bearing number 225811100000034 maintained with Andhra Bank (subsequently merged with Union Bank of India) during the relevant previous year corresponding to AY 2015-16. It was further noted that no return of income had been filed by the assessee for that year.

On the basis of the aforesaid information, reassessment proceedings were set in motion under Section 147 of the Income-tax Act, 1961, and a notice under Section 148 dated 03.04.2022 was accordingly dispatched to the assessee.

Non-Compliance by the Assessee and Assessment Proceedings

The assessee neither filed a return of income in response to the Section 148 notice nor complied with subsequent notices issued under Section 142(1). This compelled the Assessing Officer to issue a notice under Section 144 dated 02.02.2024, calling upon the assessee to show cause why the assessment should not be completed on a best judgment basis.

The Assessing Officer thereafter procured the assessee's bank account statements through a requisition under Section 133(6) of the Act. On scrutiny of the bank records, it emerged that the total cash deposits made during the relevant year amounted to Rs. 89,57,554/-, a figure exceeding the amount originally flagged under the Risk Management Strategy. Since the assessee offered no explanation whatsoever regarding the source of these deposits, the entire amount of Rs. 89,57,554/- was classified as unexplained money under Section 69A, and total income was assessed at that figure by order dated 21.02.2024 passed under Section 147 read with Section 144 and Section 144B.

Appellate History

Aggrieved by the assessment order, the assessee approached the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi. The CIT(A) dismissed the appeal vide order dated 20.12.2024, which was served upon the assessee on 01.01.2025.

The assessee thereafter filed an appeal before the ITAT on 28.07.2025, resulting in a delay of 148 days (noted by the Tribunal as 150 days) beyond the prescribed filing deadline of 02.03.2025.

Condonation of Delay

Grounds Advanced by the Assessee

In support of the application seeking condonation of delay, the assessee filed an affidavit disclosing that he was suffering from buccal mucosa cancer — a malignancy affecting the inner lining of the cheeks. He had undergone surgical intervention on 08.10.2014 and had received radiotherapy at Mahatma Gandhi Cancer Hospital and Research Institute, Visakhapatnam, from 06.11.2014 to 02.01.2015. Although the cancer had been treated, the assessee continued to suffer from persistent complications including wound infections, fever, swallowing difficulties, and jaw pain.

The affidavit further disclosed that the assessee remained unwell during the early weeks of January 2025 and continued under active medical treatment from 10.01.2025 to 10.07.2025, during which he was physically incapacitated and unable to attend to his legal and financial affairs. As soon as his health permitted, he took immediate steps and filed the appeal on 28.07.2025.

Tribunal's Decision on Condonation

The Tribunal, taking a compassionate and justice-oriented view of the medical circumstances placed on record, held that the assessee had demonstrated sufficient and reasonable cause for the delay and accordingly condoned the same.