Reassessment for AY 2015-16 Annulled: ITAT Visakhapatnam Applies Six-Year Limitation under Section 149(1)(b)

Background of the Appeal

The dispute in Penugonda Yagnasree Vs ITO (ITAT Visakhapatnam) revolved around the legality of a reassessment initiated for Assessment Year 2015-16 under Section 148 of the **Income Tax Act 1961`.

The assessee approached the Income Tax Appellate Tribunal, Visakhapatnam Bench, challenging the order of the CIT(A)–NFAC, Delhi, dated 09.09.2025. Multiple issues were raised, but the Tribunal first addressed the limitation for issuing notice under Section 148, as that question went to the very foundation of the reassessment.

Key grievances of the assessee included:

  • The Section 148 notice dated 04.04.2022 was alleged to be time-barred.
  • The reassessment was claimed to be void ab initio due to alleged non-compliance with Section 151A.
  • Addition under Section 69A of Rs. 1,65,05,300 towards unexplained bank deposits was contested.
  • It was also argued that the CIT(A) passed the order ex-parte without proper opportunity.

The Tribunal, in line with established practice, examined the limitation issue first, since a finding in favour of the assessee on this point would render all other issues academic.

Grounds of Appeal – Focus on Limitation

Among various grounds, Ground No. 3 directly attacked the validity of the Section 148 notice issued on 04.04.2022, asserting that it was beyond the statutory six-year time limit applicable to AY 2015-16.

The assessee’s arguments were built around:

  • The old reassessment regime (pre–Finance Act 2021) permitted reopening up to six years from the end of the relevant assessment year in certain cases.
  • For AY 2015-16, this period expired on 31.03.2022.
  • The first proviso to Section 149(1)(b) (as amended by the Finance Act 2021) bars issuance of Section 148 notices for years up to AY 2021-22 if, under the old law, a notice was already time-barred on the date of application of the amended regime.
  • Therefore, the notice dated 04.04.2022 was claimed to be without jurisdiction and liable to be quashed.

In support, the assessee relied on the ITAT Hyderabad Bench decision in Sudheer Parimala vs. ITO, where a similar notice for AY 2015-16 issued beyond six years was held time-barred.

Revenue’s Stand: Ten-Year Window Under Amended Law

The Departmental Representative took a different view, anchored in the amended reassessment provisions effective 01.04.2021, particularly:

  • Under the amended Section 149(1):
    • Clause (a): Reopening permissible up to three years, where alleged escaped income is below Rs. 50 lakhs.
    • Clause (b): Reopening permissible up to ten years, where alleged escaped income is Rs. 50 lakhs or more.

On this basis, the Revenue argued:

  1. For cases where the alleged escaped income is Rs. 50 lakhs or more, the Assessing Officer can reopen up to ten years from the end of the relevant assessment year under Section 149(1)(b) as amended.
  2. The first proviso to Section 149(1) was said to apply only if, as on 01.04.2021, the reassessment under the old regime was already barred.
  3. For AY 2015-16, the Revenue contended that the limitation had not fully lapsed on 01.04.2021, and consequently the extended ten-year limit under the new law could be invoked.
  4. Accordingly, the notice dated 04.04.2022 was claimed to be within the ten-year period from the end of AY 2015-16.

Judicial support was sought from: