Karnataka HC Nullifies AY 2015–16 Reassessment Started After 1 April 2021

Background of the dispute

In Kargode Chandrashekar Dayananda Vs Assessment Unit (Karnataka High Court), the assessee, a 76‑year‑old individual, approached the Karnataka High Court challenging a complete chain of reassessment and recovery proceedings for AY 2015–16 initiated under the Income Tax Act 1961.

The core trigger was a notice under Section 148A(b) dated 19.03.2022, followed by:

  • an order under Section 148A(d) dated 29.03.2022, stating that it was a fit case for reopening under Section 148;
  • a consequential notice under Section 148 also dated 29.03.2022 for AY 2015–16.

Subsequently, the Assessing Officer completed an ex parte reassessment:

  • Assessment order dated 16.03.2023 under Section 147 read with Sections 144 and 144B;
  • Computation sheet and demand notice under Section 156 issued on the same date.

Thereafter, the Department proceeded with further measures:

  • Penalty order under Section 271F dated 18.09.2023, with a corresponding computation and Section 156 demand;
  • Garnishee notice under Section 226(3) dated 10.11.2023 addressed to Karnataka Bank;
  • Recovery proceedings under the Second Schedule initiated by notice dated **12.08.2025`.

The assessee questioned not only the validity of the reassessment notice and order, but also every subsequent step: computation, penalty, tax demand, bank attachment, and recovery under the Second Schedule.

Issues considered by the Karnataka High Court

The High Court identified three interlinked questions:

  1. Whether reassessment for AY 2015–16 can lawfully be initiated on or after 01.04.2021 by issuing notices under Section 148A and Section 148.

  2. If the initial reopening is invalid, whether:

    • the assessment order under Section 147 r/w Sections 144 & 144B;
    • **demands under Section 156`;
    • **penalty under Section 271F`;
    • recovery actions, including garnishee notice u/s 226(3)` and Second Schedule proceedings
      can nevertheless survive.

  3. Whether writ jurisdiction is maintainable even though the assessee had already filed a statutory appeal against the assessment order, which remained pending.

Assessee’s key submissions

The assessee, through counsel, advanced the following main contentions:

1. Reopening for AY 2015–16 after 01.04.2021 is barred

  • The notice under Section 148A(b) dated 19.03.2022 and the order under Section 148A(d) dated 29.03.2022, together with the notice under Section 148 issued on 29.03.2022, were all post 01.04.2021.
  • These notices pertained to AY 2015–16.
  • The assessee argued that, in view of binding judicial precedent, any such notice for AY 2015–16 issued on or after 01.04.2021 must be treated as unsustainable.

2. Reliance on Venkatala Iyyappa Rajanna and Rajeev Bansal

The assessee placed strong reliance on the Division Bench judgment of the Karnataka High Court in:

Income Tax Officer v. Venkatala Iyyappa Rajanna — Writ Appeal No.612/2025 [T-IT], disposed of on 05.08.2025

In that decision, the Division Bench had:

  • examined the Supreme Court’s ruling in Union of India V. Rajiv Bansal;

  • recorded the Revenue’s concession before the Supreme Court that:

    “all such notices issued on or after 01.04.2021 in respect of Assessment Year 2015-2016 were liable to be dropped.”

On that basis, the assessee contended that his case was squarely covered by the same category of reassessment notices that had to be abandoned.

3. Absence of jurisdiction invalidates the entire chain

According to the assessee, the notice under Section 148A(b) and the order under Section 148A(d) were without jurisdiction, so:

  • the notice under Section 148 could not validly confer reassessment authority;
  • the assessment under Section 147 r/w Sections 144 & 144B was a jurisdictionally defective order;
  • all consequential actions—including:
    • tax computation,
    • demand under Section 156,
    • penalty under Section 271F,
    • garnishee notice under Section 226(3),
    • and proceedings under the Second Schedule—
      must automatically fall.

4. Writ petition despite pending statutory appeal

The assessee submitted that: