Bombay High Court rejects re-assessment notices

Bombay High Court rejects re-assessment notices

It took into account the views taken by high courts of other states

The Bombay High Court has quashed the re-assessment notices issued on or after 1 April 2021 without following the new procedures laid down under the Income Tax Act, 1961.

While concurring with the views taken by the Allahabad High Court, the Rajasthan High Court, the Delhi High Court and the Madras High Court, the bench comprising Justice KR Shriram and Justice NJ Jamadar took into account a bunch of litigations. The petitioners had challenged the initiation of the assessment proceedings issued after 1 April 2021.

The court ruled, "The Relaxation Act is not applicable for the Assessment Year 2015-2016 or any subsequent years. Hence, the question of applicability of the notification of 2021 does not arise. The time limit to issue a notice under the Act for the Assessment Years 2015-2016 onwards was not expiring within the period for which the Relaxation Act was applicable. As a consequence, there can be no question of extending the period of limitation for such assessment years."

According to the division bench, the reopening notices issued after the date mentioned were unsustainable and incorrect in law.

It explained, "The explanation seeks to extend the applicability of erstwhile Sections 148, 149 and 151. The impugned explanation does not cover Section 147, which (as amended) empowers the revenue to reopen an assessment subject to Sections 148 to 153, which includes Section 148A.

"Thus, even if those explanations are valid, the mandatory procedure laid down by Section 148A has not been followed. Hence, the notices are invalid and must be struck down," the court added.