Reassessment for A.Y. 2015-16 After 1 April 2021 -TOLA Applicability Held Void – Bombay High Court

Reassessment for A.Y. 2015–16 After 1 April 2021 Held Void – Bombay High Court Reaffirms Binding Nature of Revenue’s Concession

The Bombay High Court, in Selvakumar Vethamonickam Nadar v. Income Tax Officer Ward 34(3)(2), Mumbai (Writ Petition (L) No. 41554 of 2025, decided on 24 December 2025), has once again conclusively settled the law governing reassessment proceedings for Assessment Year 2015–16 initiated after 1 April 2021. The Court quashed the reassessment notice issued under Section 148 of the Income-tax Act, 1961, together with all consequential proceedings, on the ground that the notice was barred by limitation and without jurisdiction.

The main issue for consideration before the Court was whether a notice under Section 148 dated 23 April 2022 for A.Y. 2015–16, issued after the coming into force of the reassessment regime introduced by the Finance Act, 2021, was barred by limitation and liable to be quashed in light of the binding concession made by the Revenue before the Supreme Court. Although multiple grounds were raised in the writ petition, the matter was argued and decided exclusively on this jurisdictional issue.

The statutory framework relevant to the controversy traces its origin to the Finance Act, 2021, which substituted Sections 147 to 151 of the Income-tax Act with effect from 1 April 2021, introducing a new reassessment architecture, including mandatory pre-notice procedure under Section 148A and revised limitation provisions under Section 149. The first proviso to Section 149(1) places a clear embargo on reopening where such notice could not have been issued on the same date under the unamended law. Considerable litigation arose on whether the limitation extensions under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) could revive reassessment proceedings that were otherwise time-barred.

In the present case, the reassessment notice under Section 148 was issued on 23 April 2022 for A.Y. 2015–16. The petitioner contended that the notice was ex facie time-barred, as all notices for the said assessment year issued on or after 1 April 2021 were impermissible in law. Heavy reliance was placed on the decision of the Supreme Court in Union of India v. Rajeev Bansal [2024] 167 taxmann.com 70.

In Rajeev Bansal, the Supreme Court authoritatively examined the interaction between the post-2021 reassessment regime, Section 149, and TOLA. During the hearing, the learned Additional Solicitor General appearing for the Revenue made an unequivocal concession that for Assessment Year 2015–16, all notices issued under Section 148 on or after 1 April 2021 would have to be dropped, as such notices would not fall within the permissible period of limitation even after considering TOLA. This concession was expressly recorded in the judgment and formed the decisive basis of the ruling.

The Supreme Court in Rajeev Bansal supported its conclusion by a detailed tabular analysis of limitation, which was expressly relied upon by the Bombay High Court in Selvakumar Vethamonickam Nadar. The relevant table is reproduced below:

The Bombay High Court further noted that the ratio of Rajeev Bansal has been consistently followed by the Supreme Court in Deepak Steel and Power Ltd. v. Central Board of Direct Taxes [2025] 174 taxmann.com 144 and in Assistant Commissioner of Income Tax v. Nehal Ashit Shah, wherein reassessment notices for A.Y. 2015–16 issued after 1 April 2021 were summarily set aside on the basis of the Revenue’s concession.

The Court also referred to its own earlier decision in Verjinia Foods Limited v. Income Tax Officer Ward‑1(1), Kalyan, thereby reiterating judicial consistency on the issue. The objection of the Revenue regarding the availability of an alternate appellate remedy was rejected, as the defect went to the root of jurisdiction. It was held that once the notice under Section 148 is void, all consequential proceedings automatically collapse.

In conclusion, the Bombay High Court categorically held that for Assessment Year 2015–16, any notice under Section 148 issued on or after 1 April 2021 is barred by limitation and without authority of law. The judgment reinforces the binding nature of concessions made by the Revenue before the Supreme Court and provides finality to reassessment disputes arising from the transitional phase between the old and new reassessment regimes.

Disclaimer:

This article is intended for academic and professional discussion only and does not constitute legal advice. The views expressed are based on judicial precedents available at the time of writing. Readers are advised to evaluate the facts of their own cases independently and seek appropriate professional guidance before acting on the basis of this article.

Full judgement

Full judgement

B.P. COLABAWALLA & AMIT S. JAMSANDEKAR, JJ.

For the Petitioner: Mr. Devendra H. Jain, Mr. Shashank A. Mehta, Mr. Sauykhya D. Lakade, Mr. Kashyap N. Chotani, Advocates.

For the Respondent: Mr. Ravi Rattesar, Advocate.

P.C

1. Rule made returnable forthwith. Respondents waive service. With the consent of parties, heard finally.
2. The present Petition has been filed primarily with a prayer to quash and set aside (i) the order passed under Section 148A(d), and the Notice issued under Section 148, both dated 23rd April 2022 (Exhibit C and D); (ii) the reassessment order dated 11th March 2024 passed under Section 147 read with Section 144 read with Section 144B of the Act; (iii) the notice of demand of even date under Section 156 of the Act for the Assessment Year (‘A.Y.’) 2015-16 (Exhibit F1 and F2); as well as the consequential penalty orders and notices of demand thereof.
3. At the outset, it has been fairly stated by Mr. Jain, that the Petitioner herein has filed an Appeal against the reassessment order passed, which is still pending. Further, he stated that notices for recovery of demand have been issued and the Petitioner has been threatened with coercive steps. He submitted that if the present Writ Petition is allowed then, he shall withdraw the Appeal.
4. It is contended by Mr. Jain that though several grounds have been raised in the petition, the petition can be disposed on the solitary ground of the notice under Section 148 being barred by limitation. It is contended by the Petitioner that the Notice issued under Section 148 for A.Y.2015-16 is dated 23rd April 2022. Since it is issued after 1st April 2021, it is without jurisdiction and has to be withdrawn in light of the concession made by the Income Tax Department before the Hon’ble Supreme Court in the case of UOI v. Rajeev Bansal [2024] 167 taxmann.com70. Further, reliance is placed on the order dated 2nd April 2025 passed by the Hon’ble Supreme Court in case of Deepak Steel and Power Ltd. v. Central Board of Direct Taxes [2025] 174 taxmann.com 144 and an order dated 4th April 2025 passed in the case of Asstt. CIT v. Nehal Ashit Shah [SLP (CIVIL) Diary No (s) 57209 of 2024]. Further, our attention is also drawn to the decision of this Court in Verjinia Foods Limited v. The Income Tax Officer, Ward-1(1), Kalyan [W.P. No.1428 of 2023, decided on 6-10-2025]. Once the Notice under Section 148 is bad in law, all the consequential orders/notices would also not survive, is the submission.
5. The learned counsel for the Respondent does not dispute the above position. However, he contends that since the Petitioner has availed of the alternate remedy by file an Appeal, this Petition should not be entertained, and be dismissed.
6. We have heard the learned counsel for the parties. It is not in dispute that the present petition relates to A.Y.2015-16. Further, it is also undisputed that the notice under Section 148 has been issued on 23rd April 2022 which is at page 109 of the paper book. Once these are the facts, paragraphs 19 (e) and (f) of the judgment of the Hon’ble Supreme Court in the case of Rajeev Bansal (supra) become relevant. They read as under:-

“19. Mr. N Venkataraman, learned Additional Solicitor General of India, made the following submissions on behalf of the Revenue:-

a………..

e. The Finance Act 2021 substituted the old regime for reassessment with a new regime. The first proviso to Section 149 does not expressly bar the application of TOLA. Section 3 of TOLA applies to the entire Income-tax Act, including Sections 149 and 151 of the new regime. Once the first proviso to Section 149(1)(b) is read with TOLA, then all the notices issued between 1st April 2021 and 30th June 2021 pertaining to assessment years 2013-2014, 2014-2015, 2015-2016, 2016-2017, and 2017-2018 will be within the period of limitation as explained in the tabulation below:

f. The Revenue concedes that for the assessment year 2015-16, all notices issued on or after 1st April 2021 will have to be dropped as they will not fall for completion during the period prescribed under TOLA;”

(emphasis supplied)

1. 7. From the above it is clear, that the Department has conceded before the Hon’ble Supreme Court that all the notices issued under Section 148 after 1st April 2021 for A.Y.2015-16 have to be dropped. In the present case, the Notice under Section 148 is dated 23rd April 2022 and therefore, has to be dropped.
   8. The decision in Rajeev Bansal (supra) has been subsequently followed by the Hon’ble Supreme Court in Deepak Steel and Power Ltd. (supra). Paragraphs 4 and 5 of the said order is reproduced hereunder:-4. The learned counsel appearing for the revenue with his usual fairness invited the attention of this Court to a three judge bench decision of this Court in Union of India and Ors. v. Rajeev Bansal, reported in 2024 SCC OnLine SC 2693, more particularly, paragraph 19(1) which reads thus:-

“19. (f) The Revenue concedes that for the Assessment Year 2015-2016, all notices issued on or after April 1, 2021 will have to be dropped as they will not fall for completion during the period prescribed under the taxation and other Laws (Relaxation and Amendment of certain Provisions) Act, 2020.”

5. As the revenue made a concession in the aforesaid decision that is for the assessment year 2015-2016, all notices issued on or after 1st April, 2021 will have to be dropped as they would not fall for completion during the period prescribed under the taxation and other laws (Relaxation and Amendment of certain Provisions Act, 2020). Nothing further is required to be adjudicated in this matter as the notices so far as the present litigation is concerned is dated 25.6.2021.

(emphasis supplied)

9. Similarly, even in the matter of Nehal Ashit Shah (supra), the Hon’ble Supreme Court, relying upon paragraphs 19 (e) and (f) of the decision in case of Rajeev Bansal (supra), dismissed the SLP filed by the Revenue. Paragraph 5 of the said order is reproduced hereunder:-

“5. In this regard, reference could also be made to paragraph 19(e) and (f) n the case of Union of India v. Rajeev Bansal, Civil Appeal No. 8629 of 2024 on 03.10.2024 (2024 SCC ONLINE 754) under which the Learned Additional Solicitor General for India has made a concession insofar as the Assessment Year 2015-16 is concerned.”

10. Lastly, this very Bench on 6th October 2025, in the matter of Verjinia Foods Limited (supra),has allowed the petition filed by the Petitioner therein by noting that since, the notice under Section 148 was issued after 1st April 2021, the same was required to be set aside in light of the concession made by the Revenue before the Hon’ble Supreme Court in the case of Rajeev Bansal (supra).
11. In light of the above discussion, we find merit in the submissions as canvassed by the Petitioner. The Revenue has categorically made a concession that for A.Y.2015-16 they would drop all notices issued under Section 148 after 1st April 2021. Once this is the position, it is appropriate that the notice under Section 148 dated 23rd April 2022, and the consequential assessment order, notice of demand, penalty notices/orders as well as the recovery notices be quashed and set aside. It is accordingly so ordered.
12. In light of this order, Mr. Jain, the learned counsel appearing on behalf of the Petitioner, undertakes to withdraw the Appeal filed by him before the CIT (Appeals) within a period of 2 weeks from the date of uploading of this order. The said undertaking is accepted. If for any reason, the present order is challenged by the Revenue and is set aside, then the Appeal filed by the Petitioner before the CIT (Appeals) will automatically stand revived and the same shall be prosecuted on its own merits and in accordance with law.
13. Rule is made absolute in the above terms and the Writ Petition is also disposed of in terms thereof. No orders as to cost. We also make it clear that we have not expressed any opinion on the other grounds raised in the petition.
14. This order will be digitally signed by the Private Secretary/ Personal Assistant of this Court. All concerned will act on production by fax or email of a digitally signed copy of this order.