The High Court of Jammu & Kashmir and Ladakh quashed reassessment proceedings for AY 2013–14 as time-barred. A bench of Justice Sindhu Sharma and Justice Shahzad Azeem set aside orders issued under Income Tax Act, 1961 Sections 148A(d) and 148.
JAMMU AND KASHMIR: The High Court of Jammu & Kashmir and Ladakh has invalidated reassessment proceedings initiated for the 2013–14 year, finding they were time-barred.
A division bench of Justice Sindhu Sharma and Justice Shahzad Azeem, sitting in Srinagar, set aside the order dated July 25, 2022 issued under Section 148A(d) of the Income Tax Act and the subsequent notice dated July 26, 2022 under Section 148, concluding both were issued after the statutory limitation period had expired.
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The matter began with a Section 148 notice sent to Jasbir Singh Oberoi on May 31, 2021, alleging unassessed income of Rs 1,30,00,000 for AY 2013–14. After the Supreme Court’s decision in Union of India v. Ashish Agarwal, the Assessing Officer issued a fresh communication on May 24, 2022 under Section 148A(b), inviting Oberoi to respond to the allegations.
Oberoi did not reply within the prescribed time, and on July 25, 2022 the officer issued an order under Section 148A(d) concluding that a notice under Section 148 was warranted; the notice followed on July 26, 2022.
Oberoi approached the High Court, arguing the reassessment was barred by Section 149 of the Income Tax Act, particularly in light of amendments introduced by the Finance Act, 2021. The Bench examined how the previous reassessment scheme, the 2021 amendments, and the COVID-era extensions under the Taxation and Other Laws (Relaxation of Certain Provisions) Act, 2020 (TOLA) interacted.
Relying heavily on the Supreme Court’s later decision in Union of India v. Rajeev Bansal which clarified how limitation periods should be calculated for reassessment notices issued during the transitional window of April–June 2021 the High Court held that notices under the new regime must be issued “within the time limit surviving under the Income-tax Act read with TOLA,” and that “All notices issued beyond the surviving period are time-barred and liable to be set aside.”
Applying that framework, the Bench reconstructed the limitation timeline for AY 2013–14: the original six-year limitation expired on March 31, 2020, and under Section 3(1) of TOLA that period was extended to June 30, 2021. Accordingly, the May 31, 2021 notice was within the extended period. The Court concluded that subsequent initiation of reassessment was out of time.
The bench said,
“The impugned initiation of reassessment proceedings is, therefore, clearly barred by limitation and cannot be sustained in law,”
The judges added,
“Consequently, the order dated 25.07.2022 passed under Section 148A(d) of the Act and the notice dated 26.07.2022 issued under Section 148 of the Act are liable to be quashed.”
Allowing the writ petition, the court ordered,
“In view of the aforesaid facts and circumstances and the law laid down, this petition is accordingly allowed. The impugned order dated 25.07.2022, passed under Section 148A(d) of the Act, and the consequential notice dated 26.07.2022 issued under Section 148 of the Act are hereby set aside. Pending applications, if any, shall also stand disposed of.”
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