Facts of the Case

The petitioner, Ms. Swati Varmani, filed a writ petition challenging notice dated 25.05.2022 issued under Section 148A(b), order dated 26.07.2022 passed under Section 148A(d), and notice dated 26.07.2022 issued under Section 148 of the Income-tax Act, 1961, relating to Assessment Year 2015–16. The principal ground of challenge was that the reassessment notice issued on 26.07.2022 was barred by limitation in terms of Section 149 of the Act, as the statutory time limit had expired on 31.03.2022.

Issues Involved

Whether the reassessment notice issued under Section 148 for Assessment Year 2015–16 was barred by limitation under Section 149, whether the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 could extend the limitation period, and whether the consequential order under Section 148A(d) could survive if the notice itself was time-barred.

Petitioner’s Arguments

The petitioner contended that the reassessment notice dated 26.07.2022 was issued beyond the permissible limitation period prescribed under Section 149. It was argued that the benefit of TOLA could not be extended to reassessment notices for AY 2015–16, and therefore the entire reassessment proceedings were without jurisdiction and liable to be quashed.

Respondent’s Arguments

The Revenue, through learned Senior Standing Counsel, did not dispute the legal position advanced by the petitioner and fairly conceded that the issue was covered by binding precedents of the Supreme Court and the Delhi High Court.

Court Order / Findings

The Delhi High Court noted that the issue was squarely covered by the judgments of the Supreme Court in Union of India v. Rajeev Bansal (2024) 469 ITR 46 (SC) and Deepak Steel and Power Ltd. v. Central Board of Direct Taxes (2025) 476 ITR 369 (SC). The Court also relied upon its own decision in Roopa Goyal v. Income Tax Officer Ward 28(1), 2025 SCC OnLine Del 7864, wherein it was held that reassessment notices for AY 2015–16 issued after expiry of limitation were liable to be set aside and that TOLA was not applicable to such notices. In view of the settled legal position and the Revenue’s concession, the Court held that the impugned order under Section 148A(d) and notice under Section 148 dated 26.07.2022 were barred by limitation.

Important Clarification

The Court clarified that reassessment notices for Assessment Year 2015–16 issued after 31.03.2022 are barred by limitation under Section 149 and cannot be sustained by invoking TOLA extensions, as conclusively settled by the Supreme Court in Rajeev Bansal and Deepak Steel.

Final Outcome

The writ petition was allowed. The order dated 26.07.2022 passed under Section 148A(d) and the notice dated 26.07.2022 issued under Section 148 of the Income-tax Act, 1961 were set aside as being barred by limitation. The petition was disposed of, and the pending application was also disposed of as infructuous.

Link to download the order - https://www.mytaxexpert.co.in/uploads/1769503315_MS.SWATIVARMANIVsINCOMETAXOFFICERWARD301DELHIANR..pdf

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