A taxpayer has got relief from a tax reassessment after the Mumbai bench of the Income Tax Appellate Tribunal found that the notice issued by the Income Tax Department was beyond the prescribed limitation period.
The case relates to Deepika Ravindra Dhuri and Assessment Year 2015-16. The Income Tax Department had reopened her case after its Risk Management Strategy flagged her as a non-filer despite information showing that she had undertaken sale transactions, earned interest income and sold an immovable property during the year.
The reassessment resulted in an addition of Rs 16.14 lakh to her income. Dhuri challenged the assessment, but the first appeal before the CIT(A) was decided against her.
She then approached the Mumbai ITAT. The Tribunal has now quashed the reassessment proceedings, but not because it examined and rejected the Rs 16.14 lakh tax addition. The case was decided on a more basic legal issue — whether the tax department had validly initiated the reassessment in the first place.
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Why was the reassessment challenged?
Dhuri’s lawyer argued that the notice issued under Section 148 of the Income Tax Act for AY 2015-16 was barred by limitation.
A Section 148 notice is issued when the tax department seeks to reopen an assessment. But the law puts a time limit on such action. If the notice is issued after the permissible period, the reassessment proceedings can be challenged as being without jurisdiction.
The Mumbai ITAT noted that similar cases involving AY 2015-16 had already been considered by its coordinate benches. These decisions had relied on the Supreme Court’s ruling in Union of India vs Rajeev Bansal, along with subsequent decisions dealing with reassessment notices for AY 2015-16.
The Tribunal also referred to its earlier decision in Kawaljeet Kaur Kohli vs ITO and another case involving Nilesh Haresh Parwani, where reassessment notices for AY 2015-16 were held to be time-barred.
Rs 16.14 lakh addition was not examined
This is an important point for taxpayers.
The ITAT did not go into whether the Rs 16.14 lakh addition made by the tax department was correct or incorrect.
Once the Tribunal found that the reassessment notice itself was barred by limitation, the entire reassessment proceeding could not survive. The other grounds raised by the taxpayer therefore became academic and were not examined separately.
Dinkar Sharma, Company Secretary and Partner, Jotwani Associates, said the ruling highlights the importance of limitation in reassessment proceedings. If the notice itself is legally time-barred, the reassessment cannot survive merely because the department has made an addition to the taxpayer’s income.
How did the case reach the ITAT?
The case had a separate issue even before the Tribunal could examine the reassessment.
Dhuri’s appeal was filed 229 days late. She sought condonation of the delay and explained that her husband, who handled her income-tax affairs, had been continuously hospitalised. He subsequently died on October 18, 2025.
She said she was occupied with his medical care and, after his death, was under considerable mental stress. She later collected the relevant tax papers and approached her Chartered Accountant, who informed her that she needed to file an appeal before the ITAT.
The Tribunal accepted her explanation.
It held that the circumstances showed sufficient cause for the delay and that the delay did not appear to be deliberate or lacking in bona fides. It therefore condoned the 229-day delay and admitted the appeal.
What had the Income Tax Department done?
The department had received information through its Risk Management Strategy that Dhuri had not filed her return for AY 2015-16.
The information indicated that she had made sale transactions, earned interest and sold an immovable property during the relevant assessment year.
The Assessing Officer initiated reassessment proceedings under Section 147 and issued a notice under Section 148. The reassessment ultimately led to an addition of Rs 16,14,333 under Section 144 read with Section 147.
Dhuri challenged the assessment before the CIT(A). However, she did not comply with notices issued by the first appellate authority on seven different dates. The CIT(A) therefore passed the order ex parte and upheld the addition.
What did the ITAT finally rule?
The Mumbai ITAT found that the Section 148 notice relating to AY 2015-16 was barred by limitation.
The Tribunal followed the earlier judicial decisions on the issue and held that the reassessment proceedings initiated on the basis of that notice could not continue.
It therefore quashed the reassessment order passed under Sections 147, 144 and 144B of the Income Tax Act.
The appeal filed by Dhuri was consequently allowed.
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What does the ruling mean for taxpayers?
The case highlights an important point in reassessment proceedings. A taxpayer facing a Section 148 notice should not only look at the tax demand or addition made by the department. The validity and timing of the notice itself can also be important.
In this case, the taxpayer ultimately got relief because the Tribunal found a legal defect in the initiation of the reassessment.
The decision, however, should not be read as a finding that the Rs 16.14 lakh addition was incorrect on merits. The ITAT did not examine that question.
The relief came because the reassessment itself was found to be legally unsustainable.
For taxpayers, the broader takeaway is to check the dates and procedural validity of a reassessment notice carefully and raise any jurisdictional objection at the appropriate stage.
Disclaimer: This story is based on the order passed by the Mumbai Bench of the Income Tax Appellate Tribunal. The ruling was based on the limitation issue and the Tribunal did not examine the merits of the Rs 16.14 lakh addition. Taxpayers should consult a qualified tax professional before taking any action based on this case.
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This article was first uploaded on September twenty-four, twenty twenty-six, at fifty-three minutes past five in the evening.
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