The Income Tax Appellate Tribunal (ITAT) Mumbai bench has quashed reassessment proceedings involving a ₹50 lakh Income Declaration Scheme (IDS) disclosure after finding the tax department's section 148 notice was invalid due to jurisdictional defects. According to the latest ITAT Mumbai decision, the Assessing Officer's notice required the assessee to file returns within 30 days from the date of service, which was contrary to the provisions of section 148 of the Act. The tribunal held that failure to issue notices in accordance with the Act constitutes a jurisdictional defect that cannot be cured at this stage, making the subsequent reassessment order invalid in law. This ruling aligns with recent ITAT Amritsar decisions that emphasize limitation periods and threshold requirements for reassessment proceedings.
As reported by Mint, Jain had filed her return declaring income of ₹6.88 lakh for assessment year 2017-18. The tax department later received information that she had declared ₹50 lakh under IDS 2016 for assessment year 2012-13 but had not completed the declaration process by submitting Form-4, the certificate of final acceptance. Under IDS 2016, Jain had declared ₹50 lakh and claimed that she had paid the required tax of ₹22.50 lakh. However, she said a payment of ₹5.625 lakh could not be credited to the government's account before the deadline due to a technical error at the bank's end. According to her submissions, the bank issued a certificate acknowledging the error.
The ITAT Mumbai decision relied on erstwhile provisions of section 148 prior to its amendment by Finance (No.2) Act of 1996, which required notices to be issued calling upon assessees to file returns within not less than 30 days. The tribunal noted that the Assessing Officer's notice dated 20 May 1992 required returns to be filed within 30 days from service date, contrary to the Act's provisions. The court emphasized that jurisdictional defects in notices cannot be cured, and subsequent amendments to section 148 by Finance (No.2) Act of 1996, which removed the minimum 30-day time limit effective from 1 April 1989, would not validate already passed assessment orders. The tribunal also cited the Supreme Court's clarification in Union of India v. Rajeev Bansal that tax authorities can use only the 'surviving time' available under limitation provisions.
According to Mint reports, the original notice under section 148 was issued on 30 June 2021, under the old reassessment regime. Following the Supreme Court's ruling in Union of India v. Ashish Agarwal, such notices were treated as notices under section 148A(b) under the new reassessment framework. The tax department subsequently issued a section 148A(b) notice on 25 May 2022, with Jain responding on 26 May. However, the fresh notice under section 148 was issued on 29 June 2022, which the tribunal held was beyond the permissible surviving period and therefore invalid. The ITAT Mumbai decision establishes that assessment orders based on invalid notices cannot be saved by subsequent amendments, as they were passed prior to the amendment's effective date. Recent ITAT Amritsar decisions further clarify that reassessment beyond three years requires proper PCIT approval instead of PCCIT, highlighting the importance of proper approval mechanisms in reassessment proceedings.
According to Mint analysis, the ruling demonstrates that jurisdictional defects in section 148 notices cannot be cured by subsequent amendments and that assessment orders based on such invalid notices remain null and void. The case establishes that taxpayers facing reassessment should examine not only the dates of original notices but also the compliance with procedural requirements. The decision clarifies that bank-related payment problems do not automatically wipe out tax liabilities, and taxpayers must still complete IDS requirements including Form-4 submissions. Importantly, the ruling shows that reassessment proceedings initiated beyond legally permitted periods can be challenged even when the tax department has made additions on underlying income, with the tribunal noting that such cases are academic once the notice validity is established as invalid. The latest ITAT Pune decision further emphasizes that reassessment beyond 3 years requires proper PCIT approval instead of PCCIT, highlighting the importance of proper approval mechanisms in reassessment proceedings.
