The Madras High Court, in Appnell Holdings Limited v. Deputy Commissioner of Income-tax & Anr., W.P. No. 1513 of 2023, pronounced its decision on 13 July 2026 concerning the validity and limitation of reassessment proceedings under Sections 148, 148A and 149 of the Income-tax Act, 1961. The petitioner had challenged both CBDT Instruction No. 01/2022 dated 11 May 2022 and the consequential reassessment proceedings relating to Assessment Year 2015-16.
The petitioner questioned the order dated 28 July 2022 passed under Section 148A(d) and the consequent notice under Section 148, principally relying upon the Revenue’s submissions recorded by the Supreme Court in Union of India v. Rajeev Bansal. The petitioner also sought to challenge CBDT Instruction No. 01/2022, which had been issued to implement the Supreme Court’s ruling in Union of India v. Ashish Agarwal.
Background of the Dispute
The reassessment related to Assessment Year 2015-16. Under the old reassessment regime, the four-year and six-year limitation periods expired on 31 March 2020 and 31 March 2022 respectively. A notice under Section 148 had originally been issued to the petitioner on 30 June 2021. The Court noted that the alleged income escaping assessment was Rs. 27,06,46,000, and therefore the earlier notice had been issued before expiry of the applicable six-year limitation under the old regime.
Following the Supreme Court’s decision in Ashish Agarwal, a notice under Section 148A(b) was issued on 27 May 2022. Thereafter, an order under Section 148A(d) and a fresh notice under Section 148 were issued on 28 July 2022.
High Court on the Rajeev Bansal “Concession”
An important aspect of the judgment concerns the Revenue’s statement recorded in Rajeev Bansal that notices for AY 2015-16 issued on or after 1 April 2021 would have to be dropped. The Madras High Court held that a concession made by the Additional Solicitor General before the Supreme Court could not by itself be treated as law declared under Article 141 of the Constitution.
The Court further observed that the concession could not be understood as meaning that reassessment proceedings for AY 2015-16 would automatically abate even where the escaped income exceeded the threshold relevant under the old regime.
Limitation Under Sections 148 and 149
The Court relied upon the Supreme Court’s rulings in Ashish Agarwal and Rajeev Bansal, particularly the principle that notices issued under the old regime between 1 April 2021 and 30 June 2021 were to be treated as deemed show-cause notices under Section 148A(b).
It noted that the period during which such deemed notices remained stayed, together with the period allowed to the assessee for responding, had to be excluded while computing the surviving limitation. A fresh Section 148 notice would be time-barred only if issued beyond the surviving limitation after accounting for the permissible exclusions.
In the present case, because the alleged escaped income was Rs. 27.06 crore, the Court held that the original notice dated 30 June 2021 had been issued while the six-year limitation under the old regime was still available. Consequently, the Section 148 notice dated 28 July 2022 could not be regarded as time-barred.
Section 148A(d) Order Also Held Within Time
The petitioner had been issued a Section 148A(b) notice on 27 May 2022 and was required to respond within two weeks. No reply was furnished within that period.
Under Section 148A(d), where no reply is furnished, the order has to be passed within one month from the end of the month in which the time permitted for filing the reply expires. The Court therefore calculated that the Section 148A(d) order could validly be passed up to 31 July 2022. Since both the Section 148A(d) order and the consequential Section 148 notice were issued on 28 July 2022, they were held to be within time.
The judgment also reproduces, at page 14, the relevant portions of Section 148A(d) and the then Third Proviso to Section 149, showing the statutory exclusion of the time granted under a Section 148A(b) show-cause notice while computing limitation.
CBDT Instruction No. 01/2022
The Court rejected the challenge to CBDT Instruction No. 01/2022 dated 11 May 2022, observing that the instruction had been issued to implement the Supreme Court’s directions in Ashish Agarwal. The challenge to the instruction was therefore not accepted.
Judgment
The Madras High Court dismissed the writ petition and directed the Revenue to proceed with and complete the assessment. At the same time, the petitioner was permitted to participate in the reassessment proceedings.
Considering that the online portal may have been closed, the Court directed the petitioner to keep its reply ready and submit it before the first respondent within 30 days from receipt of the judgment. The Assessing Officer was thereafter directed to pass appropriate orders on merits after granting the petitioner an opportunity of hearing.
The decision is significant for reassessment litigation involving notices originally issued during the transitional period between the old and substituted reassessment regimes. It reiterates that limitation has to be determined by examining the surviving statutory period, the amount of income alleged to have escaped assessment, and the exclusions recognised under Section 149 read with the Supreme Court’s decisions in Ashish Agarwal and Rajeev Bansal.
 for AY 2015-16, holding the proceedings within limitation. 13 July 2026.){kind=link}