The Income Tax Appellate Tribunal (ITAT), Visakhapatnam has delivered an important ruling on the limits of reassessment powers, holding that the Income Tax Department cannot use the amended provisions of Sections 148 and 148A of the Income Tax Act to revive an assessment that had already become time-barred under the earlier statutory framework.
In Krishna Mohan Potluri v. ACIT, Central Circle, ITA Nos. 101 & 102/Viz/2026, the Tribunal held that once the statutory period prescribed for completing an assessment under Section 153A read with Section 153B had expired, the Assessing Officer could not subsequently invoke the amended reassessment provisions to reopen the matter.
The decision was delivered by the Visakhapatnam Bench comprising Vice President Vijay Pal Rao and Accountant Member Manjunatha G. The Tribunal’s decision is particularly significant because it addresses whether a later amendment to reassessment provisions can effectively extend a limitation period that had already expired.
Background of the Case
The matter originated from the seizure of ₹28 lakh in cash from Krishna Mohan Potluri during vehicle checking conducted by a Flying Squad team during the election period on 27 November 2018.
Two days later, on 29 November 2018, the Income Tax Department issued a warrant under Section 132A for requisition and seizure of the cash.
At that point, the applicable statutory framework required the Assessing Officer to proceed under Section 153A in cases involving requisition under Section 132A. Section 153A provides for assessment or reassessment following a search or requisition, while Section 153B prescribed the limitation period for completing such proceedings.
In the present case, the relevant limitation period expired on 31 December 2020. However, no proceedings under Section 153A were initiated within the prescribed period.
Reassessment Proceedings Initiated After Limitation
Instead of initiating proceedings within the Section 153A limitation period, the Department subsequently issued a notice under Section 148A(b) on 2 March 2023. This was followed by a notice under Section 148 dated 28 March 2023.
The reassessment proceedings were initiated under the amended reassessment regime that had come into force from 1 April 2021.
The Department sought to treat the seized amount of ₹28 lakh as unexplained money under Section 69A. The assessee challenged not only the addition but, more importantly, the very validity of the reassessment proceedings.
ITAT Rejects Attempt to Revive Expired Limitation
The central issue before the Tribunal was whether the Department could rely upon the amended provisions of Sections 148 and 148A to reopen a matter when the time limit for taking action under the earlier Section 153A regime had already expired.
The Tribunal answered the question in the negative.
It observed that once the assessment proceedings under Section 153A had attained finality because the limitation prescribed under Section 153B had expired, that limitation could not subsequently be extended by resorting to the amended provisions of Section 148.
In substance, the Tribunal held that a subsequent statutory amendment cannot be used as a mechanism to revive a power that had already become unavailable because the prescribed limitation period had run out.
Section 148 Explanation Also Not Applicable
The Tribunal also examined the Explanation to Section 148. According to the Tribunal, the Explanation contemplated cases involving search under Section 132 or requisition under Section 132A conducted on or after 1 April 2021.
In Potluri’s case, however, the requisition under Section 132A had taken place on 29 November 2018, substantially before the amended reassessment provisions came into force.
Therefore, the Department could not rely upon the Explanation to Section 148 to overcome the limitation that had already expired.
Consequential Penalty Also Deleted
Since the Tribunal quashed the reassessment proceedings under Section 148, the consequential reassessment order could not survive. As a result, the penalty arising from such reassessment was also deleted.
The Tribunal did not consider it necessary to adjudicate the remaining grounds raised by the assessee because those grounds had become infructuous once the reassessment itself was quashed.
Accordingly, both appeals filed by Krishna Mohan Potluri were allowed.
Key Takeaway
The ruling reinforces an important principle of tax law: limitation is not merely a procedural technicality; it places a substantive boundary on the exercise of statutory powers by tax authorities.
Where the statutory period for initiating or completing a particular assessment proceeding has expired, a subsequent amendment cannot ordinarily be employed to retrospectively revive that extinguished power unless the legislation clearly provides for such an effect.
The ITAT Visakhapatnam decision therefore provides significant guidance on the interaction between the old search/requisition assessment regime under Sections 153A and 153B and the amended reassessment framework under Sections 148 and 148A.
The case also highlights the importance for taxpayers to examine not merely the merits of an addition, but also the jurisdiction, statutory authority and limitation period governing reassessment proceedings.
Case: Krishna Mohan Potluri v. ACIT, Central Circle
ITA Nos.: 101 & 102/Viz/2026
Forum: ITAT Visakhapatnam
Issue: Validity of reassessment initiated after expiry of limitation under Sections 153A/153B
For Revenue: Nilanjan Dey, CIT(DR)
The ITAT Visakhapatnam ruling serves as a useful reminder that the Income Tax Department cannot use amended reassessment provisions to reopen an assessment after the statutory limitation applicable to the original assessment mechanism has already expired.