AO Cannot Review Concluded Order under Section 148A(d) on PCIT’s Direction: Delhi High Court Quashes Reassessment in Baba Global Case

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In a significant ruling reinforcing procedural integrity under the reassessment regime, the Delhi High Court in the case of Baba Global Ltd v. ACIT, Central Circle 29 & Ors., held that an Assessing Officer (AO), after having passed a reasoned order under Section 148A(d) dropping reassessment proceedings, cannot review or reverse such a concluded decision merely on the basis of a supervisory officer’s direction. The Court quashed the subsequent notice under Section 148 and the second 148A(d) order, observing that the AO is the final decision-maker under Section 148A(d), and any post facto reversal of a concluded opinion—especially beyond limitation—was contrary to law.

This judgment is a crucial precedent for taxpayers facing arbitrary or repeated reassessment actions, and it affirms the sanctity of quasi-judicial independence of the AO under the scheme of Section 148A of the Income Tax Act, 1961, especially in light of procedural safeguards introduced by the Finance Act, 2021.

Here are the details of the landmark Delhi High Court decision in the case of Baba Global Ltd v. ACIT, Central Circle 29 & Ors., W.P. (C) 1155/2024:

📄 Case Citation

  • Case: Baba Global Ltd v. Assistant Commissioner of Income‑Tax, Central Circle 29 & Ors.
  • Court: Delhi High Court (Justice Vibhu Bakhru & Justice Tejas Karia)
  • Reported: [2025] 176 Taxmann 466 (Delhi)

⚖️ Facts

  1. Return & 148A(b) Notice:
    Baba Global filed its return for AY 2019–20.
    On 31 March 2023, the AO issued a notice under Section 148A(b), suggesting bank remittances were inconsistent with declared income.
  2. Assessee’s Reply & Dropping Reassessment:
    The assessee replied (12 April 2023), clarifying all transactions were genuine and properly accounted for.
    On 27 April 2023, the AO passed an order under Section 148A(d), dropped the reassessment proceedings, finding no case to reopen.
  3. Midnight Flip & PCIT’s Role
    Shortly after midnight on 28 April 2023 (at ~12:08–12:31 AM), the AO issued a fresh notice under Section 148, and issued a second 148A(d) order—now stating reassessment was warranted. This was done to align with the PCIT’s prior approval.
  4. Limitation Issues
    That second notice was beyond the extended statutory time limit. The court determined that no exception under Section 149(b) applied, resulting in the notice being time-barred.

🧑‍⚖️ Legal Issues & Court’s Holding

  1. No Power to Review a Final 148A(d) Order
    The High Court ruled that once the AO passes a substantive order under Section 148A(d) (i.e. whether to drop or proceed), that decision is final. The AO has no statutory right to subsequently review or reverse it—even with PCIT approval.
  2. Nature of the Second Order
    The court emphasized that the later midnight reversal was not a mere clerical update—rather, it was a fresh, contradictory decision taken under administrative pressure, contrary to law.
  3. Limitation & Itineration of Notice
    Since the AO had already issued the first 148A(b) notice on the last day permitted (31 March), and no valid 149(b) exception existed, the later 148 notice (28 April) was time-barred and thus legally invalid.

✅ Decision: Petition Allowed & Notices Quashed

  • The High Court quashed:
    • The second 148A(d) order (midnight reversal);
    • The fresh 148 notice issued;
    • The entire reassessment proceedings.
  • It underscored that the AO’s decision under 148A(d) is final, impervious to post‑hoc administrative influence.

🏷️ Significance

  • Binding Precedent: AO cannot “reopen” a dropped reassessment after issuing a reasoned 148A(d) order.
  • Safeguard Strengthened: Reinforces statutory protection for assessees from repeated proceedings.

  • Time‑Limit Clarity: Reaffirms that corrective timelines under Section 149(b) are strictly applied and cannot be bypassed.

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