AY 2015‑16 Reopening Notices Issued After 1 April 2021 Must Be Dropped: Karnataka High Court

A Division Bench of the Karnataka High Court dismissed the Revenue’s appeal and held the reassessment barred by the Revenue’s own concession before the Supreme Court, and also a change of opinion.

The Karnataka High Court has held that reassessment notices for assessment year (AY) 2015‑16 issued on or after 1 Apr 2021 cannot survive, in view of the Revenue’s concession recorded by the Supreme Court in Union of India v. Rajeev Bansal (2024) [Deputy Commissioner of Income Tax, Bengaluru v. Nitin Gupta, 2026-juristway.com-3354-HC(Karnataka)-IT].

Chief Justice Vibhu Bakhru wrote the judgment for a Bench with Justice K.S. Hemalekha. After condoning a delay of 85 days, the Bench heard the Revenue’s writ appeal against a Single Judge’s order dated 14 Oct 2025, which had quashed an order dated 29 Jul 2022 under Section 148A(d) of the Income Tax Act, 1961 and the notice under Section 148.

The assessee had declared long‑term capital gain on shares and claimed exemption of ₹2,24,21,692 under Section 54F. The scrutiny assessment completed on 29 Dec 2017 disallowed ₹80,69,490 for want of details about construction of the house. The reopening sought to add the entire exemption on the same ground.

The Revenue argued that the notice under Section 148A, issued on 30 Jun 2021, was to be treated as a notice under the new regime following Union of India v. Ashish Agarwal (2022), and that it fell within the six‑year limit ending 31 Mar 2022, so the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) was not needed.

The Court rejected this. In Rajeev Bansal, the Revenue conceded that all notices issued on or after 1 Apr 2021 for AY 2015‑16 would have to be dropped, as they would not fall for completion within the period prescribed under TOLA. The Revenue’s plea that the six‑year limit applied was also unpersuasive.

The Bench added a second ground. The Section 54F claim had been examined by the AO during the original assessment, and the addition then was made for non‑disclosure of particulars. The same ground could not support the extended period, and reopening on it was a change of opinion and an impermissible review of the assessment.

The order under Section 148A(d), the notice under Section 148 and all consequential notices for AY 2015‑16 stood quashed, and the appeal was dismissed.

2026-juristway.com-3354-HC(Karnataka)-IT