The Gujarat High Court in Dimpal Hemang Desai v. Income-tax Officer (R/Special Civil Application No. 6101 of 2026) has reaffirmed the legal position that reassessment notices for AY 2015-16 issued after 1 April 2021 are invalid if barred by limitation under the amended reassessment provisions and the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA).

Background of the Case

The Income-tax Department initiated reassessment proceedings against the assessee for Assessment Year (AY) 2015-16 by:

• Issuing notice under Section 148 of the Income-tax Act, 1961;
• Subsequently issuing notice under Section 148A(b) after the new reassessment regime came into force from 1 April 2021.

Thereafter, the department passed a reassessment order under:

• Section 147,
• read with Section 250, and
• Section 144B,

dated 25 March 2026.

The assessee challenged the entire reassessment process before the Gujarat High Court.

Key Legal Issue

The primary issue before the Court was:

• Whether reassessment notices issued after 1 April 2021 for AY 2015-16 were legally sustainable under the amended provisions introduced by the Finance Act, 2021.

The assessee argued that:

• The notices were barred by limitation under the amended Section 149;
• TOLA did not extend the limitation period indefinitely;
• The proceedings were contrary to the law laid down by the Supreme Court.

High Court’s Decision

The Gujarat High Court ruled in favour of the assessee and quashed the reassessment proceedings.

The Court held that:

• Notices issued on or after 1 April 2021 for AY 2015-16 were time-barred under the amended reassessment framework;
• The issue was squarely covered by the Supreme Court judgment in Union of India v. Rajeev Bansal;
• TOLA could not be interpreted to revive reassessment proceedings that had already become barred under the new law.

Accordingly, the Court quashed:

• Notices issued under Sections 148 and 148A;
• All consequential reassessment proceedings;
• The reassessment order dated 25 March 2026.

Important Legal Position

The reassessment regime was substantially amended by the Finance Act, 2021 with effect from 1 April 2021. Key changes included:

• Introduction of Section 148A procedure;
• Revised limitation periods under Section 149;
• Requirement of prior inquiry and opportunity of hearing before reopening.

The Supreme Court in Union of India v. Rajeev Bansal clarified that reassessment notices issued after 1 April 2021 must comply with the amended law and limitation provisions.

Practical Impact for Taxpayers

This judgment is significant for taxpayers facing old reassessment notices because:

• Notices for earlier assessment years may still be challenged on limitation grounds;
• Compliance with amended Sections 148, 148A, and 149 is mandatory;
• Procedural lapses in reassessment cases can invalidate the entire proceedings.

Taxpayers who have received reassessment notices for old years should carefully review:

• Date of notice,
• Applicable limitation period,
• Compliance with Section 148A procedures,
• Applicability of TOLA extensions.

Conclusion

The Gujarat High Court’s ruling strengthens taxpayer protection against time-barred reassessment proceedings and reiterates the importance of strict adherence to the amended reassessment framework introduced from 1 April 2021.

For expert guidance on this topic, contact your tax professional today.