Madras High Court Quashes Geeco Enercon Reassessment, Says New Regime Cannot Revive Limitation

The Madurai Bench of the Madras High Court has held that the Income Tax Department cannot initiate reassessment proceedings under the new reassessment regime after the limitation period under the old regime has expired, and quashed the reassessment proceedings against Geeco Enercon Private Limited for Assessment Year (AY) 2015-16.

Justice C. Saravanan held that the proceedings the Income Tax Department initiated in August 2024 were barred by limitation and quashed the order dated 31 August 2024 and the consequential reopening notice. He held:

“...If the limitation prescribed under the old regime had already expired, there is no question of issuing a notice under Section 148 of the Income Tax Act, 1961 under the new regime.”

The Income Tax Department first sought to reopen Geeco Enercon's assessment for AY 2015-16 through a notice issued on 4 February 2021. It subsequently passed an assessment order on 25 March 2022.

The Department again sought to reopen the same assessment in 2024. It issued a fresh notice to Geeco Enercon on 23 August 2024 and passed an order on 31 August 2024, followed by a consequential reopening notice.

Geeco Enercon then approached the High Court and challenged the fresh proceedings. The company contended that the Department could not initiate reassessment proceedings in 2024 because the limitation period had already expired.

The Court examined the limitation periods under the old and new reassessment provisions. It noted that the extended six-year period under the old regime for AY 2015-16 expired on 31 March 2022.

It held that the new reassessment provisions, which came into force on 1 April 2021, could not revive the Department's power to reopen an assessment after the limitation period under the old regime had expired. The Bench observed:

“...the limitation for issuing a notice within the extended period of six years under the old regime had already expired on 31.03.2022. Therefore, the initiation of further proceedings under Section 148A(b) of the Income Tax Act, 1961 for issuing a notice under Section 148 of the said Act under the new regime on 23.08.2024 is clearly barred by limitation.”

Accordingly, the High Court quashed the order dated 31 August 2024 and the consequential reopening notice and allowed the writ petition.

For Petitioner: G. Shiva Kumar, Advocate

For Respondent: J. Parekh Kumar, Senior Standing Counsel