Shree Cement Ltd vs ACIT: Rajasthan HC on Section 148A Reassessment Limitation

When a reassessment notice arrives years after a completed scrutiny assessment and targets the same deduction the Assessing Officer had already examined in detail, the questions of limitation and change of opinion become acute. This judgment, delivered by the Rajasthan High Court at Jaipur on 5 August 2025, addresses precisely those questions in the context of a notice issued to Shree Cement Limited for Assessment Year 2017-18.

This page is a research summary of one specific Indian tax judgment, NOT legal advice. Always verify against the full judgment and consult a professional for case-specific guidance.

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The case at a glance

• Parties: Shree Cement Limited vs Assistant Commissioner Of Income Tax
• Bench: Rajasthan High Court - Jaipur
• Date: 5 August 2025
• Court level: High Court
• Sections engaged: 148A(b), 148A(d)
• Outcome: Taxpayer succeeded

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Facts of the case

Shree Cement Limited, a manufacturer and seller of cement with its registered office at Beawar, Ajmer, filed its return of income on 31st November 2017 for Assessment Year 2017-18, declaring a total income of Rs. 4,53,70,36,160/-. The return was subsequently revised on 31st March 2019 with a returned income of Rs. 2,87,91,24,160/-, after claiming deductions aggregating Rs. 13,45,44,54,657/-. A scrutiny assessment was completed on 12th August 2021 by the Assessing Officer with certain additions. The assessee appealed to the Commissioner of Income Tax (Appeals), who partially allowed the appeal on 8th June 2023. The assessee then approached the Income Tax Appellate Tribunal, Jaipur Bench, which allowed the appeal — with both the CIT(A) and the ITAT confirming that the assessee was entitled to the Section 80IA deduction, the dispute being only as to quantum.

Between 21st June 2023 and 26th June 2023, a survey action was conducted at the assessee's premises. The Revenue's position was that the survey disclosed new facts establishing that the assessee's deduction claim of Rs. 8,41,25,44,299/- on profits from its Solid Waste Management System (SWM), Water Treatment System (WTS), and Power Generated by New India Power Undertaking (NIPU) was inadmissible on the ground that no such systems as envisaged under the relevant deduction provision were in existence at the assessee's premises.

On the basis of these survey observations, the Assistant Commissioner of Income Tax issued a notice dated 31st March 2024 under Section 148A(b). The assessee filed a detailed reply on 25th April 2024 disputing the reopening on multiple grounds, including limitation, change of opinion, and the inapplicability of the conditions required for the extended limitation period. The Assessing Officer rejected these objections by an order dated 1st May 2024 under Section 148A(d) and simultaneously issued a reassessment notice dated 1st May 2024. The assessee challenged all three impugned actions before the Rajasthan High Court by way of D.B. Civil Writ Petition No. 10540/2024.

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Issues raised

• Issue A — Limitation: Whether the reassessment notice dated 1st May 2024 was barred by limitation, given that more than three years had elapsed from the end of AY 2017-18, and whether the conditions for the extended limitation period were satisfied on the facts.
• Issue B — Jurisdictional validity: Whether the impugned notice was invalid for having been issued by the Jurisdictional Assessing Officer (JAO) rather than the Faceless Assessing Officer (FAO).
• Issue C — Extended limitation conditions: Whether the alleged escapement of income was represented in the form of an asset, expenditure in respect of a transaction relating to an event or occasion, or an entry in the books of accounts — as the extended limitation provision requires — given that the subject matter was a deduction claim.
• Issue D — Change of opinion: Whether the Assessing Officer had proposed to reopen the assessment on the basis of a mere change of opinion on a matter already examined during original scrutiny.
• Issue E — Consistent allowance: Whether, given that the deduction had been consistently allowed by the Assessing Officer and appellate authorities in earlier years, the Assessing Officer could validly form a belief that income had escaped assessment.

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What the court held

The Rajasthan High Court allowed the writ petition in favour of Shree Cement Limited, setting aside the impugned Section 148A(b) notice dated 31st March 2024, the Section 148A(d) order dated 1st May 2024, and the reassessment notice dated 1st May 2024.

On the limitation issue, the Division Bench noted that the validity of a reassessment notice must be judged by the law in force on the date of issue, and that the three-year outer limit is the general rule. Since the notice was issued beyond that three-year period from the end of AY 2017-18, the conditions for the extended limitation period had to be satisfied. Those conditions require that the escaped income be represented in the form of an asset, expenditure in relation to an event or occasion, or an entry in the books of accounts. The court held that a deduction claim under the provision invoked by the assessee does not satisfy any of those three prescribed categories, making the extended limitation period unavailable on these facts. The court's analysis on this point drew on a Bombay High Court decision — identified in the source as Hexaware Technologies Ltd. v. Assistant Commissioner of Income-tax, Circle 15(1)(2) — authored by one of the members of the present Division Bench in his earlier capacity at the Bombay High Court, with paragraphs 24 to 30 of that decision set out in the judgment.

On the change-of-opinion issue, the court noted that during the original assessment proceedings, queries were raised specifically directed at the deduction claimed by the assessee, and the assessee responded in detail. The scrutiny assessment, the CIT(A) order, and the ITAT order all proceeded on this issue, with the deduction being upheld — quantum being the only surviving dispute. The court held that the Revenue's attempt to reopen the assessment on the same deduction, dressed up as a survey-derived new fact, amounted to an impermissible change of opinion on a matter that had been examined and resolved through the regular appellate process.

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Strategy observations

1. Limitation raised as the threshold ground: Before the High Court, the petition framed limitation as the primary challenge to the impugned Section 148A(b) notice and Section 148A(d) order. The Tribunal disposed of the writ on this and the connected grounds, rendering the merits of the deduction academic.

2. Multiple distinct grounds advanced in the reply to Section 148A(b) notice: An objection raising limitation, change of opinion, and the non-satisfaction of extended limitation conditions was filed as early as 25th April 2024 in response to the Section 148A(b) notice — before the Section 148A(d) order was passed. The court's analysis on each of Issues A through E maps directly onto the grounds articulated in that reply.

3. Documenting the original scrutiny record: The assessee's reply catalogued in detail the queries raised during original assessment proceedings and the responses filed in relation to the deduction claim. The court's analysis on change of opinion was grounded in this record, which demonstrated that the deduction had been consciously examined and accepted in the original proceedings.

4. Framing extended limitation conditions as a categorical threshold: The assessee's reply specifically argued that the subject matter of the imputed escapement — a deduction claim — falls outside the three categories (asset, expenditure relating to an event or occasion, and book entry) required for the extended limitation period. The court treated this as a decisive threshold question.

5. Writ jurisdiction invoked before reassessment order on merits: The petition was filed at the stage of the Section 148A(d) order and the reassessment notice, before any reassessment order was passed on the merits. The High Court entertained the petition and granted relief at this stage, consistent with the position that jurisdictional and limitation defects in reassessment notices are amenable to writ jurisdiction.

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Why this case matters

This judgment is significant because it applies the post-Finance Act 2021 reassessment framework to a large corporate taxpayer and reaffirms two structural limits on the Revenue's reopening power under Sections 148A(b) and 148A(d). First, where a reassessment notice is issued beyond the three-year window from the end of the relevant assessment year, the extended limitation conditions are not a general catch-all: the alleged escaped income must be referable to an asset, an expenditure linked to an event or occasion, or a book entry — a deduction claim satisfies none of these categories. Second, the change-of-opinion bar retains full force even after the 2021 amendments: where the Assessing Officer examined a particular deduction during original scrutiny and the appellate process affirmed the assessee's entitlement, a subsequent reopening on the same head — anchored in survey observations — does not cross the jurisdictional threshold.

The fact that the Division Bench applied an earlier Bombay High Court ruling on the Section 149 limitation questions, authored by the same Chief Justice who co-authored the present order, reinforces the cross-jurisdictional persuasive reach of that precedent. Researchers tracking the developing jurisprudence on post-2021 reassessment limitation — particularly the scope of the extended limitation conditions as applied to deduction disallowances — will find this judgment a useful reference point in the Rajasthan High Court's emerging position on the issue.

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Source

This case is drawn from the TaxNoticeAI structured legal corpus (16,101 Indian tax judgments, CBIC circulars, ITAT rulings, AAR rulings, GSTAT rulings), sourced from indiankanoon.org and official court portals. Original document: https://indiankanoon.org/doc/122843020/