Case Note & Summary
Background: The matter arose from a reassessment proceeding initiated by the Assistant Commissioner of Income Tax, Circle Gandhinagar against M/s Ammann India Private Limited for Assessment Year 2016-17. The assessee challenged the validity of the reassessment notice and order before the Gujarat High Court under Article 226 of the Constitution of India. Facts: The Assessing Officer issued a notice under Section 148 of the Income Tax Act, 1961 on 17.05.2021 during the extended period provided by the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (TOLA). Following the Supreme Court's decision in Union of India v. Ashish Agarwal, such notices were to be treated as show-cause notices under Section 148A(b) of the Act. The revenue supplied the relevant information to the assessee on 21.06.2022. The assessee filed its reply on 06.07.2022. The Assessing Officer passed an order under Section 148A(d) and issued a fresh notice under Section 148 on 27.08.2022. The petitioner contended that the notice was time-barred. Legal Issues: The core issue was whether the notice dated 27.08.2022 was validly issued within the 'surviving time' as per the principles laid down in Union of India v. Rajeev Bansal. Arguments: The petitioner argued that the limitation for issuing the notice expired on 19.08.2022, and the notice issued on 27.08.2022 was beyond that period. The revenue's counsel verified the dates and did not dispute the computation. Court's Analysis: The court relied on its earlier decision in Dhanraj Govindram Kella v. Income Tax Officer and the Supreme Court's rulings in Ashish Agarwal and Rajeev Bansal. It computed the surviving time from the date of the original notice (17.05.2021) to 30.06.2021 and accounted for the deemed stay period and the reply time. The limitation expired on 19.08.2022. Since the notice was issued on 27.08.2022, it was beyond the surviving period. Decision: The court held the notice invalid and quashed the order under Section 148A(d) dated 27.08.2022 and the notice under Section 148 dated 27.08.2022, along with all consequential proceedings. The writ petition was allowed.
Headnote
A) Taxation - Reassessment - Time Limitation - Surviving Time Principle - Income Tax Act, 1961, Sections 148, 148A(b), 148A(d) read with Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 - The original notice under Section 148 was issued on 17.05.2021 for AY 2016-17 during the TOLA extension, deemed a show-cause notice under Section 148A(b) as per Ashish Agarwal. After the assessee received information on 21.06.2022 and filed reply, the revenue issued order under Section 148A(d) and fresh notice under Section 148 on 27.08.2022. Applying the Supreme Court's ruling in Rajeev Bansal, the surviving time from the original notice date till June 30, 2021 was one day, and the deemed stay period ended on the date of supplying information plus two weeks for reply; the limitation for the fresh notice expired on 19.08.2022. Notice issued on 27.08.2022 was beyond the surviving time. Held that the notice was time-barred and invalid; impugned order and notice quashed with all consequential proceedings (Paras 7-10).
Issue of Consideration
Whether the reassessment notice under Section 148 of the Income Tax Act issued on 27.08.2022 for Assessment Year 2016-2017 was valid in light of the surviving time principle enunciated by the Supreme Court in Union of India v. Ashish Agarwal and Union of India v. Rajeev Bansal
Final Decision
The High Court quashed the impugned order dated 27.08.2022 under Section 148A(d) and notice under Section 148 dated 27.08.2022, along with all consequential proceedings, as they were issued beyond the surviving time and thus time barred. Rule was made absolute.
Law Points
- Reassessment notice must be issued within surviving time as per Rajeev Bansal
- Notices issued beyond surviving time are invalid
- Surviving time computed from original notice date to June 30
- 2021
- excluding deemed stay and reply period
- TOLA extension does not save notices beyond that period
- Ashish Agarwal directions complied with but notice still time-barred
