Case Note & Summary
The Southern Gujarat Chamber Trade and Industries Development Centre filed a writ petition under Article 226 of the Constitution of India challenging a reassessment notice issued by the Income Tax Officer, Exemption Ward. The dispute pertained to Assessment Year 2017-18. The Assessing Officer had originally issued a notice under section 148 of the Income Tax Act, 1961 on 29.06.2021 during the extended time period provided by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. Following the Supreme Court's decision in Union of India v. Ashish Agarwal, that notice was deemed to be a show-cause notice under section 148A(b) of the Act. The Assessing Officer supplied relevant information to the assessee on 27.05.2022. The assessee submitted its reply on 01.06.2022. Thereafter, the Assessing Officer passed an order under section 148A(d) and issued a fresh notice under section 148 on 18.07.2022. The core legal issue was whether that notice was invalid and time-barred, as it had been issued beyond the 'surviving time' as per the principles laid down in Union of India v. Rajeev Bansal. The Division Bench of the Gujarat High Court referred to its earlier decision in Dhanraj Govindram Kella v. Income Tax Officer, Ward(2), Surendranagar and the Supreme Court's directions. The court computed the surviving time by considering the period from the original notice date (29.06.2021) to the cut-off date of 30.06.2021, the stay period during the Ashish Agarwal proceedings, and the time allowed to the assessee to respond. It determined that the last date for issuing the reassessment notice under section 148 was 08.06.2022. Since the impugned notice was issued on 18.07.2022, it was held to be beyond the surviving time. The court relied on the ratio in Rajeev Bansal that all notices issued beyond the surviving period are time-barred and liable to be set aside. Accordingly, the impugned notice and all consequential proceedings were quashed. Rule was made absolute.
Headnote
A) Income Tax - Reassessment - Validity of Notice under Section 148 - Income Tax Act, 1961, Sections 148, 148A, 148A(b), 148A(d) - Held that a reassessment notice issued under section 148 of the new regime must comply with the 'surviving time' limitation computed from the date of the original notice under TOLA up to 30.06.2021, with addition of the time allowed for assessee's reply; a notice issued beyond such surviving time is invalid and time-barred, and all consequential proceedings are quashed. (Paras 6-10).
Issue of Consideration
Whether the notice under section 148 of the Income Tax Act dated 18.07.2022 for Assessment Year 2017-18 is invalid and time-barred, having been issued beyond the 'surviving time' as per the directions in Union of India v. Ashish Agarwal and Union of India v. Rajeev Bansal.
Final Decision
The impugned notice under section 148 dated 18.07.2022 and all consequential proceedings are quashed and set aside. Rule made absolute.
Law Points
- Reassessment notice under Section 148 must be within surviving time computed from original TOLA notice to 30.06.2021
- time for assessee's reply to be considered
- notice issued beyond surviving period is invalid and liable to be set aside.
Case Details
2026 LawText (GUJ) (03) 519
R/SPECIAL CIVIL APPLICATION NO. 214 of 2023
A.S. Supehia, Pranav Trivedi
Mr. Rushin Patel for Mr. Manish J Shah, Mr. Aman Mir
Southern Gujarat Chamber Trade and Industries Development Centre
Income Tax Officer, Exemption Ward
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Nature of Litigation
Writ petition under Article 226 of the Constitution of India challenging the validity of a reassessment notice issued under Section 148 of the Income Tax Act, 1961.
Remedy Sought
The petitioner sought quashing of the notice dated 18.07.2022 and all consequential proceedings on the ground that the notice was time-barred.
Filing Reason
The notice under Section 148 was issued beyond the 'surviving time' as computed under the directions in Union of India v. Ashish Agarwal and Union of India v. Rajeev Bansal, rendering it invalid.
Previous Decisions
The Assessing Officer issued an original notice on 29.06.2021 under Section 148 during the TOLA extended period. Following Ashish Agarwal, it was treated as a notice under Section 148A(b). Information was provided on 27.05.2022, reply filed on 01.06.2022, and order under Section 148A(d) and notice under Section 148 were issued on 18.07.2022.
Issues
Whether the notice under section 148 of the Income Tax Act dated 18.07.2022 for Assessment Year 2017-18 is invalid and time-barred, having been issued beyond the 'surviving time' as per the directions in Union of India v. Ashish Agarwal and Union of India v. Rajeev Bansal.
Submissions/Arguments
The petitioner contended that the notice under section 148 was issued beyond the surviving time limit and was therefore invalid.
The respondent's counsel verified the relevant dates and did not controvert the petitioner's submissions.
Ratio Decidendi
Where a notice under section 148 was originally issued during the extended period under TOLA between 01.04.2021 and 30.06.2021, and subsequently the Assessing Officer has to issue a fresh notice under section 148 pursuant to the Ashish Agarwal directions, such notice must be issued within the 'surviving time' i.e., the time remaining from the date of original notice to 30.06.2021, added to the time applicable under the old regime, after allowing for the period of stay and the assessee's reply time. If the notice under section 148 under the new regime is issued beyond that surviving time, it is invalid and time-barred and liable to be quashed.
Judgment Excerpts
65. The alternative contention of the petitioner as to whether notices would be valid notice or invalid notice considering ‘surviving time’ between the date of the issuance of notices under TOLA and 30th June, 2021 or not is required to be considered...
114. In view of the above discussion, we conclude that: ... (g) The time during which the show-cause notices were deemed to be stayed is from the date of issuance of the deemed notice between April 1, 2021 and June 30, 2021 till the supply of relevant information and material by the Assessing Officers to the assessees in terms of the directions issued by this court in Union of India v. Ashish Agarwal..., and the period of two weeks allowed to the assessees to respond to the show-cause notices; and (h) The Assessing Officers were required to issue the reassessment notice under section 148 of the new regime within the time limit surviving under the Income-tax Act read with the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. All notices issued beyond the surviving period are time barred and liable to be set aside.
In view of above, the impugned notice dated 18.07.2022 issued under section 148 of the Act would be invalid notice as the said notice is issued after 08.06.2022 as per the decision of Hon’ble Apex Court in case of Ashish Agarwal (supra). Therefore, the impugned notice having been issued beyond the ‘surviving time’ would be invalid notice as held by the Hon’ble Apex Court in case of Rajeev Bansal (supra).
Procedural History
The respondent Assessing Officer issued a notice under section 148 on 29.06.2021 for AY 2017-18 during the extended time period under TOLA. Following the Supreme Court's decision in Ashish Agarwal, that notice was treated as a show-cause notice under section 148A(b). The Assessing Officer supplied relevant information on 27.05.2022. The petitioner filed its reply on 01.06.2022. An order under section 148A(d) and a fresh notice under section 148 were issued on 18.07.2022. The petitioner filed the present Special Civil Application challenging that notice.
Acts & Sections
- Income Tax Act, 1961: 148, 148A, 148A(b), 148A(d)
- Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020: 3(1)
- Constitution of India: 226
