Case Note & Summary
The petitioner, an assessee, challenged a reassessment notice under section 148 of the Income Tax Act, 1961 for Assessment Year 2016-2017, issued by the Assistant Commissioner of Income Tax, Surat. The Assessing Officer had originally issued a notice under section 148 on 30.06.2021, relying on the extended time provided by the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (TOLA). Subsequently, the Supreme Court in Union of India v. Ashish Agarwal directed that such notices be treated as show-cause notices under section 148A(b) of the Act, which had been introduced with effect from 01.04.2021. Accordingly, the Assessing Officer supplied information to the assessee on 26.05.2022, and the assessee filed a reply on 08.06.2022. The Assessing Officer then passed an order under section 148A(d) and issued a fresh notice under section 148 on 30.07.2022. The petitioner contended that this fresh notice was time-barred because it was issued beyond the 'surviving time' as per the Supreme Court's decision in Union of India v. Rajeev Bansal. The Revenue did not dispute the calculation. The High Court applied the principles laid down in Rajeev Bansal, which held that where an original notice under section 148 was issued during the TOLA period (between 01.04.2021 and 30.06.2021), the Assessing Officer must issue a new notice under section 148 within the 'surviving time' left from the date of the original notice until 30.06.2021. For AY 2016-2017, the original notice was dated 30.06.2021, giving a surviving time of only 1 day, making the last date for issuing the fresh notice 16.06.2022. Since the notice was issued on 30.07.2022, it was beyond the limitation period and invalid. Consequently, the High Court quashed the order dated 30.07.2022 under section 148A(d), the notice under section 148, and all consequential proceedings. The court followed its earlier decision in Dhanraj Govindram Kella v. ITO, which had similarly quashed notices for other assessment years. The rule was made absolute with no order as to costs.
Headnote
A) Income Tax - Reassessment Notice - Limitation under TOLA and New Regime - Sections 148, 148A(b) Income Tax Act, 1961; Section 3(1) Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 - A notice under section 148 issued on 30.06.2021 for AY 2016-2017 during the TOLA extended period was to be treated as a show-cause notice under section 148A(b) as per Ashish Agarwal. The 'surviving time' of 1 day from 30.06.2021 to 30.06.2021 determined the limitation for issuing a fresh notice under section 148. The fresh notice was required to be issued by 16.06.2022. Held, issuance on 30.07.2022 was beyond surviving time and the notice is time-barred and invalid. (Paras 5-9) B) Income Tax - Order under Section 148A(d) - Consequence of Invalid Notice - Where the reassessment notice under section 148 is quashed as time-barred, the order under section 148A(d) dated 30.07.2022 and all consequential proceedings are also quashed and set aside. Held, the order and notice are invalid and all subsequent proceedings fail. (Paras 9-10)
Issue of Consideration
Whether the notice under section 148 of the Income Tax Act, 1961 dated 30.07.2022 for Assessment Year 2016-2017 is valid and within the limitation period after applying the principles in Union of India v. Rajeev Bansal and Union of India v. Ashish Agarwal.
Final Decision
The High Court quashed the impugned order dated 30.07.2022 under section 148A(d) and the notice dated 30.07.2022 under section 148 of the Income Tax Act, 1961, along with all consequential proceedings, holding them invalid as time-barred beyond the 'surviving time'.
Law Points
- time limit for reassessment under TOLA
- notice under section 148 treated as section 148A(b) show-cause after Ashish Agarwal
- validity depends on surviving time between notice date and 30.06.2021
- notice issued beyond surviving time is invalid under Rajeev Bansal
- order under section 148A(d) and consequential proceedings also fail
