Case Note & Summary
The Special Civil Application under Article 226 of the Constitution was filed by the petitioner-company, Gayatri Microns Ltd., challenging the reassessment proceedings initiated under the Income-tax Act, 1961. The dispute centered on the validity of an order under section 148A(d) dated 21.07.2022 and the consequent reassessment notice for Assessment Year 2017-2018. The Assessing Officer had originally issued a notice under section 148 on 29.06.2021 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, that notice was to be treated as a show-cause notice under section 148A(b). Pursuant to the directions, the Assessing Officer supplied information to the assessee on 21.05.2022, with a due date for reply falling on 06.06.2022. The petitioner filed a reply on 01.06.2022, and the impugned order under section 148A(d) was passed on 21.07.2022. The core legal issue was whether this order was issued within the 'surviving time' as mandated by the Supreme Court in its subsequent ruling in Union of India v. Rajeev Bansal. The High Court, relying on its earlier decision in Dhanraj Govindram Kella, applied the principle that a notice under section 148 of the new regime must be issued within the time limit surviving from the original notice under the old regime to 30.06.2021. For Assessment Year 2017-2018, the original notice dated 29.06.2021 left a surviving time of one day, and the due date for issuance under the new regime was computed as 08.06.2022. Since the order was passed on 21.07.2022, it was held to be beyond the surviving time and thus invalid and time-barred. The High Court extracted the relevant paragraphs from Rajeev Bansal, which stated that all notices issued beyond the surviving period are time-barred and liable to be set aside. The court accordingly quashed the order under section 148A(d) and all consequential proceedings, making the rule absolute with no order as to costs.
Headnote
A) Income Tax - Reassessment Proceedings - Validity of notice under sections 147, 148, 148A - Income-tax Act, 1961, sections 147, 148, 148A; Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 - The High Court considered the effect of the Supreme Court decisions in Ashish Agarwal and Rajeev Bansal regarding notices issued during the extended period under TOLA. It held that the reassessment notice under section 148 of the new regime must be issued within the 'surviving time' computed from the date of the original notice under section 148 of the old regime to 30.06.2021. In the present case, the original notice was issued on 29.06.2021, giving a surviving time of 1 day, and the due date for issuance of the new notice was determined as 08.06.2022. The impugned order under section 148A(d) was passed on 21.07.2022, which was beyond this calculated date, rendering it invalid and time-barred. The High Court quashed the order under section 148A(d) and all consequent proceedings, making the rule absolute (Paras 5-10).
Issue of Consideration
Whether the impugned order under section 148A(d) dated 21.07.2022 and consequent reassessment proceedings were valid in view of the Supreme Court's directions regarding computation of the surviving time limit for issuing notice under section 148 of the Income-tax Act, 1961.
Final Decision
The impugned order under Section 148A(d) of the Income-tax Act, 1961 dated 21.07.2022 and all consequential proceedings were quashed and set aside. The rule was made absolute, with no order as to costs.
Law Points
- reassessment notice under section 148 must be issued within surviving time under TOLA
- notices issued beyond surviving time are time barred
- in view of Supreme Court in Ashish Agarwal and Rajeev Bansal
- the time limit for issuing notice under new regime is determined by the surviving time from the original notice under old regime read with TOLA
- all notices issued beyond surviving period are invalid and liable to be set aside
