Case Note & Summary
The dispute originated from a reassessment notice issued under Section 148 of the Income Tax Act, 1961 for Assessment Year 2017-2018. The respondent Assessing Officer initially issued a notice on 09.06.2021 during the extended period provided by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA). Following the Supreme Court's direction in Union of India v. Ashish Agarwal, the notice was treated as one under Section 148A(b) of the Act as amended with effect from 01.04.2021. The Assessing Officer supplied relevant information to the assessee on 23.05.2022. The assessee filed replies on 11.06.2022 and 27.06.2022, and thereafter the impugned notice under Section 148 was issued on 28.08.2022. The assessee, Narayan Industries, challenged the notice before the Gujarat High Court contending it was time-barred and invalid under the principles laid down in Union of India v. Rajeev Bansal. The legal issue centered on whether the notice was issued within the 'surviving time' as defined by the Supreme Court in Rajeev Bansal. The revenue did not dispute the factual timeline. The court, relying on its earlier decision in Dhanraj Govindram Kella v. Income Tax Officer which had interpreted Rajeev Bansal, computed the period of limitation. It observed that for AY 2017-2018, a notice under Section 148 issued between 01.04.2021 and 30.06.2021 under TOLA would be considered issued within three years from the end of the relevant assessment year. The original notice dated 09.06.2021 left 21 days of surviving time till 30.06.2021. Adding the time spent on compliance with the Ashish Agarwal directions (supply of information, 15 days for reply, and time to pass order), the last date for issuance of the new notice under Section 148 was 18.07.2022. The impugned notice dated 28.08.2022 fell beyond that cut-off. The court concluded that the notice was issued beyond the surviving period and was therefore invalid. All consequential proceedings were quashed and the rule was made absolute with no order as to costs.
Headnote
A) Income Tax - Reassessment - Notice under Section 148 - Surviving Time Principle - Income Tax Act, 1961, Sections 148, 148A, 148A(b), 148A(d); Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, Section 3(1) - The Supreme Court in Union of India v. Rajeev Bansal held that reassessment notices issued under the old regime between 01.04.2021 and 30.06.2021 and later converted under Ashish Agarwal must be re-issued within the surviving time computed from the date of the original notice to 30.06.2021, plus the time allowed for compliance under Ashish Agarwal. In the present case, the original notice dated 09.06.2021 had 21 days of surviving time; after adding the time for information supply, reply, and order, the last date for re-issue was 18.07.2022. The impugned notice issued on 28.08.2022 fell beyond this period. Held: The notice is invalid and time-barred, quashed along with all consequential proceedings (Paras 5-10).
Issue of Consideration
Whether the reassessment notice dated 28.08.2022 issued under section 148 of the Income Tax Act, 1961 for Assessment Year 2017-2018 was valid considering the principle of 'surviving time' laid down in Union of India v. Rajeev Bansal
Final Decision
The impugned notice dated 28.08.2022 under section 148 of the Income Tax Act, 1961 for Assessment Year 2017-2018 is quashed and set aside. All consequential proceedings are also quashed. Rule is made absolute.
Law Points
- notices issued under section 148 of the Income Tax Act between 01.04.2021 and 30.06.2021 under TOLA are valid only if re-issued under new regime within surviving time per Rajeev Bansal
- time limitation from date of original notice to 30.06.2021 determines surviving time
- notices beyond surviving time are time barred
