Narayana Srinivasa Vs ITO (ITAT Bangalore)
Can Reopening Survive a Notice Beyond the Surviving Period and Approval from the Wrong Authority?
The controversy
The Bangalore Tribunal quashed a reassessment on two independent jurisdictional grounds. First, the notice under section 148 was issued beyond the surviving limitation period, applying the Supreme Court’s decisions in Ashish Agarwal and Rajeev Bansal. Secondly, approval had been obtained from the Principal Commissioner, although the applicable section 151 required approval from the higher specified authority because more than three years had elapsed.
Consequently, the reassessment involving estimated business income of ₹39,11,259 was quashed without adjudicating the merits of that estimation. viewOrder(20261014-135303)
The assessment and its background
The assessee, a contractor from Pandavapura Taluk, Mandya, filed his return for AY 2016-17 on 29 September 2016, declaring total income of ₹3,16,600.
The Assessing Officer subsequently reopened the assessment. After considering the assessee’s submissions, he brought to tax ₹39,11,259 as business income, calculated at 25% of ₹1,56,45,036.
The reassessment order was passed on 17 May 2023 under section 147 read with sections 144 and 144B.
The assessee challenged the reopening and the merits before the CIT(A)/NFAC and thereafter approached the Tribunal. Before the Tribunal, his representative requested that the jurisdictional ground be considered first, since it went to the root of the proceedings.
The dates that mattered
The original notice under the old section 148 regime was issued on 29 June 2021, during the extended period under the Taxation and Other Laws (Relaxation of Certain Provisions) framework—TOLA.
Following Ashish Agarwal, that notice was treated as a deemed show-cause notice under section 148A(b) of the new regime.
The Assessing Officer supplied the information on 2 June 2022. The assessee’s reply was recorded in the narrative as having been filed on 16 June 2022.
However, the order under section 148A(d) and the fresh notice under section 148 were issued only on 13 July 2022.
The question was whether the Supreme Court’s transitional directions preserved jurisdiction until that date.
Ashish Agarwal did not remove the limitation requirement
The Tribunal explained that the Finance Act, 2021 substituted the reassessment framework with effect from 1 April 2021.
In Ashish Agarwal, the Supreme Court exercised its powers under Article 142 to treat old-regime notices issued between 1 April and 30 June 2021 as deemed section 148A(b) notices. The Revenue was required to supply the information and material, and the assessees were to receive time to reply.
However, the subsequent decision in Rajeev Bansal required the fresh section 148 notice to be issued within the surviving period, after accounting for the applicable exclusions.
The Tribunal emphasised that the Assessing Officer had to consider the response, pass the section 148A(d) order and issue the fresh section 148 notice within that available period. The transitional mechanism did not confer an unrestricted extension.
The notice missed the surviving deadline
Taking the original notice dated 29 June 2021 and the TOLA deadline of 30 June 2021, the Tribunal calculated the remaining period as two days on an inclusive basis.
Applying the minimum seven-day protection referred to in the order, it adopted a seven-day surviving period. With 16 June 2022 as the relevant starting point, the Tribunal identified 23 June 2022 as the last permissible date.
The actual notice dated 13 July 2022 was therefore held time-barred.
There are two apparent inconsistencies in the order’s computation table. It states “No Reply”, although the narrative records a reply on 16 June 2022. It also describes the delay as 28 days, whereas the interval between its stated deadline of 23 June and the actual notice of 13 July is 20 days. These discrepancies should be noticed when citing the calculation; the Tribunal’s operative finding remains that the notice was issued beyond the surviving deadline.
Approval from the Principal Commissioner was also insufficient
The Tribunal separately examined the sanction obtained for the notice.
Approval had been granted by Principal Commissioner of Income-tax, Bangalore-3.
Under section 151 as applicable to these proceedings, where more than three years had elapsed from the end of the relevant assessment year, the specified authority was the Principal Chief Commissioner or Principal Director General, or, where there was no such authority, the Chief Commissioner or Director General.
For AY 2016-17, the notice dated 13 July 2022 fell beyond three years. The Principal Commissioner was therefore not the authority prescribed for granting approval.
The Tribunal also referred to CBDT Instruction No. 01/2022, requiring approval under the amended section 151 when implementing Ashish Agarwal. The reassessment was consequently liable to be quashed on this ground also. viewOrder(20261014-135303)
The ruling and author’s comments
The appeal was allowed, the notice and reassessment were quashed, and the remaining grounds were left open.
This decision makes the jurisdictional requirements cumulative: the notice must be timely, and the approval must come from the competent authority. Compliance with one cannot cure failure of the other.
For practitioners handling transitional reopening cases, the original notice date, information-supply date, reply period, fresh notice date and sanctioning authority deserve close scrutiny. The calculation should nevertheless be independently checked, particularly given the discrepancies recorded above.
The Tribunal did not approve the assessee’s business-income computation or reject the 25% estimate on merits. The assessment failed because the Department lacked valid jurisdiction to make it.
Cases Discussed
- Union of India Vs Ashish Agarwal (Supreme Court) — old-regime reassessment notices deemed notices under section 148A(b).
- Union of India Vs Rajeev Bansal (Supreme Court) — surviving limitation period governing fresh notices under section 148.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
This appeal is filed by the assessee against the order of Ld. Commissioner of Income Tax (Appeals), NFAC vide DIN: ITBA/NFAC/S/250/2025- 26/1087087642(1) dated 09-Mar-2026 for the Assessment Year 2016-17, arising out of the Order passed under section 147 r.w.s. 144 r.w.s. 144B of the Act, dated 17.05.2023.
2. Briefly stated, facts of the case are assessee filed his return of income on 29.09.2016 for the Assessment Year 2016-17 admitting a total income of Rs.3,16,600/-. The assessee carries on the business as contractor. The learned AO issued a notice under section 148 of the Act on 13.07.2022 after obtaining approval from the competent authorities. Thereafter, statutory notices under section 143(2) and 142(1) of the Act on various dates were issued and served on the assessee. The assessee furnished submissions from time to time before the learned AO. After examining the submissions made by the assessee, the learned AO considered income escaping assessment at Rs.39,11,259/- (25% of Rs.1,56,45,036/-) and brought the income as business income of the assessee.
3. On being aggrieved with the Order of the learned AO, the assessee carried the matter before the learned CIT(A). The assessee challenged the reopening under section 148 before the learned CIT(A). The assessee also made similar submissions on merits before the learned CIT(A). Considering the submissions, the learned CIT(A) set aside the appeal of the assessee.
4. On being aggrieved with the Order of the learned CIT(A), the assessee is in appeal before us by raising the following grounds:
1. The orders of the authorities below in so far as it is against the appellant is opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the case.
2. The appellant denies himself to be assessed to an income of Rs.42,27,919/- as against the returned income of Rs.3,16,660/- for the year under appeal, under the facts and circumstances of the case.
3. Grounds on reopening:
a. The notice issued under section 148 of the Act is bad in law and invalid.
b. The notice issued under section 148 of the Act dt:13.07.2022 is bad in law for want of Document Identification Number (“DIN”) on the body of the notice rendering the entire reassessment proceedings invalid and void ab initio on the facts and circumstances of the case.
c. The learned assessing officer is not justified in issuing a second 148 notice where the earlier reassessment proceeding is still open on the facts and circumstances of the case.
d. The learned assessing officer has not arrived at the proper satisfaction that there was income escaping assessment, due to the fact that the reasons recorded do not depict the satisfaction of the assessing officer, but merely relies upon the purported information received from the Office of the Deputy Commissioner of Income Tax, Central Circle, Mysore which is impermissible on the facts and circumstances of the case.
e. The order of reassessment is further bad in law and void ab initio as the learned assessing officer had no reason to believe that the income of the Appellant has escaped assessment and the said reasons amounted to merely reasons to suspect and is based on borrowed satisfaction on the facts and circumstances of the Appellant’s case.
f. The order of assessment passed by the learned assessing officer under Section 147 r.w.s 144 r.w.s 144B of the Act is bad in law since the mandatory conditions as envisaged in the Act to assume jurisdiction under section 148 did not exist or having not been complied with and consequently, the reassessment requires to be cancelled on the facts and circumstances of the case.
g. The learned assessing officer has failed to follow the principles and directions laid down by the Hon’ble Supreme Court in the case of Ashish Agarwal on the basis of which the second 148 notice is issued on the facts and circumstances of the case.
4. The learned assessing officer is not justified in making addition by merely relying on the statement of the appellant without appreciating the fact that the statement recorded under section 131 of the Act has no evidentiary value without any corroborative evidence on the facts and circumstances of the case.
5. The learned assessing officer has failed to appreciate the confirmation and statement given by Mr. Ravishankar during the course of assessment stating that he has not paid any amount to the appellant on the facts and circumstances of the case.
6. Without prejudice, the statement recorded under section 131 of the Act carries no weight as the copy of the statement was not provided, the content of the statement was not explained to the appellant and the signature of the appellant was taken by not disclosing its content on the facts and circumstances of the case.
7. Without prejudice, the learned assessing officer has failed to provide an opportunity of cross examination of Mr. Ravishankar though specifically asked thereby vitiating the principles of natural justice on the facts and circumstances of the case.
8. The learned assessing officer is not justified in arriving at a conclusion that the appellant has received a sum of Rs.1,56,45,036/- from Mr. P. Ravishankar on the facts and circumstances of the case.
9. Without prejudice, the estimation of income at 25% of Rs.1,56,45,036/- is exorbitant and deserves to be substantially reduced on the facts and circumstances of the case.
10. The appellant denies the liability to pay interest under section 234A, 234B and 234C of the Act in view of the fact that there is no liability to additional tax as determined by the learned assessing officer. Without prejudice, the rate, period and on what quantum the interest has been levied are not in accordance with law and further are not discernable from the order and hence deserves to be cancelled on the facts and circumstances of the case.
11. The appellant craves leave to add, alter, delete or substitute any of the grounds urged above.
12. In view of the above and other grounds that may be urged at the time of the hearing of the appeal, the appellant prays that the appeal may be allowed and appropriate relief be granted in the interest of justice and equity.
5. The learned AR submitted that firstly ground No.3 shall be adjudicated as it challenges the reassessment proceedings. He submitted that since this ground goes to the root of the matter, this may be adjudicated at first. The learned AR submitted that the Hon’ble Supreme Court in the case of Rajeev Bansal held notices issued under section 148 of the Act under the new regime should be within the surviving period as elaborated by the Hon’ble Supreme Court. The learned AR submitted that notice under section 148 of the Act under the old regime was issued on 29.06.2021 within the extended period under TOLA. Consequent to the decision of the Hon’ble Supreme Court in the case of Ashish Agarwal, the learned AO supplied the information to the assessee by treating the notice under section 148 of the Act of old regime as a show cause notice under section 148A(b) of the Act of the new regime on 02.06.2022. In response, the assessee filed reply on 16.06.2022 and the learned AO passed an Order under section 148A(d) of the Act and issued notice under section 148 of the Act of the new regime on 13.07.2022. The learned AR submitted that notice under section 148 of the Act was time barred by 28 days and hence reassessment of proceedings is void-ab-initio. He therefore prayed that the Assessment Order be quashed.
6. Per contra, the learned DR relied on the Order of the Revenue authorities.
7. We have heard rival submissions and perused the material on record. The Finance Act, 2021 amended the entire scheme of reassessment procedure u/s 147 to 151, w.e.f 01.04.2021. Thus, the old regime of re-assessment ended on 31.03.2021 and the new regime of re-assessment started from 01.04.2021. The Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (TOLA), extended time limits to issue notice u/s 148 of the Act under Old Regime, falling during the period from 20.03.2020 to 31.03.2021, till 30.06.2021, due to COVID-19.
8. The issue before us is that, since the Old regime of re-assessment had ended on 31.03.2021, was it valid to issue notice based on an ended regime during the extended period of 01.04.2021 to 30.06.2021. Further, under New Regime, a notice u/s 148A(b) and an order passed u/s 148A(d)is required.
9. The Hon’ble Supreme Court in the case of Ashish Agarwal (supra), by exercising powers under Article 142 of the Constitution of India, in Para-10(i) held that the notice u/s 148 of the Act issued under Old Regime between the period of 01.04.2021 to 30.06.2021, shall be deemed to be a show cause notice u/s 148A(b) of the New Regime and that the AO shall provide information and materials relied upon by revenue within 30 days of the judgment to the assessee requiring the assessee to furnish reply within two weeks. Accordingly, the revenue assumed jurisdiction for all such cases, based on the judgment of Hon’ble Supreme Court in the case of Ashish Agarwal (supra).
10. The Hon’ble Supreme Court in the case of Rajeev Bansal (supra), held that after exclusion of limitations, the notices u/s 148 of New Regime should be issued within the “SURVIVING PERIOD” and the notice issued beyond surviving period is time barred and liable to be set-aside. The Submission made before us is that the notice issued u/s 148 of the Act dated 13.07.2022, for AY-2016-17, in the case of the assessee is time barred as it was issued beyond the surviving period as specified in the case of Rajeev Bansal (supra). The relevant dates in the case of assessee are as follows:-
| Sl No | Particulars | Date |
|---|---|---|
| 1) | Date of issue of Notice u/s 148 of OLD regime during the period 01.04.2021 to 30.06.2021 | 29.06.2021 |
| 2) | Date of supply of information as per judgment of Asish Agarwal | 02.06.2022 |
| 3) | Date of reply filed by the Assessee for the above | 16.06.2022 |
| 4) | Date of passing of order u/s 148A(d) | 13.07.2022 |
| 5) | Date of issue of notice u/s 148 of New Regime | 13.07.2022 |
11. The surviving period and limitation, as provided in case of Rajeev Bansal (supra), are computed as follows:
1. Surviving period is calculated by computing the number of days between the date of issuance of the deemed notice and 30th June, 2021 (Para-108)
2. The surviving period starts ticking from the date of receipt of response by AO (Para-111 & 112)
3. The AO has to consider response of the Assessee u/s 148A(c), pass order u/s 148A(d) and issue notice u/s 148 of New regime, the compliance of procedures has to be made within the surviving period (Para-111)
4. Only notices issued within the surviving period calculated from the date of receipt of response by AO is valid. The notices issued beyond surviving period is time barred and liable to be set-aside (Para-113 and 114(g) & 114(h))
12. In the instant case following the above principles laid down by the Hon’ble Supreme Court to the facts, notice issued u/s.148 of the Act will time barred by 28 days as detailed below:
| PARTICULARS | Method of computation | No of days / date |
|---|---|---|
| Date of issue of Original Notice u/s 148 within TOLA Period | A | 29-06-2021 |
| Last date of TOLA | B | 30-06-2021 |
| Balance (On Inclusive method) | C =B-A | 2 days |
| Minimum days available as per 4th Proviso of Section 149(1) | D | 7 |
| Then SURVIVING PERIOD (Para-108 to 113 of Rajeev Bansal) | E (Higher of C & D) | 7 |
| Date of response filed by Appellant to 148A(b) notice | F | No Reply |
| Date on which Period of two weeks allowed to assessee to respond to notice ends (deemed stay as per 3rd proviso to section 149 and Para 114 (g) of Rajeev Bansal) | G | 16-06-2022 |
| Last date for issuing notice u/s 148 [i.e., 16.06.2022+ 7 days] | H =E + G | 23-06-2022 |
| Actual date of issuance of notice u/s 148 | H | 13-07-2022 |
| Then Notice is time Barred by (Para 114 (H of Rajeev Bansal) | I =H – G | 28 days |
13. To assume jurisdiction to issue notices under section 148 with respect to the relevant assessment years, an assessing officer has to:
(i) issue the notices within the period prescribed under section 149(1) of the new regime read with TOLA; and
(ii) (ii) obtain the previous approval of the authority specified under section 151.
14. A notice issued without complying with the preconditions is invalid as it affects the jurisdiction of the assessing officer. Therefore, the reassessment notices issued under section 148 of the new regime, which are in pursuance of the deemed notices, ought to be issued within the time limit surviving under the Income-tax Act read with TOLA. A reassessment notice issued beyond the surviving time limit will be time-barred.
15. Therefore, having considered the provisions of the Act, pre as well as post the amendment by the Finance Act, 2021, and the TOLA, in the light of the decision of the Hon’ble Supreme Court in Ashish Agarwal (supra) and Rajeev Bansal (supra), we are of the considered view that the notice issued under section 148 of the Act on 13/07/2022 is barred by limitation period specified under section 149 of the Act. Accordingly, we are of the considered view that notice issued under section 148 of the Act on 13/07/2022 is void ab initio and bad in law. Consequently, the entire re- assessment proceedings and assessment order passed under section 147 r.w.s 144 r.w.s 144B of the Act are also quashed.
16. Since the relief has been granted to the assessee on the aforesaid jurisdictional aspect, the other grounds raised by the assessee in the appeal are rendered academic, and therefore, are left open.
17. Further the Ld. AR has assailed the validity of the jurisdiction assumed by the Ld. AO for issuance of notice under section 148 dated 13.07.2022, i.e., without obtaining any approval from any of the authorities specified u/s. 151(ii) of the Act amended by the Finance Act, 2021 w.e.f. 01.04.2021. Admittedly, it is a matter of fact discernible from the record that the notice under section 148 of the Act, dated 13.07.2022, had been issued after obtaining the prior approval of the Principal Commissioner of Income Tax, Bangalore – 3. For the sake of clarity, we deem it fit to cull out the notice under section 148 dated 13.07.2022. We find merit in the argument of the Ld. AR regarding the validity of the jurisdiction assumed by the Ld.AO for initiating proceedings under section 147 of the Act, i.e., without obtaining the approval of the specified authority under section 151(ii) of the Act and we find substance in the same. Admittedly, the reassessment proceedings under section 147 of the Act have been amended by the Finance Act, 2021 w.e.f. 01.04.2021. The substituted Section 151 of the Act applicable w.e.f. 01.04.2021 are culled out as under:
Sanction for issue of notice-
“151. Specified authority for the purposes of section 148 and section 148A shall be—
1. (i) Principal Commissioner or Principal Director or Commissioner or Director, if three years or less than three years have elapsed from the end of the relevant assessment year;
2. (ii) Principal Chief Commissioner or Principal Director General or where there is no Principal Chief Commissioner or Principal Director General, Chief Commissioner or Director General, if more than three years have elapsed from the end of the relevant assessment year.”
18. Apart from that, we find that the CBDT vide Instruction No.01/2022 while directing implementation of the judgment of the Hon’ble Supreme Court in the case of Union of India & Ors v. Ashish Agrawal, Civil Appeal No.3005/2022, dated 04.05.2022, while laying down the procedure that is required to be followed by the jurisdictional Assessing Officers/Assessing Officer had, inter alia, held, that if it is a fit case to issue notice under section 148 of the Act, the Assessing Officer shall serve on the assessee a notice under section 148 after obtaining approval of the specified authority u/s. 151 as per the amended provisions of law.
19. We, thus, in terms of our aforesaid observation, concur with the Ld. AR that in the present case before us for A.Y. 2016-17, wherein notice under section 148 of the Act was issued on 13.07.2022, i.e. beyond a period of three years from the end of the assessment year, the Ld. AO was statutorily obligated to have obtained the approval from either of the authorities specified under section 151(ii) of the extant law, viz. Principal Chief Commissioner or Principal Director General or where there is no Principal Chief Commissioner or Principal Director General, Chief Commissioner or Director General. However, as the Ld. AO had obtained the approval from the Principal Commissioner of Income Tax Bangalore – 3, i.e. an authority who was not vested with any jurisdiction as per the amended mandate of Section 151 of the Act (as made available on the statute w.e.f 01.04.2021), therefore, the assessment so framed by him under section 147 r.w.s. 144 r.w.s 144B of the Act, dated 17.05.2023 being devoid and bereft of valid assumption of jurisdiction, is liable to be quashed on this count also.
20. In the result, appeal filed by the assessee is allowed.
Pronounced in the open court on the date mentioned on the caption page.
