Shankar Rajaram Neelam Vs ITO (ITAT Mumbai)
Only “1 surviving day” left to reopen – Mumbai ITAT quashes reassessment notices issued beyond limitation after Rajeev Bansal ruling
In a major ruling on the post-Ashish Agarwal reassessment regime, the Mumbai ITAT quashed reassessment proceedings for AYs 2013-14 and 2014-15 after holding that the notices issued u/s 148 on 25.07.2022 were time-barred and beyond the surviving limitation period prescribed under section 149.
The reassessment proceedings were originally triggered on the basis of information received during a third-party search, alleging unexplained cash deposits in the assessee’s bank account. Since the assessee had not filed returns for the relevant years, notices u/s 148 were initially issued on 30.06.2021 under the old reassessment regime. Following the Supreme Court decision in Union of India v. Ashish Agarwal, those notices were deemed to be show-cause notices u/s 148A(b) under the new regime.
The Tribunal extensively analysed the Supreme Court judgment in Union of India v. Rajeev Bansal, particularly the concept of “surviving/balance limitation period.” The ITAT noted that under the Supreme Court formula, the Revenue gets only the balance period available between the date of original notice and 30.06.2021 for completing fresh reassessment procedures under the new law.
In the present case, since the original notice itself was issued on 30.06.2021, the Revenue effectively had only ONE SURVIVING DAY left to issue the fresh notice u/s 148 after completion of section 148A proceedings. The assessee filed its reply to notice u/s 148A(b) on 22.06.2022, meaning the last permissible date for issuing fresh notice u/s 148 expired on 23.06.2022. Even after considering the extended 7-day benefit under the fourth proviso to section 149, the limitation expired on 29.06.2022.
However, the department issued the fresh notice u/s 148 only on 25.07.2022, nearly a month after expiry of the surviving limitation period. The ITAT therefore held that the reassessment notice was clearly barred by limitation, void ab initio, and unsustainable in law.
The Tribunal accordingly quashed the notices issued u/s 148 as well as the consequential reassessment orders passed u/s 147 r.w.s. 144B for both assessment years. Since the reassessment itself failed on jurisdictional grounds, the Tribunal left all other issues on merits open and academic.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
