Reassessment Quashed as U/s 148 Notice Issued After TOLA Time Limit

Anuj Kapoor Vs DCIT (ITAT Delhi)

Missed the Clock by 28 Days:  TOLA Time Over, Reassessment Game Over: ITAT Applies Rajeev Bansal- 

Delhi ITAT quashed reassessment for AY 2013-14 holding notice issued u/s 148 on 21.07.2022 as barred by limitation in light of Supreme Court ruling in UOI vs. Rajeev Bansal (469 ITR 46). Assessee Anuj Kapoor challenged validity of reassessment by way of additional legal ground, which Tribunal admitted following NTPC Ltd. vs. CIT (229 ITR 383). Tribunal noted that original notice u/s 148 was issued on 07.06.2021 under old regime & pursuant to UOI vs. Ashish Agarwal, AO was required to follow new regime timelines. Applying illustration in para 112 of Rajeev Bansal, Tribunal held that after considering TOLA extension, only 23 days survived with AO post assessee’s reply dated 01.06.2022 & hence fresh notice u/s 148 ought to have been issued by 24.06.2022. Since notice was actually issued on 21.07.2022, reassessment framed u/s 147 r.w.s. 144B dated 19.05.2023 was held to be time-barred & bad in law. Tribunal also relied on Delhi HC decision in Ram Balram Buildhome (P) Ltd. vs. ITO (477 ITR 133). Consequentially, reassessment was quashed & other grounds including addition u/s 69A were left open as academic.

FULL TEXT OF THE ORDER OF ITAT DELHI

This appeal has been preferred by the assessee against the order dated 28.10.2024 of the National Faceless Appeal Centre (NFAC) [hereinafter referred to as the ‘Ld. CIT(A)] Delhi, pertaining to Assessment Year 2013-14, arising out of Assessment order dated 19.05.2023 under Section 147 r.w.s. 144B of the Income-tax Act, 1961(hereinafter referred to as ‘the Act’).

2. In this case, the assessee filed an additional ground of appeal challenging the notice dated 21.07.2022 issued u/s 148 of the Act, on the ground that it was barred by limitation in the light of the decision of the Hon’ble Supreme Court in the case of Union of India vs. Rajeev Bansal (469 ITR 46). In this regard, the letter dated 14.10.2025 of the assessee for filing of the additional ground is reproduced as under:

“It is respectfully stated that the assessee wishes to raise the following ground of appeal, as additional grounds of appeal:

A. On the peculiar facts of the case, the notice dt.21.07.2022 issued u/s 148 is barred by limitation.

B.  The addition made by the learned AO u/s 69A which had been sustained by the learned CIT(A) is illegal, as the learned AO had show caused the assessee to explain as to why addition be not made u/s 68.

It may be worth mentioning here that the above grounds of appeal are purely legal grounds and also that the same goes to the roots of the matter.

It is hereby requested that the aforementioned grounds of appeal may kindly be admitted as Additional Grounds of Appeal.”

2.1 The Ld. AR submitted that the above grounds of appeal are purely legal grounds and also that the same goes to the root of the matter and may be admitted.

3. The Ld. Sr. DR relied upon the orders of the authorities below.

4. We find that all the facts relevant for adjudication of the aforesaid additional ground are already on record. The additional ground no. 1 raised by the assessee is purely legal in nature. Hence, in view of the decision of the Hon’ble Supreme Court in the case of NTPC Limited vs CIT 229 ITR 383(SC), the additional grounds raised by the assessee are hereby admitted and taken up for adjudication.

5. Since the assessee has challenged the very validity of notice issued u/s 148 of the Act and the consequential assessment proceedings, we first adjudicate the additional ground no. 1 raised by the assessee.

5.1 The Ld. AR filed a written submission in support of the additional ground no. 1 of the appeal which is reproduced as under:

“NOTICE U/S 148 WAS BARRED BY LIMITATION

1. The assessee had filed his ITR vide e-filing no.119407961070314.

2. The AO had issued a notice dt.07.06.2021 u/s 148 under the old regime (Pg:01). However in consequence to Hon’ble SC Order dt.04.05.2022, the learned AO had issued a letter-cum-notice dt. 18.05.2022 u/s 148A(b) asking the assessee to file his reply by 01.06.2022 (Pg:02-04). which was complied with by the assessee vide no.645885301010622 (Pg:05). Thereafter the learned AO had passed an Order dt.21.07.2022 u/s 148A(d) and issued a notice dt.21.07.2022 u/s 148 (Pg:06-07).

3. The assessee’s respectful submission in this regard is that the notice dt.21.07.2022 u/s 148 is barred by limitation, in as much as the same could have been issued by 24.06.2022 (23 days from 01.06.2022). For such proposition, reliance is hereby placed on the judgment passed by Hon’ble Supreme Court in Rajeev Bansal (469 ITR 46) more particularly its para 112 which reads, as under:

112. Let us take the instance of a notice issued on May 1, 2021 under the old regime for a relevant assessment year. Because of the legal fiction, the deemed show-cause notices will also come into effect from May 1, 2021. After accounting for all the exclusions, the Assessing Officer will have sixty-one days (days between May 1, 2021 and June 30, 2021) to issue a notice under section 148 of the new regime. This time starts ticking for the Assessing Officer after receiving the response of the assessee. In this instance, if the assessee submits the response on June 18, 2022, the Assessing Officer will have sixty-one days from June 18, 2022 to issue a reassessment notice under section 148 of the new regime. Thus, in this illustration, the time limit for issuance of a notice under section 148 of the new regime will end on August 18, 2022.

Further reliance is placed on the judgement passed by Hon’ble Delhi High Court, in Ram Balram Buildhome Pvt. Ltd. (477 ITR 133).”

6. The Ld. Sr. DR relied upon the orders of the authorities below.

7. We have heard the rival submissions and perused the material available on record. By virtue of the decision of the Hon’ble Supreme Court in the case of Union of India vs. Ashish Agarwal (2022), (2022) SCC Online SC 543, the notice issued originally u/s 148 dated 07.06.2021 under pre-amended provisions was and the time limits were set by the Hon’ble Supreme Court in the case of Union of India vs. Rajeev Bansal (supra) for issuing fresh notice under new regime. The Ld. AR further submitted in this case the final notice issued u/s 148 on 21.07.2022 is barred by limitation as it was issued beyond the time limits set by the Hon’ble Supreme Court in the case of Union of India vs. Rajeev Bansal and accordingly the reassessment framed pursuant to such notice is bad in law.

7.1 The Hon’ble Supreme Court in the case of Union of India vs. Rajeev Bansal (supra) at para 112 of the judgment the Hon’ble Supreme Court by way of an illustration had clearly set the time limit for issue of notices u/s 148 under amended provisions and applying the said illustration to the case on hand before us, the notice issued u/s 148A dated 21.07.2022 under amended scheme (new regime) is barred by limitation in view of the following sequence of events took place in this case:

7.2 The sequence of events is not in dispute before us. Applying the ratio of the decision in the case of Union of India vs. Rajeev Bansal (supra) to the above events the surviving time available as per TOLA after the time allowed to file reply by the assessee was left with only 23 days and therefore the notice u/s 148 under new regime should have been issued not later than 24.06.2022. However, the notice u/s 148 was issued on 21.07.2022 which is clearly barred by limitation and consequently the reassessment proceedings pursuant to such notice is bad in law. Thus, applying the ratio of the decision of the Hon’ble Supreme Court in the case of UOI vs. Rajeev Bansal (supra) and the decision of the Hon’ble Delhi High Court in the case of Ram Balram Buildhome (P) Ltd. vs. ITO (supra), the reassessment order passed by the Assessing Officer u/s 147 r.w.s. 144B of the Act dated 19.05.2023 pursuant to the notice issued u/s 148 dated 21.07.2022 is held to be bad in law and is hereby quashed. Ground no.1 of the additional ground of the assessee is allowed.

7.3. Since we have quashed the reassessment order by allowing the ground no.1 of the additional ground of the appeal, all other grounds in the quantum appeal as well as the additional ground no. 2 of the appeal of the assessee are not adjudicated as they become academic in nature at this stage and are left open.

8. In the result, the appeal of the assessee is allowed.

Order pronounced in the open court on 31^st December, 2025.