Gujarat HC Quashes Time-Barred Section 148 Reassessment Notices

Dhanraj Govindram Kella Vs ITO (Gujarat High Court)

The Gujarat High Court delivered its ruling in the case of Dhanraj Govindram Kella v. ITO, examining the validity of reassessment notices issued under Section 148 of the Income Tax Act in the context of the transitional legal framework following amendments effective from 1 April 2021.

The central issues before the Court were:

1. Whether the approval granted by the Principal Commissioner of Income Tax (PCIT) for passing orders under Section 148A(d) and issuance of notices under Section 148 was valid in light of amended Section 151, effective from 1 April 2021.
2. Whether the reassessment notices issued were time-barred under the amended limitation provisions of Section 149.

Background

• For Assessment Years (AYs) 2013–14 to 2017–18, the Revenue issued reassessment notices under Section 148 after 1 April 2021 by relying on the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA).
• From 1 April 2021, the reassessment regime underwent significant change with the substitution of Sections 147 to 151, introduction of Section 148A, and incorporation of the principles of natural justice as laid down in GKN Driveshafts (India) Ltd. v. ITO (259 ITR 19, SC).
• The Supreme Court in Union of India v. Ashish Agarwal (2022) held that reassessment notices issued under the old regime post-1 April 2021 were invalid. However, in exercise of its powers under Article 142, the Court salvaged nearly 90,000 notices by treating them as show-cause notices under Section 148A(b) of the new regime. The Court directed the Revenue to provide necessary information within 30 days and proceed under Section 148A(d) before issuing fresh notices under Section 148. Importantly, it also mandated compliance with the amended limitation provisions under Section 149(1).
• Following this, assessees challenged notices on the grounds that (a) they were time-barred under Section 149, and (b) approval of the “specified authority” under Section 151 of the new regime was absent. Various High Courts accepted these objections.
• The Revenue once again approached the Supreme Court, resulting in Union of India v. Rajeev Bansal (2023), which clarified how TOLA, Section 151 approvals, and limitation under Section 149 should apply to such transitional reassessment notices.

Supreme Court’s Guidance

In Rajeev Bansal, the Supreme Court clarified:

• The test for applying TOLA to Section 151 is whether the three-year limitation period under the new regime fell between 20 March 2020 and 31 March 2021. In such cases, specified authority under Section 151(i) could grant approval until 30 June 2021.
• Notices issued after 1 April 2021 but rooted in earlier TOLA-extended timelines should be considered as “substituted notices” rather than fresh ones.
• The Court also directed exclusion of time between 30 June 2021 and 4 May 2022 (when Ashish Agarwal was delivered), as well as the period taken for providing information under Section 148A(b) and the assessee’s reply time, to compute the surviving limitation.

Gujarat High Court’s Analysis

The Gujarat High Court examined the issue in light of the binding precedents of Ashish Agarwal and Rajeev Bansal.

On Approval under Section 151

• The petitioners contended that the date of fresh Section 148 notices issued in July–September 2022 should be considered the relevant date for determining approval requirements under Section 151 of the new regime.
• The Court rejected this argument, holding that the notices issued in 2022 were merely substitutes for earlier notices issued between 1 April 2021 and 30 June 2021 under TOLA. Hence, the approval granted by the specified authority under Section 151(i) was valid, consistent with Rajeev Bansal.

On Limitation under Section 149

• The Court emphasized that each matter must be factually examined to determine whether the reassessment notices issued under Section 148 were within the “surviving time” computed as per the Supreme Court’s directions in Rajeev Bansal.
• For AYs 2013–14 and 2014–15, the normal three-year limitation had already expired before 20 March 2020. The six-year period expired between 20 March 2020 and 30 June 2021. Thus, such notices were valid under TOLA only if the subsequent substituted notices under the new regime were issued within surviving time.
• For AYs 2016–17 and 2017–18, the three-year limitation period ended between 20 March 2020 and 30 June 2021, making the original notices validly issued under TOLA.

The Court then examined the timeline of notices, supply of information under Section 148A(b), replies, and issuance of orders under Section 148A(d). It found that the substituted Section 148 notices issued in July–September 2022 were beyond the surviving time available under Rajeev Bansal.

Decision

• The Court held that the approvals granted under Section 151 were valid.
• However, since the substituted notices issued under Section 148 in July–September 2022 were beyond the surviving time calculated in accordance with Rajeev Bansal, the notices were invalid.
• Consequently, the impugned notices under Section 148 and orders under Section 148A(d) were quashed. Any consequential proceedings were also set aside.
• The Court made the rule absolute to this extent and did not pass any order as to costs.

Key Judicial Precedents Considered

1. GKN Driveshafts (India) Ltd. v. ITO (2003) 259 ITR 19 (SC) – established principle of providing opportunity to assessees before reassessment.
2. Union of India v. Ashish Agarwal (2022) – salvaged old regime reassessment notices under Article 142 by treating them as Section 148A(b) notices under the new regime.
3. Union of India v. Rajeev Bansal (2023) – clarified applicability of TOLA, approvals under Section 151, and computation of surviving limitation.

FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT

A. BACKGROUND

1.In this group of petitions, the petitioners have challenged the notice issued under section 148 and order passed under section 148A(d) of the Income Tax Act, 1961 (For short “the Act”) for the Assessment Years 2013-2014, 2014-2015, 2016-2017, 2017-2018.

2. The petitioners have challenged the impugned notices and orders mainly on two issues(i) that impugned notices are time barred under section 149(1)(b) of the Act and (ii) the notices are issued without proper sanction under section 151 of the Act.

3. These petitions are pending in view of the both issues were arising out of the decision of Hon’ble Apex Court in case of Union of India and others v. Ashish Agarwal reported in (2022) 444 ITR 1 (SC) which is now further explained and both the issues are decided by the Hon’ble Apex Court in case of Union of India v. Rajeev Bansal reported in (2024) 469 ITR 46 (SC).

B. FACTS

4. Brief facts giving rise to these petitions can be summarised as under:

5. By the Finance Act, 2021, provisions of sections 147 to 151 pertaining to income escaping assessment and sanction for issuance of notice were amended with effect from April 1,2021, introducing a new procedure for issuance of notice under section 148 of the Act for reopening where income has escaped assessment and procedure before issuance of notice under section 148 by insertion of section 148A and section 148B of the Act.

6. Section 149 of the Act is also amended with effect from April,1,2021, where the time limit for issuance of notice under section 148 of the Act has been prescribed. Similarly, section 151 of the Act was also amended prescribing the authority who can grant sanction for issue of notice for the purpose of sections 148 and 148A of the Act.

7. This group of petitions has also reference to Covid-19 Pandemic, as on March 24, 2020, the Central Government announced a complete lock-down for the entire nation for twenty-one days to contain the spread of the COVID-19 pandemic.

8. As a consequence, various relief measures were taken to redress the challenges faced by the assessee in meeting the statutory time limit.

9. On March 31, 2020, the President of India promulgated the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 [(2020) 422 I.T.R. (St.) 116] for extension of time whereby time limit for completion or compliance of actions under the specified Acts was falling for completion or compliance between March 20, 2020 till June 30, 2020.

10. On June 24, 2020, the Central Government extended time limit for completion or compliance of actions under the specified Acts till March 31, 2021 by issuance of notification under section 3(1) of the ordinance.

11. Thereafter, Parliament enacted Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020[(2020) 428 I.T.R. (St.)29] (For short “TOLA”) on September 29,2020 which came into force with retrospective effect from March 31, 2020.

12. Section 3(1) of TOLA empowers the Central Government to extend the time limit beyond March 31, 2021, by notification. Accordingly, in pursuance of such powers, the Central Government issued various notifications extending the time limit upto June 30, 2021 whereby it was provided that if the time prescribed for passing of any order or issuance of any notice, sanction, or approval fell for completion or compliance from March 20, 2020 to March 31, 2021; and if the completion or compliance of such action could not be made during the stipulated period, then the time limit for completion or compliance of such action was extended to June 30, 2021.

13. The notification issued by the Central Government under section 3(1) of TOLA contained an explanation that provisions of section 147 to 151 of the Act prior to April 1, 2021 (herein after referred to as “old regime”) shall be applied to reassessment proceedings initiated under them between April 1,2021 and June 30,2021. Accordingly Notification No.20 of 2021 dated March 31, 2021 [(2021) 432 ITR (St.) 141] and Notification No.38 of 2021 dated April 27,2021 [(2021) 434 ITR (St.)11] directed and permitted the Assessing Officers to apply the provisions of the old regime for reassessment notices to be issued after coming into force of the Finance Act, 2021 with amendment with effect from April 1, 2021.

14. Hence the reassessment notices were issued between April 1, 2021, and 30^thJune 2021 under the provisions of section 148 of the old regime for A.Y.2013-14 to A.Y. 2017-18.

15. The assessee challenged such notices issued after 1^st April, 2021 for reassessment on the ground that such notices could not have been issued under the old regime in view of coming into force of amendment brought by the Finance Act, 2021.

16. Various High Courts allowed the writ petitions field by the assessee and quashed all the reassessment notices issued between April 1, 2021 and June 30, 2021 under section 148 of the Act under the old regime on the ground that no such notices could have been issued under the provisions of section 147 to 151 of the Act which are not in existence after April 1, 2021 and there was no saving clause which could have been resorted to by the Revenue and the reassessment proceedings could have been initiated as per the amended provisions of sections 147 to 151 of the Act after April 1, 2021 (herein after referred to as “new regime”) since they were remedial, beneficial and meant to protect the rights and interests of the assesses. Being aggrieved by the decisions of various High Courts, the Income tax Department challenged the same before the Apex Court.

C. DECISION IN CASE OF ASHISH AGARAWAL

17. The Hon’ble Apex Court in case of Ashish Agarwal(supra) held that it was in complete agreement with the view taken by various High Courts however the Hon’ble Apex Court considering the stand of the Revenue that the reassessment notices were issued under bona fide belief that amendment may not yet have been enforced in view of TOLA, exercised the discretionary jurisdiction under Article 142 to strike a balance between the interest of Revenue and the assessee and directed that such notices issued between April 1, 2021 and June 30, 2021 under the old regime be deemed to be notices under the new regime as provided under section 148A(b) of the Act. The Hon’ble Apex Court in case of Ashish Agarwal(supra) vide judgment and order dated 04.05.2022, modified the judgment and order passed by the respective High Courts as under:

“8. However, at the same time, the judgments of the several High Courts would result in no reassessment proceedings at all, even if the same are permissible under the Finance Act, 2021 and as per substituted sections 147 to 151 of the IT Act. The Revenue cannot be made remediless and the object and purpose of reassessment proceedings cannot be frustrated. It is true that due to a bonafide mistake and in view of subsequent extension of time vide various notifications, the Revenue issued the impugned notices under section 148 after the amendment was enforced w.e.f. 01.04.2021, under the unamended section 148. In our view the same ought not to have been issued under the unamended Act and ought to have been issued under the substituted provisions of sections 147 to 151 of the IT Act as per the Finance Act, 2021. There appears to be genuine non−application of the amendments as the officers of the Revenue may have been under a bonafide belief that the amendments may not yet have been enforced. Therefore, we are of the opinion that some leeway must be shown in that regard which the High Courts could have done so. Therefore, instead of quashing and setting aside the reassessment notices issued under the unamended provision of IT Act, the High Courts ought to have passed an order construing the notices issued under unamended Act/unamended provision of the IT Act as those deemed to have been issued under section 148A of the IT Act as per the new provision section 148A and the Revenue ought to have been permitted to proceed further with the reassessment proceedings as per the substituted provisions of sections 147 to 151 of the IT Act as per the Finance Act, 2021, subject to compliance of all the procedural requirements and the defences, which may be available to the assessee under the substituted provisions of sections 147 to 151 of the IT Act and which may be available under the Finance Act, 2021 and in law. Therefore, we propose to modify the judgments and orders passed by the respective High Courts as under:

(i) The respective impugned section 148 notices issued to the respective assessees shall be deemed to have been issued under section 148A of the IT Act as substituted by the Finance Act, 2021 and treated to be show-cause notices in terms of section 148A(b). The respective assessing officers shall within thirty days from today provide to the assessees the information and material relied upon by the Revenue so that the assessees can reply to the notices within two weeks thereafter;

(ii) The requirement of conducting any enquiry with the prior approval of the specified authority under section 148A(a) be dispensed with as a one-time measure vis–vis those notices which have been issued under Section 148 of the unamended Act from 01.04.2021 till date, including those which have been quashed by the High Courts;

(iii) The assessing officers shall thereafter pass an order in terms of section 148A(d) after following the due procedure as required under section 148A(b) in respect of each of the concerned assessees;

(iv) All the defences which may be available to the assessee under section 149 and/or which may be available under the Finance Act, 2021 and in law and whatever rights are available to the Assessing Officer under the Finance Act, 2021 are kept open and/or shall continue to be available and;

(v) The present order shall substitute/modify respective judgments and orders passed by the respective High Courts quashing the similar notices issued under unamended section 148 of the IT Act irrespective of whether they have been assailed before this Court or not.

9. There is a broad consensus on the aforesaid aspects amongst the learned ASG appearing on behalf of the Revenue and the learned Senior Advocates/learned counsel appearing on behalf of the respective assessees. We are also of the opinion that if the aforesaid order is passed, it will strike a balance between the rights of the Revenue as well as the respective assesses as because of a bonafide belief of the officers of the Revenue in issuing approximately 90000 such notices, the Revenue may not suffer as ultimately it is the public exchequer which would suffer.

Therefore, we have proposed to pass the present order with a view avoiding filing of further appeals before this Court and burden this Court with approximately 9000 appeals against the similar judgments and orders passed by the various High Courts, the particulars of some of which are referred to hereinabove. We have also proposed to pass the aforesaid order in exercise of our powers under Article 142 of the Constitution of India by holding that the present order shall govern, not only the impugned judgments and orders passed by the High Court of Judicature at Allahabad, but shall also be made applicable in respect of the similar judgments and orders passed by various High Courts across the country and therefore the present order shall be applicable to PAN INDIA.

10. In view of the above and for the reasons stated above, the present Appeals are ALLOWED IN PART. The impugned common judgments and orders passed by the High Court of Judicature at Allahabad in W.T. No. 524/2021 and other allied tax appeals/petitions, is/are hereby modified and substituted as under: –

(i) The impugned section 148 notices issued to the respective assessees which were issued under unamended section 148 of the IT Act, which were the subject matter of writ petitions before the various respective High Courts shall be deemed to have been issued under section 148A of the IT Act as substituted by the Finance Act, 2021 and construed or treated to be show-cause notices in terms of section 148A(b). The assessing officer shall, within thirty days from today provide to the respective assessees
information and material relied upon by the Revenue, so that the assesees can reply to the show-cause notices within two weeks thereafter;

(ii) The requirement of conducting any enquiry, if required, with the prior approval of specified authority under section 148A(a) is hereby dispensed with as a one-time measure vis–vis those notices which have been issued under section 148 of the unamended Act from 01.04.2021 till date, including those which have been quashed by the High Courts.

Even otherwise as observed hereinabove holding any enquiry with the prior approval of specified authority is not mandatory but it is for the concerned Assessing Officers to hold any enquiry, if required;

(iii) The assessing officers shall thereafter pass orders in terms of section 148A(d) in respect of each of the concerned assessees; Thereafter after following the procedure as required under section 148A may issue notice under section 148 (as substituted);

(iv) All defences which may be available to the assesses including those available under section 149 of the IT Act and all rights and contentions which may be available to the concerned assessees and Revenue under the Finance Act, 2021 and in law shall continue to be available.

11. The present order shall be applicable PAN INDIA and all judgments and orders passed by different High Courts on the issue and under which similar notices which were issued after 01.04.2021 issued under section 148 of the Act are set aside and shall be governed by the present order and shall stand modified to the aforesaid extent. The present order is passed in exercise of powers under Article 142 of the Constitution of India so as to avoid any further appeals by the Revenue on the very issue by challenging similar judgments and orders, with a view not to burden this Court with approximately 9000 appeals. We also observe that present order shall also govern the pending writ petitions, pending before various High Courts in which similar notices under Section 148 of the Act issued after 01.04.2021 are under challenge.

12. The impugned common judgments and orders passed by the High Court of Allahabad and the similar judgments and orders passed by various High Courts, more particularly, the respective judgments and orders passed by the various High Courts particulars of which are mentioned hereinabove, shall stand modified/substituted to the aforesaid extent only.”

D. COMPLIANCE OF DECISION IN CASE OF ASHISH AGARWAL

18. In compliance of the aforesaid directions issued by the Apex Court, the Central Board of Direct Taxes issued an Instruction on May 11, 2022, [(2022) 444 I.T.R. (St.) 43] which reads as under:

“6.1 With respect of operation of new section 149 of the Act, the following may be seen: Hon’ble Supreme Court has held that the new law shall operate and all the defences available to assessees under section 149 of the new law and whatever rights are available to the Assessing Officer under the new law shall continue to be available. Sub-section (1) of new section 149 of the Act as amended by the Finance Act,2021 (before its amendment by the Finance Act, 2022) reads as under:- 149. (1) No notice under section 148 shall be issued for the relevant assessment year,- (a) if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b): (b) if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more for that year: Provided that no notice under section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April, 2021, if such notice could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause (b) of sub-section (1) of this section, as they stood immediately before the commencement of the Finance Act, 2021:

6.2 Hon’ble Supreme Court has upheld the views of High Courts that the benefit of new law shall be made available even in respect of proceedings relating to past assessment years. Decision of Hon’ble Supreme Court read with the time extension provided by TOLA will allow extended reassessment notices to travel back in time to their original date when such notices were to be issued and then new section 149 of the Act is to be applied at that point. Based on above, the extended reassessment notices are to be dealt with as under: (i) AY 2013-14, AY 2014-15 and AY 2015-16: Fresh notice under section 148 of the Act can be issued in these cases, with the approval of the specified authority, only if the case falls under clause (b) of sub-section (1) of section 149 as amended by the Finance Act, 2021 and reproduced in paragraph 6.1 above. Specified authority under section 151 of the new law in this case shall be the authority prescribed under clause (ii) of that section. (ii) AY 16-17, AY 17-18: Fresh notice under section 148 can be issued in these cases. with the approval of the specified authority, under clause (a) of sub-section (1) of new section 149 of the Act, since they are within the period of three years from the end of the relevant assessment year. Specified authority under section 151 of the new law in this case shall be the authority prescribed under clause (i) of that section.”

19. The Assessing Officers therefore, provided the information and materials in compliance with the order passed by the Apex Court in case of Ashish Agarwal(supra) and after considering the replies furnished by the assessee passed the order under section 148A(d) of the Act along with the notices issued under section 148 of the Act under the new regime between July, 2022 and September, 2022 for Assessment Years 2013-2014 to 2017-2018.

20.The assessees again challenged these notices before several High Courts and again the notices were declared to be invalid on the ground that they were time barred and issued without appropriate sanction of the specified authority under the provisions to section 149 and 151 of the new regime.

21 Revenue, therefore, again approached the Hon’ble Supreme Court challenging the orders passed by various High Courts. During this period, the present group of petitions were filed and are kept pending to await the outcome of the pending matters before the Hon’ble Apex Court.

22. The Hon’ble Apex Court in case of Rajeev Bansal(supra) has now settled both the issues (i)whether the notices being time barred or (ii) whether notices were issued without appropriate sanction of the specified authority.

E. APPLICATION OF DECISION IN CASE OF RAJEEV BANSAL

23. We are therefore, disposing off these batch of petitions in line of what is held by Hon’ble Apex Court in case of Rajeev Bansal (supra) considering the facts of each case after considering the submissions made by both the sides.

Facts of individual cases

24. For the sake of convenience, brief facts of each petition which represents different assessment years are summarised as under:

25. Rule returnable forthwith. Learned Senior Standing Counsel Mr. Varun K. Patel, Ms. Maithili D. Mehta and Mr. Karan Sanghani waives service of notice of rule on behalf of the respondents.

26. In Special Civil Application No.6387 of 2023 represented by learned advocate Mr. Hiren J. Trivedi which pertains to Assessment Year 2013-2014, brief facts are as under:

i) The petitioner is an individual and has filed original return of income on 28.09.2013 declaring total income of Rs. 9,23,740/-.

ii) The return was processed under section 143(1) of the Act and order under section 143(3) of the Act was passed on 24.02.2016.

iii) Thereafter notice under section 148 of the Act was issued on 17.06.2021 by the respondent stating that a search and seizure action under section 132 of the Act was carried out in case of one M/s. Shree Renuka Mata Multi State Urban Cooperative Credit Society and during the course of search and assessment proceedings, it was found that the petitioner has received credit in his bank account of Rs. 99,60,330/- from the said entity and therefore, income to the said extent has escaped assessment.

iv) The petitioner thereafter received notice under section 148A(b) of the Act on 26.05.2022.

v) The petitioner filed two objections dated 04.06.2022 and 15.06.2022 inter-alia stating that there was no direct business with the said entity and the information provided in incomplete.

vi) The respondent passed the order dated 29.07.2022 under section 148A(d) of the Act on the common portal.

vii) Thereafter notice dated 29.07.2022 was issued under section 148 of the Act to the petitioner.

viii) Thereafter, the assessment proceedings were taken over by National Faceless Assessment Centre and notice dated 27.01.2023 was issued under section 142 of the Act.

ix) The petitioner filed objections vide letter dated 01.03.2023 against the notice.

x) The respondent issued notice dated 02.03.2023 calling for various details.

xi) The respondent thereafter issued show cause notice dated 17.04.2023 proposing various additions and calling upon the petitioner to respond by 20.04.2023 failing which the assessment shall be finalised.

xii) Being aggrieved by the impugned order as well as the impugned notice, the petitioner has preferred this petition.

27. In Special Civil Application No.5688 of 2023 represented by learned advocate Mr. Manish J. Shah with learned advocate Mr. Jimmy Patel which pertains to Assessment Year 2014-2015, brief facts are as under:

i) The petitioner is an individual having PAN APYPV0219J. The petitioner had not filed return of income for Assessment Year 2014-2015 as according to the petitioner she did not have any taxable income which exceeds the maximum amount chargeable to income.

ii) Respondent therefore, issued notice under section 148 of the Act on 09.06.2021.

iii) The petitioner vide letter dated 14.08.2021 raised preliminary objection against the issuance of notice under section 148 after filing the return of income on 07.08.2021 under protest in response to the notice issued under section 148 of the Act.

iv) Respondent thereafter vide letter dated 26.08.2021 provided copy of reasons recorded stating that the petitioner had made transaction of sale of immovable property and received a sale consideration of Rs.93,35,250/- and also the petitioner has not filed her return of income which resulted into escapement of income to the tune of Rs.93,35,250/-.

v) In response to the reasons recorded, the petitioner raised detailed objections vide letter dated 20.10.2021 through her Chartered Accountant.

vi) The petitioner also filed writ petition being Special Civil Application No.16565 of 2021 against notice under section 148 of the Act which was disposed off by order dated 06.05.2022 in view of judgment of Hon’ble Supreme Court in case of Ashish Agarwal (supra).

vii) Thereafter notice under section 148A(b) of the Act was issued to the petitioner on online portal in pursuance to the directions issued by the Hon’ble Supreme Court in case of Ashish Agarwal (supra).

viii) It is the case of the petitioner that the petitioner could not comply with the aforesaid notice as she could not check the portal or email-id before the date of compliance and when the petitioner had accessed the portal, she became aware about the fact that notice under section 148A(b) of the Act was issued to her which has culminated into order under section 148A(d) of the Act vide order dated 27.07.2022. Thereafter notice under section 148 was issued on 27.07.2022.

ix) Being aggrieved by the impugned order as well as the impugned notice, the petitioner has preferred this petition.

28. In Special Civil Application No.22260 of 2022 represented by learned Senior Advocate Mr. Tushar Hemani with learned advocate Ms. Vaibhavi Parikh which pertains to Assessment Year 2016-2017, brief facts are as under:

i) The petitioner is an individual and for Assessment Year 2016-2017, notice under section 148 of the Act dated 30.06.2021 was issued.

ii) Thereafter respondent issued notice under section 148A(b) of the Act on 23.05.2022 whereby the petitioner was called upon to show cause as to why notice under section 148 of the Act should not be issued for the year under consideration.

iii) The petitioner furnished a detailed reply vide letter dated 06.06.2022 and requested to drop the reassessment proceedings.

iv) Respondent vide order dated 30.07.2022 passed under section 148A(d) of the Act concluded that there is escapement of income to the tune of Rs. 1,20,00,000/-and therefore, this is a fit case for issuance of notice under section 148 of the Act and accordingly, issued notice under section 148 of the Act dated 30.07.2022 seeking to reopen the case of the petitioner for year under consideration.

v) Being aggrieved by the impugned order as well as the impugned notice, the petitioner has preferred this petition.

29. In Special Civil Application No.996 of 2023 represented by learned advocate Mr. B. S. Soparkar which pertains to Assessment Year 2017-2018, brief facts are as under:

i) Petitioner is a private limited company. Petitioner filed its original return of income for Assessment Year 20172018 on 25.10.2017 declaring total income at Rs.2,90,91,670/-. The return of income was processed and the case of the petitioner for selected for scrutiny.

ii) The respondent thereafter issued notices under section 142(1) of the Act dated 21.01.2019 and 5.12.2019.

iii) The petitioner replied to such notices vide letters dated 23.03.2019 and 9.12.2019 supplying various details called for.

iv) The Assessing Officer vide assessment order dated 20.12.2019 framed the assessment under section 143(3) of the Act.

v) The respondent thereafter issued notice under section 148 of the Act dated 30.06.2021.

vi) The petitioner thereafter received the impugned notice dated 24.05.2022 under section 148A(b) of the Act from the respondent in consequence of decision of Hon’ble Apex Court in case of Ashish Agarwal (supra).

vii) The petitioner filed its objection to the said notice on 10.06.2022.

viii) Respondent thereafter passed the impugned order under section 148A(d) of the Act dated 19.07.2022 and also issued impugned notice under section 148 of the Act.

ix) Being aggrieved by the impugned order as well as the impugned notice, the petitioner has preferred this petition.

F. FINDINGS IN CASE OF RAJEEV BANSAL

30. Before adverting to the submissions of the learned advocates for the parties, it would be germane to refer to the submissions raised on behalf of the Revenue before the Hon’ble Apex Court in case of Rajeev Bansal (supra) where the Revenue has conceded that for the Assessment Year 2015-2016, all notices issued on or after April 1, 2021 will have to be dropped as they would not fall for consideration during the period prescribed under TOLA (applicable from 20^TH March,2020 till 30^TH June,2021) as per section 149 of Act under new regime and 3 years from the end of the A.Y.2015-16 would be over on 31.03.2019 which is prior to 20^TH March,2020 and 6 years would be over on 31.03.2022 which is after 30.06.2021. The arguments of the Revenue are reproduced herein below:

“19. Mr. N. Venkataraman, learned Additional Solicitor General of India, made the following submissions on behalf of the Revenue:

(a) Parliament enacted Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 as a free-standing legislation to provide relief and relaxation to both the assessees and the Revenue during the time of covid-19. Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 seeks to relax actions and proceedings that could not be completed or complied with within the original time limits specified under the Income-tax Act;

(b) Section 149 of the new regime provides three crucial benefits to the assessees : (i) the four-year time limit for all situations has been reduced to three years; (ii) the first proviso to section 149 ensures that re-assessment for previous assessment years cannot be undertaken beyond six years; and (iii) the monetary threshold of Rupees fifty lakhs will apply to the reassessment for the previous assessment years;

(c) The relaxations provided under section 3(1) of the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 apply “notwithstanding anything contained in the specified Act”. Section 3(1), therefore, overrides the time limits for issuing a notice under section 148 read with section 149 of the Income-tax Act;

(d) Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 does not extend the life of the old regime. It merely provides a relaxation for the completion or compliance of actions following the procedure laid down under the new regime;

(e) The Finance Act, 2021 ((2021) 432 ITR (Stat) 52) substituted the old regime for reassessment with a new regime. The first proviso to section 149 does not expressly bar the application of Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. Section 3 of the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 applies to the entire Income-tax Act, including sections 149 and 151 of the new regime. Once the first proviso to section 149(1)(b) is read with Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, then all the notices issued between April 1, 2021 and June 30, 2021 pertaining to the assessment years 2013-2014, 2014-2015, 2015-2016, 2016-2017, and 2017-2018 will be within the period of limitation as explained in the tabulation below:

Assessment year (1)	Within 3 years (2)	Expiry of limitation read with TOLA for (2) (3)	Within six years (4)	Expiry of limitation read with TOLA for (4) (5)
2013-2014	31.03.2017	TOLA not applicable	31.03.2020	30.06.2021
2014-2015	31.03.2018	TOLA not applicable	31.03.2021	30.06.2021
2015-2016	31.03.2019	TOLA not applicable	31.03.2022	TOLA not applicable
2016-2017	31.03.2020	30.06.2021	31.03.2023	TOLA not applicable
2017-2018	31.03.2021	30.06.2021	31.03.2024	TOLA not applicable

(f) The Revenue concedes that for the assessment year 2015-2016, all notices issued on or after April 1, 2021 will have to be dropped as they will not fall for completion during the period prescribed under the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020;

(g) Section 2 of the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 defines “specified Act” to mean and include the Income-tax Act. The new regime, which came into effect on April 1, 2021, is now part of the Income-tax Act. Therefore, Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 continues to apply to the Income-tax Act even after April 1, 2021; and

(h) Union of India Ashish Agarwal [(2022) 444 ITR 1 (SC); (2023) 1 SCC 617.] treated section 148 notices issued by the Revenue between April 1, 2021 and June 30, 2021 as show-cause notices in terms of section 148A(b). Thereafter, the Revenue issued notices under section 148 of the new regime between July and August 2022. Invalidation of the section 148 notices issued under the new regime on the ground that they were issued beyond the time limit specified under the Income-tax Act read with the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 will completely frustrate the judicial exercise undertaken by this court in Union of India v. Ashish Agarwal.”

31. The Hon’ble Apex Court has considered the effect of provisions of TOLA in case of Rajeev Bansal (supra) as under:

“61.Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 is a legislation enacted by Parliament. The assessees have neither challenged the legislative competence of Parliament to enact Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 nor have they challenged the vires of the legislation. Section 3(1) of Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 provides for the relaxation of “any time limit” prescribed under the specified Acts for completion or compliance of “any proceeding or passing of any order or issuance of any sanction, intimation,
notification, sanction, or approval”. The expression “any” has been interpreted by this court to mean “all” or “every”. (Lucknow Development Authority v. M.K. Gupta [(1994) 80 Comp Cas 714 (SC); (1994) 1 SCC 243.] ; Raj Kumar Shivhare v. Asst. Director, Directorate of Enforcement [(2010) 4 SCC 772; (2010) 3 SCC (Civ) 712.] ) The context in which the word “any” appears has to be construed after taking into consideration the scheme and the purpose of the enactment. (Vivek Narayan Sharma v. Union of India [(2023) 21 Comp Cas-OL 199 (SC); (2023) 3 SCC 1.

62. The purpose of section 3(1) of the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 is to provide relaxation of time limits prescribed under the specified Acts, which fell for completion or compliance from March 20, 2020 to March 31, 2021. Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 was enacted in the backdrop of the covid-19 pandemic, which impeded the functioning of the Government at all levels. The imposition of national and local lockdowns created difficulties for the common people, including litigants and assessees, to comply with their legal obligations. The covid-19 pandemic and the ensuing lockdowns required Legislatures across the world to dynamically adapt their laws and policies to redress the difficulties faced by persons, entities, and Governmental authorities. The World Bank identified that persons and business entities faced severe financial  situations characterised by a lack of cash or easily convertible-to-cash assets. It suggested that this would impact revenue collection because individuals and entities would not be in a position to pay the assessed taxes. Therefore, the World Bank advised deferral of tax filings and payment deadlines to allow individuals and business entities to cope with the crisis. Many countries across the world have extended deadlines for filing tax returns.

63.Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 extended the time limits for completion or compliance of certain actions under the specified Act, which fell for completion during the covid-19 outbreak. The use of the expression “any” in section 3(1) indicates that the relaxation applies to “all” or “every” action whose time limit falls for completion from March 20, 2020 to March 31, 2021. Section 3(1) is only concerned with the performance of actions contemplated under the
provisions of the specified Acts. Consequently, the amendment or substitution of a provision under the specified Acts will not affect the application of Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, so long as the action contemplated under the provision falls for completion during the period specified by Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, that is, March 20, 2020 to March 31, 2021.

64. When enacting a statute, the Legislature often endeavours to ensure that the provisions of one legislation do not conflict with the provisions of another legislation. [Interplay between Arbitration Agreements under Arbitration and Conciliation Act, 1996 and Stamp Act, 1899, In re, (2024) 6 SCC 1; 2023 INSC 1066.] The purpose of the Income-tax Act is to levy tax on income and raise revenues for the functioning of the Government. On the other hand, the purpose of Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 is to provide relaxation of the time for completion of any actions or proceedings falling for completion within a particular period. Thus, the two enactments operate in separate and distinct fields. This court must ensure that the provisions of the two enactments are interpreted harmoniously unless there is an irreconcilable conflict between them.

(b) Reading Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 into section 149.”

32. The effect of TOLA vis-a-vis the time limit prescribed for issuance of notification under sections 148 and 148A after 01.04.2021 is summarised as under:

“68. After April 1, 2021, the Income-tax Act has to be read along with the substituted provisions. The substituted provisions apply retrospectively for past assessment years as well. On April 1, 2021, Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 was still in existence, and the Revenue could not have ignored the application of Taxation and other Laws
(Relaxation and Amendment of Certain Provisions) Act, 2020 and its notifications. Therefore, for issuing a reassessment notice under section 148 after April 1, 2021, the Revenue would still have to look at : (i) the time limit specified under section 149 of the new regime; and (ii) the time limit for issuance of notice as extended by Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 and its notifications. The Revenue cannot extend the operation of the old law under Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, but it can certainly benefit from the extended time limit for completion of actions falling for completion between March 20, 2020 and March 31, 2021.

69. For instance, section 149(1) (a) of the new regime specified the time limit of three years from the end of the relevant assessment year for reopening of the assessment. For the assessment year 2017-2018, the three-year period expired on March 31, 2021. The expiry of time fell within the time period contemplated by section 3 of the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 read with its notifications. Resultantly, the Revenue had time until June 30, 2021 to issue a reassessment notice for the assessment year 2017-2018 under section 149(1)(a). This harmonious reading gives effect to the legislative intention of both the Income-tax Act and the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. Moreover, sections 147to 151 are machinery provisions. Therefore, they must be given an interpretation that is consistent with the object and purpose of the Income-tax Act.

xxx

72 The non obstante clause in section 3(1) has to be read as controlling the provisions of the specified Acts, including the provisions of the Income-tax Act. (M.P.V. Sundararamier and Co. v. State of Andhra Pradesh [(1958) 9 STC 298 (SC); 1958 SCC OnLine SC 22.]) In the context of the issuance of a reassessment notice, the non obstante clause will override the provisions of the Income-tax Act in case of any direct conflict or inconsistency. Section 3(1) overrides section 149 only to the extent of relaxing the time limit for issuance of reassessment notice under section 148. The time limit for issuance of reassessment notices, which fall for completion between March 20, 2020 and March 31, 2021, has been extended till June 30, 2021. However, the non obstante clause under section 3(1) of the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 will operate neither to extend the time limit of three years from the end of the relevant assessment year under section 149(1)(a) of the new regime nor to extend the time limit of six years from the end of the relevant assessment years under section 149(1)(b) of the old regime. The non obstante clause ensures that the Revenue has additional time beyond the statutory stipulated time limit to complete or comply with the formalities given the administrative difficulties that arose due to the covid-19 pandemic.

(iii) Sanction of the specified authority.”

33. The issue of sanction by the specified authority under section 151 after April 1, 2021 and effect of granting of sanction by the authority is considered as under:

“75. After April 1, 2021, the new regime has specified different authorities for granting sanctions under section 151. The new regime is beneficial to the assessee because it specifies a higher level of authority for the grant of sanctions in comparison to the old regime. Therefore, in terms of Union of India v. Ashish Agarwal [(2022) 444 ITR 1 (SC); (2023) 1 SCC 617.] , after April 1, 2021, the prior approval must be obtained from the appropriate authorities specified under section 151 of the new regime. The effect of section 151 of the new regime is thus:

(i) If income escaping assessment is less than rupees fifty lakhs : (a) a reassessment notice could be issued within three years after obtaining the prior approval of the Principal Commissioner, or Principal Director or Commissioner or Director; and (b) no notice could be issued after the expiry of three years; and

(ii) If income escaping assessment is more than rupees fifty lakhs : (a) a reassessment notice could be issued within three years after obtaining the prior approval of the Principal Commissioner, or Principal Director or Commissioner or Director; and (b) after three years after obtaining the prior approval of the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General.

76. Grant of sanction by the appropriate authority is a precondition for the Assessing Officer to assume jurisdiction under section 148 to issue a reassessment notice. Section 151 of the new regime does not prescribe a time limit within which a specified authority has to grant sanction. Rather, it links up the time limits with the jurisdiction of the authority to grant sanction. Section 151(ii) of the new regime prescribes a higher level of authority if more than three years have elapsed from the end of the relevant assessment year. Thus, non-compliance by the Assessing Officer with the strict time limits prescribed under section 151 affects their jurisdiction to issue a notice under section 148.

77. Parliament enacted Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 to ensure that the interests of the Revenue are not defeated because the Assessing Officer could not comply with the preconditions due to the
difficulties that arose during the covid-19 pandemic. Section 3(1) of the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 relaxes the time limit for compliance with actions that fall for completion from March 20, 2020 to March 31, 2021. The Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 will accordingly extend
the time limit for the grant of sanction by the authority specified under section 151. The test to determine whether Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 will apply to section 151 of the new regime is this : if the time limit of three years from the end of an assessment year falls between March 20, 2020 and March 31, 2021, then the specified authority under section 151(i) has an extended time till June 30, 2021 to grant approval. In the case of section 151 of the old regime, the test is : if the time limit of four years from the end of an assessment year falls between March 20, 2020 and March 31, 2021, then the specified authority under section 151(2) has time till March 31, 2021 to grant approval. The time limit for section 151 of the old regime expires on March 31, 2021 because the new regime comes into effect on April 1, 2021.

78. For example, the three-year time limit for the assessment year 2017-2018 falls for completion on March 31, 2021. It falls during the time period of March 20, 2020 and March 31, 2021, contemplated under section 3(1) of the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. Resultantly, the authority specified under section 151(i) of the new regime can grant sanction till June 30, 2021.

79. Under the Finance Act, 2021 ((2021) 432 ITR (Stat) 52), the Assessing Officer was required to obtain prior approval or sanction of the specified authorities at four stages:

(a) Section 148A(a) – to conduct any enquiry, if required, with respect to the information which suggests that the income
chargeable to tax has escaped assessment;

(b) Section 148A(b) – to provide an opportunity of hearing to the assessee by serving upon them a show-cause notice as to why a notice under section 148 should not be issued based on the information that suggests that income chargeable to tax has escaped assessment. It must be noted that this requirement has been deleted by the Finance Act, 2022 ([2022] 442 ITR (Stat) 91) [ Section 45, Finance Act, 2022.] ;

(c) Section 148A(d) – to pass an order deciding whether or not it is a fit case for issuing a notice under section 148; and

(d) Section 148 – to issue a reassessment notice.

80. In Union of India v. Ashish Agarwal [(2022) 444 ITR 1 (SC); (2023) 1 SCC 617.] , this court directed that section 148 notices which were challenged before various High Courts “shall be deemed to have been issued under section 148A of the Income-tax Act as substituted by the Finance Act, 2021 ((2021) 432 ITR (Stat) 52) and construed or treated to be show-cause notices in terms of section 148A(b)”.

Further, this court dispensed with the requirement of conducting any enquiry with the prior approval of the specified authority under section 148A(a). Under section 148A(b), an Assessing Officer was required to obtain prior approval from the specified authority before issuing a show-cause notice. When this court deemed the section 148 notices under the old regime as section 148A(b) notices under the new regime, it impliedly waived the requirement of obtaining prior approval from the specified authorities under section 151 for section 148A(b) notices. It is well established that this court while exercising its jurisdiction under article 142, is not bound by the procedural requirements of law. (High Court Bar Association, Allahabad v. State of Uttar Pradesh [(2024) 6 SCC 267.])

81. This court in Union of India v. Ashish Agarwal [(2022) 444 ITR 1 (SC); (2023) 1 SCC 617.] directed the Assessing Officers to “pass orders in terms of section 148A(d) in respect of each of the assessees concerned”. Further, it directed the Assessing Officers to issue a notice under section 148 of the new regime “after following the procedure as required under section 148A”. Although this court waived off the requirement of obtaining prior approval under section 148A(a) and section 148A(b), it did not waive the requirement for section 148A(d) and section 148. Therefore, the Assessing Officer was required to obtain prior approval of the specified authority according to section 151 of the new regime before passing an order under section 148A(d) or issuing a notice under section 148. These notices ought to have been issued following the time limits specified under section 151 of the new regime read with the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, where applicable.

F. Section 148 notices issued in June-September 2022

(i) Scope of article 142.”

34. The Hon’ble Apex Court has therefore, held that for the notices issued for reassessment, if income escaping assessment is less than rupees fifty lakhs within three years, then the Principal Commissioner, or Principal Director or Commissioner or Director is required to grant sanction as per section 151(i) of the Act and no notice can be issued after the expiry of three years and if income escaping assessment is more than Rupees Fifty Lakhs, notice can be issued within three years as per the prior approval of the Principal Commissioner, or Principal Director or Commissioner or Director; and after three years after obtaining the prior approval of the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General.

35. The Apex Court after analysing the effect of exercise of the powers vested in Article 142 of the Constitution of India in case of Ashish Agarwal (supra) held as under:

“99. In Union of India v. Ashish Agarwal [(2022) 444 ITR 1 (SC); (2023) 1 SCC 617.] , this court created a legal fiction by deeming the section 148 notices issued under the old regime as show-cause notices under section 148A(b) of the new regime. The purpose of the legal fiction was to enable the Revenue “to proceed further with the reassessment proceedings as per the substituted provisions” of the Income-tax Act. Accordingly, all the reassessment notices issued under the old regime were deemed to always have been show-cause notices issued under section 148A(b) of the new regime. The fiction replaced section 148 notices with section 148A(b) notices with effect from the date when the notices under section 148 of the old regime were issued between April 1, 2021 and June 30, 2021, as the case may be. This ensured the continuance of the reassessment process initiated by the Revenue from April 1, 2021 to June 30, 2021 under the old regime.

100. Importantly, this court in Union of India v. Ashish Agarwal [(2022) 444 ITR 1 (SC); (2023) 1 SCC 617.] did not quash the reassessment notices issued under section 148 of the old regime. In Shree Chamundi Mopeds Ltd. v. Church of South India Trust Association [(1992) 75 Comp Cas 440 (SC); (1992) 3 SCC 1.] , a three-judge Bench of this court explained the distinction between quashing an order and staying the operation of an order thus (page 448 of 75 Comp Cas):

“10…. Quashing of an order results in the restoration of the position as it stood on the date of the passing of the order which has been quashed. The stay of operation of an order does not, however, lead to such a result. It only means that the order which has been stayed would not be operative from the date of the passing of the stay order and it does not mean that the said order has been wiped out from existence.”

The reassessment proceedings erroneously initiated by the Revenue under the old regime were not wiped out from existence. Consequently, the Revenue was not required to start the procedure of reassessment afresh after the decision of this court in Union of India v. Ashish Agarwal [(2022) 444 ITR 1 (SC); (2023) 1 SCC 617.]

36. The Hon’ble Apex Court after considering the effect of new provisions of section 148A which have been pressed into service in direction issued in case of Ashish Agarwal (supra) together with third proviso to section 149 as it existed at the relevant time held as under:

“105. A direction issued by this court in exercise of its jurisdiction under article 142 is an order of a court. The third proviso to section 149 of the new regime provides that the period during which the proceedings under section 148A are stayed by an order or injunction of any court shall be excluded for computation of limitation. During the period from the date of issuance of the deemed notice under section 148A(b) and the date of the decision of this court in Union of India v. Ashish Agarwal [(2022) 444 ITR 1 (SC); (2023) 1 SCC 617.], the Assessing Officers were deemed to have been prohibited from passing a reassessment order. Resultantly, the show-cause notices were deemed to have been stayed by order of this court from the date of their issuance (somewhere from April 1, 2021 till June 30, 2021) till the date of decision in Union of India v. Ashish Agarwal [(2022) 444 ITR 1 (SC); (2023) 1 SCC 617.] , that is, May 4, 2022.

106. In Union of India v. Ashish Agarwal [(2022) 444 ITR 1 (SC); (2023) 1 SCC 617.] , this court directed the Assessing Officers to provide relevant information and materials relied upon by the Revenue to the assessees within thirty days from the date of the judgment. A show-cause notice is effectively issued in terms of section 148A(b) only if it is supplied along with the relevant information and material by the Assessing Officer. Due to the legal fiction, the Assessing Officers were deemed to have been inhibited from acting in pursuance of the section 148A(b) notice till the relevant material was supplied to the assessees. Therefore, the show-cause notices were deemed to have been stayed until the Assessing Officers provided the relevant information or material to the assessees in terms of the direction issued in Union of India v. Ashish Agarwal [(2022) 444 ITR1 (SC); (2023) 1 SCC 617.] . To summarize, the combined effect of the legal fiction and the directions issued by this court in Union of India v. Ashish Agarwal [(2022) 444 ITR 1 (SC); (2023) 1 SCC 617.] is that the show-cause notices that were deemed to have been issued during the period between April 1, 2021 and June 30, 2021 were stayed till the date of supply of the relevant information and material by the Assessing Officer to the assessee. After the supply of the relevant material and information to the assessee, time begins to run for the assessees to respond to the show-cause notices.

107. The third proviso to section 149 allows the exclusion of time allowed for the assessees to respond to the show-cause notice under section 149A(b) to compute the period of limitation. The third proviso excludes “the time or extended time allowed to the assessee”. Resultantly, the entire time allowed to the assessee to respond to the show-cause notice has to be excluded for computing the period of limitation. In Union of India v. Ashish Agarwal [(2022) 444 ITR 1 (SC); (2023) 1 SCC 617.] , this court provided two weeks to the assessees to reply to the show-cause notices. This period of two weeks is also liable to be excluded from the computation of limitation given the third proviso to section 149. Hence, the total time that is excluded for computation of limitation for the deemed notices is : (i) the time during which the show-cause notices were effectively stayed, that is, from the date of issuance of the deemed notice between April 1, 2021 and June 30, 2021 till the supply of relevant information or material by the Assessing Officers to the assessees in terms of the directions in Union of India v. Ashish Agarwal [(2022) 444 ITR 1 (SC); (2023) 1 SCC 617.] ; and (ii) two weeks allowed to the assessees to respond to the show-cause notices.

(b) Interplay of Union of India v. Ashish Agarwal [(2022) 444 ITR 1 (SC); (2023) 1 SCC 617.] with Taxation and other Laws
(Relaxation and Amendment of Certain Provisions) Act, 2020”

37. The Hon’ble Apex Court has considered the interplay of TOLA with the directions issued in case of Ashish Agarwal (supra) as under :

“108. The Income-tax Act read with Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 extended the time limit for issuing reassessment notices under section 148, which fell for completion from March 20, 2020 to March 31, 2021, till June 30, 2021. All the reassessment notices under challenge in the present appeals were issued from April 1, 2021 to June 30, 2021 under the old regime. Union of India v. Ashish Agarwal [(2022) 444 ITR 1 (SC); (2023) 1 SCC 617.] deemed these reassessment notices under the old regime as show-cause notices under the new regime with effect from the date of issuance of the reassessment notices. The effect of creating the legal fiction is that this court has to imagine as real all the consequences and incidents that will inevitably flow from the fiction. (East End Dwellings Co. Ltd. v. Finsbury Borough Council [[1952] A.C. 109. (Lord Asquith, in his concurring opinion, observed: “If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it.”)] ) Therefore, the logical effect of the creation of the legal fiction by Union of India v. Ashish Agarwal [(2022) 444 ITR 1 (SC); (2023) 1 SCC 617.] is that the time surviving under the Income-tax Act read with Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 will be available to the Revenue to complete the remaining proceedings in furtherance of the deemed notices, including issuance of reassessment notices under section 148 of the new regime. The surviving or balance time limit can be calculated by computing the number of days between the date of issuance of the deemed notice and June 30, 2021.

109. If this court had not created the legal fiction and the original reassessment notices were validly issued according to the provisions of the new regime, the notices under section 148 of the new regime would have to be issued within the time limits extended by Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. As a corollary, the reassessment notices to be issued in pursuance of the deemed notices must also be within the time limit surviving under the Income-tax Act read with Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. This construction gives full effect to the legal fiction created in Union of India v. Ashish Agarwal [(2022) 444 ITR 1 (SC); (2023) 1 SCC 617.] and enables both the assessees and the Revenue to obtain the benefit of all consequences flowing from the fiction. (See State of A.P. v. A.P. Pensioners’ Association
[(2005) 13 SCC 161; 2006 SCC (L&S) 666. (This court observed that the “legal fiction undoubtedly is to be construed in such a manner so as to enable a person, for whose benefit such legal fiction has been created, to obtain all consequences flowing therefrom”.)]

110. The effect of the creation of the legal fiction in Union of India v. Ashish Agarwal [(2022) 444 ITR 1 (SC); (2023) 1 SCC 617.] was that it stopped the clock of limitation with effect from the date of issuance of section 148 notices under the old regime [which is also the date of issuance of the deemed notices]. As discussed in the preceding segments of this judgment, the period from the date of the issuance of the deemed notices till the supply of relevant information and material by the assessees in terms of the directions issued by this court in Union of India v. Ashish Agarwal [(2022) 444 ITR 1 (SC); (2023) 1 SCC 617.] has to be excluded from the computation of the period of limitation. Moreover, the period of two weeks granted to the assessees to reply to the show-cause notices must also be excluded in terms of the third proviso to section 149.”

38. The Hon’ble Apex Court after considering the submissions made on behalf of both the sides and examining the legal intricacies and background of the controversy raised, in case of Rajeev Bansal(supra), has arrived at the following conclusion:

“114. In view of the above discussion, we conclude that:

(a) After April 1, 2021, the Income-tax Act has to be read along with the substituted provisions;

(b) Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 will continue to apply to the Income-tax Act after April 1, 2021 if any action or proceeding specified under the substituted provisions of the Income-tax Act falls for completion between March 20, 2020 and March 31, 2021;

(c) Section 3(1) of the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 overrides section 149 of the Income-tax Act only to the extent of relaxing the time limit for issuance of a reassessment notice under section 148;

(d) Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 will extend the time limit for the grant of sanction by the authority specified under section 151. The test to determine whether Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 will apply to section 151 of the new regime is this : if the time limit of three years from the end of an assessment year falls between March 20, 2020 and March 31, 2021, then the specified authority under section 151(i) has extended time till June 30, 2021 to grant approval;

(e) In the case of section 151 of the old regime, the test is : if the time limit of four years from the end of an assessment year falls between March 20, 2020 and March 31, 2021, then the specified authority under section 151(2) has extended time till March 31, 2021 to grant approval;

(f) The directions in Union of India Ashish Agarwal [(2022) 444 ITR 1 (SC); (2023) 1 SCC 617.] will extend to all the ninety thousand reassessment notices issued under the old regime during the period April 1, 2021 and June 30, 2021;

(g) The time during which the show-cause notices were deemed to be stayed is from the date of issuance of the deemed notice between April 1, 2021 and June 30, 2021 till the supply of relevant information and material by the Assessing Officers to the assessees in terms of the directions issued by this court in Union of India Ashish Agarwal [(2022) 444 ITR 1 (SC); (2023) 1 SCC 617.] , and the period of two weeks allowed to the assessees to respond to the show-cause notices; and

(h) The Assessing Officers were required to issue the reassessment notice under section 148 of the new regime within the time limit surviving under the Income-tax Act read with the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. All notices issued beyond the surviving period are time barred and liable to be set aside.”

39. From the above analysis and the conclusions arrived at by the Hon’ble Apex Court, it appears that so far as Assessment Years 2013-2014 and 2014-2015 are concerned, Revenue has issued notice under TOLA after expiry of three years but within six years and so far as Assessment Years 2016-2017 and 2017-2018 are concerned, the reassessment notices have been issued within three years as extended by TOLA upto 30^thJune, 2021 as TOLA is not applicable for Assessment Years 20162017 and 2017-2018 if time limit for issuance of notice is considered as beyond three years as the last date of issuance of such notice within six years would be 31.03.2023 and 31.03.2024 respectively.

G. RELEVANT PROVISIONS OF THE INCOME TAX ACT,1961

40. It would therefore, be germane to refer to the provisions of section 149 and 151 which came into effect from 1^st April, 2021 by Finance Act, 2021 which reads as under:

“149.Time limit for notices-

(1) No notice under Section 148 shall be issued for the relevant assessment year,—

(a) if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b);

[(b) if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of

(1) an asset;

(ii) expenditure in respect of a transaction or in relation to an event or occasion; or

(iii) an entry or entries in the books of account, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more:]

Provided that no notice under section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April, 2021, if (a notice under section 148 or section 153A or section 153C could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause (b) of subsection (1) of this section or section 153A or section 153C, as the case may be], as they stood immediately before the commencement of the Finance Act, 2021:

Provided further that the provisions of this sub-section shall not apply in a case, where a notice under section 153A, or section 153C read with section 153A, is required to be issued in relation to a search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A, on or before the 31st day of March, 2021:

[Provided also that for cases referred to in clauses (i), (iii) and (iv) of Explanation 2 to section 148, where,-

(a) a search is initiated under section 132; or

(b) a search under section 132 for which the last of authorisations is executed; or

(c) requisition is made under section 132A,

after the 15th day of March of any financial year and the period for issue of notice under section 148 expires on the 31st day of March of such financial year, a period of fifteen days shall be excluded for the purpose of computing the period of limitation as per this section and the notice issued under section 148 in such case shall be deemed to have been issued on the 31st day of March of such financial year:

Provided also that where the information as referred to in Explanation 1 to section 148 emanates from a statement recorded or documents impounded under section 131 or section 133A, as the case may be, on or before the 31st day of March of a financial year, in consequence of,-

(a) a search under section 132 which is initiated; or

(b) a search under section 132 for which the last of authorisations is executed; or

(c) a requisition made under section 132A, after the 15th day of March of such financial year, a period of fifteen days shall be excluded for the purpose of computing the period of limitation as per this section and the notice issued under clause (b) of section 148A in such case shall be deemed to have been issued on the 31st day of March of such financial year:]

Provided also that for the purposes of computing the period of limitation as per this section, the time or extended time allowed to the assessee, as per show-cause notice issued under clause (b) of section 148A or the period during which the proceeding under section 148A is stayed by an order or injunction of any court, shall be excluded:

Provided also that where immediately after the exclusion of the period referred to in the immediately preceding proviso, the period of limitation available to the Assessing Officer for passing an order under clause (d) of section 148A 746[does not exceed seven days], such remaining period shall be extended to seven days and the period of limitation under this sub-section shall be deemed to be extended accordingly.

Explanation. For the purposes of clause (b) of this sub-section, “asset” shall include immovable property, being land or building or both, shares and securi- ties, loans and advances, deposits in bank account.

xxx

(2) The provisions of sub-section (1) as to the issue of notice shall be subject to the provisions of section 151.]

xxx

151. Sanction for issue of notice.

Specified authority for the purposes of section 148 and section 148A shall be,—

(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;

(ii)Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General, if more than three years have elapsed from the end of the relevant assessment year.

[Provided that the period of three years for the purposes of clause (i) shall be computed after taking into account the period of limitation as excluded by the third or fourth or fifth provisos or extended by the sixth proviso to sub-section (1) of section 149.]”

41. The above provisions are analysed by Hon’ble Apex Court in case of Rajeev Bansal (supra), in detail as extracted here-in-above. Therefore, the same are not analysed once again.

H. SUBMISSIONS OF THE PETITIONERS

42. Learned advocates for the petitioners Mr.Hiren 3. Trivedi, Mr. M.3. Shah, Mr. Tushar Hemani Senior Advocate with Ms. Vaibhavi K. Parikh and Mr. S.N. Soparkar Senior Advocate with Mr. B.S. Soparkar have mainly raised the following contentions on the issue of incorrect sanction granted by the authority as per the provisions of section 151 as it existed at the relevant time.

43. That reassessment notice under section 148 is admittedly issued between July and September, 2022. Therefore, the authority has to grant the sanction on the date of issuance of notice and admittedly, the reassessment proceedings beyond the period of three years and therefore, only the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General can grant sanction for issuance of notice under section 148 of the Act whereas in each of the case sanction for issuance of notice is granted by the Principal Commissioner, or Principal Director or Commissioner or Director. It was therefore, submitted that in absence of the authorised sanction, notice under section 148 shall be invalid and without jurisdiction as held by the Apex Court in case of Rajeev Bansal (supra).

44. It was submitted that the impugned notice under section 148 of the Act is issued after the procedure prescribed under section 148A is followed as per the directions issued by the Apex Court in case of Ashish Agarwal (supra) for the relevant assessment years and therefore, as held by the Apex Court in case of Rajeev Bansal (supra), in paragraph nos. 73 to 81, so far as assuming jurisdiction under section 148A(b) of the Act is concerned, there was no requirement for obtaining prior approval from the specified authority, as the notices issued between April 1, 2021 and June 30,2021 under the old regime were deemed to be show cause notices issued under section 148A(b) of the Act under the new regime and therefore, the requirement to obtain prior approval for issuing the notice under section 148A(b) of the Act was impliedly waived by exercise of jurisdiction by the Apex Court under Article 142 of the Constitution of India. Therefore, the notices issued between July, 2022 and September, 2022 would be a notice under section 148 under the new regime and therefore, sanction is required to be granted by the specified authority as per the provisions of section 151(ii) as such notices are not issued prior to 30^th June, 2021 as observed by the Hon’ble Apex Court in the aforesaid paragraphs.

45. Learned advocates for the petitioners heavily relied upon and referred to the observations of the Apex Court in paragraph no. 81 of the judgment of Rajeev Bansal (supra) wherein it is observed that the Assessing Officer was required to obtain prior approval of the specified authority according to section 151 of the new regime before passing an order under section 148A(d) or issuing notice under section 148 and such notices ought to have been issued following time limit specified under section 151 of the new regime read with TOLA were applicable. It was therefore, submitted that though the notices under section 148 are issued pursuant to the directions of decision in case of Ashish Agarawal (supra), nonetheless notices are issued under section 148 of the new regime and as such, provision of section 151(ii) of the Act would be applicable which provides for sanction of specified authority namely, the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General as such notices, are admittedly issued after three years. It was therefore, submitted that as the sanction is granted by the Principal Commissioner as per the provisions of section 151(i) of the Act, the impugned notices for reassessment is without jurisdiction as sanction by the Principal Chief Commissioner is a pre-condition for the Assessing Officer to assume jurisdiction under section 148 to issue the notice for reassessment. It was submitted that as held by the Hon’ble Apex Court, section 151 of the new regime does not prescribe the time limit within which the specified authority has to grant sanction but time limit is linked up with the jurisdiction of the authority to grant sanction and section 151(ii) prescribes for higher level of authority if more than three years have elapsed from the relevant assessment year for issuance of notice under section 148 of the Act. It was therefore, pointed out that admittedly in facts of each case, notice is issued beyond three years at-least for Assessment Years 2016-2017 and 2017-2018 and therefore, for want of valid sanction, the impugned notices are liable to be quashed and set aside.

46. With regard to the issue of time limit as prescribed under section 149(1) as it existed with effect from 01.04.2021 as inserted by the Finance Act, 2021 is concerned, it was submitted that so far as the notices for Assessment Years 2013-2014 and 2014-2015 as well as notices under sections 2016-2017 and 2017-2018 are concerned, would be beyond the period of limitation and invalid if such notices are issued beyond the surviving time as held by the Apex Court in case of Rajeev Bansal (supra).

47. It was further submitted that in each petition, the petitioner has submitted table containing the details and computation of the number of days of surviving time to pass order under section 148A(d) as well as notice under section 148 under the new regime along with remarks as to whether such notice is time barred or not as held by the Hon’ble Apex Court.

48. It was submitted that contention of the notice being invalid having been issued beyond the surviving time is in the alternative and without prejudice to the principal contention raised regarding sanction granted by the competent authority under section 151(i) is not valid sanction as competent authority namely, the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General ought to have granted sanction as per provisions of section 151(ii) of the new regime as amended with effect from 1^stApril, 2021.

I. SUBMISSIONS OF THE RESPONDENT -REVENUE

49. Per contra, learned Senior Standing Counsel Ms. Maithili D. Mehta with learned Senior Standing Counsel Mr. Karan Sanghani appearing for the respondents submitted that the impugned notice dated 29.07.2022 issued between July, 2022 and September, 2022 issued under section 148 of the Act was as per the directions issued by the Apex Court in case of Ashish Agarwal (supra). It was submitted that the impugned notice dated 30.06.2021 for Assessment Year 2017-2018 was issued under the old regime considering that TOLA is applicable. It was therefore, submitted that the respondent has issued notice dated 30.06.2021 under section 148 of the Act under the old regime read together with provisions of section 3(1) of TOLA. It was therefore, pointed out that in view of the decision of Hon’ble Apex Court in order to save the notice issued under the old regime under TOLA, the respondent was given direction to provide the material so as to comply with the provision of section 148A(b) of the Act under the new regime and accordingly, the respondent has provided the information within 30 days from the date of decision of the Hon’ble Apex Court and thereafter, the petitioners were granted time to file replies and after consideration of the replies, order under section 148A(d) of the Act was passed along with the impugned notice under section 148 of the Act. It was therefore submitted that but for the order of Hon’ble Apex Court while exercising jurisdiction under Article 142 of the Constitution of India, notice dated 30.06.2021 was invalid notice as held by various High Courts as affirmed by Apex Court in case of Ashish Agarwal (supra). It was therefore, pointed out that notice under section 148 has to be deemed to have been issued considering the time limit of three years as the first notice dated 30.06.2021 issued under TOLA was to be considered as having been issued applying the provisions of section 149(1) of the new regime which has been explained by Hon’ble Apex Court in detail in the decision in case of Rajeev Bansal (supra).

50. It was further submitted that combined effect of decision in case of Rajeev Bansal (supra) read with decision in case of Ashish Agarwal (supra) is that the impugned notice under section 148 of the Act is deemed to have been issued under new regime read with TOLA and therefore, as per the example given by the Hon’ble Apex Court in paragraph no.78 of the decision in case of Rajeev Bansal (supra), the respondent has rightly obtained the sanction of the competent authority as prescribed under section 151(i) of the Act.

51. Learned Senior Standing Counsel for the respondents also invited the attention of the Court to the observations of the Hon’ble Apex Court in paragraph nos.80 and 81 of the decision in case of Rajeev Bansal (Supra) which also refers to obtaining sanction under the provisions of section 151(i) of the Act wherein it is explained that as notice under section 148 dated 30.06.2021 was to be deemed to be a notice under section 148A(b) of the new regime, there was no need to obtain prior sanction as provided under the provision of section 148A(d) of the Act. However, sanction from the competent authority as provided under section 151 of the new regime was mandatory under section 148A(d) and section 148 under the new regime and therefore, the Assessing Officer was required to obtain prior approval of the specified authority according to section 151 of the new regime which is obtained by the respondent.

52. Learned Senior Standing Counsel for the respondent also invited the attention of the Court to the conclusion at paragraph no. 114(d) of the decision in case of Rajeev Bansal (supra) to submit that TOLA will extend the time limit for grant of sanction by the authority specified under section 151 of the Act. Itwas submitted that as the time limit of three years from the end of assessment year falls within March 20, 2020 and March 31, 2021, then specified authority under section 151(i) is required to grant the approval till the extended time limit i.e. till June 30, 2021. It was therefore, pointed out that so far as the Assessment Years 2016-2017 and 2017-2018 is concerned, time limit of three years from the end of relevant assessment year would fall within March 20, 2020 and March 31,2021 and therefore, approval of the specified authority as per provision of section 151(i) is rightly obtained by the respondent.

53. It was therefore, submitted by learned Senior Standing Counsel that the contention of the petitioners that date of notice under section 148 of the Act issued pursuant to the directions of decision in case of Ashish Agarwal (supra) is only to be considered ignoring the directions of the Apex Court in case of Rajeev Bansal (supra) to the effect that when such notice is issued in relation to the notice which was issued under TOLA and therefore, notice dated 29.07.2022 issued between issued between July, 2022 and September, 2022 cannot be considered as notice issued beyond the period of three years.

54. It was therefore, submitted that there is a valid approval of the specified authority obtained by the respondent prior to passing of order under section 148A(d) and notice under section 148 of the Act.

55. It was submitted that Hon’ble Apex Court has categorically referred to TOLA along with reference to the period prescribed under section 149(1) of the new regime in paragraph no. 113 of the decision in case of Rajeev Bansal (supra).

56. It was pointed out that but for implementation of TOLA, extending period upto 30.06.2021 for the time limit expiring within March 20, 2020 and March 31, 2021, respondent would not have issued the notice under old regime and hence the notice dated 29.07.2022 issued between July, 2022 and September, 2022 under section 148 of the Act has to be considered as notice for reopening within three years from the expiry of the assessment year as time period from 30.06.2021 till the order passed by the Hon’ble Apex Court in case of Ashish Agarwal (supra) upto 04.05.2022 is considered as period of stay. It was therefore, submitted that surviving time period as explained by the Hon’ble Apex Court in case of Rajeev Bansal (supra) is applicable even for Assessment Years 2016-2017 and 2017-2018 and the notices for both the assessment years cannot be said to be invalid for want of approval from specified authority. It was submitted that the respondent has therefore, rightly obtained the approval from the specified authority and as per the provision of section 151(i) of the Act i.e. Principal Commissioner or Principal Director or Commissioner or Director.

57. It was further submitted by learned Senior Standing Counsel for the respondent that alternative contention raised on behalf of the petitioners that the impugned notices under section 148 would be invalid if it is not satisfying the test of surviving time as explained by Hon’ble Apex Court in case of Rajeev Bansal (supra) is concerned, it was pointed out that the details submitted by the petitioners are verified and appropriate order is required to be passed by this Court declaring such notice as valid and invalid as directed by Hon’ble Apex Court in case of Rajeev Bansal (supra).

58. Learned Senior Standing Counsel for the respondent also referred to para 114(e) of decision of Hon’ble Apex Court in case of Rajeev Bansal (supra) to submit that the Hon’ble Apex Court was conscious about the fact of section 151 of the old regime which provides for approval of specified authority if time limit of four years from the end of assessment year falls between March 20, 2020 and March 31,2021 then the specified authority under section 151(2) of old regime which is equivalent to section 151(i) of the new regime except in place of Joint Commissioner of Income Tax, Principal Commissioner of Income Tax has to grant approval. It was pointed out that so far as specified authority under section 151(1) applicable to old regime which was amended with effect from 01.04.2021 being section 151(ii) are same i.e. Principal Chief Commissioner of Income Tax. It was further pointed out that if time period of four years from the end of assessment year falls within period of March 20, 2020 to March 31, 2021 covered by TOLA, the specified authority mentioned in section 151(2) of old regime has to grant sanction. It was therefore, submitted that such direction of the Hon’ble Apex Court is clearly applicable in facts of the case as notices under section 148 dated 30.06.2021 was issued after March 31, 2021 under TOLA during the extended period and therefore, there was no question of obtaining approval under the provisions of old regime in view of the directions issued by Apex Court in paragraph no. 114(d) of the decision in case of Rajeev Bansal (supra) and respondent was required to obtain approval only from specified authority under section 151(i) which is extended under new regime in view of the provisions of TOLA.

J. ANALYSIS AND FINDINGS

59. Having heard the learned advocates for the respective parties and having considered the rival submissions and on perusal of decisions in cases of Ashish Agarwal (supra) and Rajeev Bansal (supra) of the Hon’ble Apex Court, short questions which arise for consideration is (i) whether the approval granted by the Principal Commissioner of Income Tax for passing of order under section 148A(d) and issuance of notice under section 148 under the new regime is valid or not considering the provision of section 151 which has been amended with effect from 1st April, 2021 and(ii) whether notice issued under section 148 of the Act would be time barred and invalid or not.

60. In order to answer the above issues, it would be germane to summarise the undisputed facts emerging from the record.

1) For Assessment Years 2013-2014 to 2017-2018 admittedly notices under section 148 was issued after 1^stApril, 2021 by respondent authority by taking recourse to the provisions of TOLA.

2) With effect from 1^stApril, 2021 the entire procedure for issuance of reassessment notice under section 148 has undergone a change by replacing the old procedure under sections 147 to 151 by new procedure under section 147 to 151 including the insertion provision of section 148A providing an opportunity of hearing to the petitioners in consonance with the decision of the Hon’ble Apex Court in case of GKN Driveshafts India Ltd. v. ITO reported in (2003) 259 ITR 19.

3) The Hon’ble Apex Court in case of Ashish Agarwal (supra) has come to the conclusion that notices issued under TOLA under provision of section 148 of old regime would be an invalid notice and therefore, by exercise of jurisdiction under Article 142 of the Constitution of India, and in order to save 90,0000 such notices issued by the Revenue, the Hon’ble Apex Court directed to consider such notices as notices issued under section 148A(b) of the Act under new regime with further direction to provide necessary information within 30 days from the date of decision i.e. 04.05.2022 to the respective assessees so as to enable them to file objections as provided under the section 148A(b) of the Act and thereafter directed the Revenue to pass order under section 148A(d) and issue notice under section 148 of the Act under the new regime.

4) The Hon’ble Apex Court at the time of issuance of directions also directed that such issuance of notices shall be governed by the time limit prescribed in section 149(1) which has been amended with effect from 1^stApril, 2021 under the new regime.

5) Therefore, assessee raised objections that such notice issued under section 148 of the Act pursuant to the directions issued by Hon’ble Apex Court in case of Ashish Agarwal (supra) would be time barred and such notices also would be without valid approval of the specified authority as per provision of section 151 which has been amended with effect from 1st April, 2021 under the new regime.

6) On challenge to such notices, various High Courts have held that such notices would be time barred considering the same being hit by the provisions of section 149 of the Act under the new regime and some of the High Courts also held that notices were invalid for want of approval by the specified authority as required under section 151(ii) of Act under the new regime, as such notices were admittedly issued beyond the period of three years from the end of relevant assessment year.

7) The Hon’ble Apex Court was therefore, once again approached by the Revenue challenging such orders passed by several High Courts. The Hon’ble Apex Court in order to resolve the issues raised with regard to considering as to whether the notices issued under section 148 under new regime pursuant to the directions issued by Hon’ble Apex Court in case of Ashish Agarwal (supra) would be time barred or not and whether such notices would be valid or invalid notice for want of approval of the specified authority as per provision of section 151 of Act under the new regime or not and by order passed in case of Rajeev Bansal (supra), the Hon’ble Apex Court has issued the direction and in compliance to such directions, this group of petitions which which were awaiting decision of Hon’ble Apex Court are now required to be disposed of.

61. Therefore, in view of above dictum of law, the directions issued by the Hon’ble Apex Court in case of Ashish Agarwal (supra) and further explained in case of Rajeev Bansal (supra) are to be followed and implemented in letter and spirit.

62. Therefore, taking the first issue raised by the petitioners for consideration that there is no approval of the specified authority as per provision of section 151 of the new regime is required to be considered in light of the decision in case of Rajeev Bansal (supra).

63. Contention of the petitioners that date of notices under section 148 issued as per the direction of Hon’ble Apex Court in case of Ashish Agarwal(supra) is to be considered as the relevant date to apply the provisions of section 151 for approval of the specified authority seems to be very attractive at the first blush however, if decision of Hon’ble Apex Court in case of Rajeev Bansal (supra) is read and re-read, in detail comprehensively and in wholesome manner, we are of the opinion that such contentions raised on behalf of the petitioners is required to be rejected outright for the following reasons:

1) Hon’ble Apex Court in case of Rajeev Bansal (supra) has considered the aspect of sanction of the specified authority in paragraph nos. 73 to 81 in detail. On perusal of paragraph no. 73 to 81, Hon’ble Apex Court has referred to notice under section 148 of Act under the new regime pursuant to the directions issued in case of Ashish Agarwal (supra) and has considered the same along with the provisions of TOLA.

2) After considering the mandatory requirement of grant of sanction by the appropriate authority which is a precondition for the Assessing Officer to assume jurisdiction under section 148 of the Act to issue notice for reassessment, in paragraph no. 77, Hon’ble Apex Court referred to the provisions of TOLA wherein it is categorically observed that:

“The test to determine whether Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 will apply to section 151 of the new regime is this : if the time limit of three years from the end of an assessment year falls between March 20, 2020 and March 31, 2021, then the specified authority under section 151(i) has an extended time till June 30, 2021 to grant approval. In the case of section 151 of the old regime, the test is : if the time limit of four years from the end of an assessment year falls between March 20, 2020 and March 31, 2021, then the specified authority under section 151(2) has time till March 31, 2021 to grant approval. The time limit for section 151 of the old regime expires on March 31, 2021 because the new regime comes into effect on April 1, 2021.”

3) In view of above observations there is no confusion as tried to have been raised on behalf of the petitioners that the date of notice under section 148 i.e. 29.07.2022 issued between July, 2022 and September, 2022 has to be considered being notice issued beyond three years forgetting the fact that such notices have the genesis in notice issued on or before 30.06.2021 under TOLA and when Hon’ble Apex Court has observed as above and further explained in paragraph no.78 by giving example for Assessment Year 2017-2018 for obtaining approval of the specified authority by observing that

“…three years time limit for Assessment Year 2017-2018 falls for completion on March 31, 2021 which falls during the time period of March 20,2020 and March, 31, 2021 contemplated under section 3(1) of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 and as such, authority specified under section 151(i) of the new regime can grant
sanction till June 30, 2021.”

Therefore, notice issued under section 148 issued between July, 2022 and September, 2022 is nothing but substitution of the notices which were issued under TOLA by the respondent between 1^st April, 2021 and 30^th June, 2021. This is further fortified by directions of the Hon’ble Apex Court to exclude the period from 30^th June, 2021 till 4^th May, 2022 date of decision in case of Ashish Agarwal (supra) and exclusion of the time till the information is provided to the assessees as required under section 148A(b) of the Act and further exclusion of 15 days for filing reply or raising objections by the assessee so as to see that order under section 148A(d) and notice under section 148 is issued between surviving time as per TOLA i.e. from the date of issuance of notices under TOLA till 30^th June, 2021 as explained by Hon’ble Apex Court in paragraph nos. 94 to 112 in case of Rajeev Bansal (supra).

64. Considering the observations and directions issued by the Hon’ble Apex Court in case of Rajeev Bansal (supra)and applying the same to the facts of the case, we are of the opinion that approval granted by the specified authority as per section 151(i) of the Act for issuance of order under section 148A(d) and notice under section 148 of the Act is valid and therefore, contention of the petitioners is not tenable in view of facts of the case.

65. The alternative contention of the petitioner as to whether notices would be valid notice or invalid notice considering ‘surviving time’ between the date of the issuance of notices under TOLA and 30^thJune, 2021 or not is required to be considered and for that each matter has to be considered separately on the basis of the facts of case considering the date of issuance of notices under section 148 under TOLA by the Revenue and thereafter date of supplying information to the assessee and date of passing of order under section 148A(d) and date of issuance of notice under section 148 of the Act so as to consider whether issuance of notice under section 148 of the Act is within ‘surviving time’ as per the direction of Hon’ble Apex Court in case of Rajeev Bansal (supra) or not.

66. So far as Assessment Years 2013-2014 and 2014-2015 are concerned, the period of three years from the end of the assessment year would be over prior to 20.03.2020 and the period of six years would be over between 20.03.2020 and 30.06.2021. Therefore, the notices issued under section 148 of the Act under old regime between 01.04.2021 and 30.06.2021 as per TOLA, will be a valid notice if the notice under section 148 of the Act under new regime is issued within the period of ‘surviving time’ as per the directions issued by Hon’ble Apex Court in case of Rajeev Bansal (supra). For the Assessment Years 2016-2017 and 2017-2018 are concerned, the notice issued under section 148 of the Act under old regime between 01.04.2021 and 30.06.2021 under TOLA would be considered to be issued within three years from the end of the relevant assessment year as three years would complete within the period of 20.03.2020 and 30.06.2021.

67. Therefore, in facts of these petitions, following data is required to be considered to find out ‘surviving time’ to decide as to whether the impugned notices under section 148 of the Act issued under the new regime as per the decision of Hon’ble Apex Court in case of Ashish Agarwal (supra) would be valid notice or not in view of the decision of the Hon’ble Apex Court in case of Rajeev Bansal (supra):

SCA NO	AY	Date of notice under section 148 under TOLA	No of days of surviving time available till 30.06.2021	Date of providing information under section
6387/2023	2013-2014	17.06.2021	13	26.05.2022
5688/2023	2014-2015	09.06.2021	21	23.05.2022
22260/2022	2016-2017	30.06.2021	1	23.05.2022
996/2023	2017-2018	30.06.2021	1	24.05.2022

–

SCA NO	Due date of filing reply	Date of reply:-	Date of order under section 148A(d) and notice under section 148:-	Last date for issuance of notice under section 148 as per surviving time:-
6387/2023	09.06.2022	04.06.2022	29.07.2022	22.06.2022
5688/2023	06.06.2022	–	27.07.2022	27.06.2022
22260/2022	07.06.2022	06.07.2022	30.07.2022	14.06.2022
996/2023	11.06.2022	10.06.2022	19.07.2022	18.06.2022

68. It is apparent from the above details that impugned notice under section 148 of the Act is issued beyond the period of ‘surviving time’ as per the direction of Hon’ble Apex Court in case of Rajeev Bansal (supra)and therefore, such notices would be invalid notices.

69. The impugned notices issued under section 148 of the Act are accordingly quashed and set aside being invalid having been issued beyond the ‘surviving time’. Accordingly, impugned orders passed under section 148A(d) of the Act would also not survive and are accordingly, quashed and set aside. Subsequent proceedings, if any, undertaken by the respondent would not survive and are also quashed and set aside.

70. Rule is made absolute to the aforesaid extent. No order as to costs.