Nilanjana Arvinder Singh v. DCIT (ITAT Mumbai)
Ashish Agarwal + Rajeev Bansal Combo = Reopening Knockout- Limitation Law is Supreme – 148A Procedure Cannot Override Section 149
Summary: This case before the ITAT Mumbai concerned the jurisdictional validity of reassessment proceedings for AYs 2013-14 and 2014-15. The Assessing Officer (AO) issued a fresh notice under Section 148 on July 28, 2022, subsequent to the Supreme Court’s Ashish Agarwal ruling which converted the original time-extended notice (dated June 29, 2021) into a deemed Section 148A(b) show cause notice. The assessee challenged the new notice, arguing it was time-barred under Section 149. The Tribunal carefully applied the Supreme Court’s Rajeev Bansal precedent, which requires the AO to calculate the precise “surviving limitation” after the COVID-related extension (TOLA) expired on June 30, 2021. For AY 2013-14, the Tribunal found that the first notice utilized the time up to the extended deadline, leaving a surviving time of only two days. The AO was therefore required to issue the new Section 148 notice by June 26, 2022. By issuing the notice on July 28, 2022, the AO exceeded the statutory time limit by 32 days. The Tribunal rejected the Department’s argument that Section 148A(d) granted a full month for the order, firmly holding that the limitation period defined by Section 149 is supreme and cannot be extended by the procedural rules of Section 148A. Consequently, the ITAT ruled the Section 148 notice void ab initio and quashed the entire reassessment for both assessment years.
Assessee, an advocate, had not filed returns for AYs 2013-14 & 2014-15. Based on Form 26AS data showing professional receipts, AO issued notice u/s 148 on 29.06.2021. After the Supreme Court’s decision in Ashish Agarwal, this notice was treated as a deemed 148A(b) show cause notice. AO then issued a fresh order u/s 148A(d) & notice u/s 148 on 28.07.2022, leading to reassessment & disallowance of expenses. CIT(A) upheld reassessment. Assessee appealed before ITAT, challenging only one thing at the threshold – the reassessment was time-barred u/s 149 & therefore void ab initio.
Core Jurisdictional Issue – Was the 148 notice issued within limitation?
Assessee argued that:
- Under old section 149 (pre-1.4.2021), time limit to issue 148 notice for AY 2013-14 expired on 31.03.2020 (6 years).
- Due to the COVID relaxation law (TOLA), time was extended only up to 30.06.2021.
- Original notice dated 29.06.2021 was within this extended period, but under Ashish Agarwal, it became only a deemed 148A(b) notice, not a valid 148 notice.
- Fresh actual 148 notice under new law was issued only on 28.07.2022, far beyond the permissible time.
- The assessee relied on Supreme Court in Rajeev Bansal (2024) 469 ITR 46 (SC), which laid down a specific method to calculate the “surviving time” after 30.06.2021.
Tribunal carefully applied Rajeev Bansal & found:
- For AY 2013-14, the last permissible date under old law (6 years) was 31.03.2020, which fell within TOLA period (20.03.2020 to 31.03.2021) – hence extension till 30.06.2021.
- The first notice was issued on 29.06.2021, leaving only 2 days of surviving limitation (29 & 30 June) as per Rajeev Bansal.
- After the assessee replied to 148A(b) on 24.06.2022, the AO had only 2 days (up to 26.06.2022) to issue a fresh notice u/s 148.
- Instead, AO issued the notice on 28.07.2022, i.e., 32 days late.
Department argued that section 148A(d) gives the AO one full month after reply, but the Tribunal rejected this by citing Delhi High Court in Ram Balram Buildhome (2025) 171 taxmann.com 99 (Del), which held that 148A(d) time cannot extend beyond the statutory limitation of section 149.
Tribunal also rejected reliance on section 149 third/fourth provisos, because even after granting exclusions & the 7-day cushion, the notice was still hopelessly delayed.
Held:
- Notice u/s 148 dated 28.07.2022 is beyond limitation u/s 149.
- Hence, it is void ab initio & bad in law.
- Consequently, the entire reassessment order u/s 147 r.w.s. 144B is quashed.
- Since reopening itself is invalid, all additions & other grounds become academic.
The same reasoning was applied mutatis mutandis to AY 2014-15, as the dates were identical: 148 notice again issued on 28.07.2022 despite having only 2 days of surviving time.
Key Takeaway:
After Rajeev Bansal (SC), AO must compute the “surviving time” after TOLA & Ashish Agarwal with precision. If that surviving time is exhausted—even by a day—the reassessment is invalid, no matter what section 148A(d) says. The limitation under section 149 prevails over all procedural timelines.
This is a powerful precedent protecting taxpayers from belated reassessment notices.
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