Section 148 Notice Issued Beyond Surviving Limitation Quashed: Gujarat HC

Aneri Dipakkumar Patel Vs ITO (Gujarat High Court)

Section 148 Reassessment Challenge

The Gujarat High Court allowed the writ petition challenging the order dated 20.08.2022 under Section 148A(d) of the Income Tax Act, 1961, the Section 148 notice of the same date and consequential reassessment proceedings for Assessment Year 2014-15. The petitioner contended that the notice was invalid and time barred.

The Assessing Officer had originally issued a Section 148 notice on 21.05.2021 during the extended period under the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (TOLA). Following the Supreme Court’s decision in Union of India and others v. Ashish Agarwal, (2022) 444 ITR 1 (SC), the notice was to be treated as a notice under Section 148A(b) under the reassessment regime effective from 01.04.2021.

Surviving Limitation Under Ashish Agarwal and Rajeev Bansal

The Court referred to Union of India Rajeev Bansal, (2024) 469 ITR 46 (SC), concerning the surviving time available for issuing reassessment notices after applying TOLA and the directions in Ashish Agarwal. The Court also relied on its earlier decision in Dhanraj Govindram Kella, which held that the validity of each reassessment notice had to be determined by examining the dates of the original Section 148 notice, supply of information under Section 148A(b), reply, Section 148A(d) order and subsequent Section 148 notice.

In the present case, the original Section 148 notice was issued on 21.05.2021, leaving 41 days between its issuance and 30.06.2021. Information pursuant to Ashish Agarwal was supplied on 25.05.2022. The petitioner filed the reply on 17.06.2022.

The Court determined that the surviving period resulted in 28.07.2022 as the maximum date by which the subsequent Section 148 notice could be issued.

Section 148 Notice Issued After Limitation

The Section 148A(d) order and Section 148 notice were both issued on 20.08.2022, after the 28.07.2022 deadline. The respondent’s Senior Standing Counsel verified the relevant dates and could not controvert them.

The Court referred to paragraphs 114(g) and 114(h) of Rajeev Bansal, under which the period from issuance of deemed notices between 01.04.2021 and 30.06.2021 until supply of relevant information, along with the period allowed to respond, was to be considered in determining the surviving limitation. Reassessment notices issued beyond the surviving period were held to be time barred and liable to be set aside.

Final Decision

Holding that the impugned proceedings were initiated beyond the surviving limitation period, the Gujarat High Court quashed and set aside the Section 148A(d) order dated 20.08.2022 and the Section 148 notice dated 20.08.2022. All consequential reassessment proceedings were also quashed and set aside.

Cases Discussed

• Dhanraj Govindram Kella v. Income Tax Officer, Ward (2), Surendranagar, [2025] 177 com 194 (Gujarat)
• Union of India and others v. Ashish Agarwal, (2022) 444 ITR 1 (SC)
• Union of India Rajeev Bansal, (2024) 469 ITR 46 (SC)

FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT

1. This petition is filed under Article 226 of the Constitution of India challenging the order under Section 148A(d) of the Income Tax Act, 1961 (for short “the Act”) dated 20.08.2022, notice under Section 148 of the Act dated 20.08.2022 and consequential reassessment proceedings under Section 147 of the Act on the ground that the notice would be invalid and time barred.

2. Brief facts of the case are that the respondent – Assessing Officer issued notice dated 21.05.2021 under Section 148 of the Act for the Assessment Year 2014-2015 during the extended time period as per Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 [(2020) 422 ITR (St.) 116] (for short “TOLA”).

3. In view of the decision of the Apex Court in the case of Union of India and others v. Ashish Agarwal, (2022) 444 ITR 1 (SC), the aforesaid notice was to be treated as notice under Section 148A(b) of the Act, which has come into statute with effect from 01.04.2021.

4. The Apex Court in the case of Union of India Rajeev Bansal, (2024) 469 ITR 46 (SC) has laid down the law to consider such notice as valid notice or invalid notice depending upon the surviving time left between the date of issuance of notice under Section 148 of the Act read with Section 3(1) of TOLA upto 30.06.2021 and the issuance of notice under Section 148 of the Act pursuant to the directions issued by the Apex Court in the case of Ashish Agarwal (supra).

5. This Court in the case of Dhanraj Govindram Kella v. Income Tax Officer, Ward (2), Surendranagar, [2025] 177 com 194 (Gujarat) (Judgment dated 08.07.2025 rendered in Special Civil Application No.6387 of 2023 and allied matters) has considered in detail the submissions made by both the sides and has held as under: –

“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 30thJune, 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 2014­2015 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 2017­2018 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):

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68. It is apparent from the above details section beyond time’ Hon’ble Rajeev that impugned notice under148 of the Act is issued the period of ‘surviving as per the direction of Apex Court in case of 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 undersection 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.”

6. In the facts of the case, the respondent – Assessing Officer has provided information pursuant to the directions issued by the Apex Court in the case of Ashish Agarwal (supra) on 25.05.2022 and therefore, considering 14 days’ time to file reply by the assessee, the due date would be 08.06.2022. The petitioner filed reply on 17.06.2022. The order under Section 148A(d) of the Act was issued on 20.08.2022. However, considering the period of limitation from the date of issuance of notice under Section 148 read with TOLA upto 30.06.2021, the limitation for issuance of notice under Section 148 of the Act applying the decision of the Apex Court in the case of Ashish Agarwal (supra) as well as Rajeev Bansal (supra), would be 28.07.2022 as original notice under Section 148 [now 148A(b)] was issued on 21.05.2021. The table showing the relevant dates of notice and orders in the case of petitioner is as under.

7. Learned Senior Standing Counsel Mr.Aaditya Bhatt has verified the above facts and could not controvert the same.

8. In view of above, the impugned order dated 20.08.2022 issued under Section 148A(d) of the Act, notice under Section 148 of the Act dated 20.08.2022 and consequent reopening proceedings would be invalid as the said notice is issued after 28.07.2022 as per the decision of the Apex Court in the case of Ashish Agarwal (supra). Therefore, the impugned notice having been issued beyond the ‘surviving time’ would be invalid notice as held by the Apex Court in the case of Rajeev Bansal (supra) in the following paragraph Nos.114(g) and 114(h) of the judgment:

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

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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 Unionof India v. Ashish Agarwal [2022] 138 com 64/286 Taxman 183/444 ITR 1 (SC); (2023) 1 SCC617.], 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.”

10. In view of foregoing reasons, the present writ petition is allowed. The impugned order under Section 148A(d) of the Act dated 20.08.2022 and notice issued under Section 148 of the Act dated 20.08.2022 are hereby quashed and set aside and all consequential proceedings are also quashed and set aside.