Gujarat HC Quashes Woman’s 2016-17 Tax Reopening After 2022 Notice Missed COVID-Era Deadline

The petitioner challenged the order under Section 148A(d) and notice under Section 148 of the Income-tax Act, 1961, both dated 31 July 2022, and the consequential reassessment proceedings for Assessment Year 2016–17, contending that the notice was time-barred.

The reassessment order under Section 147, dated 11 May 2023, was under appeal before the CIT(A).

The Court recorded that the original notice under Section 148, issued under the extended TOLA period and treated as a notice under Section 148A(b) following Ashish Agarwal, was issued on 30 June 2021.

The Assessing Officer supplied information on 27 May 2022; the petitioner did not reply by the stated due date of 11 June 2022.

Whether the notice under Section 148 dated 31 July 2022 was issued within the surviving limitation period applicable under TOLA and the Supreme Court’s directions in Ashish Agarwal and Rajeev Bansal.

Whether the order under Section 148A(d) and consequential reassessment proceedings were liable to be quashed as time-barred.

Section 148A(b) and (d), Section 148 and Section 147 of the Income-tax Act, 1961, read with the Taxation and Other Laws (Relaxation of Certain Provisions) Act, 2020 (TOLA), governed the reassessment process and applicable extended limitation period.

Under Union of India v. Ashish Agarwal, notices issued under the former reassessment regime during the relevant extended period were to be treated as show-cause notices under Section 148A(b).

Under Union of India v. Rajeev Bansal, the Assessing Officer had to issue a fresh Section 148 notice within the limitation time surviving after accounting for the period during which the deemed show-cause notice was stayed and the time allowed to respond; notices issued beyond that period are time-barred and liable to be set aside.

The Court also relied on Dhanraj Govindram Kella v. ITO for applying the surviving-time calculation to the dates in each case.

Applying Rajeev Bansal and the surviving-time approach adopted in Dhanraj Govindram Kella, the Court calculated that the time available for issuing the fresh Section 148 notice expired on 9 June 2022, given the original notice dated 30 June 2021.

Although information had been supplied on 27 May 2022 and the petitioner did not respond by 11 June 2022, the order under Section 148A(d) and notice under Section 148 were not issued until 31 July 2022—after the calculated deadline.

The respondent’s counsel verified the dates and did not controvert them.

The Court therefore held that the notice exceeded the surviving limitation period.

The rule was made absolute to that extent; the Court stated that the pending appeal before the CIT(A) would become infructuous.