Reassessment Notice Issued Beyond Surviving Limitation Period Under TOLA and Ashish Agarwal Framework Is Time-Barred.

The Petitioner challenged a reassessment notice issued under Section 148 of the Income Tax Act, 1961, dated 12.07.2022 for Assessment Year (AY) 2017-2018.

Originally, a notice was issued on 16.06.2021 during the extended period provided by the Taxation and Other Laws (Relaxation of Certain Provisions) Act, 2020 (TOLA).

Pursuant to the Supreme Court’s judgment in Ashish Agarwal, this was treated as a show-cause notice under Section 148A(b).

The Revenue provided relevant information to the Petitioner on 20.05.2022, setting a reply deadline of 04.06.2022.

The Assessing Officer subsequently passed an order under Section 148A(d) on 10.07.2022 and issued the impugned notice under Section 148 on 12.07.2022.

1. Whether the notice issued under Section 148 of the Act on 12.07.2022 was barred by limitation considering the "surviving time" principle.

2. Whether the reassessment proceedings and subsequent demand notices are legally sustainable if the jurisdictional notice was issued beyond the limitation period.

The court applied Section 148 and 148A of the Income Tax Act, 1961, as amended by the Finance Act, 2021.

The court relied heavily on the "surviving time" doctrine established by the Hon’ble Supreme Court in Union of India v. Rajeev Bansal (2024) 469 ITR 46 (SC), which dictates that the time available to the Revenue to issue a notice under the old regime (as extended by TOLA) must be applied to the new regime.

The court also followed its own precedent in Dhanraj Govindram Kella v. ITO (SCA No. 6387/2023), which clarified that notices issued beyond this calculated surviving period are time-barred and void.

The Court calculated the "surviving time" for AY 2017-2018 by determining the number of days remaining between the issuance of the original TOLA-protected notice (16.06.2021) and the TOLA deadline (30.06.2021).

The court noted that information was provided on 20.05.2022, and adding the mandatory 15-day response period, the limitation clock resumed on 04.06.2022.

Under the principles laid down in Rajeev Bansal, the final deadline for the Revenue to issue the Section 148 notice was 18.06.2022.

Since the respondent issued the impugned notice only on 12.07.2022, the Court found it was issued after the expiry of the limitation period.

The Revenue’s counsel could not controvert these dates.

Consequently, the Court quashed and set aside the impugned notice, the order passed under Section 147 read with Section 144B dated 27.04.2023, and all consequential demand notices.