A reassessment notice is invalid if issued after the “surviving time” limit established by the Supreme Court, rendering all subsequent proceedings void.
Issue
Is a fresh reassessment notice issued under Section 148 of the new tax regime legally valid if it was issued after the expiry of the “surviving time” limit, as calculated under the TOLA extension period and clarified by the Supreme Court in the Union of India v. Rajeev Bansal case?
Facts
- The Assessing Officer (AO) issued a reassessment notice for the Assessment Year 2014-15 on June 22, 2021, during the extended period granted by the TOLA Ordinance.
- Following the Supreme Court’s landmark decision in Union of India v. Ashish Agarwal, this notice was treated as a preliminary show-cause notice under the new Section 148A(b).
- The department provided the underlying information to the assessee on May 24, 2022, and granted 15 days to reply (until June 7, 2022). The assessee did not file a reply.
- The AO then passed an order under Section 148A(d) and issued a fresh, final notice under Section 148 on July 28, 2022.
- However, the Supreme Court’s subsequent judgment in Rajeev Bansal clarified that such fresh notices must be issued within the “surviving time” available under the law. For this specific case, that deadline had expired on June 16, 2022.
Decision
The High Court held that the reassessment notice dated July 28, 2022, was invalid as it was issued beyond the “surviving time” limit of June 16, 2022. Since the notice itself was time-barred and void, all consequential proceedings based on it were quashed.
Key Takeaways
- “Surviving Time” is a Hard Deadline: The Supreme Court’s ruling in Rajeev Bansal has established a strict, non-negotiable deadline for issuing reassessment notices in cases transitioning from the old to the new regime under TOLA.
- Procedural Timelines are Mandatory: Tax authorities must strictly adhere to the timelines prescribed by law and interpreted by the apex court. A failure to issue a notice within the stipulated period renders the entire proceeding void from the start.
- Invalid Notice Vitiates Everything: A legally invalid notice cannot be the foundation for any assessment or recovery action. If the initial notice is time-barred, all subsequent steps, orders, and demands are automatically nullified.
HIGH COURT OF GUJARAT
Dilipbhai Jayantibhai Patel
v.
Assessment Unit Income-tax Department
BHARGAV D. KARIA and Pranav Trivedi, JJ.
R/SPECIAL CIVIL APPLICATION NO. 11622 of 2023
JULY 22, 2025
Manish J Shah, Adv. for the Petitioner. Karan G Sanghani, Adv. for the Respondent.
ORDER
Bhargav D. Karia, J.- Heard learned advocate Mr. Manish J. Shah for the petitioner and learned Senior Standing Counsel Mr. Karan Sanghani for the respondent.
2. This petition is filed under Article 226 of the Constitution of India challenging the notice under section 148 of the Income Tax Act, 1961 (For short “the Act”) dated 28.07.2022 on the ground that the notice would be invalid and time barred.
3. Brief facts of the case are that the respondent Assessing Officer issued notice dated 22.06.2021 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”).
4. In view of the decision of Hon’ble Apex Court in case of Union of India v. Ashish Agarwal 183/444 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.
5. The Hon’ble Apex Court in case of Union of India v. Rajeev Bansal 238/469 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 pursuant to the directions issued by the Hon’ble Apex Court in case of Ashish Agarwal (supra).
6. This Court in case of Dhanraj Govindram Kella v. ITO 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 30th June, 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 20132014 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 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):
| 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 148A(b) |
| 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.”
7. In the facts of the case, the respondent Assessing Officer has provided information pursuant to the directions issued by the Hon’ble Apex Court in case of Ashish Agarwal (supra) on 24.05.2022 and therefore, considering 15 days’ time to file reply by the assessee, the due date would be 07.06.2022. The petitioner filed no reply. The order under section 148A(d) of the Act as well as notice under section 148 of the Act was issued on 28.07.2022. 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 Hon’ble Apex Court in case of Ashish Agarwal (supra) as well as Rajeev Bansal (supra), would be 16.06.2022.
8. Learned Senior Standing Counsel Mr. Karan Sanghani has verified the above dates and could not controvert the same.
9. In view of above, the impugned notice dated 28.07.2022 issued under section 148 of the Act would be invalid notice as the said notice is issued after 16.06.2022 as per the decision of Hon’ble Apex Court in case of Ashish Agarwal (supra). Therefore, the impugned notice having been issued beyond the ‘surviving time’ would be invalid notice as held by the Hon’ble Apex Court in case of Rajeev Bansal (supra) in the following paragraph no. 114 (g) and (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 Union of India v. Ashish Agarwal. 183/444 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.”
10. In view of foregoing reasons, impugned notice dated 28.07.2022 is hereby quashed and set aside and all consequential proceedings are also quashed and set aside.