Section 148 notice issued in June 2021 without Section 148A procedure held invalid

By | December 6, 2025
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Section 148 notice issued in June 2021 without Section 148A procedure held invalid

Issue

Whether a reopening notice under Section 148 for AY 2015-16, issued on 25-06-2021, is valid if it followed the old reassessment procedure relying on TOLA extensions, instead of complying with the mandatory new procedure under Section 148A effective from 01-04-2021.

Facts

  • Assessment Year: The case pertains to Assessment Year 2015-16.

  • Date of Notice: The Assessing Officer issued a notice under Section 148 on 25-06-2021.

  • Procedural Lapse: The notice was issued without complying with the provisions of Section 148A (conducting an inquiry and providing an opportunity to be heard), which became mandatory via the Finance Act, 2021, with effect from 01-04-2021.

  • Revenue’s Stand: The Department relied on the Taxation and Other Laws (Relaxation of Certain Provisions) Act, 2020 (TOLA), arguing that the time limit for issuing notices under the old regime was extended up to 30-06-2021, thereby validating the procedure used.

  • Challenge: The assessee challenged the notice, arguing that TOLA could not override the substantive amendments to the Income Tax Act that came into force on 01-04-2021.

Decision

  • New Regime Supremacy: The Court held that with the enactment of the Finance Act, 2021, the new reassessment regime (including Section 148A) became the law of the land effective from 01-04-2021.

  • Scope of TOLA: While TOLA extended the limitation periods due to the pandemic, it did not suspend the operation of the new procedural safeguards introduced by the Parliament.

  • Procedural Violation: Any notice issued under Section 148 after 01-04-2021 must mandatorily follow the new procedure (Section 148A). A notice issued under the old procedure during the extended period (April to June 2021) is legally unsustainable.

  • Ruling: The impugned notice issued on 25-06-2021 without adhering to Section 148A was held to be invalid and was quashed.

Key Takeaways

Date of Issuance is Critical: For reassessment validity, the law applicable on the date of issuance of the notice governs the procedure. If the date is after 31-03-2021, the new Section 148A procedure is non-negotiable.

TOLA Limitation vs. Procedure: TOLA extended the time to issue notices but did not allow the Revenue to bypass the new procedure (Section 148A) for notices issued after April 1, 2021.

Ashish Agarwal Precedent: This judgment aligns with the Supreme Court’s view (Union of India v. Ashish Agarwal) that notices issued under the old provision during this specific window are deemed to be Show Cause Notices under Section 148A(b), rather than valid Section 148 notices.

HIGH COURT OF GUJARAT
Vishwa Realty Ltd.
v.
Assessment Unit, Income-tax Department
BHARGAV D. KARIA and Pranav Trivedi, JJ.
R/SPECIAL CIVIL APPLICATION NO. 14954 of 2023
NOVEMBER  4, 2025
Ms Vaibhavi K Parikh for the Petitioner. Ms Maithili D Mehta for the Respondent.
ORDER
Bhargav D. Karia, J. – Heard learned advocate Ms. Vaibhavi K. Parikh for the petitioner and learned Senior Standing Counsel Ms. Maithili D. Mehta for the respondents.
2. The petitioner has challenged notices issued under section 148 of the Income Tax Act, 1961 (for short “the Act”) for the Assessment Year 2015-2016 under the old regime in view of TOLA without issuing notice under section 148A(b) as required to be issued with effect from 01.04.2021.
3. Notice under section 148 under Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 [(2020) 422 ITR (St.) 116] (For short “TOLA”) was issued on 25.06.2021 whereas notice under section 148A(b) of the Act after judgment in case of Union of India v. Ashish Agarwal (SC)/[2022] 444 ITR 1 (SC) was issued on 30.05.2022.
4. The respondent Assessing Officer has issued notice under section 148 of the Act after 31.03.2021 on the pretext that due to operation of TOLA, time limit for issuance of notice would be extended upto 30.06.2021.
5. Thereafter, considering the decision of Hon’ble Apex Court in case of Ashish Agarwal (supra), notice issued under section 148 between 01.04.2021 and 30.06.2021 for Assessment Year 2015-2016 was deemed to be notice under section 148A(b) of the Act which has come into operation with effect from 01.04.2021 and thereafter as per the direction issued by the Hon’ble Apex Court in case of Ashish Agarwal (supra) department has issued the notices under section 148 of the Act between the month of July,2022 and August, 2022 after following the procedure of inviting reply and passing order under section 148A(d) of the Act.
6. The petitioners challenged such notices issued by the respondent Assessing Officer for Assessment Year 2015-2016 pursuant to the order of Hon’ble Apex Court in case of Ashish Agarwal (supra).
7. During the pendency of these petitions, similar notices which were issued for Assessment Years 2013-2014 to 2017-2018 came up for consideration on the ground of delay as well as on the ground of getting valid sanction before this Court and other High Courts. This Court in case of Keenara Industries (P.) Ltd v. ITO reported in Keenara Industries (P.) Ltd. v. ITO ITR 51 (Gujarat), allowed such petitions.
8. The matter was carried to Hon’ble Supreme Court. Hon’ble Supreme Court in case of Union of India v. Rajeev Bansal  (SC)/[2024] 469 ITR 46 (SC), decided the issues raised with regard to delay as per the provisions of section 149 of the Act which has come into operation after 01.04.2021 as well as validity of sanction granted under section 155 of the Act.
9. During the course of hearing before the Hon’ble Apex Court, Revenue conceded to the effect that so far as Assessment Year 2015-2016 is concerned, Revenue could not have issued the notices under section 3(1) of TOLA as considering the time period as prescribed under section 149 of the Act with effect from 01.04.2021, three years would be over on 31.03.2019 which is prior to coming into force of TOLA and six years would be completed on 31.03.2022 which is after operation of TOLA. In such circumstances, notices for Assessment Year 2015-2016 are held to be invalid by Hon’ble Apex Court in case of Rajeev Bansal (supra).
10. The Hon’ble Apex Court followed the decision of Rajeev Bansal (supra) in case of Deepak Steel and Power Ltd. v. CBDT (SC)/[2025] 476 ITR 369 (SC) and after recording the concession of the learned advocate for the department and in view of the concession given before the Apex Court by learned advocate appearing for the Revenue as recorded in para 19(f) of the judgment in case of Rajeev Bansal (supra), has quashed and set aside the notice issued after 31.03.2021 under TOLA for A.Y. 2015-16 as under:
“1. Leave granted.
2. These appeals arise from the order passed by the High Court of Orissa at Cuttack in Writ Petition (C) Nos. 2446 of 2023, 2543 of 2023 dated 1.2.2023 and 2544 of 2023 dated 10.02.2023 respectively by which the High Court disposed of the original writ petitions in the following terms:-

“1. The memo of appearance filed by Mr. S. S. Mohapatra, learned Senior Standing Counsel for Revenue Department on behalf of Opposite Parties is taken on record.

2. In view of the order passed by this Court on 1st December, 2022 in a batch of writ petitions of which W.P.(C) No.9191 of 2022 (Kailash Kedia v. Income Tax Officer) was a lead matter and the subsequent order dated 10th January, 2023 passed in W.P.(C) No.36314 of 2022 (Shiv Mettalicks Pvt. Ltd., Rourkela v. Principal Commissioner of Income Tax, Sambalpur), the Court declines to entertain the present writ petition, but leaves it open to the Petitioner to raise all grounds available to the Petitioner in accordance with law including the grounds urged in the present petition at the appropriate stage as explained by the Court in those orders.

3. The writ petition is disposed of in the above terms.”

3. We heard Mr. Saswat Kumar Acharya, the learned counsel appearing for the appellants(assessee) and Mr. Chandrashekhar, the learned counsel appearing for the revenue.
4. The learned counsel appearing for the revenue with his usual fairness invited the attention of this Court to a three judge bench decision of this Court in Union of India and Ors. v. Rajeev Bansal, reported in 2024 SCC OnLine SC 2693, more particularly, paragraph 19(f) which reads thus:-

“19. (f) The Revenue concedes that for the assessment year 2015- 2016, all notices issued on or after April 1, 2021 will have to be dropped as they will not fall for completion during the period prescribed under the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020.”

5. As the revenue made a concession in the aforesaid decision that is for the assessment year 2015-2016, all notices issued on or after 1st April, 2021 will have to be dropped as they would not fall for completion during the period prescribed under the taxation and other laws (Relaxation and Amendment of certain Provisions Act, 2020). Nothing further is required to be adjudicated in this matter as the notices so far as the present litigation is concerned is dated 25.6.2021.
6. In view of the aforesaid, in such circumstances referred to above the original writ petition nos.2446 of 2023, 2543 of 2023 and 2544 of 2023 respectively filed before the High Court of Orissa at Cuttack stands allowed.
7. The impugned notice therein stands quashed and set aside.
8. The relief in terms of prayer (a) is granted.
9. The appeals stand disposed of in the above terms.
10. Pending application(s), if any, stand disposed of.”
11. Similar orders are also passed by the Apex Court in the following cases:
1) Asstt. CIT v. Nehal Ashit Shah [Special Leave Petition (Civil) Diary No. 57209 of 2024];
2) The Income-tax Officer v. R. K. Build Creations (P.) Ltd. [Special Leave Petition (Civil) Diary No. 59625 of 2024].
12. The Delhi High Court has also passed the similar order in following cases:
1) Bhagwan Sahai Sharma v. Deputy Commissioner of Income-tax (Delhi)
2) Lalit Gulati v. Assistant Commissioner of Income-tax (Delhi);
13. The Punjab and Haryana High Court has taken similar decision in case of Jay Jay Agro Industries v. ITO [CWP No. 7405 of 2025, dated 19-3-2025]
14. Rajasthan High Court has also taken similar decision in case of Shreyansh Mehta v. ITO [Civil Writ Petition No. 3299 of 2023, dated 12-2-2025].
15. Karnataka High Court has also taken similar decision in case of Siddaiah Gurappaji v. Asstt. CIT [Writ Petition No. 20292 of 2023, dated 17-4-2025].
16. This Court also in case of (order dated 17.06.2025 rendered in Mayurkumar Babubhai Patel v. Assistant Commissioner of Income-tax   (Gujarat)/Special Civil Application No.3154 of 2022 and allied matters) has held as under:
“15. Considering the facts of the case, it is not in dispute that the respondent-Assessing Officer has issued the notice under section 148A(b) of the Act after the period of six years were over on 31.03.2022. As observed by the Hon’ble Apex Court in case of Deepak Steel and Power Ltd(supra) and in view of the concession made by the Revenue before the Apex Court for the Assessment Year 2015-16, all the notices issued on or after 01.04.2021 will have to be dropped as they would not fall for completion during the period prescribed under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 and therefore, nothing further is required to be adjudicated in the matters as the notice so far as the present petitions are concerned, though dated 31.03.2021, admittedly have been issued after 01.04.2021.
16. It is also not in dispute that the notices under section 148A(b) have been issued pursuant to the decision of the Hon’ble Apex Court in Ashish Agarwal (supra) dated 04.05.2022 admittedly after 31.03.2022. Therefore, on both counts, the notices issued under section 148 of the Act dated 27/28/29.07.2022 would be time barred.”
17. In view of above, for the foregoing reasons, the petition is allowed. The impugned notice issued under section 148 of the Act for Assessment Year 2015-2016 is held to be invalid as same was issued during the extended period from 01.04.2021 to 30.06.2021 under TOLA.
18. Petition is accordingly disposed off.