Reassessment Notice Quashed as it Was Issued Beyond the "Surviving Time" Limit.

Reassessment Notice Quashed as it Was Issued Beyond the “Surviving Time” Limit.

Issue

Whether a reassessment notice issued under Section 148 on August 30, 2022 (for AY 2016-17) is legally valid, or if it is barred by limitation because it was issued after the expiry of the “surviving time” available to the department under the TOLA (Taxation and Other Laws Ordinance).

Facts

For the Assessment Year 2016-17, the Assessing Officer (AO) issued a notice under Section 148 on June 30, 2021, during the extended period allowed by the TOLA Ordinance.
Following the Supreme Court’s Ashish Agarwal decision, this notice was treated as a preliminary show-cause notice under Section 148A(b).
The AO provided the information to the assessee on July 27, 2022.
The assessee filed a reply on August 11, 2022.
The AO passed the final order under Section 148A(d) on August 29, 2022.
The new, final reassessment notice under Section 148 was issued on August 30, 2022.
The court calculated that the “surviving time” or period of limitation available to the department for issuing the final notice in this case expired on August 25, 2022.

Decision

The High Court ruled decisively in favour of the assessee.
It held that the final notice under Section 148, issued on August 30, 2022, was barred by limitation as it was issued after the “surviving time” had expired on August 25, 2022.
The impugned notice was therefore held to be invalid and was quashed.

Key Takeaways

“Surviving Time” is a Hard Deadline: The Ashish Agarwal judgment did not grant an indefinite extension. It only granted the “surviving time” that was available to the AO under the TOLA extensions, which must be calculated precisely.
Limitation is a Jurisdictional Bar: A notice issued even a few days after the statutory limitation period has expired is a fatal jurisdictional defect, not a curable error.
Strict Compliance Required: This judgment reinforces that tax authorities must strictly adhere to the specific limitation periods, even those calculated under the complex TOLA and Ashish Agarwal framework. Any action taken after this deadline is void ab initio (from the beginning).

HIGH COURT OF GUJARAT

Ashitkumar Satishchandra Patel

Income-tax Officer^*

BHARGAV D. KARIA and Pranav Trivedi, JJ.

R/SPECIAL CIVIL APPL. NO. 1678 of 2023

SEPTEMBER 30, 2025

Dhinal A Shah for the Petitioner. Ms Maithili D Mehta for the Respondent.

ORDER

Bhargav D. Karia, J.- Heard learned advocate Mr. Dhinal A. Shah for the petitioner and learned Senior Standing Counsel Ms. Maithili D. Mehta 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 30.08.2022 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 30.06.2021 under section 148 of the Act for the Assessment Year 2016-2017 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 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 ITR 46 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 (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 30^th 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 2013-2014 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 2017-2018 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 Hon’ble Apex Rajeev Bansal decision of the 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 27.07.2022 and therefore, considering 15 days’ time to file reply by the assessee, the due date would be 18.08.2022. The petitioner filed reply on 11.08.2022. The order under section 148A(d) of the Act was passed on 29.08.2022 and notice under section 148 of the Act was issued on 30.08.2022. 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 Hon’ble Apex Court in case of Ashish Agarwal (supra) as well as Rajeev Bansal (supra), would be 25.08.2022.

8. Learned Senior Standing Counsel Ms. Maithili D. Mehta has verified the above dates and could not controvert the same.

9. In view of above, the impugned notice dated 30.08.2022 issued under section 148 of the Act would be invalid notice as the said notice is issued after 25.08.2022 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:

xxx

(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 [[2022] 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 order dated 29.8.2022 and notice dated 30.08.2022 is hereby quashed and set aside and all consequential proceedings are also quashed and set aside.