Section 148 Notice for AY 2015-16 Issued Post-Ashish Agarwal Beyond Limitation Period Is Invalid

By | August 1, 2026
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Section 148 Notice for AY 2015-16 Issued Post-Ashish Agarwal Beyond Limitation Period Is Invalid

Issue

Whether a Section 148 reassessment notice for Assessment Year 2015–16 issued on July 27, 2022, pursuant to the Supreme Court’s Ashish Agarwal ruling, is barred by limitation under the principles laid down in Union of India v. Rajeev Bansal.

Facts

  • The assessee-company’s original assessment for Assessment Year 2015–16 was completed under Section 143(3).

  • Between April 1, 2021, and June 30, 2021, the Revenue issued a reopening notice for AY 2015–16 under the erstwhile (pre-April 1, 2021) reassessment provisions.

  • Following the Supreme Court judgment in Ashish Agarwal (dated May 4, 2022), the old notices were deemed to be show-cause notices under the newly enacted Section 148A(b).

  • The Assessing Officer (AO) issued a formal Section 148A(b) show-cause notice on June 1, 2022, to which the assessee submitted its reply on June 20, 2022.

  • On July 27, 2022, the AO passed an order under Section 148A(d) alleging income escapement and simultaneously issued a notice under Section 148 to reopen the assessment for AY 2015–16.

  • The assessee challenged the order and the reassessment notice on the ground that they were issued beyond the statutory limitation period.

Decision

  • The Supreme Court decision in Union of India v. Rajeev Bansal   469 ITR 46 (SC)) strictly governs the extended limitation timelines for reassessment under TOLA and the post-Ashish Agarwal mechanism.

  • Applying the Rajeev Bansal framework, the Section 148A(d) order and the Section 148 notice issued on July 27, 2022, for AY 2015–16 were determined to be beyond the permissible statutory limitation period.

  • Consequently, the impugned order under Section 148A(d) and the reassessment notice dated July 27, 2022, were held invalid and quashed in favour of the assessee.

Key Takeaways

  • Binding Limitation Framework: Reassessment notices issued under Section 148 following the Ashish Agarwal directives must strictly comply with the time limits and TOLA relaxation boundaries established by the Supreme Court in Rajeev Bansal.

  • Statutory Time-Barring: Notices issued outside the extended limitation window for pre-2021 assessment years (such as AY 2015–16) are void ab initio and lack legal jurisdiction.

  • TOLA Interplay: While TOLA extended certain procedural timelines during the COVID-19 period, it cannot be stretched indefinitely to validate reassessment notices issued beyond the maximum permissible outer limit.

HIGH COURT OF GUJARAT
Jay Bharat Dyeing and Printing (P.) Ltd.
v.
Assistant Commissioner of Income-tax
A.S. Supehia and Ms. VAIBHAVI D. NANAVATI, JJ.
R/SPECIAL CIVIL APPLICATION NO. 17644 of 2022
JULY  8, 2026
Ms. Vaibhavi K. Parikh for the Petitioner. Karan G. Sanghani for the Respondent.
JUDGMENT
A.S. Supehia, J. – By way of present writ petition the petitioner has challenged the impugned order and Notice dated 27.07.2022 passed under Section 148A(d) and Section 148 of the Income Tax Act, 1961 (for short ‘the Act’), respectively.
2. The petitioner is a Company duly incorporated under the provisions of Companies Act,1956. The majority of the share holders are citizens of India. Accordingly, the petitioner-Company is entitled to the constitutional rights guaranteed under Article 14 and 19(1)(g) of the Constitution of India. The impugned Notice of reopening the income tax assessment of the petitioner was issued by the Department for the Assessment Year (A.Y) 2015-16 during the period between 01.04.2021 to 30.06.2021 after following the due procedure for reopening the assessment applicable till 31.03.2021. Despite the fact that with effect from 01.04.2021, new regime of reopening provisions had come into force. The Supreme Court, vide judgment dated 04.05.2022 in the case of Union of India v. Ashish Agarwal 444 ITR 1 (SC), adjudicated the issue as to validity of such reopening notices issued across the nation and gave certain directions to the Department. Consequently, the reassessment proceedings for the year under consideration have been initiated. The case of the petitioner was selected for scrutiny assessment and various details were called upon by the then Assessing Officer. Eventually, assessment was framed under Section 143(3) of the Act vide order dated 22.12.2017.
2.1 The respondent had issued a Show-Cause Notice dated 01.06.2022 under clause(b) of Section 148A of the Act. The petitioner thereafter filed reply to the Show-Cause Notice vide letter dated 20.06.2022, requesting the respondent to drop the reassessment proceedings initiated for A.Y 2015-16. However, the respondent vide order dated 27.07.2022 passed under Clause(d) of Section 148A of the Act, held that there is escapement of income chargeable to tax to the tune of Rs.1,05,00,000/-. The respondent has thereafter issued Notice dated 27.07.2022 under Section 148 of the Act seeking to reopen the case of the petitioner. Hence, the present writ petition is filed seeking quashing and setting aside the impugned Notice as well as order dated 27.07.2022.
3. Learned advocate appearing for the petitioner has submitted that for the A.Y 2015-2016, the respondent has conceded before the Apex Court that all the Notices issued on or after 01.04.2021 will have to be dropped as they will not fall during the period prescribed under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (for short “the TOLA”). Hence the Notices issued are time barred. Consequently, the subsequent proceedings, including the order passed under Section 148 of the Act, on 27.07.2022, is also bad in law.
3.1 It is submitted that as per the amended provisions in terms of Section 148A(b) of the Act, the respondent-authorities could have issued notices only upto 31.03.2022, i.e. under the new regime, the notices issued by the Revenue are also time barred. Consequently, the subsequent proceedings, including the order passed under Section 148 of the Act, on 27.07.2022, is also bad in law.
4. The Apex Court in the case of Union of India v. Rajeev Bansal 469 ITR 46 (SC) has laid down the law to consider such notice as a 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 of the Act, pursuant to the directions issued by the Apex Court in the case of Ashish Agarwal (supra).
5. Learned Senior Standing Counsel Mr. Karan Sanghani for the respondents has submitted that the issue stands squarely covered in view of the law laid down in the case of Rajeev Bansal (supra) relating to the validity and limitation of reassessment proceedings initiated during the transition period from the old regime to the new reassessment regime.
6. It is pertinent is to note that the captioned writ petition is arising out of the proceedings initiated by the Income Tax Department by invoking the provision of Section 148 of the Act operative prior to 01.04.2021. The subsequent Notice issued by invoking Section 148A(b) of the amended provision of the Act, which came into force with effect from 01.04.2021. Subsequently, the order under Section 148 of the Act, has been passed on 27.07.2022. The issue pertaining to the Notices invoking Section 148 of the Act i.e. prior to 01.04.2021 and Section 148A(b) of the Act, amended by the Finance Act, 2021 with effect from 01.04.2021, came up for consideration before the Apex Court in the case of Rajeev Bansal (supra).
7. The aforesaid position of law placed before us could not be disputed by the learned Senior Standing Counsel appearing for the respondent -Revenue. Since the issue is squarely covered by the decision of Apex Court in the case of Rajeev Bansal (supra) as well as by various other decisions of this Court. Accordingly, the writ petition is allowed in terms of the law laid down in the case of Rajeev Bansal (supra). The impugned Notice as well as the Order dated 27.07.2022 are hereby quashed and set aside along with all the consequential proceedings including the reassessment order.
8. The writ petition stands allowed Rule is made absolute to the aforesaid extent.