CBDT Instruction No. 01/2022 and Section 148 notice

CBDT Instruction No. 01/2022 and Section 148 notice for AY 2015-16 issued within TOLA limitation are valid.

Issue

Whether CBDT Instruction No. 01/2022, issued to implement the Supreme Court judgment in Union of India v. Ashish Agarwal, is legally valid.
Whether an order under Section 148A(d) and a reassessment notice under Section 148 issued on 28.07.2022 for AY 2015–16 are within the surviving limitation period under Section 149 read with TOLA.

Facts

Initial Reopening Notice: A notice under Section 148 was issued to the assessee on 30.06.2021 for AY 2015–16 under the old reassessment regime.
Escaped Income Threshold: The alleged income escaping assessment for AY 2015–16 was Rs. 27.06 crore, exceeding the statutory threshold of Rs. 50 lakhs.
Implementation of Ashish Agarwal: Following the Supreme Court’s directives in Ashish Agarwal, the initial notice was deemed a show-cause notice under Section 148A(b), and the Revenue provided the necessary information/material to the assessee on 27.05.2022.
Issuance of Order and Fresh Notice: Subsequent to the assessee’s response, the Assessing Officer passed an order under Section 148A(d) and issued a fresh notice under Section 148 on 28.07.2022.
Assessee’s Challenge: The assessee challenged CBDT Instruction No. 01/2022 dated 11.05.2022 and contended that the Section 148 notice issued on 28.07.2022 was barred by limitation.

Decision

Validity of CBDT Instruction: CBDT Instruction No. 01/2022 was issued strictly to implement the Supreme Court’s judgment in Ashish Agarwal; hence, the challenge to the instruction was rejected.
Compliance with Limitation: Since the alleged escaped income was over Rs. 50 lakhs and the proceedings were conducted within the surviving limitation period under Section 149 read with TOLA, the notice was not time-barred.
Final Verdict: The order under Section 148A(d) and the notice under Section 148 dated 28.07.2022 were held to be valid and within limitation. The writ petition was dismissed in favor of the Revenue.

Key Takeaways

CBDT Instructions Executing Judicial Mandates: Guidelines issued by the CBDT to operationalize binding Supreme Court judgments (such as Ashish Agarwal) are legally valid and binding on field officers.
Surviving Limitation under TOLA: Reassessment notices issued for extended period years (where escaped income exceeds Rs. 50 lakhs) remain valid if issued within the surviving limitation period calculated pursuant to TOLA and Ashish Agarwal directives.
Threshold for Extended Limitation: Where income escaping assessment is Rs. 50 lakhs or more, the Revenue can invoke the extended timeframe under Section 149(1)(b), provided procedural compliance under Section 148A is satisfied.

HIGH COURT OF MADRAS

Appnell Holdings Ltd.

Deputy Commissioner of Income-tax, International Tax

C.Saravanan, J.

W.P. No.1513 of 2023
W.M.P. No.1662 of 2023

JULY 13, 2026

R.Sivaraman and Allwin Godwin for the Petitioner. Avinash Krishnan Ravi, Jr. Standing Counsel and B.Ramanakumar, Sr. Standing Counsel for the Respondent.

ORDER

1. Heard the learned counsel for the Petitioner and the learned Junior Standing Counsel for the Respondents.

2. In this Writ Petition, the Petitioner has challenged the Impugned Instruction No.01/2022 issued by the 2^nd Respondent Central Board of Direct Taxes dated 11.05.2022 and the Impugned Order dated 28.07.2022 passed under Section 148A(d) of the Income Tax Act, 1961 as it stood in force with effect from 01.04.2021 and a Notice under Section 148 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) as it stood during the aforesaid period for the Assessment Year 2015-2016.

3. The challenge to these Impugned Instruction dated 11.05.2022, Impugned Order passed under Section 148A(d) of the Act dated 28.07.2022 and Impugned Section 148 Notice dated 28.07.2022 are primarily on account of the apparent concession given by the Additional Solicitor General of India before the Hon’ble Supreme Court in UOI v. Rajeev Bansal (SC)/2024 SCC Online SC 2693.

4. For the sake of clarity, Paragraph No.19 from the said decision of the Hon’ble Supreme Court in Rajeev Bansal case referred to supra is extracted below:-

“19. Mr.N.Venkataraman, learned Additional Solicitor General of India, made the following submissions on behalf of the Revenue:

Parliament enacted TOLA as a free-standing legislation to provide relief and relaxation to both the assesses and the Revenue during the time of COVID-19. TOLA seeks to relax actions and proceedings that could not be completed or complied with within the original time limits specified under the Income-tax Act;

Section 149 of the new regime provides three crucial benefits to the assesses: (i) the four-year time limit for all situations has been reduced to three years; (ii) the first proviso to Section 149 ensures that re-assessment for previous assessment years cannot be undertaken beyond six years; and (iii) the monetary threshold of Rupees fifty lakhs will apply to the re assessment for previous assessment years;

The relaxations provided under section 3(1) of TOLA apply “notwithstanding anything contained in the specified Act.” Section3(1), therefore, overrides the time limits for issuing a notice under Section 148 read with Section 149 of the Income-tax Act;

TOLA does not extend the life of the old regime. It merely provides a relaxation for the completion or compliance of actions following the procedure laid down under the new regime;

The Finance Act 2021 substituted the old regime for reassessment with a new regime. The first proviso to Section 149 does not expressly bar the application of TOLA. Section 3 of TOLA applies to the entire Incometax Act, including Sections 149 and 151 of the new regime. Once the first proviso to Section 149(1)(b) is read with TOLA, then all the notices issued between 1 April 2021 and 30 June 2021 pertaining to assessment years 2013-2014, 2014-2015, 2015-2016, 2016-2017, and 2017-2018 will be within the period of limitation as explained in the tabulation below:

Assessment Year	Within Three Years	Expiry of Limitation read with TOLA for (2)	Within six Years	Expiry of Limitation read with TOLA for (4)
(1)	(2)	(3)	(4)	(5)
2013-2014	31.03.2017	TOLA not applicable	31.03.2020	30.06.2021
2014-2015	31.03.2018	TOLA not applicable	31.03.2021	30.06.2021
2015-2016	31.03.2019	TOLA not applicable	31.03.2022	TOLA not applicable
2016-2017	31.03.2020	30.06.2021	31.03.2023	TOLA not applicable
2017-2018	31.03.2021	30.06.2021	31.03.2024	TOLA not applicable

The Revenue concedes that for the assessment year 201516, all notices issued on or after 1 April 2021 will have to be dropped as they will not fall for completion during the period prescribed under TOLA;

Section 2 of TOLA defines “specified Act” to mean and include the Income-tax Act. The new regime, which came into effect on 1 April 2021, is now part of the Income-tax Act. Therefore, TOLA continues to apply to the Income Tax Act even after 1 April 2021, and

Ashish Agarwal (supra) treated Section 148 notices issued by the Revenue between 1 April 2021 and 30 June 2021 as show-cause notices in terms of Section 148A(b). Thereafter, the Revenue issued notices under section 148 of the new regime between July and August 2022. Invalidation of the Section 148 notices issued under the new regime on the ground that they were issued beyond the time limit specified under the Income-tax Act read with TOLA will completely frustrate the judicial exercise undertaken by this Court in Ashish Agarwal (supra).”

5. At the outset, a concession given by the learned Additional Solicitor General before the Hon’ble Supreme Court can neither be construed to be law declared under Article 141 of the Constitution of India nor purport of such concession can be construed to mean that the limitation for issuance of Notice under Section 148 of the Act had expired even where the amount involved is more than the specified limit both under the new and the old regime. A reading of the above table from Paragraph 19 of the decision of the Hon’ble Supreme Court in Rajeev Bansal case referred to supra also makes it clear that the Court was not informed that where the amount was above the specified limit, proceedings will abate even if Section 148 Notice was issued in time under the old regime.

6. That apart, it is to be remembered that the Hon’ble Supreme Court in UOI v. Ashish Agarwal (SC)/(2023) 1 SCC 617 rendered its decision on 04.05.2022, and held that a Notice issued under Section 148 under the old regime, will be treated as a Notice under Section 148A(b) under the new regime as in force with effect from 01.04.2021. This has also been explained by the Hon’ble Supreme Court in Rajeev Bansal case referred to supra, to which I shall refer to.

7. To implement the above decision of the Hon’ble Supreme Court in Ashish Agarwal case referred to supra, the Impugned Instruction No.01/2022 dated 11.05.2022 was issued. Therefore, the challenge to the

Impugned Instruction No.01/2022 dated 11.05.2022 implementing the decision of the Hon’ble Supreme Court in Ashish Agarwal case referred to supra cannot be countenanced and therefore has to be dismissed. To that extent, prayer (b) of the Petitioner is straight away liable to be dismissed.

8. The Hon’ble Supreme Court in Rajeev Bansal case referred to supra clarified the decision the Hon’ble Supreme Court in Ashish Agarwal case referred to supra. The Hon’ble Supreme Court in Rajeev Bansal case referred to supra, framed the following questions of law to be answered by it:-

Whether TOLA and notifications issued under it will also apply to reassessment notices issued after 1 April 2021; and

Whether the reassessment notices issued under Section 148 of the new regime between July and September 2022 are valid.

9. In Rajeev Bansal case referred to supra, the Hon’ble Supreme Court summarized its views in Paragraph No.114. It is reproduced below:-

“114. In view of the above discussion, we conclude that:

After 1 April 2021, the Income Tax Act has to be read along with the substituted provisions;

TOLA will continue to apply to the Income Tax Act after 1 April 2021 if any action or proceeding specified under the substituted provisions of the Income Tax Act falls for completion between 20 March 2020 and 31 March 2021;

Section 3(1) of TOLA overrides Section 149 of the Income Tax Act only to the extent of relaxing the time limit for issuance of a reassessment notice under Section 148;

TOLA will extend the time limit for the grant of sanction by the authority specified under Section 151. The test to determine whether TOLA will apply to Section 151 of the new regime is this: if the time limit of three years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under Section 151(i) has extended time till 30 June 2021 to grant approval;

In the case of Section 151 of the old regime, the test is: if the time limit of four years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under Section 151(2) has extended time till 31 March 2021 to grant approval;

The directions in Ashish Agarwal (supra) will extend to all the ninety thousand reassessment notices issued under the old regime during the period 1 April 2021 and 30 June 2021;

The time during which the show cause notices were deemed to be stayed is from the date of issuance of the deemed notice between 1 April 2021 and 30 June 2021 till the supply of relevant information and material by the assessing officers to the assesses in terms of the directions issued by this Court in Ashish Agarwal (supra), and the period of two weeks allowed to the assesses to respond to the show cause notices; and

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 TOLA. All notices issued beyond the surviving period are time barred and liable to be set aside.”

10. In Paragraph No.112, the Hon’ble Supreme Court in Rajeev Bansal case referred to supra also gave an illustration. It is reproduced as under:-

“112.Let us take the instance of a notice issued on 1 May 2021 under the old regime for a relevant assessment year. Because of the legal fiction, the deemed show cause notices will also come into effect from 1 May 2021. After accounting for all the exclusions, the assessing officer will have sixty-one days [days between 1 May 2021 and 30 June 2021] to issue a notice under Section 148 of the new regime. This time starts ticking for the assessing officer after receiving the response of the assessee. In this instance, if the assessee submits the response on 18 June 2022, the assessing officer will have sixty-one days from 18 June 2022 to issue a reassessment notice under Section 148 of the new regime. Thus, in this illustration, the time limit for issuance of a notice under Section 148 of the new regime will end on 18 August 2022.”

11. As per the First Proviso to Section 149 of the Act, a Notice under Section 148 under the new regime could be issued, provided the limitation under the old regime had not expired.

12. If the amount of income that had escaped assessment was below Rs.1,00,000/-, it can be held that Section 148 Notice dated 30.06.2021 issued to the Petitioner under the old regime as it stood till 31.03.2021 was time barred and therefore barred under Proviso to Section 149 of the Act as in force. This interpretation would be in consonance with the concession given by the learned Additional Solicitor General of India before the Hon’ble Supreme Court in Rajeev Bansal case referred to supra.

13. The dispute in the present case pertains to the Assessment Year 2015-2016 in respect of certain transactions of the Petitioner during relevant Previous Year 2014-2015. The four years and six years limitation under the old regime had expired on 31.03.2020 and 31.03.2022 for the Assessment Year 2015-2016.

14. In the present case, a Section 148 Notice was issued to the Petitioner on 30.06.2021 under the old regime. It was issued prior to the expiry of limitation on 31.03.2022 under the old regime as the income chargeable to tax that is said to have escaped assessment for the Assessment Year 2015-2016 was Rs.27,06,46,000/-.

15. This was of course made known to the Petitioner after Section 148A(b) Notice dated 27.05.2022 was issued to the Petitioner under the new regime after the Hon’ble Supreme Court in Ashish Agarwal case referred to supra rendered its decision on 04.05.2022.

16. Since the income chargeable to tax that is said to have escaped assessment for the Assessment Year 2015-2016 was Rs.27,06,46,000/-, it cannot therefore be held that the Impugned Section 148 Notice dated 28.07.2022 issued to the Petitioner can be said to be time barred.

17. As per the Scheme of Section 148A(b) of the Act, a Notice has to be issued, giving time not exceeding 30 days from the date of such Notice or such further time as may be extended on the basis of an application made in this behalf, for furnishing a Reply under Section 148A(c) of the Act.

18. Based on such Reply, an order has to be passed under Section 148A(d) of the Act, with the approval of the specified authority, within one month from the end of the month in which the Reply under Section 148A(c) of the Act is received.

19. Where no such Reply is furnished, the Order shall be passed within one month from the end of the month in which the time or the extended time allowed for furnishing the Reply, as provided under Clause (b) expires.

20. In Paragraph No.113, the Hon’ble Supreme Court in Rajeev Bansal case referred to supra observed as under:-

“113. In Ashish Agarwal (supra), this Court allowed the assesses to avail all the defences, including the defence of expiry of the time limit specified under Section 149(1). In the instant appeals, the reassessment notices pertain to the assessment years 2013-2014, 2014-2015, 2015-2016, 2016-2017, and 2017-2018. To assume jurisdiction to issue notices under Section 148 with respect to the relevant assessment years, an assessing officer has to: (i) issue the notices within the period prescribed under Section 149(1) of the new regime read with TOLA; and (ii) obtain the previous approval of the authority specified under Section 151. A notice issued without complying with the preconditions is invalid as it affects the jurisdiction of the assessing officer. Therefore, the reassessment notices issued under Section 148 of the new regime, which are in pursuance of the deemed notices, ought to be issued within the time limit surviving under the Income Tax Act read with TOLA. A reassessment notice issued beyond the surviving time limit will be time barred.”

21. The Hon’ble Supreme Court in Paragraph No.114(g) in Rajeev Bansal case referred to supra has clearly clarified that the time during which the Show Cause Notices were deemed to be stayed from the date of issuance of the deemed Notice between 1^st April 2021 and 30^th June 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 Ashish Agarwal referred to supra, and the period of two weeks allowed to the assessees to respond to the Show Cause Notices is to be excluded and thereafter the Assessing Officer(s) was/were required to issue the Reassessment Notice under Section 148 of the Act under the new regime within the time limit surviving under the Act read with the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020.

22. Only if Section 148 Notice is issued beyond the surviving period of limitation, such Notice can be held to be time barred and can liable to be set aside. However, this is not the situation in the facts of the present case.

23. The time between 01.04.2021 and 27.05.2022 (being the date of Section 148A(b) Notice) and two weeks time given thereafter to Reply under Section 148A(b) read with the Third Proviso to Section 149 of the Act and the time for passing Order has to be excluded in terms of the decision of the Hon’ble Supreme Court in Ashish Agarwal case referred to supra and the decision of the Hon’ble Supreme Court in Rajeev Bansal case referred to supra are to be excluded.

24. As per the Third Proviso to Section 149 of the Act, (later renumbered as Fifth Proviso vide Finance Act No.8 of 2023 with effect from 01.04.2023), the said period stands excluded. For the sake of clarity, Section 148A(d) and Third Proviso to Section 149 of the Act is reproduced below:-

Section 148A(d)

Third Proviso to Section 149

The Assessing Officer shall, before issuing any notice under Section 148,-
(a) …
(b)…
(c) …
(d) decide, on the basis of material available on record including reply of the assessee, whether or not it is a fit case to issue a notice under section 148, by passing an order, with the prior approval of specified authority, within one month from the end of the month in which the reply referred to in clause (c) is received by him, or where no such reply is furnished, within one month from the end of the month in which time or extended time allowed to furnish a reply as per clause (b) expires:

(1) No notice under Section 148 shall be issued for the relevant assessment year,-
(a)….
(b)….
Provided that-
Provided further that-.
Provided also that for the purposes of computing the period of limitation as per this section, the time or extended time allowed to the assessee, as per show-cause notice issued under clause (b) of section 148A or the period during which the proceeding under section 148A is stayed by an order or injunction of any court, shall be excluded:*
Note – * Third Proviso

25. In the facts of the present case, a Notice dated 27.05.2022 under Section 148A(b) of the Act was issued to the Petitioner in terms of the decision of the Hon’ble Supreme Court in Ashish Agarwal case referred to supra. The Petitioner should have replied to it within two weeks thereof i.e., on or before 10.06.2022.

26. An Order under Section 148A(d) of the Act had to be passed within one month from the end of the month in which the Reply referred to in Clause (c) is received by the Assessing Officer or Assessing Authority. Since no such Reply was furnished by the Petitioner to the said Notice dated 27.05.2022, an Order had to be passed under Section 148A(d) of the Act, within one month from the end of the month in which time or extended time allowed to furnish a Reply expired. In this case, such time would have expired on 31.07.2022.

27. The said Section 148 Notice dated 28.07.2022 was to be issued with the prior approval of the specified authority under Section 151 of the Act.

28. Since Order under Section 148A(d) of the Act had to be passed by 31.07.2022, the Impugned Order which came to be passed on 28.07.2022 under Section 148A(d) of the Act in the absence of a Reply by the Petitioner and the Impugned Section 148 Notice dated 28.07.2022 are to be held to be in time.

29. Therefore, the so called concession will not apply to the facts of the present case, and the income chargeable to tax that is said to have escaped assessment for the Assessment Year 2015-2016 was Rs.27,06,46,000/- as per Section 148A(b) Notice dated 27.05.2022 as mentioned above.

30. That apart, under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Ordinance, 2020 and the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 and the Notifications issued therein and in view of the periodical extension of time given by the Hon’ble Supreme Court independently in Cognizance for Extension of Limitation, In re (SC)/Miscellaneous Application Nos. 21 and 29 of 2022 in Miscellaneous Application No.665 of 2021 dated 10.01.2022, it cannot be said the proceedings are barred.

31. Similar issues have came before this Court on several occasions and several orders have been passed wherein it has been clearly clarified that the so called concession recorded in Paragraph No.19 from the decision of the Hon’ble Supreme Court in Rajeev Bansal case referred to supra was indeed not concessional.

32. That apart, the issue has been answered by this Court in all these cases:-

D.Tamilselvi v. The Income Tax Officer, Virudhunagar in W.P.(MD)No.30938 of 2024 etc., batch vide order dated 15.09.2025.

Mrs. Thulasidass Prabavathi v. ITO [2026] 486 ITR 270 (Madras)/W.P.No.19010 of 2022 vide order dated 24.01.2025.

Kandasamy Veluswamy v. Asstt. CIT (Madras)/W.P.No.26533 of 2022 vide order dated 28.11.2025.

Ravi Constructions v. Asstt. CIT [W.P. No.11606 of 2023, dated 23.02.2026].

Exemplarr Worldwide Ltd. v. CBDT [W.P. No.15322 of 2023, dated 20.04.2026].

S. Palani v. Addl./Jt./Dy./Asstt. CIT/ITO, NFAC, Delhi (Madras)/W.P.No.15325 of 2023 vide order dated 20.04.2026.

33. The ratio of these cases will apply to the facts of the present case. The Impugned Order is dated 28.07.2022. It was passed under Section 148A(d) of the Act as it stood in force with effect from 01.04.2021. Similarly, the Notice dated 28.07.2022 was issued under Section 148 of the Act as it stood during the aforesaid period for the Assessment Year 2015-2016.

34. Therefore, this Writ Petition is liable to be dismissed. The Respondents are therefore directed to complete the assessment. Needless to state, the Petitioner shall be entitled to participate in the proceedings in accordance with law in the aforesaid assessment proceedings.

35. The Respondents shall pass appropriate orders on merits as expeditiously as possible once the Petitioner files the Reply. Since the Web Portal would have been closed, the Petitioner is directed to keep the Reply ready and file it before the 1^st Respondent within a period of 30 days from the date of receipt of a copy of this order. Thereafter, the Respondents or any other jurisdictional Assessing Officer or Assessing Authority, may pass appropriate orders after hearing the Petitioner.

36. This Writ Petition is dismissed with the above liberty. No costs. Connected Writ Miscellaneous Petition is closed.