Reassessment Notice u/s 148 for AY 2014-15 Quashed as Time-Barred Post-TOLA & Supreme Court’s Rajeev Bansal Ruling

Reassessment Notice u/s 148 for AY 2014-15 Quashed as Time-Barred Post-TOLA & Supreme Court’s Rajeev Bansal Ruling

Issue

Whether the notice under Section 148 issued on 22.07.2022 for the Assessment Year 2014-15, pursuant to the Supreme Court’s ruling in Ashish Agarwal, is barred by limitation considering the extended timelines under TOLA (Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act) and the recent Supreme Court judgment in Union of India v. Rajeev Bansal.

Facts

• Assessment Year: 2014-15.

• Original Notice: The Assessing Officer (AO) originally issued a notice under the old Section 148 on 22.06.2021 (uploaded on 30.06.2021).

• Legal Transition: This notice was deemed to be a show-cause notice under Section 148A(b) following the Supreme Court’s decision in Union of India v. Ashish Agarwal (444 ITR 1), which validated notices issued under the old regime (between 01.04.2021 and 30.06.2021) by treating them as show-cause notices under the new regime.

• Subsequent Events:

  • 26.05.2022: AO issued a letter/notice u/s 148A(b) providing information.

  • 10.06.2022: Assessee filed a reply.

  • 22.07.2022: AO passed an order u/s 148A(d) rejecting objections.

  • 22.07.2022: AO issued the consequential fresh notice u/s 148.

• Assessee’s Argument: The “surviving time limit” for issuing the notice u/s 148 expired on 18.06.2022 (calculated based on TOLA extensions and SC directions). Therefore, the notice issued on 22.07.2022 was time-barred.

Decision

• The Income Tax Appellate Tribunal (ITAT), Delhi Bench, allowed the assessee’s appeal and quashed the reassessment order.

• Reliance on SC’s Rajeev Bansal: The Tribunal applied the principles laid down in Union of India v. Rajeev Bansal (469 ITR 46), which clarified the calculation of the “surviving time limit” available to the AO.

• Limitation Calculation: The Tribunal noted that under TOLA, the limitation was extended to 30.06.2021. The Ashish Agarwal judgment stopped the clock on the date of the original notice (22.06.2021/30.06.2021). The clock started ticking again after the assessee filed their reply.

• Expired Timeline: Based on the calculations (similar to the illustration in Rajeev Bansal), the surviving time available to the AO to issue the fresh notice expired before 22.07.2022.

• Jurisdictional Precedent: The ITAT also followed the jurisdictional Delhi High Court’s ruling in Ram Balram Buildhome v. ITO and the coordinate bench decision in Tyagi Pipe Craft, which held similar notices to be time-barred.

• Outcome: The notice issued on 22.07.2022 was held to be barred by limitation, rendering the subsequent assessment void ab initio.

Key Takeaways

• Surviving Time Limit: The time available to an AO to issue a notice u/s 148 (post-Ashish Agarwal) is strictly limited to the balance days remaining from the original limitation period (as extended by TOLA), calculated from the date the assessee files their reply to the 148A(b) notice.

• Strict Compliance: If the AO fails to issue the notice within this specific “surviving window,” the proceedings are time-barred. There is no indefinite extension.

• Impact of Rajeev Bansal: This Supreme Court judgment is the definitive guide for calculating limitation in all TOLA-related reassessment cases (AY 2013-14 to 2017-18), often leading to the quashing of late notices.