Reassessment Notice Issued Beyond Statutory Limitation Under

Reassessment Notice Issued Beyond Statutory Limitation Under First Proviso to Section 149 Is Time-Barred

Issue

Whether a reassessment notice issued under Section 148 on July 30, 2022 for Assessment Year 2015-16 is barred by limitation under the first proviso to Section 149, rendering the subsequent reassessment order legally unsustainable.

Facts

Original Return & Scrutiny: The assessee filed its return of income for AY 2015-16 on May 29, 2015, and the original assessment under Section 143(3) was completed accepting the returned income on December 21, 2017.
Initial Reassessment Attempt: Reassessment proceedings were initially initiated by issuing a notice under Section 148 on June 30, 2021.
Ashish Agarwal Mechanics: Following the Supreme Court judgment in Union of India v. Ashish Agarwal, proceedings were modified and conducted under Section 148A.
Order & Reassessment Notice: The Assessing Officer passed an order under Section 148A(d) on July 30, 2022, and issued a fresh notice under Section 148 on the same day.
Completion of Reassessment: The Assessing Officer finalized the reassessment under Section 147 read with Section 144B on May 30, 2023, making a disallowance addition under Section 40(a)(ia).

Decision

Barred by Limitation: The Section 148 notice issued on July 30, 2022 for Assessment Year 2015-16 is barred by limitation under the first proviso to Section 149 of the Income-tax Act, 1961.
Exclusions Inapplicable: Exclusion periods under the fifth and sixth provisos to Section 149 and interim procedural modifications under Section 148A cannot revive an assessment year that has crossed the statutory time limit under the first proviso.
Quashing of Order: Consequently, the reassessment order passed under Section 147 read with Section 144B dated May 30, 2023, is legally invalid and quashed in favor of the assessee.

Key Takeaways

Strict Application of First Proviso: A notice under Section 148 cannot be issued for an assessment year if it has become time-barred under the unamended or primary limitation rules applicable under the first proviso to Section 149.
Procedural Safeguards via Ashish Agarwal: Compliance with Section 148A procedural steps following the Supreme Court’s directives does not automatically extend or grant an exemption from the outer statutory limitation period under Section 149.
Quashing of Time-Barred Reassessments: Any assessment finalized pursuant to an invalid or time-barred Section 148 notice is jurisdictionally defective and subject to total deletion.

IN THE ITAT BANGALORE BENCH ‘B’

NAG Projects (P.) Ltd.

Deputy Commissioner of Income-tax

Keshav Dubey, Judicial Member
and BALAKRISHNAN S., Accountant Member

IT Appeal No. 2142 (Bang) of 2025
[Assessment year 2015-16]

SEPTEMBER 28, 2026

B.S. Balachandran, AR for the Appellant. Pradeep S., Addl. CIT DR for the Respondent.

ORDER

Keshav Dubey, Judicial Member. – This appeal at the instance of the assessee is directed against the order of the ld. CIT(A)/NFAC dated 22.07.2025 vide DIN & Order No. ITBA/NFAC/S/250/2025-26/1078772369(1) passed u/s 250 of the Income Tax Act, 1961 (in short “the Act”) for the assessment year 2015-16.

2. The assessee has raised the following grounds of appeal:-

3. The assessee has also filed a petition dated 09.09.2025 for the admission of additional grounds of appeal, which is reproduced below for ease of reference & convenience:

4. We have heard both the parties on admission of additional grounds. The Lucknow bench of the Hon’ble Allahabad High Court in the case of CIT v. Sahara India [2012] 347 ITR 331 (Allahabad) held that a legal issue can be raised at any stage but there shall be good reason for admitting the additional ground. In our Opinion all the facts are already on record and there is no necessity of investigation of any fresh facts for the purpose of the adjudication of above grounds. Further, we are also of the opinion that the additional grounds raised in the present case are purely legal in nature & therefore these are critical for a fair adjudication of the matter. The Hon’ble Madras High Court in the case of CIT v. Indian Bank (Madras) held that Rule 11 of the I.T. Rules makes it clear that the assessee has the right to raise additional grounds and if the same is beneficial to the assessee, the same should be considered by the Tribunal.

4.1 Further, the Hon’ble Karnataka High Court in the case of Gundathur Thimmappa & Sons v. CIT [1968] 70 ITR 70 (Mysore) held that when the point raised by the assessee is a point which went to the root of the matter and affected not merely his liability to pay tax but also jurisdiction of the Tribunals and Authorities themselves to subject the amount concerned to tax, the Appellate Tribunal had the discretion to permit point of law to be raised for the first time in appeal because the question went to the root of the case. The Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd. v. CIT 229 ITR 383 (SC) held that undoubtedly, the Tribunal will have the discretion to allow or not allow a new ground to be raised. But where the Tribunal is only required to consider a question of law arising from the facts which are on record in the assessment proceedings, we fail to see why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee. Accordingly, we are inclined to admit the additional legal grounds for the purpose of adjudication as there was no investigation of any fresh facts otherwise on record and these are critical for a fair adjudication of the matter.

5. Now having admitted the additional grounds raised by the assessee, we first proceed to adjudicate the second additional legal ground raised with regard to the reassessment proceedings initiated by the AO u/s 148 of the Act vide notice dated 30.07.2022 for the A.Y.2015-16 to be barred by limitation. Undisputedly, the AO had passed the assessment order u/s 143(3) of the Act on 21.12.2017 by accepting the returned income of the assessee. Subsequently, a show cause notice u/s 148A(b) of the Act was issued to the assessee. In response, the assessee submitted its reply to the notices. After considering the facts of the case and the explanation offered by the assessee company, an order under clause-(d) of section 148A of the Act was passed on 30.07.2022. Thereafter, the AO on the same day i.e., on 30.07.2022 had also issued notice u/s 148 of the Act after obtaining the prior approval of Pr. Chief Commissioner of Income Tax, Karnataka and Goa region accorded on 30.07.2022 vide reference no. F.No.275/Pr.CCIT/Tech/2022-23 and directed the assessee company to furnish a return of income for the A.Y.2015-16 within 30 days from the date of service of the notice. Thereafter, the AO completed the reassessment proceeding u/s 147 r.w.s 144B of the Act on 30.05.2023 by adding Rs.3,32,87,214/- as deemed income u/s 40(a)(i)(a) of the Act and assessed on a total income of Rs.3,95,12,094/-. Now before us, the AR of the assessee is contending that the notice issued u/s 148 of the Act on 30.07.2022 for the A.Y.2015-16 is barred by limitation in view of 1^st Proviso to Section 149(1) of the Act and accordingly, subsequent proceedings including the reassessment order passed on 30.05.2023 are non-est and void ab initio and liable to be quashed.

6. The ld. DR on the other hand vehemently supported the orders of the lower authorities and vehemently submitted that in terms of 5^th and 6^th Provisos to section 149(1) of the Act, the order u/s 148A(d) of the Act as well as notice issued u/s 148 of the Act both dated 30.07.2022 were well within the prescribed timeline. Further, the ld. DR submitted that initially the notice u/s 148 was issued on 30.06.2021 which was well before 31.03.2022 and subsequently by following the ruling of the Hon’ble Supreme Court in the case of Union of India v. Ashish Agarwal, the fresh notice dated 30.07.2022 u/s 148 of the Act was issued pursuant to passing order u/s 148A(d) of the Act and accordingly, the notice issued u/s 148 of the Act dated 30.07.2022 was well within the time.

7. We have heard the rival submissions and perused the material available on record. Undisputedly, the present case relates to AY.Y.2015-16. It is an undisputed fact that initially the notice u/s 148 of the Act was issued on 30.06.2021 and thereafter by following the judgement of the Apex Court in the case of Union of India v. Ashish Agarwal, a show cause notice u/s 148A(b) of the Act was issued and accordingly order u/s 148A(d) of the Act was passed on 30.07.2022. Thereafter, the notice u/s 148 of the Act was also issued for the A.Y.2015-16 on the same day i.e., on 30.07.2022. It is also an undisputed fact that the last date for issuing the notice u/s 148 of the Act under the erstwhile section 149(1)(b) of the Act for the A.Y.2015-16 was 31.03.2022 (six years from the end of the assessment year). Thus, the core issue revolves around whether the issuance of notice u/s 148 of the Act on 30.07.2022 for the A.Y.2015-16 falls within the permissible time limit or not? In a similar facts and circumstances and for the same A.Y.2015-16, the coordinate bench of this tribunal in the case of Abbur Subramanyam Venkata Kumar in IT(IT)A No.664/Bang/2025 vide order dated 30.03.2026 has held as under:-

“7. We have heard the rival submission and perused the material available on record. Undisputedly, the present case relates to AY 2015-16. It is also an undisputed fact that the notice u/s. 148A(b) of the Act was issued on 25/03/2022 and accordingly the order u/s. 148A(d) of the Act was passed on 08/04/2022. Thereafter, the notice u/s. 148 of the Act was issued for the AY 2015-16 on the same day i.e. on 08/04/2022. It is also an undisputed fact that the last date for issuing the notice u/s 148 of the Act under the erstwhile section 149(1)(b) of the Act for the AY 2015-16 was 31/03/2022 (6 years from the end of the assessment year). Now, it is apposite here to note down the chronological date of event for a better appreciation of fact which are detailed below-

Particulars	Date	Paper Book reference
Last date for issuing notice u/s. 148 under erstwhile section 149(1)(b) for AY 2015-16 (6 years from end of AY)	31/03/2022	NA
Issuance of Show cause notice u/s. 148A(b)	25/03/2022	6
Due Date/time provided to respond to the show cause notice issued u/s. 148A(b) as cited in the Notice u/s. 148A(b)	01/04/2022	6
Date of response by the Assessee	Not Filed
Approval by Specified Authority- PCCIT (IT), Delhi as cited in the order u/s. 148A(d)	08/04/2022	13
Date of Order u/s. 148A(d)	08/04/2022	10
Issuance of Notice u/s. 148	08/04/2022	15

Thus, the core issue revolves around whether the issuance of the notice undersection 148 of the Act on April 08, 2022, for AY 2015-16, falls within the permissible time limits or not?

7.1 Before proceeding further, it is apposite here to mention the relevant provisions of the Act as it stood then which are as follows-

Time limit for notice.

149. (1) No notice under section 148 shall be issued for the relevant assessment year,-

(a)

if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b);

(b)

if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing officer has in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more for that year:

Provided that no notice under section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 1^st day of April, 2021, if such notice could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause(b) of sub-section (1) of this section,as they stood immediately before the commencement of the Finance Act, 2021:

Provided further that the provisions of this sub-section shall not apply in case, where a notice under section 153A, or section 153C read with section 153A, is required to be issued in relation to a search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A, on or before the 31^st day of March, 2021:

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:

Provided also that where immediately after the exclusion of the period referred to in the immediately preceding proviso, the period of limitation available to the Assessing Officer for passing an order under clause (d) of section 148A is less than seven days, such remaining period shall be extended to seven days and the period of limitation under this sub-section shall be deemed to be extended accordingly.

Explanation. – For the purposes of clause (b) of this sub-section, “asset” shall include immovable property, being land or building or both, shares and securities, loans and advances, deposits in bank account.

7.2 On going through the above provisions, we take note of the fact that for the AY 2015-16, the old 6 years’ time limit expired on March 31, 2022. Therefore, the notices issued between 01/04/2021 and 31/03/2022, for escaped income of Rs. 50lakhs or more, could be valid if section 148A procedures were followed and the notice was not time-barred under the old law as of 31/03/2021. However, the notices issued after 31/03/2022, would generally be invalid as they would have become time-barred under the old law, failing the test of the first proviso to section 149(1) of the Act. Thus, the validity of the notice issued u/s 148 of the Act on April 08, 2022, for AY 2015-16, is primarily governed by the first proviso to the substituted Section 149(1) of the Act. This proviso stipulates that no notice under Section 148 shall be issued for an assessment year beginning on or before April 1, 2021, if such notice could not have been issued under the time limits of the old regime (pre-Finance Act, 2021). It is an undisputed fact that for AY 2015-16, the last date for issuing a notice under the old regime was March 31, 2022. Since the notice was issued on April 08, 2022, it was issued after this cut-off date, rendering it time-barred under the old law. Consequently, the firstproviso to the amended Section 149(1) acts as a bar, making the notice invalid, irrespective of the procedural compliance with Section 148A of the Act. We are also of the opinion that the exclusion of time under the 3^rd& 4^thprovisos to Section 149(1) of the Act for Section 148A proceedings does not revive a notice that was already time-barred under the old regime as per the first proviso. We are of the considered opinion that the extended time limits of the new regime do not apply at all if the old limitation period had already expired as on 31/03/2022 & therefore the exclusions under the 3^rd& 4^thprovisos to Section 149(1) of the Act do not arise at all. Thus, under the unamended Section 149(1)(b) of the Act, a notice under Section 148 of the Act could generally be issued within six years from the end of the relevant assessment year, provided the income escaping assessment amounted to or was likely to amount to one lakh rupees or more. Therefore, the last date for issuing a notice for AY 2015-16 under the old regime was March 31, 2022. Thus, the first proviso to amended section 149(1) acts as a statutory bar, preventing the issuance of a notice under Section 148 for an assessment year like AY 2015-16 (which began on or before April 1, 2021) if such notice could not have been issued under the time limits of the old law. In the present case as the notice in question was issued on April 08, 2022, which is after March 31, 2022 and therefore the condition precedent for issuing a notice for AY 2015-16 under the new regime, as laid down by the first proviso to Section 149(1), is not met. The notice, having been issued after the expiry of the time limit under the old law, is therefore invalid.

7.3 The Hon’ble Supreme Court in the case of Union of India and others v. Rajeev Bansal reported in (2024) 469 ITR 46 meticulously analyzed the first proviso to Section 149(1)(b) of the new regime. The relevant paragraphs are reproduced below-

“45. The first proviso to Section 149(1)(b) provides thus:

“149. (1) No notice under section 148 shall be issued for the relevant assessment year, –

(a) If three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b);

(b) If three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in possession of books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more for that year:

Provided that no notice under section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April 2021, if such notice could not have been issued at that time on account of being immediately beyond the time limit specified under the provisions of clause (b) of sub-section (1) of this section, as they stood immediately before the commencement of the Finance Act, 2021:”

[Emphasis supplied]

46. The ingredients of the proviso could be broken down for analysis as follows: (i) no notice under section 148 of the new regime can be issued at any time for an assessment year beginning on or before 1 April 2021; (ii) if it is barred at the time when the notice is sought to be issued because of the “time limits specified under the provisions of” 149(1)(b) of the old regime. Thus, a notice could be issued under section 148 of the new regime for assessment year 2021-2022 and before only if the time limit for issuance of such notice continued to exist under section 149(1)(b) of the old regime.

47. In CTO v. Biswanath Jhunjhunwalla (SC)/[1996] 5 SCC 626 the Bengal Sales Tax Rules 1941 empowered the Commissioner to revise any assessment within four years from the date of assessment. Subsequently, the State Government issued a notification following the law to extend the time limit from four years to six years from the date of assessment. The extension of the time limit was challenged by the respondents on the ground that the assessments which had attained finality because of the expiry of the period of four years could not be reassessed. This Court observed that it was the clear intention of the notification to permit the Commissioner to revise any assessment made or order passed, provided the assessment had not been made before six years. It was held that if the legislative intention is clear and the language is unambiguous, full effect must be given to the legislative intention by reading the notification as applying not only to the incomplete assessments but also to assessments that had reached finality because of lapse of the earlier prescribed period. The principle that emanates from Biswanath Jhunjhunwalla (supra) is that the courts should give full effect to the legislative intention of granting reassessment powers to assessing officers unless the legislature, by express provision, states otherwise.

48. Notices have to be judged according to the law existing on the date the notice is issued. Section 149 of the old regime primarily provided two time limits: (i) four years for all situations and (ii) beyond four years and within six years if the income chargeable to tax which escaped assessment amounted to Rupees one lakh or more. After 1 April 2021, the time limits prescribed under the new regime came into force. The ordinary time limit of four years was reduced to three years. Therefore, in all situations, reassessment notices could be issued under the new regime if not more than three years have elapsed from the end of the relevant assessment year. For example, for assessment year 2018-2019, the four year period would have expired on 31 March 2023 under the old regime. However, if the notice is issued after 1 April 2021, the three year time limit prescribed under the new regime will be applicable. The three year time limit will expire on 31 March 2022.

49. The first proviso to Section 149(1)(b) requires the determination of whether the time limit prescribed under section 149(1)(b) of the old regime continues to exist for the assessment year 2021-2022 and before. Resultantly, a notice under Section 148 of the new regime cannot be issued if the period of six years from the end of the relevant assessment year has expired at the time of issuance of the notice. This also ensures that the new time limit of ten years prescribed under section 149(1)(b) of the new regime applies prospectively. For example, for the assessment year 2012-2013, the ten year period would have expired on 31 March 2023, while the six year period expired on 31 March 2019. Without the proviso to Section 149(1)(b) of the new regime, the Revenue could have had the power to reopen assessments for the year 2012-2013 if the escaped assessment amounted to Rupees fifty lakhs or more. The proviso limits the retrospective operation of Section 149(1)(b) to protect the interests of the assesses.

50. Another important change under section 149(1)(b) of the new regime is the increase in the monetary threshold from Rupees one lakh to Rupees fifty lakhs. The old regime prescribed a time limit of six years from the end of the relevant assessment year if the income chargeable to tax which escaped assessment was more than Rupees one lakh. In comparison, the new regime increases the time limit to ten years if the escaped assessment amounts to more than Rupees fifty lakhs. This change could be summarized thus:

Regime	Time limit	Income chargeable to tax which has escaped assessment
Old regime	Four years but not more than six years	Rupees one lakh or more
New regime	Three years but not more than ten years	Rupees fifty lakhs or more

51. Given Section 149(1)(b) of the new regime, reassessment notices could be issued after three years only if the income chargeable to tax which escaped assessment is more than Rupees fifty lakhs. The proviso to Section 149(1)(b) limits the retrospectivity of that provision with respect to the time limits specified under section 149(1)(b) of the old regime.

52. In Ashish Agarwal (supra), this Court held that the benefit of the new regime must be provided for the reassessment conducted for the past periods. The increase of the monetary threshold from Rupees one lakh to Rupees fifty lakh is beneficial for the assesses. Mr Venkataraman has also conceded on behalf of the Revenue that all notices issued under the new regime by invoking the six year time limit prescribed under section 149(1)(b) of the old regime will have to be dropped if the income chargeable to tax which has escaped assessment is less than Rupees fifty lakhs.

53. The position of law which can be derived based on the above discussion may be summarized thus: (i) Section 149(1) of the new regime is not prospective. It also applies to past assessment years; (ii) The time limit of four years is now reduced to three years for all situations. The Revenue can issue notices under section 148 of the new regime only if three years or less have elapsed from the end of the relevant assessment year; (iii) the proviso to Section 149(1)(b) of the new regime stipulates that the Revenue can issue reassessment notices for past assessment years only if the time limit survives according to Section 149(1)(b) of the old regime, that is, six years from the end of the relevant assessment year; and (iv) all notices issued invoking the time limit under section 149(1)(b) of the old regime will have to be dropped if the income chargeable to tax which has escaped assessment is less than Rupees fifty lakhs.

ii. TOLA can extend the time limit till 31 June 2021

54. The proviso to Section 149(1)(b) of the new regime uses the expression “beyond the time limit specified under the provisions of clause (b) of sub section (1) of this section, as they stood immediately before the commencement of the Finance Act, 2021.” Thus, the proviso specifically refers to the time limits specified under section 149(1)(b) of the old regime………………..”

7.4 Thus, the Apex Court held that “no notice under section 148 of the new regime can be issued at any time for an assessment year beginning on or before 1 April 2021; if it is barred at the time when the notice is sought to be issued because of the ‘time limits specified under the provisions of’ 149(1)(b) of the old regime” (Para 46). This means that for AY 2015-16, a notice under the new Section 148 could only be issued if it was not time-barred under the old regime’s Section 149(1)(b) of the Act. Further, the Apex Court held that for the AY 2015-16, the six-year limitation period under the unamended Section 149(1)(b) expired on March 31, 2022 (six years from the end of the relevant assessment year, i.e., March 31, 2016). The Supreme Court explicitly stated that “a notice under Section 148 of the new regime cannot be issued if the period of six years from the end of the relevant assessment year has expired at the time of issuance of the notice” (Para 49).

7.5 Now coming to the contention of the Revenue that the AO had initiated the proceedings by issuing the notice under clause (b) of section 148A of the Act well before 31/03/2022 i.e. on 25/03/2022 and hence the subsequent order passed u/s 148A(d) of the Act and the notice issued u/s 148 of the Act both dated 08/04/2022 are well within the time. In this regard we are of the considered opinion that section 149 of the Act stipulates the time limit to issue the notice u/s 148 of the Act& not the issuing of the notice u/s 148A(b) of the Act. This time limit has nothing to do with the issuance of show cause notice u/s 148A(b) of the Act & passing of the order u/s 148A(d) of the Act unlike in section 151 of the Act which categorically prescribed the specified authority for sanction for issue of notice for the purposes of both section 148 as well as section 148A of the Act. We are of the opinion that provisions of section 148A proceedings are completely different withthat of the 148 proceedings. After the amendment in Finance Act, 2021, the proceedings u/s 148 of the Act can only be commenced after completion of 148A proceedings, however subject to certain exceptions. Before issue of the notice u/s 148 of the Act, the AO shall conduct an enquiry, provide an opportunity of being heard to the assessee by serving SCN and after considering the reply furnished if any, decide, on the basis of material available on record including the reply of the assessee whether or not it is a fit case to issue notice u/s 148 of the Act by passing an Order. Thus,section 148A of the Act is a complete code in itself. In the present case, the contention of the assessee is that the notice issued u/s 148 of the Act dated 08/04/2022 is barred by limitation as per the 1^st proviso to amended section 149(1) of the Act. Further section 149 of the Act stipulates the time limit for issue of the notice u/s 148 of the Act & therefore the contention of the Revenue that the proceedings initiated by the issuance of show cause notice u/s 148A(b) of the Act within the stipulated time period prior to the issue of notice u/s 148 is not at all tenable. The procedural compliance with Section 148A, while necessary, cannot validate a notice issued u/s 148 of the Act that is fundamentally flawed due to being issued beyond the statutory period of limitation.

7.6 Now coming to another contention of the Revenue that the notice under section 148A(b) of the Act was issued on 25/03/2022 by which assessee was asked to give response/ objection to the same within 01/04/2022. In response to the same, assessee did not file any objection. On a plain reading of 5^th proviso to Section 149, the time period of 7 days allowed to assessee to give response/ objection needs to be excluded. Further as per 6^th proviso a period of 7 days also need to be excluded. The assessing officer has passed the order u/s. 148A(d) on 08/04/2022 and issued the notice u/s. 148 on 08/04/2022, which very well falls within the limitation period. In this regard we are of the considered opinion that undisputedly the erstwhile third proviso to amended section 149(1) of the Act allows for the exclusion of the time taken for Section 148A proceedings. However, this exclusion is for computing the period of limitation as per section 149 of the Act. It does not override the first proviso to Section 149(1) of the Act, which acts as a threshold condition for the applicability of the new regime to old assessment years. If a notice was already time-barred under the old law, the exclusion of time under the 3^rd or 4^thprovisos cannot revive it. The exclusion cannot override the fundamental bar imposed by the first proviso to Section 149(1) of the Act. Asstated earlier the first proviso to amended section 149(1) acts as a statutory bar, preventing the issuance of a notice under Section 148 of the Act for the assessment year like AY 2015-16 (which began on or before April 1, 2021) if such notice could not have been issued under the time limits of the old law. We are of the considered opinion that first proviso to section 149(1) of the Act is a restriction & act as a gate keeper and the erstwhile 3^rd& 4^th Provisos (which allow for exclusion of time for certain events) cannot override this fundamental restriction. This means that even if there were delays due to assessee’s response or court stays, these exclusions cannot revive a notice that is already time-barred by the first proviso. In Assistant Commissioner of Income-tax v. Godrej Industries Ltd (Bombay), for AY 2014-15, the High Court held that the validity of a notice must be judged on the law existing on the date of issuance of the Section 148 notice. It emphasized that “the fifth proviso cannot apply in a case where the first proviso applies because, if a notice under section 148 could not be issued beyond the time period provided in the first proviso, then the fifth proviso could not save such notices” (Para 15). This means that if the notice is already time-barred under the old regime as per the first proviso, the exclusion of time for Section 148A proceedings under the 3rd proviso or 4^th provisos cannot revive it. Further, the Hon’ble Gujarat High Court in the case of Assistant Commissioner of Income-tax v. Devika Fibres (P.) Ltd. [2023] 153 (Gujarat) clearly stated that “the notice which could not have been issued in the old regime period due to becoming time barred as per then operating provision, would also not be permissible to be issued post 01-4-2021” (Para 5.4.6). Thus, the embargo of the six-year limitation under the old regime continues in the new regime for assessment years prior to 2021-22.

8. It is apposite here to mention that under the similar facts & circumstance & for the similar AY 2015-16, the Hon’ble Jurisdictional High Court of Karnataka in the case of Mohammed Yaseen v. Income Tax officer reported in (Karnataka) has held as under-

“5. As rightly contended by the learned counsel for the petitioner, the material on record discloses that the impugned proceedings is relating to the Assessment Year 2015-16 in respect of the petitioner; however, it is an undisputed fact that the respondents issued impugned notice at Annexure-A2 under Section 148 of the I.T. Act on 01.04.2022, beyond the period of limitation and the same has already been held not to be permissible by the Apex Court in Rajeev Bansal’s case (supra), which reads as under:-

“19(e). The Finance Act, ([2021]) 431 ITR (St.) 52) substituted the old regime for reassessment with a new regime. The first proviso to Section 149 does not expressly bar the application of Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. Section 3 of Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 applies to the entire Income-Tax Act, including Sections 149 and 151 of the new regime. Once the first proviso to Section 149(1)(b) is read with Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, then all the notices issued between April 1, 2021 and June 30, 2021 pertaining to assessment years 2013-14, 2014-15, 2015-16, 2016-17, and 2017-18 will be within the period of limitation as explained in the tabulation below:

Assessment year (1)	Within 3 years (2)	Expiry of limitation read with TOLA for (3)	Within six years (4)	Expiry of limitation read with TOLA for (4) (5)
2013-2014	31-3-2017	TOLA not applicable	31-3-2020	30-6-2021
2014-2015	31-3-2018	TOLA not applicable	31-3-2021	30-6-2021
2015-2016	31-3-2019	TOLA not applicable	31-3-2022	TOLA not applicable
2016-2017	31-3-2020	30-06-2021	31-3-2023	TOLA not applicable
2017-2018	31-3-2021	30-06-2021	31-3-2024	TOLA not applicable

19(f). The Revenue concedes that for the assessment year 2015-16, 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;

49. The first proviso to Section 149(1)(b) requires the determination of whether the time limit prescribed under Section 149(1)(b) of the old regime continues to exist for the assessment year 2021-22 and before. Resultantly, a notice under Section 148 of the new regime cannot be issued if the period of six years from the end of the relevant assessment year has expired at the time of issuance of the notice. This also ensures that the new time limit of ten-years prescribed under Section 149(1)(b) of the new regime applies prospectively. For example, for the assessment year 2012-13, the ten-year period would have expired on March 31, 2023, while the six-year period expired on March 31, 2019. Without the proviso to Section 149(1)(b) of the new regime, the Revenue could have had the power to reopen assessments for the year 2012-13 if the escaped assessment amounted to Rupees fifty lakhs or more. The proviso limits the retrospective operation of Section 149(1)(b) to protect the interests of the assesses.

6. Subsequently, in Nehal Ashit’s case (supra) also, the Apex Court reiterated the very same position and dismissed the appeal filed by the Revenue on the ground that the notice issued after 01.04.2022 was barred by limitation and the impugned proceedings are not permissible beyond period of limitation. In the instant case, it is an undisputed fact that the impugned proceedings is relating to the Assessment Year 2015-16, while the impugned notice under Section 148 of the Act dated 01.04.2022 was issued beyond/after 01.04.2021 which is impermissible in law and barred by limitation and consequently, the impugned orders/notices etc., deserve to be quashed.

7. In the result, I pass the following:-

‘ORDER

(i)

Petition is hereby allowed.

(ii)

The impugned orders/Notices at Annexures-A1, A2, B, C1, D1 and E1 dated 01.04.2022, 01.04.2022, 15.03.2022, 09.03.2022, 27.08.2024 and 27.08.2024 respectively and subsequent orders/notices issued by the 1^st respondent are hereby quashed.”

8.1 Further,the Hon’ble High Court of Karnataka in the case of Tarish Investment and Trading Company (P) Ltd v. Union of India reported in (Karnataka) has under the similar facts & circumstances but for the AY2017-18 also taken a similar view. The relevant paragraph of the said judgment is reproduced below-

“2. The petitioner in the subject petition calls in question an order passed by the 2^nd respondent under Section 148A(d) of the Income Tax Act and consequent notices so issued to the petitioner under section 148 of the Income Tax Act, 1961. The notice reads as follows:

“Notice under section 148 of the Income-tax Act, 1961

Sir/Madam/M/s.

1. I have the following information in your case or in the case of the person in respect of which you are assessable under the Income tax Act, 1961 (here in alter referred to as “the Act”) for Assessment Year 2017-18

• information in accordance with the risk management strategy formulated in this regard

suggesting that income chargeable to tax has escaped assessment within the meaning of section 147 of the Act. Order under sub-section (d) of section 148A of the Act has been passed in such case vide DIN ITBA/AST/F/148A/2024-25/1064704419(1) dated 07/05/2024 and annexed herewith for reference,

2. I, therefore, propose to assess or reassess such income or recompute the loss or the depreciation allowance or any other allowance or deduction for the Assessment Year 2017-18 and I, hereby, require you to furnish, within a period of three months from the end of month in which this notice is issued, a return in the prescribed form for the Assessment Year 2017-18.

Note:- Please note that any return of income, required to be furnished by you under this section and furnished beyond the period allowed shall not be deemed to be a return under section 139 of the Act. (Proviso 3 to Section 148)

NITHAN RAJ T.N.

CIRCLE 7(1)(1), BANGALORE”

3. The notice itself indicates that it is issued for the Assessment Year 2017-18 and is admittedly issued on 7.5.2024. Learned counsel appearing for the petitioner submits that the notice is barred by limitation, as the limitation prescribed under Section 148 is for a period of six years from the date of end of the Financial Year of the Assessment Year. Admittedly, Financial Year of Assessment Year, 2017-18 comes to an end on 31.03.2018 and the limitation would cap at 31.03.2024.

4. Learned counsel for the petitioner would submit that the issue in the lis stands covered by the three Judge Bench of the Apex Court in the case of UOI v. Rajeev Bansal 469 ITR 46 (SC), in which the Apex Court at Paras 49, 53 and 60 has held as follows:

“49. The first proviso to Section 149(1)(b) requires the determination of whether the time limit prescribed under section 149(1)(b) of the old regime continues to exist for the assessment year 2021-2022 and before. Resultantly, a notice under Section 148 of the new regime cannot be issued if the period of six years from the end of the relevant assessment year has expired at the time of issuance of the notice. This also ensures that the new time limit of ten years prescribed under Section 149(1)(b) of the new regime applies prospectively. For example, for the assessment year 2012-2013, the ten year period would have expired on March 31, 2023, while the six year period expired on March 31, 2019. Without the proviso to section 149(1)(b) of the new regime, the Revenue could have had the power to reopen assessments for the year 2012-2013 if the escaped assessment amounted to rupees fifty lakhs or more. The proviso limits the retrospective operation of section 149(1)(b) to protect the interests of the assesses.

53. The position of law which can be derived based on the above discussion may be summarized thus: (i) Section 149(1) of the new regime is not prospective. It also applies to past assessment years; (ii) The time limit of four years is now reduced to three years for all situations. The Revenue can issue notices under Section 148 of the new regime only if three years or less have elapsed from the end of the relevant assessment year; (iii) the proviso to Section 149(1)(b) of the new regime stipulates that the Revenue can issue reassessment notices for past assessment years only if the time limit survives according to section 149(1)(b) of the old regime, that is, six years from the end of the relevant assessment year; and (iv) all notices issued invoking the time limit under section 149(1)(b) of the old regime will have to be dropped if the income chargeable to tax which has escaped assessment is less than rupees fifty lakhs.

ii. Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 can extend the time limit till June 31, 2021

60. The above principles can be applied as follows to the factual situation in the present appeals: (i) The Finance Act, 2021 ([2021] 432 ITR (St.) 52) substituted Sections 147 to 151 of the Income Tax Act with effect from April 1, 2021; (ii) sections 147 to 151 of the old law ceased to operate from April 1, 2021; (iii) after April 1, 2021, any reference to the Income Tax Act means the Income Tax Act as amended by the Finance Act 2021; (iv) the time limits prescribed for issuing reassessment notices under section 149 operate retrospectively for three years for all situations and six years in case the escaped assessment amounts to or is likely to amount to more than rupees fifty lakhs.”

(Emphasis supplied)

5. The High Court of Delhi in two of the judgments has followed the said judgment of the Apex Court in Rajeev Bansal supra. In Sheetal International (P.) Ltd. v. Chief CIT (Delhi), it is held as under:

“1. Issue notice.

2. Learned counsel appearing for the respondents accepts notice.

3. The petitioner has filed the present petition, inter alia, impugning an order dated 01.05.2024 (hereafter the impugned order) issued under Section 148A(d) of the Income Tax Act, 1961 (hereafter the Act) for the assessment year (AY) 2017-18 as well as the notice dated 01.05.2024 issued under Section 148 of the Act.

4. The petitioner contends that the said notice was issued beyond the period of limitation as prescribed in first proviso to Section 149(1) of the Act.

5. The learned counsel appearing for the petitioner submits that the issue stands covered by the decision of this Court in Manju Somani v. Income Tax Officer 466 ITR 758 (Delhi): Neutral Citation: 2024:DHC:5411-DB.

6. It is also relevant to note that the Supreme Court in a recent decision of Union of India v. Rajeev Bansal: 2024 SCC OnLine SC 2693/ (SC) (SC) has observed as under:

“46. The ingredients of the proviso could be broken down for analysis as follows: (i) no notice under Section 148 of the new regime can be issued at any time for an assessment year beginning on or before 1 April 2021; (ii) if it is barred at the time when the notice is sought to be issued because of the “time limits specified under the provisions of” 149(1)(b) of the old regime. Thus, a notice could be issued under Section 148 of the new regime for assessment year 20212022 and before only if the time limit for issuance of such notice continued to exist under Section 149(1)(b) of the old regime.

**************

49. The first proviso to Section 149(1)(b) requires the determination of whether the time limit prescribed under Section 149(1)(b) of the old regime continues to exist for the assessment year 2021-2022 and before. Resultantly, a notice under Section 148 of the new regime cannot be issued if the period of six years from the end of the relevant assessment year has expired at the time of issuance of the notice. This also ensures that the new time limit of ten years prescribed under Section 149(1)(b) of the new regime applies prospectively. For example, for the assessment year 2012-2013, the ten year period would have expired on 31 March 2023, while the six year period expired on 31 March 2019. Without the proviso to Section 149(1)(b) of the new regime, the Revenue could have had the power to reopen assessments for the year 20122013 if the escaped assessment amounted to Rupees fifty lakhs or more. The proviso limits the retrospective operation of Section 149(1)(b) to protect the interests of the assesses.”

7. In view of the above, the present petition is allowed. The impugned order dated 01.05.2024 as well as the notice issued under Section 148 in respect of the AY 201718 are set aside.”

8.2 In view of the above discussions & respectfully following the decisions of the Hon’ble Apex Court as well as Jurisdictional High Court, we are of the considered opinion that the notice issued under Section 148 of the Income Tax Act, 1961, on April 08, 2022, for Assessment Year 2015-16, is invalid& barred by time. The first proviso to the substituted Section 149(1) acts as a statutory bar, as the six-year limitation period under the old regime for AY 2015-16 expired on March 31, 2022. The procedural compliance with Section 148A or the exclusion of time under the 3^rd or 4^th erstwhile provisos cannot override this fundamental jurisdictional defect of limitation. Since we have held the notice dated 08/04/2022 issued under section 148 of the Act to be barred by limitation & therefore the consequent order passed u/s 147 r.w.s 144C(13) of the Act dated 15/01/2025 deserve to be quashed. Further, since we have adjudicated the sole legal ground in favour of the assessee, the other grounds raised by the assessee becomes academic.”

8. Respectfully following the above decision of this coordinate bench of this Tribunal, we are inclined to held that the notice dated 30.07.2022 issued u/s 148 of the Act is barred by limitation and accordingly, the consequent reassessment order passed u/s 147 of the Act dated 30.05.2023 deserved to be quashed. Since we have adjudicated the sole legal ground in favour of the assessee, the other grounds raised by the assessee becomes academic.

9. In the result the appeal filed by the assessee is allowed.