Section 148 Income Tax Act | Reassessment Notices Issued Beyond TOLA Limitation Period Void: ITAT Agra Quashes Rs. 23 Crore Additions

The Income Tax Appellate Tribunal (ITAT), Agra Bench, has delivered a significant ruling on the validity of reassessment notices issued under Section 148 of the Income Tax Act, 1961 beyond the limitation period prescribed by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA). The Tribunal quashed reassessment proceedings in four appeals, holding that notices issued after 21.06.2022 were time-barred, thereby invalidating additions aggregating Rs. 23,12,87,600 across assessment years 2014-15 to 2017-18.

Background & Facts

The Dispute

The appellant, M/s. Friends Co-op. Housing Society Ltd., challenged reassessment notices issued by the Assessing Officer (AO) under Section 148 for assessment years (A.Y.) 2014-15, 2015-16, 2016-17, and 2017-18. The AO had made additions ranging from Rs. 1,28,65,000 to Rs. 9,06,60,400 on account of alleged income from capital gains, which were upheld ex parte by the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC).

Key Facts

• The appellant is a cooperative housing society registered under the PAN: AAAAF3339A.
• Reassessment notices were issued for A.Y. 2014-15 to 2017-18, alleging escapement of income from capital gains.
• The appellant contended that the notices were issued beyond the limitation period prescribed under TOLA and the Finance Act, 2021, relying on the Supreme Court’s decision in Union of India and ors. Vs. Rajeev Bansal (CIVIL Appeal No. 8629 of 2024).
• The AO’s assessment orders, dated 26.05.2023, confirmed additions totaling Rs. 23,12,87,600.

Procedural History

The timeline of key events for A.Y. 2014-15 (representative of all appeals) is as follows:

• 31.03.2021: Last date to issue notice under Section 148 as per old law (6 years from end of relevant A.Y.).
• 30.06.2021: Extended deadline under TOLA for issuing notices.
• 04.05.2022: Supreme Court’s order in Ashish Agarwal ((2023) 1 SCC 617) deemed notices under old law as show-cause notices under Section 148A(b) of the new law.
• 30.05.2022: Deadline for AO to provide material/information to the assessee.
• 14.06.2022: Deadline for assessee to file reply (two weeks from 30.05.2022).
• 21.06.2022: Last date to issue notice under Section 148 as per Section 149 read with TOLA and Rajeev Bansal.
• 26.07.2022: Notice under Section 148 issued (beyond limitation period).
• 26.05.2023: Assessment order passed confirming additions.
• 10.02.2026: NFAC dismissed assessee’s appeal ex parte.
• 23.04.2026: ITAT hearing held.
• 29.04.2026: ITAT pronounced order allowing appeals.

Positions Before the Tribunal

• For the Appellant: Argued that notices issued after 30.06.2021 were time-barred under Rajeev Bansal. Relied on tabulated compliance timelines and precedents such as Assam Entrade Limited v. DCIT (ITA No. 2222/Kol/2025), Deepak Steel and Power Ltd. v. CBDT ((2025) 174 taxmann.com 144 (SC)), and Kum Kum Kohli v. ACIT ((2026) 182 taxmann.com 344 (Delhi-HC)).
• For the Respondent: Supported the ex parte order of the NFAC, contending that the reassessment proceedings were valid.

Relief Sought

The appellant sought:

• Quashing of reassessment notices issued under Section 148 for all four assessment years.
• Setting aside of the NFAC’s orders dated 10.02.2026.
• Quashing of the additions made in the assessment orders dated 26.05.2023.

The Legal Issue

The central question was whether reassessment notices issued under Section 148 of the Income Tax Act, 1961 beyond the limitation period prescribed by TOLA and the Finance Act, 2021, as interpreted by the Supreme Court in Rajeev Bansal, were valid in law.

Arguments Presented

For the Appellant

• The notices issued on 26.07.2022 (A.Y. 2014-15, 2015-16) and 30.07.2022 (A.Y. 2016-17, 2017-18) were beyond the limitation period of 21.06.2022 as per Rajeev Bansal.
• Relied on the Supreme Court’s holding in Rajeev Bansal that TOLA extends the limitation period only up to 30.06.2021 for notices issued under the old law, and any notices issued thereafter must comply with the new regime’s timelines.
• Submitted that the AO failed to adhere to the procedural safeguards laid down in Ashish Agarwal, including the supply of material and allowance of reasonable time for reply.

For the Respondent

• Contended that the reassessment proceedings were initiated within the extended period under TOLA.
• Argued that the AO’s actions were in compliance with the Supreme Court’s directions in Ashish Agarwal.

The Court's Analysis

The ITAT meticulously analyzed the limitation period for reassessment notices under Section 148 in light of TOLA and the Supreme Court’s decisions in Rajeev Bansal and Ashish Agarwal. Key observations include:

1. Applicability of TOLA: The Tribunal noted that TOLA applies to actions or proceedings under the Income Tax Act that fell due between 20.03.2020 and 31.03.2021. The first proviso to Section 149 does not bar the application of TOLA, and Section 3 of TOLA extends the limitation period for issuing notices under Section 148.

2. Limitation Period for A.Y. 2014-15:

   • Under the old law, the last date to issue notice was 31.03.2021 (6 years from the end of A.Y. 2014-15).
   • TOLA extended this deadline to 30.06.2021.
   • The Supreme Court’s order in Ashish Agarwal (04.05.2022) deemed notices issued under the old law as show-cause notices under Section 148A(b) of the new law.
   • The AO was required to provide material by 30.05.2022, and the assessee was to reply by 14.06.2022.
   • The fourth proviso to Section 149(1) granted an additional 7 days, making the last date for issuing notice 21.06.2022.
   • The notice issued on 26.07.2022 was thus beyond the limitation period and invalid.

3. Revenue’s Concession for A.Y. 2015-16:

   • The Tribunal noted that in Rajeev Bansal, the Revenue conceded that for A.Y. 2015-16, all notices issued on or after 01.04.2021 would be time-barred as they could not be completed within the period prescribed under TOLA.

4. Precedents Relied Upon:

   • The Tribunal referred to Assam Entrade Limited v. DCIT (ITA No. 2222/Kol/2025), where the Kolkata Bench of ITAT applied Rajeev Bansal to quash reassessment notices.
   • Also relied on Deepak Steel and Power Ltd. v. CBDT ((2025) 174 taxmann.com 144 (SC)) and Kum Kum Kohli v. ACIT ((2026) 182 taxmann.com 344 (Delhi-HC)), which followed Rajeev Bansal.

"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 the Apex Court in Union of India v. Ashish Agarwal, and the period of two weeks allowed to the assesses to respond to the show cause notices. Accordingly, the assessing officer was required to issue the reassessment notice u/s. 148 of the new regime within the time limit surviving under the Act r/w TOLA and all the notices issued beyond the surviving period shall be time barred."

The Verdict

The ITAT allowed all four appeals (ITA No. 165/Agr/2026, ITA No. 166/Agr/2026, ITA No. 167/Agr/2026, and ITA No. 168/Agr/2026), holding that:

• The reassessment notices issued under Section 148 on 26.07.2022 (A.Y. 2014-15, 2015-16) and 30.07.2022 (A.Y. 2016-17, 2017-18) were invalid as they were issued beyond the limitation period of 21.06.2022.
• The consequent reassessment proceedings, including the additions of Rs. 1,28,65,000 (A.Y. 2014-15), Rs. 7,32,45,200 (A.Y. 2015-16), Rs. 9,06,60,400 (A.Y. 2016-17), and Rs. 5,45,17,000 (A.Y. 2017-18), were quashed.
• The appeals were allowed, and other grounds raised were left open.

What This Means For Similar Cases

Strict Adherence to Limitation Periods Under TOLA

The judgment reinforces that reassessment notices issued beyond the limitation period prescribed by TOLA and the Finance Act, 2021 are invalid. Practitioners must:

• Verify the last date for issuing notices under Section 148 for each assessment year, considering the extended deadlines under TOLA.
• Ensure compliance with procedural timelines, including the supply of material and allowance of reasonable time for reply, as directed in Ashish Agarwal.

Revenue’s Burden to Comply with Supreme Court Directives

The Tribunal’s reliance on Rajeev Bansal underscores that the Revenue cannot unilaterally extend the limitation period. Key takeaways:

• The Revenue’s concession in Rajeev Bansal for A.Y. 2015-16 sets a precedent that notices issued beyond 30.06.2021 may be time-barred.
• Assessing Officers must adhere to the Supreme Court’s directions in Ashish Agarwal, failing which reassessment proceedings will be quashed.

Precedential Value for Pending Appeals

• Assessees with pending appeals involving reassessment notices issued beyond 21.06.2022 can rely on this judgment to challenge the validity of such notices.
• Tribunals and High Courts are likely to follow the ITAT Agra’s reasoning, particularly in cases where the AO failed to comply with procedural safeguards under Ashish Agarwal and Rajeev Bansal.