The ITAT Ahmedabad has delivered a decisive ruling that invalidates reassessment notices issued beyond the statutory "surviving time" under the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020. This judgment reinforces the principle that procedural compliance in tax reassessments is not a mere formality but a jurisdictional precondition. The decision aligns with the Supreme Court’s binding interpretation in Union of India v. Rajeev Bansal and sets a clear benchmark for assessing the validity of notices issued during the transitional period under TOLA.
Background & Facts
The Dispute
The assessee, Shree Nakoda Texfab Pvt. Ltd., filed its return for Assessment Year 2017-18 declaring income of Rs. 69,32,730. The Assessing Officer reopened the assessment under Section 147 of the Income Tax Act, 1961, alleging that the assessee had availed accommodation entries worth Rs. 57,73,400 from entities linked to Shri Sanjay Tibrewal. The AO made an addition of Rs. 57,53,400 under Section 68 as unexplained cash credit.
Procedural History
The case progressed through multiple stages:
- 31-10-2017: Assessee filed original return
- 29-06-2021: Notice under Section 148 issued under the old regime, extended by TOLA
- 04-05-2022: Supreme Court judgment in Union of India v. Ashish Agrawal clarified that notices issued between 01-04-2021 and 30-06-2021 are deemed issued under Section 148A(b)
- 26-05-2022: Fresh information supplied to assessee as per Ashish Agrawal directions
- 13-06-2022: Assessee filed reply within the two-week window
- 29-07-2022: Reassessment notice under Section 148 issued under the new regime
- 02-09-2025: CIT(A) upheld the assessee’s appeal, deleting the addition
Relief Sought
The assessee challenged the validity of the Section 148 notice under Rule 27 of the ITAT Rules, arguing that the notice was issued beyond the "surviving time" prescribed by the Supreme Court in Rajeev Bansal. The Revenue appealed the CIT(A)’s order, while the assessee sought quashing of the entire reassessment proceedings.
The Legal Issue
The central question was whether a reassessment notice issued under Section 148 after 30-06-2021, pursuant to the Ashish Agrawal directions, remains valid if it exceeds the "surviving time" calculated from the original limitation period under the Income Tax Act read with TOLA.
Arguments Presented
For the Petitioner
The assessee relied on Union of India v. Rajeev Bansal (2024) 469 ITR 46 (SC) and Union of India v. Ashish Agrawal (2022) 444 ITR 1 (SC), arguing that the notice under Section 148 was issued on 29-07-2022, which was beyond the last permissible date of 21-06-2022. The assessee contended that the jurisdiction to reassess was extinguished once the surviving time lapsed, rendering the notice void ab initio. The jurisdictional defect, they argued, invalidated all subsequent proceedings.
For the Respondent
The Revenue initially contested the validity of the challenge but, during hearing, conceded that the notice was issued beyond the limitation period. The Sr. D.R. did not dispute the timeline presented by the assessee and acknowledged that the notice under Section 148 was issued after the expiry of the statutory window under Section 149 read with TOLA.
The Court's Analysis
The ITAT undertook a meticulous chronological analysis of the dates under the framework established by the Supreme Court in Rajeev Bansal. The Court noted that the original limitation period for reassessment for AY 2017-18 expired on 31-03-2024, but the extended period under TOLA ended on 30-06-2021. The notice issued on 29-06-2021 was deemed issued under Section 148A(b), triggering a two-week window for the assessee to respond. The information was supplied on 26-05-2022, and the reply was filed on 13-06-2022. The last date for issuing the reassessment notice under the new regime, as per the surviving time calculation, was 21-06-2022.
"All notices issued beyond the surviving period are time barred and liable to be set aside."
The Court emphasized that the Supreme Court’s ruling in Rajeev Bansal was not discretionary but mandatory. The notice issued on 29-07-2022 was 38 days beyond the permissible deadline. The Court held that the jurisdiction to reassess is not merely procedural but foundational. Once the time limit under Section 149 is exceeded, the Assessing Officer loses all authority to proceed. The Court further relied on the jurisdictional High Court’s decisions in Dhanraj Govindram Kella and Rakesh Rameshchandra Patel, both of which had quashed notices issued beyond the surviving time.
The Court concluded that the reassessment notice was invalid, and therefore, the entire reassessment proceedings were void ab initio. The addition under Section 68 could not be sustained, as it flowed from an illegal initiation of proceedings.
The Verdict
The assessee prevailed. The ITAT held that the Section 148 notice issued on 29-07-2022 was time-barred and invalid under the surviving time doctrine laid down in Rajeev Bansal. Consequently, the reassessment order was quashed, and the Revenue’s appeal was dismissed. The entire proceedings were declared void for want of jurisdiction.
What This Means For Similar Cases
Notice Validity Turns on Precise Date Calculation
- Practitioners must calculate the "surviving time" by subtracting the original limitation period from the TOLA extension window (20-03-2020 to 30-06-2021)
- The two-week response window under Ashish Agrawal must be added to the date of information supply, not the notice issuance date
- Any reassessment notice issued after the calculated "last permissible date" is void, regardless of the merits of the case
Jurisdictional Defects Cannot Be Curated
- A defective notice under Section 148 renders all subsequent proceedings null and void
- Even if the assessee has undisclosed income, the tax department cannot cure jurisdictional defects through substantive findings
- Rule 27 applications challenging notice validity must be raised at the earliest opportunity
Procedural Compliance Is Non-Negotiable
- The ITAT reaffirmed that Section 148 compliance is not a technicality but a jurisdictional condition
- Revenue authorities must maintain a digital log of all notice issuance, information supply, and reply dates
- Tax litigators should routinely verify the surviving time in every reassessment case involving AY 2017-18 to 2019-20
