The Income Tax Appellate Tribunal, Agra Bench, has delivered a decisive ruling clarifying the application of limitation under Section 148 of the Income-tax Act, 1961, following the Supreme Court’s interpretation in Union of India v. Rajeev Bansal. The Tribunal held that reassessment notices issued after the expiry of the extended limitation period, even under the new procedural regime introduced by the Finance Act, 2021, are void ab initio. This judgment reinforces the non-negotiable nature of statutory timelines in tax reassessment proceedings.
Background & Facts
The Dispute
The appeals concern reassessment proceedings initiated by the Income Tax Officer (ITO), Ward-1(1)(1), Agra, for Assessment Years (AY) 2013-14 and 2014-15. The assessee, Shri Kailash Gautam, challenged the validity of notices issued under Section 148 of the Income-tax Act, 1961, on the ground that they were barred by limitation. The dispute centers on whether the notice dated 30.07.2022, issued under the amended provisions of Section 148, was legally valid given the transitional framework established by the Finance Act, 2021, and the Supreme Court’s rulings in Union of India v. Ashish Agarwal and Union of India v. Rajeev Bansal.
Key Facts
- Original notice under Section 148 (old regime): Issued on 28.06.2021 for AY 2013-14
- Finance Act, 2021 came into force w.e.f. 01.04.2021, replacing the old Section 148 regime
- Notice under Section 148A(b): Issued on 24.05.2022 seeking information
- Due date for reply to Section 148A(b) notice: 07.06.2022
- Assessee’s reply filed: 10.06.2022
- Order under Section 148A(d): Passed on 30.07.2022
- Notice under Section 148 (new regime): Issued on 30.07.2022
- Assessment order under Section 147: Dated 16.05.2023 (for AY 2013-14) and 25.05.2023 (for AY 2014-15)
- Order of CIT(A): Dated 11.11.2025, upholding the reassessment
Procedural History
- 28.06.2021: Original notice under Section 148 issued under pre-amendment law
- 24.05.2022: Notice under Section 148A(b) issued
- 10.06.2022: Assessee filed reply
- 30.07.2022: Order under Section 148A(d) and fresh notice under Section 148 issued
- 16.05.2023 & 25.05.2023: Final assessment orders passed
- 11.11.2025: CIT(A) dismissed appeal
- 17.03.2026: Hearing before ITAT Agra
- 24.03.2026: Judgment pronounced
Relief Sought
The assessee sought quashing of the reassessment notices dated 30.07.2022, the order under Section 148A(d), and the final assessment orders for both AYs 2013-14 and 2014-15, on the ground that the notices were issued beyond the statutory limitation period.
The Legal Issue
The central question was whether a notice issued under Section 148 of the Income-tax Act on 30.07.2022, following the transitional framework established by the Finance Act, 2021 and the Supreme Court’s decision in Union of India v. Rajeev Bansal, was time-barred under Section 149(1) read with the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (TOLA).
Arguments Presented
For the Appellant
The assessee contended that the notice issued on 30.07.2022 was beyond the permissible limitation period. Reliance was placed on Union of India v. Rajeev Bansal (469 ITR 46), which held that the clock for issuing a reassessment notice under the new regime starts ticking only after the assessee’s reply to the Section 148A(b) notice is received, and that the surviving period of limitation under the old regime must be strictly adhered to. The assessee argued that the surviving period for AY 2013-14 was only two days (from 28.06.2021 to 30.06.2021), and after excluding the time for reply and the period between the Supreme Court’s judgment and the issuance of the Section 148A(b) notice, the deadline for issuing the notice under Section 148 expired on 09.06.2022. The notice issued on 30.07.2022 was therefore time-barred.
For the Respondent
The Revenue argued that the notice under Section 148A(d) and the subsequent notice under Section 148 were issued within the time prescribed under the amended procedure, which allows the Assessing Officer to pass the order under Section 148A(d) by the end of the month following receipt of the reply. It was submitted that since the reply was received on 10.06.2022, the order under Section 148A(d) and the notice under Section 148 issued on 30.07.2022 were within the permissible timeframe.
The Court's Analysis
The Tribunal undertook a meticulous analysis of the Supreme Court’s judgment in Union of India v. Rajeev Bansal (469 ITR 46), particularly paragraphs 110 - 112, which established the legal framework for computing limitation under the transitional regime. The Court held that the legal fiction created in Ashish Agarwal stops the limitation clock from the date of the original notice under the old regime, and the surviving period of limitation is preserved for use under the new regime. The period between the issuance of the Section 148A(b) notice and the receipt of the assessee’s reply, as well as the two-week reply period, must be excluded from the computation.
"The clock started ticking for the Revenue only after it received the response of the assesses to the show cause notices. After the receipt of the reply, the assessing officer had to perform the following responsibilities: (i) consider the reply of the assessee under Section 149A(c); (ii) take a decision under Section 149A(d) based on the available material and the reply of the assessee; and (iii) issue a notice under Section 148 if it was a fit case for reassessment. Once the clock started ticking, the assessing officer was required to complete these procedures within the surviving time limit."
The Tribunal applied this principle to the facts of the case. For AY 2013-14, the original notice was issued on 28.06.2021, leaving only two days of limitation remaining under the old regime (until 30.06.2021). The assessee filed the reply on 10.06.2022. The surviving period of two days was to be added to the date of receipt of the reply, making the extended deadline 09.06.2022. The notice under Section 148 was issued on 30.07.2022 - 51 days beyond the deadline.
The Tribunal further relied on the Delhi High Court’s decision in Ram Balram Buildhome v. ITO (445 ITR 1), which held that the time available under Section 149(1) for issuing the notice under Section 148 is not extended by the procedural timelines under Section 148A. The Revenue’s argument that the notice was issued within the end-of-month rule was rejected as inconsistent with the statutory scheme.
The Tribunal concluded that the notice under Section 148 issued on 30.07.2022 was void ab initio, rendering the subsequent assessment order invalid.
The Verdict
The appeals were allowed. The Tribunal set aside the notice under Section 148 dated 30.07.2022, the order under Section 148A(d) dated 30.07.2022, and the assessment orders dated 16.05.2023 and 25.05.2023 for AYs 2013-14 and 2014-15. The reassessment proceedings were quashed as void ab initio for being barred by limitation. No monetary relief was sought or granted, as the sole issue was procedural validity.
What This Means For Similar Cases
Limitation Periods Are Non-Negotiable
- Practitioners must calculate the surviving limitation period under the old regime with precision - every day counts
- The two-day window in this case was decisive; even a one-day delay would have been fatal
- The extended deadline is not computed from the date of the Section 148A(b) notice, but from the date of receipt of the assessee’s reply, plus the surviving period
Section 148A Does Not Extend Section 149 Time Limits
- The procedural timelines under Section 148A (e.g., end-of-month rule for passing orders) cannot override the statutory limitation under Section 149(1)
- Revenue authorities cannot rely on internal procedural deadlines to justify out-of-time notices
- Any reassessment notice issued after the expiry of the computed deadline is void, regardless of the merits of the case
Precedent Binding Across Tribunals
- The Rajeev Bansal and Ram Balram Buildhome precedents are now binding on all Income Tax Appellate Tribunals
- Practitioners should cite these judgments in all reassessment limitation challenges, regardless of jurisdiction
- The Tribunal’s reliance on the Delhi High Court’s reasoning signals a national alignment on this issue
