R RAMESH CHANDRA AND COMPANY ,MUMBAI vs. DCIT, CIRCLE 19(3), MUMBAI

The brief facts relevant for adjudication of this jurisdictional issue are that the original notice under section 148 under the erstwhile regime was issued on 07.06.2021. Thereafter, pursuant to the change in law brought about by the Finance Act, 2021 and in view of the directions of the Hon’ble Supreme Court in Ashish Agarwal, the proceedings were treated as having been initiated under section 148A(b), and the assessee filed its reply on 08.06.2022. Subsequently, the impugned notice under section 148 came to be issued on 28.07.2022 under the new regime. The chronology of relevant dates and events forming part of the reassessment proceedings, as placed on record, is incorporated hereunder:

The controversy, however, hinges upon the legal permissibility of issuance of such notice within the framework of limitation as now settled by the Hon’ble Supreme Court in Union of India vs. Rajeev Bansal & Ors. (2024) 469 ITR 46

It would be apposite to refer to the ratio laid down by the Hon’ble Supreme Court in Union of India vs. Rajeev Bansal & Ors. (2024) 469 ITR 46 (SC), wherein the concept of “surviving limitation” has been expounded in clear and unambiguous terms. The relevant observations of the Hon’ble Supreme Court, particularly paragraphs 110 and 111, are reproduced hereunder:

The clock started ticking for the Revenue only after it received the response of the assesses to the show causes 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 surviving time limit, as prescribed under the Income-tax Act read with TOLA, was available to the assessing officers to issue the reassessment notices under section 148 of the new regime.” 112. Let us take the instance of a notice issued on 1 May 2021 under the old regime for a relevant assessment year. Because of the legal fiction, the deemed show cause notices will also come into effect from 1 May 2021. After accounting for all the exclusions, the assessing officer will have sixty-one days [days between 1 May 2021 and 30 June 2021] to issue a notice under section 148 of the new regime. This time starts ticking for the assessing officer after receiving the response of the assessee. In this instance, if the assessee submits the response on 18 June 2022, the assessing officer will have sixty-one days from 18 June 2022 to issue a reassessment notice under section 148 of the new regime. Thus, in this illustration, the time limit for issuance of a notice under section 148 of the new regime will end on 18 August 2022.

The principle which clearly emerges from the aforesaid authoritative pronouncement is that the extensions granted under TOLA do not have the effect of reviving a limitation which has already expired, nor do they confer a fresh window

In the light of the aforesaid legal position, when the facts of the present case are examined, it is evident that the original notice under section 148 under the old regime was issued on 07.06.2021, leaving only 23 days as the surviving period up to 30.06.2021. This surviving period of 23 days alone was available to the Assessing Officer for issuance of notice under section 148 under the new regime after following the procedure prescribed under section 148A. Once the assessee filed its reply on 08.06.2022, even if the computation is made in the manner most favourable to the Revenue, the outer limit for issuance of notice under section 148 would expire on 01.07.2022. However, the admitted factual position is that the impugned notice under section 148 has been issued only on 28.07.2022, which is clearly beyond the said surviving period, and thus the delay is not merely procedural but strikes at the very root of jurisdiction, rendering the assumption of jurisdiction by the Assessing Officer invalid. It is a settled proposition that issuance of a valid notice within

In view of the foregoing discussion and respectfully following the binding ratio laid down by the Hon’ble Supreme Court in Union of India vs. Rajeev Bansal & Ors. (2024) 469 ITR 46 (SC), we hold that the notice issued under section 148 dated 28.07.2022 is invalid and without jurisdiction, being barred by limitation. Consequently, the entire reassessment proceedings culminating in the impugned assessment order are hereby quashed.

Since the reassessment proceedings have been quashed on the preliminary legal ground, the other grounds raised by the assessee on merits are rendered academic and are not adjudicated upon.