MR. MOHINDER PAL SINGH SWAHNEY vs. DEPUTY COMMISSIONER OF INCOME TAX

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HC-KAR NC: 2025:KHC:49146 WP No. 16943 of 2022 C/W WP No. 16931 of 2022 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 24TH DAY OF NOVEMBER, 2025 BEFORE THE HON'BLE MR. JUSTICE S.R.KRISHNA KUMAR WRIT PETITION NO. 16943 OF 2022 (T-IT) C/W WRIT PETITION NO. 16931 OF 2022 (T-IT) IN WP No. 16943/2022 BETWEEN: MR. VINEET AGRWAL S/O V.N.AGRAWAL AGED 60 YEARS, ADDRESS AT VILLA NO.73, ADARSH PALM RETREAT, LANE 3, PHASE 1, BELLANDUR POST, BELLANDUR, BANGALORE- 560 103. …PETITIONER (BY SRI. SANDEEP HUILGOL., ADVOCATE) AND: 1. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 3(3)(1), BANGALORE HMT BHAWAN, NO.59 BELLARY ROAD, GANGANAGAR BENGALURU- 560 032. 2. CENTRAL BOARD OR DIRECT TAXES DEPARTMENT OF REVENUE, MINISTRY OF FINANCE, Digitally signed by SHARADAVANI B Location: High Court of Karnataka

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HC-KAR NC: 2025:KHC:49146 WP No. 16943 of 2022 C/W WP No. 16931 of 2022 NORTH BLOCK, NEW DELHI-110002 REPRESENTED HEREIN BY ITS CHAIRPERSON 3. PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX, KARNATAKA AND GOA REGION GROUND FLOOR, CR BUILDING, NO.1. QUEENS ROAD, BENGALURU- 560 001. …RESPONDENTS (BY SRI. E.I.SANMATHI., ADVOCATE)

THIS W.P. FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE IMPUGNED ORDER DTD.27.7.2022 PASSED BY THE R-1 UNDER SECTION 148A(D) OF THE INCOME TAX ACT 1961 FOR THE ASSESSMENT YEAR 2014-15 ANNEXURE-A., AND ETC. IN WP NO. 16931/2022 BETWEEN: MR. MOHINDER PAL SINGH SWAHNEY AGED 79 YEARS, S/O RAJINDER SINGH SAWHNEY ADDRESS AT S 65 GOLDEN ENCLAVE, AIRPORT ROAD, BENGLAURU- 560 017. ...PETITIONER (BY SRI. SANDEEP HUILGOL., ADVOCATE) AND: 1. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 4(1)(1), BANALORE BMTC BUILDING, 80 FEET ROAD, 6TH BLOCK NEAR KHB GAMES VILLAGE, KORAMANGALA, BENGALUREU- 560 095. 2. CENTRAL BOARD OF DIRECT TAXES

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HC-KAR NC: 2025:KHC:49146 WP No. 16943 of 2022 C/W WP No. 16931 of 2022 DEPARTMENT OF REVENUE, MINISTRY OF FINANCE, NORTH BLOCK NEW DELHI-110002 REPRESENTED HEREIN BY ITS CHAIRPERSON 3. PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX, KARNATAKA AND GOA REGION GROUND FLOOR, CR BUILDING, NO.1, QUEENS ROAD, BENGALURU-560 001. ...RESPONDENTS (BY SRI. E.I.SANMATHI., ADVOCATE) THIS WP FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE IMPUGNED ORDER DTD 28.07.2022 BEARING ITBA.COM/F/17/2022-23/1044214801(1) PASSED BY THE R1 U/S 148A(d) OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEAR 2014-15 ANNEXURE- A., AND ETC.

THESE PETITIONS, COMING ON FOR PRELIMINARY HEARING IN B GROUP, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE S.R.KRISHNA KUMAR ORAL ORDER

The petitioner seeks for following reliefs in W.P.No.16943/2022: (i) Quashing the impugned order dated 27.07.2022 bearing ITBA/COM/F17/2022-23/1044145499(1) passed by the 1st respondent under Section 148A(d) of the Income-Tax Act, 1961 for the assessment year 2014-15 (Annexure-A).

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HC-KAR NC: 2025:KHC:49146 WP No. 16943 of 2022 C/W WP No. 16931 of 2022 (ii) Quashing the impugned notice dated 27.07.2022 issued by the 1st respondent under Section 148 of income-tax Act, 1961 for the assessment year 2014-15 (Annexure-B); and (iii) Pass such other or further orders as this Hon'ble court may deem fit in the facts and circumstances of the case, and in the interests of justice and equity. The petitioner seeks for following reliefs in W.P.No.16931/2022: (i) Quashing the impugned order dated 28.07.2022 bearing ITBA/COM/F17/2022-23/1044214801(1)) passed by the 1st respondent under Section 148A(d) of the Income-Tax Act, 1961 for the assessment year 2014-15 (Annexure-A). (ii) Quashing the impugned notice dated 28.07.2022 issued by the 1st respondent under Section 148 of income-tax Act, 1961 for the assessment year 2014-15 (Annexure-B); and (iv) Pass such other or further orders as this Hon'ble court may deem fit in the facts and circumstances of the case, and in the interests of justice and equity.

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HC-KAR NC: 2025:KHC:49146 WP No. 16943 of 2022 C/W WP No. 16931 of 2022 2. Heard learned counsel for the petitioner and learned counsel for the respondent and perused the material on record. 3. A perusal of the material on record will indicate that in relation to the assessment year 2014-15, the respondent No.1 issued a notice dated 30.06.2021 under Section 148 of the Income Tax Act, prior to the said provisions being amended w.e.f., 01.04.2021. Subsequently, in the case of Union of India vs. Ashish Agarwal – [2022] 138 taxmann.com 64 (SC), the Apex Court while dealing with the aforesaid amendment and notices issued to the assessee under Section 148 subsequent to the amendment, issued the following directions: “10. In view of the above and for the reasons stated above, the present Appeals are ALLOWED IN PART. The impugned common judgments and orders passed by the High Court of Judicature at Allahabad in W.T. No. 524/2021 and other allied tax appeals/petitions, is/are hereby modified and substituted as under: (i) The impugned section 148 notices issued to the respective assessees which were issued under unamended section 148 of the IT Act, which were the subject matter of writ petitions before the various respective High Courts shall be deemed to have been issued under section 148A of the IT Act as

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HC-KAR NC: 2025:KHC:49146 WP No. 16943 of 2022 C/W WP No. 16931 of 2022 substituted by the Finance Act, 2021 and construed or treated to be showcause notices in terms of section 148A(b). The assessing officer shall, within thirty days from today provide to the respective assessees information and material relied upon by the Revenue, so that the assesees can reply to the showcause notices within two weeks thereafter; (ii) The requirement of conducting any enquiry, if required, with the prior approval of specified authority under section 148A(a) is hereby dispensed with as a onetime measure visàvis those notices which have been issued under section 148 of the unamended Act from 01.04.2021 till date, including those which have been quashed by the High Courts. Even otherwise as observed hereinabove holding any enquiry with the prior approval of specified authority is not mandatory but it is for the concerned Assessing Officers to hold any enquiry, if required; (iii) The assessing officers shall thereafter pass orders in terms of section 148A(d) in respect of each of the concerned assessees; Thereafter after following the procedure as required under section 148A may issue notice under section 148 (as substituted); (iv) All defences which may be available to the assesses including those available under section 149 of the IT Act and all rights and contentions which may be available to the concerned assessees and Revenue under the Finance Act, 2021 and in law shall continue to be available.” 4. In pursuance of aforesaid directions issued by the Apex Court, PAN INDIA which applied to the petitioner and the

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HC-KAR NC: 2025:KHC:49146 WP No. 16943 of 2022 C/W WP No. 16931 of 2022 notice dated 30.06.2021 also, which was directed to be treated as a notice under Section 148A(b) of the Income Tax Act (as amended), the respondent furnished/provided information to the petitioner on 30.05.2022 and called upon the petitioner to file a reply on or before 14.06.2022. In response to the same, the petitioner submitted a reply dated 14.06.2022 and in pursuance of which, the respondent proceeded to pass the impugned order and under Section 148A(d) and simultaneously, issued a notice under Section 148 of the IT Act on 27.07.2022. It is the specific contention of the petitioner that having regard to the aforesaid directions issued in Ashish Agarwal's case, the impugned order and notice had to be issued on or before 21.06.2022 and the same having been issued on 27.07.2022 was clearly barred by limitation as held by the Apex Court in the case of Union of India Vs. Rajeev Bansal - 2024 INSC 754 and followed by various High Courts including the Gujarat High Court in the case of Southern Gujarat Chamber Trade and Industries Development Centre Vs. ITO Exemption – [2025] 179 taxmann.com. 55.

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HC-KAR NC: 2025:KHC:49146 WP No. 16943 of 2022 C/W WP No. 16931 of 2022 5. Per contra, learned counsel for the respondent - revenue submits that there is no merit in the petition and the same is liable to be dismissed. 6. As rightly contented by the learned counsel for the petitioner, in the light of the undisputed fact that the respondent provided information to the petitioner pursuant to the judgment of the Apex Court in Ashish Agarwal's case on 30.05.2022 to which the petitioner submitted a reply on 14.06.2022, the period of limitation for passing the impugned order under 148A(d) and also issued notice under Section 148 which expired on 21.06.2022 and consequently, the impugned order and notice dated 27.07.2022 was hopelessly and clearly barred by limitation as held in Rajeev Bansal's case as supra as hereunder: “110. The effect of the creation of the legal fiction in Ashish Agarwal (supra) was that it stopped the clock of limitation with effect from the date of issuance of Section 148 notices under the old regime [which is also the date of issuance of the deemed notices]. As discussed in the preceding segments of this judgment, the period from the date of the issuance of the deemed notices till the supply of relevant information and material by the assessing officers to the assesses in terms of the directions issued by this

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HC-KAR NC: 2025:KHC:49146 WP No. 16943 of 2022 C/W WP No. 16931 of 2022 Court in Ashish Agarwal (supra) has to be excluded from the computation of the period of limitation. Moreover, the period of two weeks granted to the assesses to reply to the show cause notices must also be excluded in terms of the third proviso to Section 149. 111. 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

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HC-KAR NC: 2025:KHC:49146 WP No. 16943 of 2022 C/W WP No. 16931 of 2022 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.” 7. The aforesaid judgment in Rajeev Bansal's case has been followed by in Southern Gujarat Chamber Crates case supra as hereunder: “Heard learned Advocate Mr. Manish J. Shah for the petitioner and learned Senior Standing Counsel Ms. Maithili D. Mehta for the respondent. 2. This petition is filed under Article 226 of the Constitution of India challenging the notice under section 148 of the Income Tax Act, 1961 (For short "the Act") dated 18.07.2022 on the ground that the notice would be invalid and time barred. 3. Brief facts of the case are that the respondent Assessing Officer issued notice dated 29.06.2021 under section 148 of the Act for the Assessment Year 2016-2017 during the extended time period as per Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 [(2020) 422 ITR (St.) 116] (For short "TOLA").

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HC-KAR NC: 2025:KHC:49146 WP No. 16943 of 2022 C/W WP No. 16931 of 2022 4. In view of the decision of Hon'ble Apex Court in case of Union of India v. Ashish Agarwal [2022] 138 taxmann.com 64/286 Taxman 183/444 ITR 1 (SC), the aforesaid notice was to be treated as notice under section 148A(b) of the Act which has come into statute with effect from 01.04.2021. 5. The Hon'ble Apex Court in case of Union of India v. Rajeev Bansal [2024] 167 taxmann.com 70/301 Taxman 238/469 ITR 46 (SC) has laid down the law to consider such notice as valid notice or invalid notice depending upon the surviving time left between the date of issuance of notice under section 148 of the Act read with section 3(1) of TOLA upto 30.06.2021 and the issuance of notice under section 148 pursuant to the directions issued by the Hon'ble Apex Court in case of Ashish Agarwal (supra). 6. This Court in case of Dhanraj Govindram Kella v. ITO [2025] 177 taxmann.com 194 (Guj) (Judgment dated 08.07.2025 rendered in Special Civil Application No.6387 of 2023 and allied matters) has considered in detail the submissions made by both the sides and has held as under: "65. The alternative contention of the petitioner as to whether notices would be valid notice or invalid notice considering 'surviving time' between the date of the issuance of notices under TOLA and 30th June, 2021 or not is required to be considered and for that each matter has to be considered separately on the basis of the facts of case considering the date of issuance of notices

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HC-KAR NC: 2025:KHC:49146 WP No. 16943 of 2022 C/W WP No. 16931 of 2022 under section 148 under TOLA by the Revenue and thereafter date of supplying information to the assessee and date of passing of order under section 148A(d) and date of issuance of notice under section 148 of the Act so as to consider whether issuance of notice under section 148 of the Act is within 'surviving time' as per the direction of Hon'ble Apex Court in case of Rajeev Bansal (supra) or not. 66. So far as Assessment Years 2013- 2014 and 2014-2015 are concerned, the period of three years from the end of the assessment year would be over prior to 20.03.2020 and the period of six years would be over between 20.03.2020 and 30.06.2021. Therefore, the notices issued under section 148 of the Act under old regime between 01.04.2021 and 30.06.2021 as per TOLA, will be a valid notice if the notice under section 148 of the Act under new regime is issued within the period of 'surviving time' as per the directions issued by Hon'ble Apex Court in case of Rajeev Bansal (supra). For the Assessment Years 2016-2017 and 2017-2018 are concerned, the notice issued under section 148 of the Act under old regime between 01.04.2021 and 30.06.2021 under TOLA would be considered to be issued within three years from the end of the relevant assessment year as three years would complete within the period of 20.03.2020 and 30.06.2021. 67. Therefore, in facts of these petitions, following data is required to be considered to find out 'surviving time' to decide as to whether the impugned notices under section 148 of the Act issued under the new regime as per the decision of Hon’ble Apex Court in case of Ashish Agarwal (supra) would be valid notice or not in view of the decision of the Hon’ble Apex Court in case of Rajeev Bansal (supra):

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HC-KAR NC: 2025:KHC:49146 WP No. 16943 of 2022 C/W WP No. 16931 of 2022 SCA NO AY Date of notice under section 148 under TOLA No of days of surviving time available till 30.06.2021 Date of providing information under section 148A(b) 6387/2023 2013-2014 17.06.2021 13 26.05.2022 5688/2023 2014-2015 09.06.2021 21 23.05.2022 22260/2022 2016-2017 30.06.2021 1 23.05.2022 996/2023 2017-2018 30.06.2021 1 24.05.2022 SCA NO Due date of filing reply Date of reply:- Date of order under section 148A(d) and notice under section 148:- Last date for issuance of notice under section 148 as per surviving time:- 6387/2023 09.06.2022 04.06.2022 29.07.2022 22.06.2022 5688/2023 06.06.2022

27.07.2022 27.06.2022 22260/2022 07.06.2022 06.07.2022 30.07.2022 14.06.2022 996/2023 11.06.2022 10.06.2022 19.07.2022 18.06.2022 68. It is apparent from the above details that impugned notice under section 148 of the Act is issued beyond the period of 'surviving time' as per the direction of Hon'ble Apex Court in case of Rajeev Bansal (supra)and therefore, such notices would be invalid notices. 69. The impugned notices issued under section 148 of the Act are accordingly quashed and set aside being invalid having been issued beyond the 'surviving time'. Accordingly, impugned orders passed under section 148A(d) of the Act would also not survive and are accordingly, quashed and set aside. Subsequent proceedings, if any, undertaken by the respondent would not survive and are also quashed and set aside. 70. Rule is made absolute to the aforesaid extent. No order as to costs."

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HC-KAR NC: 2025:KHC:49146 WP No. 16943 of 2022 C/W WP No. 16931 of 2022 7. In the facts of the case, the respondent Assessing Officer has provided information pursuant to the directions issued by the Hon'ble Apex Court in case of Ashish Agarwal (supra) on 27.05.2022 and therefore, considering 15 days' time to file reply by the assessee, the due date would be 10.06.2022. The petitioner filed reply on 01.06.2022. The order under section 148A(d) of the Act was passed on 15.07.2022 and notice under section 148 of the Act was issued on 18.07.2022. However, considering the period of limitation from the date of issuance of notice under section 148 read with TOLA upto 30.06.2021, the limitation for issuance of notice under section 148 of the Act applying the decision of Hon'ble Apex Court in case of Ashish Agarwal (supra) as well as Rajeev Bansal (supra), would be 17.06.2022. 8. Learned Senior Standing Counsel Ms. Maithili D. Mehta has verified the above dates and could not controvert the same. 9. In view of above, the impugned notice dated 18.07.2022 issued under section 148 of the Act would be invalid notice as the said notice is issued after 17.06.2022 as per the decision of Hon'ble Apex Court in case of Ashish Agarwal (supra). Therefore, the impugned notice having been issued beyond the 'surviving time' would be invalid notice as held by the Hon'ble Apex Court in case of Rajeev Bansal (supra) in the following paragraph no. 114 (g) and (h) of the judgment:

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HC-KAR NC: 2025:KHC:49146 WP No. 16943 of 2022 C/W WP No. 16931 of 2022 "114. In view of the above discussion, we conclude that: xxx (g) The time during which the show-cause notices were deemed to be stayed is from the date of issuance of the deemed notice between April 1, 2021 and June 30, 2021 till the supply of relevant information and material by the Assessing Officers to the assessees in terms of the directions issued by this court in Union of India v. Ashish Agarwal [(2022) 444 ITR 1 (SC); (2023) 1 SCC 617.], and the period of two weeks allowed to the assessees to respond to the show- cause notices; and (h) The Assessing Officers were required to issue the reassessment notice under section 148 of the new regime within the time limit surviving under the Income-tax Act read with the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. All notices issued beyond the surviving period are time barred and liable to be set aside." 10. In view of foregoing reasons, impugned order dated 15.07.2022 and impugned notice dated 18.07.2022 is hereby quashed and set aside and all consequential proceedings are also quashed and set aside. 8. Similar view has been taken by High Court of Delhi and other High Courts. Under these circumstances, I am of the considered opinion that the impugned order and notices at Annexures- A and B deserve to be quashed. 9. In the result, I pass the following:

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HC-KAR NC: 2025:KHC:49146 WP No. 16943 of 2022 C/W WP No. 16931 of 2022 ORDER i) The petitions are hereby allowed. ii) The impugned order at Annexures-A and Notice at Annexure-B both dated 27.07.2022 passed by respondent No.1 are hereby quashed. Sd/- (S.R.KRISHNA KUMAR) JUDGE SS List No.: 2 Sl No.: 86