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Facts
For AY 2015-16, the assessee, Urvashi Sarees Pvt. Ltd., filed a return of income of Rs. 64,05,380/-. Reassessment proceedings were initiated, and a notice under Section 148 of the Income Tax Act was issued on 31.07.2022 after an order under Section 148A(d). The Assessing Officer added Rs. 2,05,42,360/- as bogus purchases, which was partially relieved by the CIT(A), confirming an addition of Rs. 27,73,218/-. Both the assessee and the Revenue filed appeals to the ITAT, with the assessee primarily contending that the reassessment was time-barred.
Held
The Tribunal held that the reassessment notice under Section 148, issued on 31.07.2022 for AY 2015-16, was time-barred as per the Supreme Court's decision in Union of India v. Rajeev Bansal. The benefit of TOLA for extending the limitation period was not applicable because the limitation for AY 2015-16 expired on 31.03.2022, which fell outside the specified TOLA period for extensions (20.03.2020 to 31.03.2021). Consequently, the assumption of jurisdiction by the AO was illegal, leading to the assessment order being quashed.
Key Issues
Whether the reassessment proceedings initiated under Section 147/148 of the Income Tax Act for AY 2015-16 were time-barred in light of the Supreme Court's decision in Union of India v. Rajeev Bansal and the applicability of the TOLA extension.
Sections Cited
147, 148, 148A(d), 144B, 250, 143(2), 69C, 139(1), 149, 149(1)(b), 149(1)(a), 151, 151(ii), 3(1), 151(i), 151(2), 148A(a), 148A(b), 153A, 153C
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Income Tax Appellate Tribunal, “D” BENCH”, KOLKATA
Appearances by: Assessee represented by : Ramesh Patodia, Advocate Department represented by : Sanat Kumar Raha, CIT-DR S.B. Chakraborthy, Sr. DR Date of concluding the hearing : 22.07.2025 Date of pronouncing the order : 24.07.2025 O R D E R I T A N o . 2 2 2 / K o l / 2 0 2 5 I T A N o . 1 9 4 6 / K o l / 2 0 2 4 U r v a s h i S a r e e s P v t . L t d . Page | 2 PER SANJAY AWASTHI, ACCOUNTANT MEMBER 1.0 These are a batch of two appeals for the AY 2015-16, filed by both the Revenue [ITA 222/Kol/2025] and assessee [1946/Kol/2025] for settling their respective grievances. Both these appeals are against the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2015-16, dated 20.8.2024, which has been passed against the assessment order u/s 147/144B of the Act, dated 29.05.2023. 1.1 The Revenue’s appeal is barred by limitation to the tune of 89 days, for which a petition for condonation has been filed as under: Dates Events/Reasons 20.08.2024 Order of CIT(A) was received in the O/o Pr. CIT2, Kol. 19.10.2024 Due date for filing of 2nd Appeal 24.09.2024 ASR is submitted to the O/o PCIT-2, Kolkata through proper channel 05.11.2024 Certificate of filing 2nd appeal was received from the O/o Pr. CIT-2, Kolkata, 23.01.2025 Necessary hardcopies of documents/paper/details required for filing 2nd Appeal before Hon’ble ITAT, Kolkata were collected and prepared 18.01.2025 2nd Appeal was filed It is respectfully submitted that the appeal could not be filed on or before due date due to an immense work load relating to assessment, penalties and writ petition filed by the various assessee in the Calcutta High Court against the order U/s 148A(d) and notice U/s148, as well as collecting and arranging the required documents/files for the 2nd appeal. Therefore, it is requested to kindly condone the delay of 101 days in filing appeal before the Hon'ble ITAT, Kolkata for the sake of substantial justice.” 1.2 Considering the contents of the said petition, the delay is hereby condoned and the Revenue’s appeal is also admitted for adjudication along with the assessee’s.
I T A N o . 2 2 2 / K o l / 2 0 2 5 I T A N o . 1 9 4 6 / K o l / 2 0 2 4 U r v a s h i S a r e e s P v t . L t d . Page | 3 2. The assessee has raised the following grounds of appeal: “I. FOR THAT in passing the impugned order dated August 20, 2024 the Learned Commissioner of Income Tax (Appeals) (hereinafter referred to as the "CIT (Appeals)") has acted by an outright refusal to consider relevant matters, has misdirected itself in points of law, has taken into account irrelevant considerations and has failed to take into account relevant materials on record. The said impugned order, to the extent the same has confirmed addition of Rs. 27,73,218/-under Section 69C of the Income Tax Act, 1961 (hereinafter referred to as "the Act"), is arbitrary to that core and perverse. II. FOR THAT on the facts and circumstances of the instant case the appellate order dated August 20, 2024 passed by the Learned CIT (Appeals), to the extent it restricts the addition of Rs. 27,73,218/- against the purported addition made by the Assessment Unit by its order dated May 29, 2023 under Section 147 read with Section 144B of the Act for the assessment year 2015-16, is arbitrary, unjustified, unwarranted and illegal. III. FOR THAT the Learned CIT (Appeals) erred in upholding the assessment order passed by the Assessment Unit, National Faceless Assessment Centre (hereinafter referred to as the "Assessment Unit") to the extent of Rs. 27,73,218/-even though the mandatory notice required to be issued under Section 143(2) of the Act before passing the assessment order was not issued by the Assessment Unit which is impermissible in law as well as absolute disregard of the provisions of the Act and as such the impugned order as well as the purported assessment order is contrary to law, untenable and unsustainable and is liable to be quashed and/or set aside on this ground alone. IV. FOR THAT it is well settled that issuance of notice under Section 143(2) of the Act is a mandatory requirement before completing the assessment and the Learned CIT (Appeals) acted arbitrarily in rejecting such contention of the appellant on the basis of an illegal finding that the return was not filed within the time which was allowed to the appellant and such purported finding and consequent dismissal of the contention of the appellant in this regard is absolutely illegal, invalid and bad and as such the entire reassessment proceedings are liable to be quashed and/or set aside. V. FOR THAT the Learned CIT (Appeals) erred in upholding the validity of notice under Section 148 of the Act, even though it was issued without Document Identification Number ("DIN") in clear violation of the circular of the Central Board of Direct Taxes, being Circular No. 19/2019 dated August 14, 2019 and such purported action of the Learned CIT (Appeals) is arbitrary, unjustified, unwarranted and illegal and hence all proceedings in pursuance of such invalid notice is liable to be quashed and/or set aside on this ground also. VI. FOR THAT the entire material in support of the purported information on the basis of which the reassessment proceedings was initiated having not been supplied to the appellant, the Learned CIT (Appeals) erred in upholding the validity of such assessment proceedings on the basis of the decision of the Hon'ble Supreme Court of India in the case of Union of India Vs. Ashish Agarwal even though the said decision was not applicable in the instant case and thus I T A N o . 2 2 2 / K o l / 2 0 2
5. I T A N o . 1 9 4 6 / K o l / 2 0 2
4. U r v a s h i S a r e e s P v t . L t d . Page | 4 the entire proceedings in pursuance of such illegal action is liable to be quashed and/or set aside. VII. FOR THAT the Assessment Unit wrongly relied upon the decision of the Hon'ble Supreme Court in the case of Union of India Vs. Ashish Agarwal by deeming the notice under Section 148 of the Act dated July 31, 2022 as notice under Section 148A(b) of the Act in pursuance of the decision of the Supreme Court and such purported action of the Assessment Unit and upholding the same by the Learned CIT (Appeals) is arbitrary, unjustified, unwarranted and illegal. VIII. FOR THAT even assuming but not admitting that the notice under Section 148A(b) of the Act could have been issued in pursuance of directions of the Hon'ble Supreme Court of India, the Assessment Unit did not part with the documents relied upon in support of the issuance of such notice ignoring the mandatory directions of the Hon'ble Supreme Court and such purported action of the Assessment Unit and upholding the same by the Learned CIT (Appeals) is arbitrary, unjustified, unwarranted and illegal and all proceedings in pursuance of such illegal action is liable to be quashed and/or set aside. IX. FOR THAT the Learned CIT (Appeals) erred in confirming the addition to the extent of Rs. 27,73,218/- being 12.5% of the alleged disputed purchases even though the appellant had produced full details of the party from whom the purchases were made including the applicable and relevant documents in this regard and such purported action of the Learned CIT (Appeals) is arbitrary, unjustified, unwarranted and illegal and hence the entire assessment is liable to be quashed and/or set aside. X. FOR THAT the Learned CIT (Appeals) erred in upholding the purported action of the Assessment Unit in relying upon the alleged statement of Sri Maniklal Daga who had admittedly retracted his statement which was given by him and in any event the said purported statement was not supplied and/or parted with the appellant at any time stage before the assessment was completed and even no opportunity of cross-examining the said party was given to the appellant and as such the entire assessment is illegal, invalid and bad and hence is liable to be quashed and/or set aside. XI. FOR THAT the books of account of the appellant having not been rejected and the assessment having been made under Section 147 read with Section 144B of the Act, the purported action of the Learned CIT (Appeals) in upholding the addition, to the extent of Rs. 27,73,218/-, under Section 69C of the Act is arbitrary, unjustified, unwarranted and illegal and hence all proceedings in pursuance thereof are liable to be quashed and/or set aside. XII. FOR THAT the entire assessment was completed in complete disregard of the principles of natural justice as well as without dealing with the contentions of the appellant and as such the entire assessment is liable to be quashed and/or set aside. XIII. FOR THAT, without prejudice, the addition, if at all, is to be limited to the net profit rate of the appellant and the purported addition of Rs. 27,73,218/- is arbitrary, unjustified, unwarranted and illegal.
I T A N o . 2 2 2 / K o l / 2 0 2 5 I T A N o . 1 9 4 6 / K o l / 2 0 2 4 U r v a s h i S a r e e s P v t . L t d . Page | 5 XIV. FOR THAT the addition, to the extent of Rs. 27,73,218/-, under Section 69C of the Act is liable to be deleted. XV. FOR THAT the appellant craves indulgence to add, amend, alter and/or modify the Grounds of Appeal on or before the hearing of this appeal.” 2.2 The Revenue has raised the following grounds before the ITAT: “Whether the Ld. CIT(A) has erred in law as well as in the facts by not disallowing the entire purchase amount and to restrict it to Rs. 27,73,218/-? Whether the Ld. CIT(A) has erred in law as well as in facts in ignoring the judicial principles laid down in the matter of N.K. Protein Ltd. Vs. DCIT (84txman.com 195) (SC). That the appellant craves leave to add any new ground or alter any of the grounds and to put forward necessary arguments in support of the grounds of appeal.” 2.3. Brief facts of the case are that the assessee had filed the return of income for AY 2015-16 showing total income of Rs. 64,05,380/- u/s 139(1) of the Act. Notice u/s 148 of the Act was issued after passing the necessary order u/s 148A(d) of the Act on 31.07.2022. The Ld. AO issued show cause notice and after considering the reply of the assessee, assessed the income after adding an amount of Rs. 2,05,42,360 as bogus purchases. 2.4 Aggrieved with the assessment order the assessee filed an appeal before the Ld. CIT(A) where he could get partial relief. Further aggrieved with the order of the Ld. CIT(A) both the assessee and Revenue have filed the appeals before this Tribunal.
3. Rival contentions were heard and the submissions made have been examined. At the outset, the Ld. AR contended that the reopening of assessment for AY 2015-16 was barred on account of decision of the Hon'ble Supreme Court in the case of Union of India vs. Rajeev Bansal [2024] 469 ITR 46 (SC)[03-10-2024].
I T A N o . 2 2 2 / K o l / 2 0 2 5 I T A N o . 1 9 4 6 / K o l / 2 0 2 4 U r v a s h i S a r e e s P v t . L t d . Page | 6 3.1. We have carefully considered this aspect and we have also gone through the facts and circumstances of the case. Ground nos. 5 and 7 of the assessee’s appeal relate to the reopening as being bad in law as it is averred that the notice u/s 148 of the Act was barred by limitation, since the notice u/s 148A(b) of the Act, having been initiated after six years from the assessment year, the assessment year in question was not covered by TOLA as admitted by the Ld. ASG in the case of Rajeev Bansal (supra) and so held in the said judgement. 3.2. At this juncture we need to consider the judgement of the Hon'ble Supreme Court in the case of Rajeev Bansal (supra), where it has been held as under: “52. In Ashish Agarwal (supra), this Court held that the benefit of the new regime must be provided for the reassessment conducted for the past periods. The increase of the monetary threshold from Rupees one lakh to Rupees fifty lakh is beneficial for the assessees. Mr Venkataraman has also conceded on behalf of the Revenue that all notices issued under the new regime by invoking the six year time limit prescribed under section 149(1)(b) of the old regime will have to be dropped if the income chargeable to tax which has escaped assessment is less than Rupees fifty lakhs. ….
When enacting a statute, the legislature often endeavours to ensure that the provisions of one legislation do not conflict with provisions of another legislation. Interplay (supra) [between Arbitration Agreements under the Arbitration and Conciliation Act 1996 and the Indian Stamp Act 1899, 2023 INSC 1066]. The purpose of the Income-tax Act is to levy tax on income and raise revenues for the functioning of the Government. On the other hand, the purpose of TOLA is to provide relaxation of the time for completion of any actions or proceedings falling for completion within a particular period. Thus, the two enactments operate in separate and distinct fields. This Court must ensure that the provisions of the two enactments are interpreted harmoniously unless there is an irreconcilable conflict between them. …… b. Reading TOLA into Section 149 68. After 1 April 2021, the Income-tax Act has to be read along with I T A N o . 2 2 2 / K o l / 2 0 2 5 I T A N o . 1 9 4 6 / K o l / 2 0 2 4 U r v a s h i S a r e e s P v t . L t d . Page | 7 the substituted provisions. The substituted provisions apply retrospectively for past assessment years as well. On 1 April 2021, TOLA was still in existence, and the Revenue could not have ignored the application of TOLA and its notifications. Therefore, for issuing a reassessment notice under section 148 after 1 April 2021, the Revenue would still have to look at: (i) the time limit specified under section 149 of the new regime; and (ii) the time limit for issuance of notice as extended by TOLA and its notifications. The Revenue cannot extend the operation of the old law under TOLA, but it can certainly benefit from the extended time limit for completion of actions falling for completion between 20 March 2020 and 31 March 2021.
For instance, Section 149(1)(a) of the new regime specified the time limit of three years from the end of the relevant assessment year for reopening of the assessment. For assessment year 2017-2018, the three year period expired on 31 March 2021. The expiry of time fell within the time period contemplated by Section 3 of TOLA read with its notifications. Resultantly, the Revenue had time until 30 June 2021 to issue a reassessment notice for assessment year 2017-2018 under section 149(1)(a). This harmonious reading gives effect to the legislative intention of both the Income-tax Act and TOLA. Moreover, Sections 147 to 151 are machinery provisions. Therefore, they must be given an interpretation that is consistent with the object and purpose of the Income-tax Act. …… 74. The above table indicates that the specified authority is directly co- related to the time when the notice is issued. This plays out as follows under the old regime: (i) If income escaping assessment was less than Rupees one lakh: (a) a reassessment notice could be issued under section 148 within four years after obtaining the approval of the Joint Commissioner; and (b) no notice could be issued after the expiry of four years; and (ii) If income escaping was more than Rupees one lakh: (a) a reassessment notice could be issued within four years after obtaining the approval of the Joint Commissioner; and (b) after four years but within six years after obtaining the approval of the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner.
After 1 April 2021, the new regime has specified different authorities for granting sanctions under section 151. The new regime is beneficial to the assessee because it specifies a higher level of authority for the grant of I T A N o . 2 2 2 / K o l / 2 0 2 5 I T A N o . 1 9 4 6 / K o l / 2 0 2 4 U r v a s h i S a r e e s P v t . L t d . Page | 8 sanctions in comparison to the old regime. Therefore, in terms of Ashish Agarwal (supra), after 1 April 2021, the prior approval must be obtained from the appropriate authorities specified under section 151 of the new regime. The effect of Section 151 of the new regime is thus: (i) If income escaping assessment is less than Rupees fifty lakhs: (a) a reassessment notice could be issued within three years after obtaining the prior approval of the Principal Commissioner, or Principal Director or Commissioner or Director; and (b) no notice could be issued after the expiry of three years; and (ii) If income escaping assessment is more than Rupees fifty lakhs: (a) a reassessment notice could be issued within three years after obtaining the prior approval of the Principal Commissioner, or Principal Director or Commissioner or Director; and (b) after three years after obtaining the prior approval of the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General.
Grant of sanction by the appropriate authority is a precondition for the assessing officer to assume jurisdiction under section 148 to issue a reassessment notice. Section 151 of the new regime does not prescribe a time limit within which a specified authority has to grant sanction. Rather, it links up the time limits with the jurisdiction of the authority to grant sanction. Section 151(ii) of the new regime prescribes a higher level of authority if more than three years have elapsed from the end of the relevant assessment year. Thus, non-compliance by the assessing officer with the strict time limits prescribed under section 151 affects their jurisdiction to issue a notice under section 148.
Parliament enacted TOLA to ensure that the interests of the Revenue are not defeated because the assessing officer could not comply with the pre conditions due to the difficulties that arose during the COVID-19 pandemic. Section 3(1) of TOLA relaxes the time limit for compliance with actions that fall for completion from 20 March 2020 to 31 March 2021. TOLA will accordingly extend the time limit for the grant of sanction by the authority specified under section 151. The test to determine whether TOLA will apply to Section 151 of the new regime is this: if the time limit of three years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under section 151(i) has an extended time till 30 June 2021 to grant approval. In the case of Section 151 of the old regime, the test is: if the time limit of four years from the end of an assessment year falls between 20 March 2020 and 31 March I T A N o . 2 2 2 / K o l / 2 0 2 5 I T A N o . 1 9 4 6 / K o l / 2 0 2 4 U r v a s h i S a r e e s P v t . L t d . Page | 9 2021, then the specified authority under section 151(2) has time till 31 March 2021 to grant approval. The time limit for Section 151 of the old regime expires on 31 March 2021 because the new regime comes into effect on 1 April 2021.
For example, the three year time limit for assessment year 2017- 2018 falls for completion on 31 March 2021. It falls during the time period of 20 March 2020 and 31 March 2021, contemplated under section 3(1) of TOLA. Resultantly, the authority specified under section 151(i) of the new regime can grant sanction till 30 June 2021.
Under Finance Act 2021, the assessing officer was required to obtain prior approval or sanction of the specified authorities at four stages: a. Section 148A(a) - to conduct any enquiry, if required, with respect to the information which suggests that the income chargeable to tax has escaped assessment; b. Section 148A(b) - to provide an opportunity of hearing to the assessee by serving upon them a show cause notice as to why a notice under section 148 should not be issued based on the information that suggests that income chargeable to tax has escaped assessment. It must be noted that this requirement has been deleted by the Finance Act 2022;33 c. Section 148A(d) - to pass an order deciding whether or not it is a fit case for issuing a notice under section 148; and d. Section 148 - to issue a reassessment notice.
In Ashish Agarwal (supra), this Court directed that Section 148 notices which were challenged before various High Courts "shall be deemed to have been issued under section 148-A of the Income-tax Act as substituted by the Finance Act, 2021 and construed or treated to be show-cause notices in terms of Section 148-A(b)." Further, this Court dispensed with the requirement of conducting any enquiry with the prior approval of the specified authority under section 148A(a). Under Section 148A(b), an assessing officer was required to obtain prior approval from the specified authority before issuing a show cause notice. When this Court deemed the Section 148 notices under the old regime as Section 148A(b) notices under the new regime, it impliedly waived the requirement of obtaining prior approval from the specified authorities under section 151 for Section 148A(b). It is well established that this Court while exercising its jurisdiction under Article 142, is not bound by the I T A N o . 2 2 2 / K o l / 2 0 2 5 I T A N o . 1 9 4 6 / K o l / 2 0 2 4 U r v a s h i S a r e e s P v t . L t d . Page | 10 procedural requirements of law High Court Bar Association v. State of U P [2024] 160 taxmann.com 32/299 Taxman 21 (SC)/[2024] 6 SCC 267.
This Court in Ashish Agarwal (supra) directed the assessing officers to "pass orders in terms of Section 148-A(d) in respect of each of the assesses concerned." Further, it directed the assessing officers to issue a notice under Section 148 of the new regime "after following the procedure as required under section 148-A." Although this Court waived off the requirement of obtaining prior approval under section 148A(a) and Section 148A(b), it did not waive the requirement for Section 148A(d) and Section 148. Therefore, the assessing officer was required to obtain prior approval of the specified authority according to Section 151 of the new regime before passing an order under section 148A(d) or issuing a notice under section 148. These notices ought to have been issued following the time limits specified under section 151 of the new regime read with TOLA, where applicable. F. Section 148 notices issued in June-September 2022 i. Scope of Article 142 113. In Ashish Agarwal (supra), this Court allowed the assesses to avail all the defences, including the defence of expiry of the time limit specified under section 149(1). In the instant appeals, the reassessment notices pertain to the assessment years 2013-2014, 2014-2015, 2015-2016, 2016-2017, and 2017-2018. To assume jurisdiction to issue notices under section 148 with respect to the relevant assessment years, an assessing officer has to: (i) issue the notices within the period prescribed under section 149(1) of the new regime read with TOLA; and (ii) obtain the previous approval of the authority specified under section 151. A notice issued without complying with the preconditions is invalid as it affects the jurisdiction of the assessing officer. Therefore, the reassessment notices issued under section 148 of the new regime, which are in pursuance of the deemed notices, ought to be issued within the time limit surviving under the Income- tax Act read with TOLA. A reassessment notice issued beyond the surviving time limit will be time-barred. G. Conclusions 114. In view of the above discussion, we conclude that: a. After 1 April 2021, the Income-tax Act has to be read along with the substituted provisions; b. TOLA will continue to apply to the Income-tax Act after 1 April 2021 if any action or proceeding specified under the substituted I T A N o . 2 2 2 / K o l / 2 0 2 5 I T A N o . 1 9 4 6 / K o l / 2 0 2 4 U r v a s h i S a r e e s P v t . L t d . Page | 11 provisions of the Income-tax Act falls for completion between 20 March 2020 and 31 March 2021; c. Section 3(1) of TOLA overrides Section 149 of the Income-tax Act only to the extent of relaxing the time limit for issuance of a reassessment notice under section 148; d. TOLA will extend the time limit for the grant of sanction by the authority specified under section 151. The test to determine whether TOLA will apply to Section 151 of the new regime is this: if the time limit of three years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under section 151(i) has extended time till 30 June 2021 to grant approval; e. In the case of Section 151 of the old regime, the test is: if the time limit of four years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under section 151(2) has extended time till 31 March 2021 to grant approval; f. The directions in Ashish Agarwal (supra) will extend to all the ninety thousand reassessment notices issued under the old regime during the period 1 April 2021 and 30 June 2021; 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 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 this Court in Ashish Agarwal (supra), and the period of two weeks allowed to the assesses 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 TOLA. All notices issued beyond the surviving period are time barred and liable to be set aside;” 3.3. Admittedly the notice u/s 148 of the Act was issued on 31.07.2022 i.e. beyond the TOLA period and as per the decision of the Hon'ble Supreme Court such a notice under the old regime could have been issued only up to 31.03.2022 and the benefit of extension of due date as per TOLA would be applicable only to the notices issued between 01.04.2021 to 30.06.2021 if the limitation for issuing such notices was expiring between 20th March 2020 and 31st March 2021. The limitation I T A N o . 2 2 2 / K o l / 2 0 2 5 I T A N o . 1 9 4 6 / K o l / 2 0 2 4 U r v a s h i S a r e e s P v t . L t d . Page | 12 for A.Y. 2015-16 was expiring on 31.03.2022, i.e. beyond the period of 20.03.2020 to 31.03.2022, therefore, the benefit of TOLA would not be applicable. Further, in view of the first proviso to section 149(1) of the Act, the time limit for reopening assessments has been reduced from four years to three years. However, in cases where income escaping assessment amounts to ₹50 lakhs or more, assessments can be reopened within ten years. The new regime prohibits reopening of assessments that were time-barred under the old regime. The provisions of section 149 of the new regime are as under: 149. (1) No notice under section 148 shall be issued for the relevant assessment year,— (a) if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b); b) if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of— (i) an asset; (ii) expenditure in respect of a transaction or in relation to an event or occasion; or (iii) an entry or entries in the books of account, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more:] Provided that no notice under section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April, 2021, if a notice under section 148 or section 153A or section 153C could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause (b) of sub-section (1) of this section or section 153A or section 153C, as the case may be, as they stood immediately before the commencement of the Finance Act, 2021: {emphasis supplied} 3.4. In this case the notice u/s 148 of the Act was earlier issued on 26.06.2021 and the order u/s 148A(d) of the Act has been passed on I T A N o . 2 2 2 / K o l / 2 0 2 5 I T A N o . 1 9 4 6 / K o l / 2 0 2 4 U r v a s h i S a r e e s P v t . L t d . Page | 13 31.07.2022 and as per the old provisions of reassessment, the notice u/s 148 of the Act after complying with the procedural requirement as per the amended provisions, ought to have been issued by 31.03.2022 after excluding the period granted to file the reply in response to the notice u/s 148A(b) of the Act. Since the limitation for issue of notice u/s 148 of the Act expired on 31.03.2022 under the old regime, the benefit of TOLA for extending the limitation for issue of notice u/s 148 of the Act will not be available to the Revenue. Hence, in view of the decisions relied upon by the Ld. AR (supra), the notice issued u/s 148 of the Act on 31.07.2022 is barred by limitation and the assessment order is hereby quashed and appeal of the assessee is allowed. Other issues are not adjudicated as the assessment order has been quashed.
Since the very assumption of jurisdiction by the Ld. AO has been held to be illegal, hence the appeal of Revenue is also dismissed.