SANSKRITI BUILD-DEV PRIVATE LIMITED,JAIPUR vs. ITO WD 6(2), JAIPUR

While dealing with the above said contention raised on behalf of the assessee, Learned CIT(A) observed as under:- “I have gone through all the submissions and documents furnished by the appellant. As the appellant has raised objections against re-assessment proceedings, the concerned provisions are reproduced below for reference: The Finance Act, 2021 has also substituted Section 148 of the Act, with effect from 01/04/2021. The provisions u/s 148 of the Act reads as under: "Section 148 Before making the assessment, reassessment or recomputation under section 147, and subject to the provisions of section 148A, the Assessing Officer shall serve on the assessee a notice, along with a copy of the order passed, if required, under clause (d) of section 148A, requiring him to furnish within such period, as may be specified in such notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139: Provided that no notice under this section shall be issued unless there is information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the relevant assessment year and the Assessing Officer has obtained prior approval of the specified authority to issue such notice. The provisions of section 148 of the Act are made subject to the provisions of section 148A of the Act, which provision has been newly enacted by the Finance Act, 2021. The provisions of section 148A of the Act, read as under :- 148A. The Assessing Officer shall, before issuing any notice under section 148, conduct any enquiry, if required, with the prior approval of specified authority. with respect to the information which suggests that the income chargeable to tax has escaped assessment; Sanskriti Build-Dev Pvt. Ltd, Jaipur. provide an opportunity of being heard to the assessee, with the prior approval of specified authority, by serving upon him a notice to show cause within such time, as may be specified in the notice, being not less than seven days and but not exceeding thirty days from the date on which such notice is issued, or such time, as may be extended by him on the basis of an application in this behalf. as to why a notice under section 148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year and results of enquiry conducted, if any, as per clause (a); consider the reply of assessee furnished, if any, in response to the show-cause notice referred to in clause (b); decide, on the basis of material available on record including reply of the assessee, whether or not it is a fit case to issue a notice under section 148, by passing an order, with the prior approval of specified authority, within one month from the end of the month in which the reply referred to in clause (c) is received by him, or where no such reply is furnished, within one month from the end of the month in which time or extended time allowed to furnish a reply as per clause (b) expires: Provided that the provisions of this section shall not apply in a case where,- a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A in the case of the assessee on or after the 1st day of April, 2021, or the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any money, bullion, jewellery or other valuable article or thing, seized in a search under section 132 or requisitioned under section 132A, in the case of any other person on or after the 1st day of April, 2021, belongs to the assessee; or the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any books of account or documents. seized in a search under section 132 or requisitioned under section 132A, in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information contained therein, relate to, the assessee. CBDT issued Instruction No. 01 of 2022 on May 11, 2022, instructing the Assessing Officers as under.

To provide the information and material relied upon for issuance of extended reassessment notices within 30 days of the judgement of the Hon'ble Supreme Court Le. June 02, 2022.

The assessee had two weeks to reply as to why a notice under section 148 of the Act should not be issued to him on the basis of information which suggests that income chargeable to tax has escaped assessment in his case for the said assessment year.

If it is a fit case to issue a notice under section 148 of the Act, the assessing officer shall serve on the assesse notice under section 148 after obtaining the approval of the specified authority under section 151 of the Act, along with a copy of the order under section 148A(d) of the Act. In the second round of litigations, writ petitions/appeals were filed and various High Courts quashed the notices on the ground that benefit of TOLA was not applicable to the new regime of reassessment. It is found that the AO has followed the instructions of CBDT and various courts during re-assessment proceedings. The AO has issued notices, provided the information and material relied upon by the AO to the appellant. issued order u/s 148A (d) of the Income tax Act, 1961 by following the provisions of the Act. All the objections raised by the appellant were duly considered by the AO and a speaking order u/s 148A (d) of the Income tax Act, 1961 was passed on 27/07/2022. I do not find any merit in the grounds of appeal

Application to the Present Case - No Delay  Original notice u/s 148: 23.06.2021 (under old regime, deemed valid SCN under Section 148A(b) as per Ashish Agarwal)  Material provided: As per CBDT Instruction No. 1/2022  Assessee filed reply: 19.06.2022  Surviving period under TOLA: 61 days (from date of original notice up to 30.06.2021, as per Para 112 of SC judgment)  Notice u/s 148 issued: 27.07.2022  Time elapsed from date of reply: 38 days.”

Ld. DR for the department has also pointed out that Writ Petition –DB Civil Writ Petition No.14988/2022 filed by the appellant herein and others challenging the notice under section 148 stands dismissed by our own Hon’ble High Court. She has further submitted that factum of dismissal of Sanskriti Build-Dev Pvt. Ltd, Jaipur. the writ petition filed by our own Hon’ble High Court, challenging notice u/s 148 of the Act, has been concealed on behalf of the assessee even in the course of arguments.

We have specifically enquired from Ld. AR for the appellant as to why the factum of dismissal of the Writ Petition, filed by the appellant, challenging notice u/s 148 of the Act, has not been brought to our notice, Ld. AR has submitted that he himself is not within the know of the dismissal of the writ petition filed by the assessee.

Be that as it may, as pointed out by Ld. DR for the department, the above writ petition filed by the assessee and others has been recently dismissed on 21.08.2025.

In para 5 ,6 and 8 to 10 of the order passed by our own Hon’ble High Court, it has been observed as under:- “5. We accordingly direct the revenue to examine each and every case relating to the deemed notices issued under Section 148 of the Act, in light of the observations made by the Supreme Court in Rajeev Bansal's case (supra) and reach to a conclusion, as to whether the proceedings would fall within the limitation or have become time barred in terms of sub-para F, G & H of paragraph No.114 (supra).

While examining the cases, the example as mentioned by the Apex Court in its judgment in Rajeev Bansal's case (supra) in paragraph No.112 and observations made in paragraph Nos. 110 and 111, shall also be taken into consideration. Cases, which fall less than the value of Rs.50,00,000/- would have to be dropped keeping in view the stand taken by the revenue before the Apex Court, as observed in paragraph No.53. …………..

In view of the above, the contentions raised before us are rejected. Further, it has also been brought to notice that in the recent judgments passed in the cases of Assistant Commissioner of Income Tax Vs. Vikram Kapahi, reported in 2025] 170 taxmann.com 593 (SC), decided on 06.01.2025, Income Tax Officer Vs. Ashish Acharatlal Varaiya, reported in [2024] 168 taxmann.com 588 (SC) and Income Tax Officer Vs. Pradeep Himatlal Shah, reported in [2025] 170 taxmann.com 472 (SC), decided on 20.12.2024, the Hon'ble Supreme Court has also disposed of the Special Leave Petitions in terms of the judgment passed in Rajeev Bansal (supra) with the observation that the Assessing Officer shall dispose of the petitions in terms of the law laid down therein.

At this stage, on the issue involved herein, relevant paragraphs of decision in Rajeev Bansal’s case (supra), cited by Learned AR for the appellant and learned DR for the appellant, need to be reproduced for ready reference. Same read as under:- “108. The Income Tax Act read with TOLA extended the time limit for issuing reassessment notices under Section 148, which fell for completion from 20 March 2020 to 31 March 2021, till 30 June 2021. All the reassessment notices under challenge in the present appeals were issued from 1 April 2021 to 30 June 2021 under the old regime. Ashish Agarwal (supra) deemed these reassessment notices under the old regime as show cause notices under the new regime with effect from the date of issuance of the reassessment notices. The effect of creating the legal fiction is that this Court has to imagine as real all the consequences and incidents that will inevitably flow from the fiction. 163 Therefore, the logical effect of the creation of the legal fiction by Ashish Agarwal (supra) is that the time surviving under the Income Tax Act read with TOLA will be available to the Revenue to complete the remaining proceedings in furtherance of the deemed notices, including issuance of reassessment notices under Section 148 of the new regime. The surviving or balance time limit can be Sanskriti Build-Dev Pvt. Ltd, Jaipur. calculated by computing the number of days between the date of issuance of the deemed notice and 30 June 2021.

If this Court had not created the legal fiction and the original reassessment notices were validly issued according to the provisions of the new regime, the notices under Section 148 of the new regime would have to be issued within the time limits extended by TOLA. As a corollary, the reassessment notices to be issued in pursuance of the deemed notices must also be within the time limit surviving under the Income Tax Act read with TOLA. This construction gives full effect to the legal fiction created in Ashish Agarwal (supra) and enables both the assesses and the Revenue to obtain the benefit of all consequences flowing from the fiction, 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 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.

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.

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 nerfs Section 148 of the Sanskriti Build-Dev Pvt. Ltd, Jaipur. 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.

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

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 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;

The judgments of the High Courts rendered in Union of India v. Rajeev Bansal, 105 Keenara Industries Pvt. Ltd. v. ITO, Surat, JM Financial and Investment Consultancy Services Pvt. Ltd. v. ACIT, Siemens Financial Services Pvt. Ltd. v. DCIT, 168 Geeta Agarwal v. ITO, 169 Ambika Iron and Steel Pvt Ltd v. PCIT, 170 Twylight Infrastructure Pvt Ltd v. ITO, 171 Ganesh Dass Khanna v. ITO, 172 and other judgments of the High Courts which relied on these judgments, are set aside to the extent of the observations made in this judgment.

The appeals filed by the Revenue are accordingly allowed. The appeals filed by the assesses will be governed by reasons discussed in this judgment.”

Herein, notice under section 148 of the Act was issued on 23.6.2021. It is clear from the copy of the notice itself available on record. In the written submission, however, Learned DR has mentioned the date of issuance of notice as 1.5.2021. But, the record speaks otherwise.

Admittedly, as regards assessment year 2014-15, the period of six years was to be over between 20.3.2020 and 30.6.2021. Therefore, the Sanskriti Build-Dev Pvt. Ltd, Jaipur. notice issued under section 148 of the Act under old regime as per TOLA , on 23.6.2021 was a valid notice.

Proceeding further, admittedly, information was supplied to the assessee under section 148A(b) on 13.6.2022. Assessee filed reply thereto on 19.6.2022.

In this manner, counting the period as per decision by Hon’ble Apex Court, right from 23.6.2021, last date for issuance of notice under section 148 A(d) i.e. after considering the reply of the assessee, was 26.6.2022. But, herein, admittedly, the notice under section 148A(d) was issued to the assessee on 27.7.2022, after considering reply of the assessee under section 148A(c). In other words, the proceedings were not concluded by the Assessing Officer within the stipulated/surviving period i.e. upto 26.6.2022. When so calculated, we find merit in the contention raised on behalf of the appellant that the notice under section 148A(d) issued on 27.7.2022 was beyond the surviving period. Since the period of limitation, as provided under Section 149(1) of the Act, had expired prior to issuance of the impugned notice, same is held to be invalid being beyond the period of limitation.