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Facts
The assessee filed an appeal against the order of the NFAC for AY 2015-16. The core issue revolved around the validity of reassessment proceedings initiated under Section 147/148 of the Income Tax Act. The assessee contended that the notice was time-barred and lacked compliance with Section 149 and the TOLA Act.
Held
The Tribunal held that the reassessment proceedings and the consequent order were void ab initio as the notice under Section 148 was issued beyond the limitation period. The Tribunal noted that TOLA relaxation did not apply to the assessment year in question, and the notice was issued under the old law after the new law had come into effect.
Key Issues
Whether reassessment proceedings initiated by issuing notice u/s 148 of the IT Act are barred by limitation and void ab initio due to non-compliance with Section 149 and the TOLA Act.
Sections Cited
147, 148, 149, 151, TOLA Act
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘A’ NEW DELHI
Before: SHRI SUDHIR KUMAR & SMT. RENU JAUHRI
ORDER
Per Sudhir Kumar, JM :
This appeal filed by the Assessee is directed against the order dated 26.9.2025passed by the National Faceless Appeal Centre (NFAC), Delhi for the assessment year 2015-16. At the time of hearing, both the sides have only argued the following legal issues:- 1. On the facts and circumstances of the case, the reassessment proceedings initiated u/s. 147 of the I.T. Act by issue of notice dated 21.7.2022 u/s. 148 of the I.T. Act is barred by limitation and has been initiated without making compliance of provision of section 149 read with TOLA Act, 2020 therefore, the reassessment proceedings and consequent reassessment order are void ab initio.
2. The reassessment proceedings and consequent reassessment both are invalid and without jurisdiction as the said assessment has been initiated and completed without complying with legal requirements of the provisions of section 147, 148, 148A, 151, 149 of the Act therefore, such assessment is void abintio and liable to be quashed. 2. At the time of hearing, Ld. AR has submitted with regard to ground relating to reassessment proceedings are barred by limitation is concerned, stated that the assessment year does not fall under relaxation under TOLA Act. He stated that notice u/s. 148 of the Act in the present case was issued on 30.6.2021 under un-amended Act and such notices were held to be invalid in view of the Hon’ble Apex Court recent decision in the case of UOI vs. Rajeev Bansal [2024] 167 Taxmann.com 70 (SC). He stated that Hon’ble Apex Court in the said decision has held that the time period for issuing reassessment notices under the new law for the assessment year 2015-16 remained open and available until 31st March, 2022. Consequently, it can be safely inferred that TOLA would not apply to notices issued u/s. 148 of the act for AY 2015-16 under the old law during the period from 1st April, 2021 to 30th June, 2021, as the limitation period for issuing those notices under section 148 had not expired by 31st March, 2021. Furthermore, the Supreme Court has already ruled that the new law applies to all reassessment notices upto the assessment year 20121-22, when the new reassessment regime was introduced. Therefore, TOLA relaxation does not validate the reassessment proceedings for AY 2015-16 in particular which position of law has been accepted by the department before the Hon’ble Apex court in para 19(f) therein and the Hon’ble Apex Court has not found the acceptance of the department to be without reason. He further submite that the above conclusion is further illustrated in a chart found on page 52 in paragraph 19(e) of the Apex Court’s judgement. Assessment Within 3 Expiry of Within Six Expiry of year years Limitation years Limitation (1) (2) read with (4) read with TOLA for (2) TOLA for (4) (3) (5) 2013-14 31.03.2017 TOLA not 31.03.2020 30.06.2021 applicable 2014-15 31.02.2018 TOLA not 31.03.2021 30.06.2021 applicable 2015-16 31.03.2019 TOLA not 31.03.2022 TOLA not applicable applicable 2016-17 31.03.2020 30.06.2021 31.03.2023 TOLA not applicable 2017-18 31.03.2021 30.06.2021 31.03.2024 TOLA not applicable Since TOLA does not apply to the assessment year 2015-16 and the regular time limit for issuing notice under section 148 of the Act was available until 31st March, 2022, the notices issued for the assessment year 2015-16 under the old law between 1st April, 2021 and 30th June, 2021 would not receive an extended period of validity. These notices would be considered invalid as they were issued under the old law which was impermissible since the new law had kicked in from 1st April, 2021 and they did not receive a fresh lease of life under TOLA since the time limit available for reopening the said year was till 31st March, 2022. He further submitted that recently the Hon’ble Jurisdictional High Court of Delhi in the case of IBIBO Group Private Limited vs. ACIT WP (C) 17639/2022 dated 13.12.2024 (Del) has quashed the reassessment proceedings for AY 2015-16 on identical facts relying on the decision of the Hon’ble Supreme Court in the case of UOI vs. Rajeev Bansal (supra).
Ld. AR for the assessee with regard to notice beyond surviving period in view of section 149(1) r.w. relaxation granted under TOLA Act has stated that notice u/s. 148 of the Act was issued under the un-amended Act to the appellant on 30.6.2021. The section 148 of the Act has been substituted by Finance Act, 2021 w.e.f. 1.4.2021 wherein notice u/s. 148 of the Act as per the old provisions of section 148 of the Act applicable upto 31.3.2021 could not 3 have been issued after 31.3.2021. He further submitted that this issue per se was subject matter of various writ petitions filed in various High Courts and ultimately got settled by the Apex Court in the case of UOI vs. Ashish Agarwal reported in 444 ITR 1 (SC) dated 4.5.2022. Thereafter, the AO issued letter u/s. 18A(b) of the Act on 19.5.2022. The assessee filed its reply on 2.6.2022. The AO passed an order u/s. 148A(d) of the Act on 20.7.2022 rejecting the objections of the assessee and proceeded to issue notice u/s. 148 of the act on 21.7.2022. He further submitted that now the short question that arises for consideration of the Bench is as to whether the subsequent notice issued u/s. 148 of the Act on 21.7.2022 is to be treated as time barred or not in the light of decision of Hon’ble Apex Court in the case of UOI vs. Rajeev Bansal reported in 469 ITR 46 (SC). To support his contention, he stated that the above facts can be verified from the following table and the compilation of the documents in paper book:-
S.No. Particulars Paper Book 1. Assessment year 2015-16 2. Extended period of limitation 30.6.2021 as per IT Act read with TOLA 3. Date of original notice u/s. 30.6.2021 1 148 under unamended Act 4. Time surviving from date of issuance of deemed SCN till expiry of period as extended by TOLA (from 30.6.2021) 5. Date of issue of notice u/s. 19.5.2022 2 148A(b) 6. Due date of issue of notice 2.6.2022 2 u/s.148A(b) 7. Reply objection filed on 2.6.2022 3-5 8. Extended date by which 2.6.2022 notice should have been issued u/s. 148 (A+B) 9. Actual date of issuance of 21.7.2022 8 notice u/s. 148 Ld. AR submitted that the AO issued the notice u/s 148 of the Act on 21-07-2022 which is to be treated time barred. Reliance has placed on the decision of Union of India & Ors Vs. Rajeev Bansal (Supra) wherein, it has been held has as under:
“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 segment of the judgment, the period from the date of the issuance of the deemed notices till the supply of relevant information and material by the assessing officer to the assessee in terms of the direction 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 assessee to reply to the cause notices must 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 assessee 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) basd 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 see State of AP v. AP Pensioners Association, (2005) 13 SCC 161 [28]. [This court observed that the “legal fiction undoubtedly is to be construed in such a manner so as to enable a person, for whose benefit such legal fiction has been created, to obtain all consequences flowing thereform.”] PART F 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, notice 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 202 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.” Ld. AR has submitted that in view of the observations of the Hon’ble Supreme Court in the case of Rajeev Bansal (supra), the notice u/s. 148 is to be treated as barred by limitation and consequently the reassessment proceedings would be liable to be quashed as void ab initio.
The Ld. DR relied upon the orders of the lower authorities.
We have heard the revival contentions of the parties and gone through the material available on record. In view of the aforesaid discussions, we find force in the contention of the Ld. AR that TOLA does not apply to the assessment year and the regular limit for issuing notice u/s. 148 of the Act was available until 31.3.2022, the notices issued of the assessment year 2015-16 under the old law between 1st April, 2021 and 30th June, 2021 would not receive an extended period of validity. These notices would be considered invalid as they were issued under the old law which was impermissible since the new laws had kicked in from 1st April, 2021 and they did not receive a fresh lease of life under TOLA since the time limit available for reopening the said year was till 31.3.2022. It is noted that Hon’ble Jurisdictional High Court in the case of IBIBO Group Pvt Lgd. Vs. ACIT WP (C) 17639/2022 dated 13.12.2024 (Del) and quashed the reassessment proceedings for AY 2015-16 on identical facts relying on the decision of the UOI vs. Rajeev Bansal (Supra). We also note that in view of the Hon’ble Supreme Court decision in the case of Rajeev Bansal(Supra) the extended due date for issuance of notice u/s 148 of the Act expired on 18.6.2022 and since, the notice is u/s 148 of the Act is issued on 21-07-2022, thus the said notice was time barred by limitation. Respectfully following the aforesaid decision of the Hon’ble Supreme Court, we hold that the notice issued u/s 148 of the Act on 21.7.2022 is time barred by limitation, hence, the same is quashed and consequently, the reassessment also quashed. Accordingly the legal issues raised by the assessee is allowed.
Since we have decided the legal grounds in favour of the assessee, the other grounds have become academic.
In the result, Assessee’s appeal is allowed in the above terms.