INCOME TAX OFFICER WARD-2(2)(1), GHAZIABAD, GHAZIABAD vs. VIKAS SHARMA, GHAZIABAD

2. On the facts and circumstances of the case and in law, the Ld. CIT(A) has not considered a crucial fact that in this case the assessee did not file any response to the notice and as such notice issued u/s 148 on 29.06.2022 was not barred by limitation in view of the Hon'ble Supreme Court decision in the case of Union of India Vs. Rajeev Bansal (Supra). The Ld. CIT(A) himself has noted this fact at para no. 5.2.5, the relevant portion of the same is being reproduced as under: "In the instant case, the notice u/s 148 of the Act under old regime was issued on 09.06.2021. Therefore, as per the illustration the AO had 22 days (days between 9 June 2021 and 30 June 2021] to issue a notice under section 148 of the new regime. This time starts ticking for the AO after receiving the response of the assessee. In this case, as per notice dated 17.05.2022 vide DIN ITBA/COM/F/17/2022- 23/1043042649(l) the AO gave time up to 31.05.2022 to the appellant to submit his response and the appellant did not file any response."

3. As per the said judgments of the Hon'ble Supreme Court, time starts ticking for the AO only after receiving the response of the assessee but it does not say anything about the time limit if no response is submitted by the assessee. Therefore, in the cases like case of the assessee where the assessee did not file response to the notice are not covered by the illustration given by the learned CIT(A) as mentioned above. Therefore, the notice issued u/s 148 in this case on 29.06.2022 is not barred by limitation as per judgments of the Hon'ble Apex Court passed in the case of Ashish Agarwal and Rajeev Bansal."

3. At the outset, ld. DR of the Revenue brought to our notice the relevant facts of the case and filed written submissions which are reproduced below :- “1. Brief facts of the case are that the appellant is an individual and filed his return of income on 30.09.2013 declaring total income of Rs.23,55,050/- after claiming deduction under chapter VIA 0~Rs.1,00,0001-. In this case order u/s 143(3) was passed 30.03.2016 and total additions of Rs.2,66,22,416 were made in the assessment order. As per the information available with the department the appellant has received amount from M/s. ILA International (Account in DCO Bank bearing 002400210001387) amounting to Rs. 27,01,16,945/- from bank account no, 02400210001387 of DCO Bank. The appellant also debited Rs.2,53,38,244/- from M/s Pandit Cements from Account no. 2400500001543 and Rs. 1,09,03,776/- from M/s Krishna Distributer to M/s ILA International. The case was reopened u/s 147 and notice u/s 148 dated 09.06.2021 was issued to the assessee. Subsequently, the Hon'ble Supreme Court in the case of Union of India & Ors. Vs. Ashish Agarwal & Ors. Vide CIVIL APPEAL NO. 3005/2022 dated 04.05.2022 directed that the notice issued between 01.04.2021 to 30.06.2021 to be treated as show cause notice.

2. Following the above referred judgment of the Hon'ble Apex Court and CBDT's instruction, the notice issued u/s 148 of the Act dated 09.06.2021 was treated as show cause notice u/s 148A(b) of the Income Tax Act and the material underlying was provided to the assessee on 17.05.2022 requiring therein to furnish response within two weeks time in the matter. Thereafter, considering all the material available before him, the jurisdictional Assessing Officer found the case fit for issuance of notice u/s 148 of the Act and passed order 148A(d) of the Act accordingly within the stipulated time frame. Accordingly, a fresh notice u/s 148 of the Act was issued to the assessee on 29.06.2022 with prior approval of the specified authority. Thereafter, the proceedings were assigned to this Assessment Unit for further assessment proceedings under the Faceless Assessment Regime.

3. The Assessment Unit vide order dated 23.05.2023 passed the order u/s 147 r.w.s. 144 read with section 144~ of the Income Tax Act making addition of Rs.34,28,09,214/- u/s 69A r.w.s. 115BBE of the LT. Act. Aggrieved with the above assessment order, the assessee filed an appeal before CIT(A) on 01.07.2023 who vide order dated 05.03.2025 allowed the appeal of the assessee stating: 5.2.5 In the instant case, the notice U/S 148 of the Act under old regime was issued on 09.06.2021. Therefore, as per the illustration the AO had 22 days [days between 9 June 2021 and 30 June 2021} to issue a notice under section 148 of the new regime. This time starts ticking for the AO after receiving the response of the assessee. In this case, as per notice dated 17.05.2022 vide DIN: ITBAICOMIFI1712922- 23/1043043117(1), the AO gave time up to 31.05.2022 to the appellant to submit his response and the appellant did not file any response, the AO will have 22 days from 31.05.2022 to issue a reassessment notice under section 148 of the new regime. Thus, the limit for issuance of a notice under section 148 of the new regime expired on 22 June 2022. Therefore, the Impugned notice u/s 148 of The Act dated 29.06.2022 is barred by limitation in view of the Hon'ble Supreme Court decision in the case of Union of India vs Rajeev Bansal (Supra). Hence, the reassessment order is quashed and the Ground No. 5 is Allowed. 5.3 Since reassessment order has been quashed at above, the remaining grounds need not be adjudicated 6.0 In the result, the appeal filed against the order uls. 147rw.s.144B. of the IT Act, 1961 for the AY 2014-15 is ALLOWED.

4. From the perusal of the order of the CIT(A), it was noted that the CIT(A) has erred in interpreting the order of Hon'ble Supreme Court decision in the case of Union of India v Rajeev Bansal (Supra). The Ld. CIT(A) has not considered the crucial fact that in this case the assessee did not file any response to the notice issued U/S 148 dated 29.06.2022 and therefore the case law of Rajeev Bansal is not applicable in the instant case. As per the said judgments of the Hon'ble Supreme Court, time starts ticking for the AO only after receiving the response of the assessee but it does not say anything about the time limit if no response is submitted by the assessee. Therefore, in the cases like case of the assessee where the assessee did not file response to the notice are not covered by the illustration given by the learned CIT(A) in his order. Since, no response had been filed by the assessee, the time had not started ticking for the JAO and, therefore, the JAO had time to issue notice upto 30.06.2022. Thus, the notice issued U/S 148 in this case on 29.06.2022 is not barred by limitation as per judgments of the Hon'ble Apex Court passed in the case of Ashish Agarwal and Rajeev Bansal. In fact, the assessee remained non-compliant during the entire assessment proceedings. Therefore, Ld.

CIT(A) has erred in deciding the case on incorrect interpretation of ruling of the Hon'ble Supreme Court in the case of Rajeev Bansal ignoring the merit of the case and the fact that the assessee failed to furnish any reply to notice dated 17.05.2022.

5. The relevant Para of the decision of the Hon'ble Supreme Court in the case of Rajeev Bansal [2024] 167 taxmann.com 70 (SC)/[2024] 301 Taxman 238 (SC)/[2024] 469 ITR 46(SC)[03-10-2024]are reproduced herein below:- "111. The clock started ticking (or the Revenue on Iv after it received the response of the assesses to the show cause notice. 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 202I.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 are assessment 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. Further, as regards to the limitation jar issue of notice u/s 148 upto 30.06.2022 has been discussed in para no. 19( e) cited as below 6. The Finance Act 2021 substituted the old regime for re-assessment with a new regime. The first proviso to Section 149 does not expressly bar the application of TOLA. Section 3 of TOLA applies to the entire Income-tax Act, including Sections 149 and 151 of the new regime. Once the first proviso to Section 149(1)(b) is read with TOLA, then all the notices issued between 1 April 2021 and 30 June 2021 pertaining to assessment years 2013-2014, 2014- 2015, 2015-2016,2016-2017, and 2017-2018 will be within the period of limitation as explained in the tabulation below:

Assessment Within 3 Expiry of Within six Expiry of Year years Limitation years limitation read with read with TOLA for (2) TOAL for (4) 1 2 3 4 5 2013-2014 31.3.2017 TOLA not 31.3.2020 31.3.2021 applicable 2014-2015 31.3.2018 TOLA not 31.3.2021 31.3.2021 applicable 2015-2016 31.3.2019 TOLA not 31.3.2022 TOLA not applicable applicable 2016-2017 31.3.2020 30.6.2021 31.3.2023 TOLA not applicable 2017-2018 31.3.2021 30.6.2021 31.3.2024 TOLA not applicable 7. On 11-5-2022, the Central Board of Direct Taxes issued an Instruction for the implementation of the decision Ashish Agarwal (supra). The Instruction "clarified" that Ashish Agarwal (supra) will apply "to all cases where extended reassessment notices have been issued [...] irrespective of the fact whether such notices have been challenged or not." Paragraph 6.1 of the Instruction stated that the reassessment notices will "travel back in time to their original date when such notices were to be issued and then new section 149 of the Act is to be applied at that point." Thus, the Instruction is based on the presumption that the notices issued under Section 148 of the new regime will travel back in time to their original dates, that is, the date when the Section 148 notice under the old regime was issued.

8. In the said case the original notice u/s 148 was issued on 09.06.2022 and in view of the decision of Supreme Court in the case of Ashish Agarwal read with time lines of TOLA, the notice U/S 148 of the IT Act, 1961 in new regime could have been issued upto 30.06.2022.

9. The Ld. CIT(A)has rightly calculated the surviving time for issue of notice u/s 148 of the IT Act, 1961, under the new regime but has failed to appreciate that the time limitation starts ticking for the Revenue only after it received the response of the assesses to the show cause notices. In light of the facts mentioned above it is requested that the order of Ld. CIT(A) maybe quashed in view of the decision of Hon'ble Supreme Court as discussed above and the case be decided on merits.”

1. The Revenue in its grounds of appeal filed before ITAT has failed to correctly appreciate the binding legal position settled by the Hon’ble Supreme Court in Union of India & Ors. v. Rajeev Bansal (2024 SCC Online SC 2693; 469 ITR 46). The Assessee respectfully submits that since the notice under Section 148A(b) of the Income Tax Act, 1961 (“the Act”) was issued on 17.05.2022, allowing time till 31.05.2022 to furnish a reply, the said 14-day period is statutorily required to be excluded while computing the “surviving period” for issuance of notice under Section 148, in accordance with paragraph 110 and the third proviso to Section 149 of Act. The Hon’ble Supreme Court, while construing the legal fiction created in Union of India v. Ashish Agarwal (2022) 138 taxmann.com

64. (SC), categorically held that only the surviving time available between the date of issuance of the original notice under the old regime and 30.06.2021 (i.e., the last date extended under TOLA) could be utilized by the Assessing Officer (“AO”) after excluding the period granted for reply under Section 148A(b) of the Act.

2. On facts, the original notice under Section 148 was issued on 09.06.2021, leaving a surviving period of 22 days up to 30.06.2021. Pursuant to the Supreme Court’s directions in Ashish Agarwal (supra), a fresh show-cause notice under Section 148A(b) was issued on 17.05.2022, providing time till 31.05.2022 for filing a reply. Even assuming that the Assessee did not file any reply, the limitation clock restarted immediately upon the expiry of the reply period on 31.05.2022. The Assessing Officer was therefore required to complete the process under Section 148A(c) and (d) and issue the consequential notice under Section 148 within the surviving 22 days, i.e., on or before 22.06.2022. However, the impugned notice under Section 148 was issued only on 29.06.2022, clearly beyond the permissible period.

3. The contention of the Revenue that the “clock of limitation” would start only from the date of filing of a reply by the assessee is misconceived. Paragraph 110 of Rajeev Bansal makes it abundantly clear that only the period actually allowed for reply, i.e., two weeks as per the third proviso to Section 149 is to be excluded, and there is no scope for indefinite suspension of limitation pending reply. This view stands fortified by the decision of the Hon’ble ITAT, Mumbai Bench, in DCIT v. Prasad Shetty (ITA No. 6256/Mum/2024; order dated 28.04.2025), where on similar facts the Tribunal categorically held that once the time granted for reply to the notice under Section 148A(b) expires without any response, the Assessing Officer must issue the notice under Section 148 within the surviving period, and any notice issued thereafter is barred by limitation. The Tribunal clarified that the limitation clock begins immediately upon the expiry of the period permitted for reply, and not upon any subsequent act or inaction on the part of the assessee.

4. In the present case, the notice under Section 148A(b) was issued on 17.05.2022, granting the statutory period of 14 days to furnish a reply. As per the ratio laid down in Rajeev Bansal (supra), this “time allowed for furnishing objections” is to be excluded while computing the limitation for issuance of a reassessment notice under Section 148. The third proviso to Section 149(1) explicitly mandates exclusion of “the time or extended time allowed to the assessee to furnish a reply to the show-cause notice under Section 148A(b)”.

8. The Hon’ble Supreme Court in Rajeev Bansal (Supra) adopted the very phraseology of the third proviso, holding that “the third proviso to Section 149 allows the exclusion of time allowed for the assessees to respond to the show-cause notice under Section 148A(b) to compute the period of limitation. The third proviso excludes ‘the time or extended time allowed to the assessee’. Resultantly, the entire time allowed to the assessee to respond to the show-cause notice has to be excluded for computing the period of limitation.”The Court’s usage of the statutory phrase “time or extended time allowed” make it a clear case at it is only such time provided which will be construed for the purposes of limitation and no other date.

9. Paragraph 110 of the judgment further clarifies that the limitation clock remains suspended only during specific exclusionary intervals—namely, “from the deemed notice till the supply of relevant information/material … and the period of two weeks to reply under Section 148A(b)”—after which it resumes. Paragraph 111 must therefore be read contextually with paragraph 107. While it observes that “the clock started ticking for the Revenue only after it received the response of the assessees to the show- cause notices,” this statement pertains to cases where the assessee has actually filed a reply within the period allowed. In such instances, the reply date coincides with the expiry of the allowed period. However, where no reply is filed or it is filed belatedly, the law permits exclusion only of the “time or extended time allowed” and not an indefinite hiatus until the assessee’s eventual response. To read paragraph 111 in isolation would defeat both the language and purpose of the third proviso, effectively nullifying the limitation framework under Section 149 of the Act.

11. Applying these principles, the limitation for issuance of notice under Section 148 expired upon completion of the surviving period, even after excluding the 14-day window from 17.05.2022 to 31.05.2022. The AO was thus bound to issue the notice on or before 22.06.2022 (being the last day of the surviving period, as per the computation chart). Instead, the impugned notice was issued on 29.06.2022, i.e., beyond the jurisdictionally permissible period.

13. In such cases, the limitation clock restarts on the date of receipt of the reply, because the reply was filed within the statutorily allowed period. However, where no reply is filed, or a reply is filed after the expiry of the permitted time, the Assessing Officer cannot indefinitely defer the commencement of limitation. The only period that can be excluded under the statute is the period “allowed” to the assessee, not an indeterminate interval extending until an optional or belated response is received. To hold otherwise would render the jurisdictional limitation under Section 149 illusory and unbounded, contrary to both the legislative intent and the controlling ratio in Rajeev Bansal (para 114(h)), which mandates that all notices issued beyond the surviving period are “time-barred and liable to be set aside.” Accordingly, the reference to “receipt of reply” in paragraph 111 must be read in the context of a timely reply filed before expiry of due date, and cannot be stretched to postpone limitation in cases of non- response or belated compliance.

15. Accordingly, it is submitted that the impugned notice dated 29.06.2022, having been issued beyond the surviving period that ended on 22.06.2022, is ex facie barred by limitation and void ab initio. The entire reassessment proceedings initiated pursuant thereto are non est in law. The subsequent participation or inaction of the assessee cannot cure this foundational jurisdictional defect. Hence, the proceedings deserve to be quashed as being time-barred and without authority of law.

16. To summarise, it is the case of the Assessee that any inaction, acquiescence, or subsequent participation on its part cannot confer jurisdiction upon the Assessing Officer once the proceedings have already become time-barred. Jurisdiction under the reassessment framework is a condition precedent; once it stands extinguished due to the expiry of the statutory limitation period, no subsequent act or conduct of the Assessee can revive it. The Assessing Officer’s authority must exist ab initio and cannot be validated post facto through waiver, consent, or implied concurrence.

17. It is the aforenoted three periods which are thus liable to be added to the date when the notice for reassessment was issued in order to answer the question as to whether the reassessment notices could be said to be barred by the timelines as prescribed by Section 149 of the Act.

5. Ld. AR further submitted the charts showing the key factor and computation of limitation as per decision of UOI vs. Rajeev Bansal as under :- A. KEY FACTS S. Particulars Date Relevant Pg. No. of paper book 1. Notice issued under section 148 09.06.2021 1 (old regime) 2. Letter/Notice communicating 17.05.2022 2 information pursuant to SC decision in Ashish Agarwal – reply to be filed by 31.05.2022 3. Letter/Notice issued in continuation 19.05.2022 3 of the notice issued on 17.05.2022 4. Reply filed by Petitioner - 5. Order u/s 148A(d) 29.06.2022 4-6 6. Notice issued u/s 148- Sanction 29.06.2022 7-8 obtained from PCCIT 7. Copy of letter intimating the DIN 29.06.2022 9 for notice under section 148 of the Act issued on 29.06.2022 B. COMPUTATION OF LIMITATION AS PER DECISION OF UOI VS. RAJEEV BANSAL: S. SC Paras No. 1. Assessment Year 2013-14 2. Period of limitation u/s 149 [3 years or 6 6 years years] 3. Original Period of Limitation u/s 149 31.03.2020 4. Extended period of limitation as per IT 30.06.2021 Paras65-69 Act read with TOLA 5. Sanction to be obtained u/s 151 till PCIT 30.06.2021 [within 6 years] 6. Date of original notice u/s 148 – 09.06.2021 deemed SCN u/s 148A (b) 7. Time surviving from the date of 22 Days Paras109- issuance of deemed SCN till the expiry 113 of the period as extended by TOLA [from 09.06.2021 till 30.06.2021] 8. Period of deemed stay to be excluded as 09.06.2021 Paras105- per 3rd proviso to section 149 [Date of to 107 Original 148 till date allowed to file a 31.05.2022 reply to assessee] 9. Last date for issuing notice u/s 148 [i.e., 22.06.2022 Para77 31.05.2022+22 days] 10. Actual date of issuance of notice u/s 148 29.06.2022 11. Notice u/s 148 issued under the new No, it is Para77 regime is within time period barred by time limitation 6. Accordingly, in view of his above submissions, he pleaded that the appeal of the Revenue be dismissed and the order of the ld. CIT (A) be upheld.

10. Respectfully following the aforesaid decisions, we are inclined not to disturb the findings of the ld. CIT (A) and accordingly, dismiss the grounds taken by the Revenue.

12. With regard to appeal filed by the Revenue for AY 2014-15, since the facts are exactly similar to AY 2013-14 our above findings in Assessment Year 2013-14 are applicable mutatis mutandis in AY 2014-15. Accordingly, the appeal filed by the Revenue for AY 2014-15 is dismissed.