Reassessment notice under Section 148 quashed as time-barred beyond six-year limitation period for AY 2013-14

Gujarat HC quashed reassessment notice under Section 148 for Assessment Year 2013-14, holding it time-barred. The court ruled that notices issued between 01.04.2021 to 30.06.2021 under the old regime exceeded the prescribed six-year limitation period from the end of the relevant assessment year. Following precedents from Keenara Industries and Allahabad HC's Rajeev Bansal decision, the court declared such notices beyond permissible timeline and without jurisdiction. The reassessment notice and all consequential actions were quashed.

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Issues Involved:
1. Legality of the notice issued under Section 148 of the Income Tax Act, 1961, for reopening the assessment for the assessment year 2014-15.
2. Applicability of the time limit for issuing notices under the old and new regimes of the Income Tax Act, particularly in light of the Finance Act, 2021.
3. Impact of the Supreme Court's decision in Ashish Agarwal and the Division Bench decision in Keenara Industries Pvt. Ltd. on the validity of the notice.

Issue-wise Detailed Analysis:

1. Legality of the Notice Issued Under Section 148:
The petitioner challenged the notice dated 26.07.2022 issued under Section 148 of the Income Tax Act, 1961, for the assessment year 2014-15, arguing it was barred by limitation. The petitioner contended that the notice was issued beyond the permissible time limit of six years from the end of the relevant assessment year, as prescribed under the old regime of the Income Tax Act. The court agreed with this contention, referencing the decision in Keenara Industries Pvt. Ltd., which held that notices issued beyond the six-year limitation period were without jurisdiction and time-barred.

2. Applicability of Time Limit for Issuing Notices:
The court examined the transition from the old regime to the new regime introduced by the Finance Act, 2021, which came into effect from 01.04.2021. Under the old regime, Section 149 allowed for notices to be issued within four to six years from the end of the relevant assessment year, provided the escaped income exceeded one lakh rupees. The new regime reduced this period to three years, extendable to ten years only if the escaped income exceeded fifty lakh rupees and was represented in the form of an asset. The court emphasized that the first proviso to Section 149 of the new regime maintained the limitation period from the old regime, thereby barring notices that were already time-barred before the commencement of the Finance Act, 2021.

3. Impact of Supreme Court's Decision in Ashish Agarwal and Division Bench Decision in Keenara Industries Pvt. Ltd.:
The court considered the Supreme Court's decision in Ashish Agarwal, which allowed notices issued between 01.04.2021 and 30.06.2021 to be treated as show-cause notices under Section 148A(b) of the Act. However, the Supreme Court also clarified that all defenses available under Section 149 and the Finance Act, 2021, remained intact. The Division Bench in Keenara Industries Pvt. Ltd. further clarified that notices which became time-barred under the old regime could not be revived under the new regime. The court in the present case agreed with these interpretations, holding that the notice for the assessment year 2014-15 was issued beyond the permissible timeline and was thus illegal and without jurisdiction.

Conclusion:
The court concluded that the notice dated 26.07.2022 and the consequential order under Section 148A(d) were time-barred and without jurisdiction. Therefore, the notice and all consequential actions were quashed and set aside. The petition was allowed, and the rule was made absolute, with all other questions of fact and law kept open for future consideration.

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