2025 (2) TMI 1429 - AT - Income Tax

Time bar on reassessment: compute surviving limit after deemed notice and reply exclusion; notice beyond that limit is invalid.

Application of the post 2021 reassessment procedure requires computing a surviving time limit from the deemed initial notice date, subtracting the ... Validity of reopening of assessment as barred by limitation - Notice issued u/s 148 as barred by limitation u/s 149 - scope of New regime law - applicability of TOLA - surviving time limit under TOLA - extension to seven days under the fourth proviso to section 149 HELD THAT:- In the cases where section 148 notices issued under the old regime between 01.04.2021 to 30.06.2021, by virtue of the decision of Ashish Agarwal [2022 (5) TMI 240 - SUPREME COURT] were deemed to be issued under section 148A of the Act. For such notices deemed as issued under 148A for AY 2013-14 and 2014-15, (where TOLA is applicable) the Hon'ble Supreme Court in the case Rajeev Bansal [2024 (10) TMI 264 - SUPREME COURT (LB)] provided clarity as to the time limit available to the AO for completing the procedure under section 148A and for issuing of notice under 148. Surviving time limit available to the AO for issue of notice under section 148 is number of days from the date of the issuance of the deemed notices 148A(a) till 30.06.2021 besides the period granted to the assesses to reply to the show cause notices in terms of the third proviso to Section 149. Further as per the fourth proviso if the surviving time limit is less that 7 days then, such remaining period shall be extended to seven days for the purpose of period limitation. In assessee's case the original notice under section 148 was issued on 30.06.2021 and said notice was deemed to be issued under section 148A and as per fourth proviso to section 149 is 7 days. Further the AO in the notice under section 148A(b) dated 28.05.2022 has given 15 days time to respond i.e. by 12.06.2022. Therefore the time limit by when the AO out to have issued the notice is 19.06.2022. In the present case the AO has issued the notice under section 148 on 28.07.2022 and therefore we are of the considered view that the notice u/s 148 is barred by limitation and invalid. Assessee appeal allowed. Issues: Whether the notice under section 148 dated 28.07.2022 is time barred and the reassessment initiated thereon is invalid.Analysis: The Tribunal considered the reassessment sequence under the new regime (issue of notice under section 148A(b), response period, order under section 148A(d), and issuance of notice under section 148) and the effect of the Supreme Court decisions treating certain section 148 notices issued between 01.04.2021 and 30.06.2021 as deemed section 148A notices. Applying the principles in the cited decisions, the period available to the Assessing Officer to issue a notice under section 148 is the surviving time limit computed from the date of the deemed notice to 30.06.2021, plus the exclusion for the period allowed to the assessee to reply under the provisos to section 149. Where the surviving period after exclusions is less than seven days, it is extended to seven days. On the facts the original notice was dated 30.06.2021 (deemed to be under section 148A), the assessee had until 12.06.2022 to reply to the section 148A(b) notice which expired without reply, and the extended surviving period for issuance of a section 148 notice thus ended on 19.06.2022. The AO issued the section 148 notice on 28.07.2022, beyond the computed surviving time limit. The Tribunal held that issuance beyond the surviving time limit renders the notice invalid and the consequent reassessment order liable to be quashed.Conclusion: The notice under section 148 dated 28.07.2022 is time barred; the reassessment order is quashed and the assessee's appeal is allowed.