Time Bar for Reassessment upheld: transitional-period notices held illegal where limitation had already expired, and set aside.

Notices issued as show-cause under the reassessment scheme during the transitional period are time barred where they had already become barred under the pre-amendment six-year limitation; the court applied the preservation principle in the amended reassessment regime and held such notices relating to the two specified assessment years expired by efflux of time and could not be revived by subsequent statutory changes or notifications, following prior divisional authority, and set aside the impugned notices and related orders as illegal and without jurisdiction.

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Issues: Whether notices issued under Section 148 of the Income-tax Act, 1961 (treated as show-cause notices under Section 148A(b)) between 01.04.2021 and 30.06.2021 insofar as they relate to Assessment Year 2013-14 and Assessment Year 2014-15 are time barred and consequently illegal and without jurisdiction.

Analysis: The Court examined the statutory scheme governing reassessment, particularly Sections 147 and 149 of the Income-tax Act, 1961 as they existed before 01.04.2021 (old regime) and as recast by the Finance Act, 2021 (new regime), together with the introduction of Section 148A and the procedural changes effected by Section 42 of the Finance Act, 2021. The Court considered the effect of temporary extensions effected by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (Section 3) and relevant notifications, and the Supreme Court's directions in Union of India v. Ashish Agarwal treating notices issued in the period as showcause notices under Section 148A(b). The Court applied the principle that where a notice had become time barred under the old regime (six years from the end of the relevant assessment year), it could not be revived by the new regime or by secondary legislation or notifications; the First Proviso to Section 149 (as amended) preserves the bar where the notice could not have been issued under the old regime. The Division Bench's prior decision in Keenara Industries Pvt. Ltd. was followed, holding that notices relating to AY 2013-14 and AY 2014-15 expired by efflux of time (six years) before 01.04.2021 and thus could not be validly issued between 01.04.2021 and 30.06.2021. The Court declined to traverse other factual or legal questions, keeping them open.

Conclusion: The impugned notices under Section 148 and the orders under Section 148A(d) of the Income-tax Act, 1961 insofar as they relate to Assessment Year 2013-14 and Assessment Year 2014-15 are time barred, illegal and without jurisdiction, and are set aside; the petitions are allowed in favour of the assessees.

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