Surviving Limitation Period: reopening notices issued beyond the surviving limitation are invalid and consequent reassessments void.

Notices under section 148 issued after the Ashish Agarwal legal fiction must fall within the surviving limitation period computed by excluding the stay period and the time allowed to the assessee to respond; where that surviving period has expired, a fresh 148 notice and any consequent order under section 147 are time barred. Applying the Rajiv Bansal clarification and co-ordinate decisions, the ITAT found the 28.07.2022 and 29.07.2022 notices to be beyond the surviving limitation period and therefore invalid, and held consequential reassessment orders void ab initio, allowing the appeals in favour of the assessee.

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Issues: (i) Whether the notices issued under section 148 (after being treated as deemed show-cause notices under the Ashish Agarwal decision) for Assessment Years 2015-16 and 2016-17 were issued within the surviving limitation period as computed under the legal fiction and directions in Ashish Agarwal and the subsequent Rajiv Bansal rulings, and (ii) Whether reassessment orders passed pursuant to such notices are valid or liable to be quashed.

Issue (i): Whether the notices issued under section 148 dated 28.07.2022 (AY 2015-16) and 29.07.2022 (AY 2016-17) were within the surviving time limit available to the assessing officer under the legal framework established by Ashish Agarwal, read with the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, and as clarified by Rajiv Bansal.

Analysis: The Tribunal examined the timeline of issuance of the original notices, the deemed effect of those notices as show-cause notices under the Ashish Agarwal decision, the period excluded for computation of limitation (including the stay period and the time allowed to the assessee to respond), and the surviving period available to the Assessing Officer to pass the 148A(d) order and issue a fresh section 148 notice. The Tribunal applied the Supreme Court's holding in Rajiv Bansal that TOLA does not operate to extend limitation for AY 2015-16 beyond the surviving period and relied on co-ordinate decisions (including Tribunal and High Court authorities) which held that notices issued on or after 1.4.2021 for AY 2015-16 are to be dropped and that notices issued beyond the surviving period computed under the legal fiction are time barred. On the facts, the Tribunal found that the surviving period in the present cases expired before the dates on which the orders under section 148A(d) and the fresh section 148 notices were passed/issued; accordingly those notices fell beyond the surviving time limit.

Conclusion: The notices under section 148 dated 28.07.2022 (for AY 2015-16) and 29.07.2022 (for AY 2016-17) were issued beyond the surviving limitation period and are time barred. This conclusion is in favour of the assessee.

Issue (ii): Whether the reassessment orders passed pursuant to the aforesaid time-barred notices are valid.

Analysis: Having held the impugned section 148 notices to be invalid for being time barred, the Tribunal treated the consequential reassessment orders passed under section 147 read with the relevant procedural provisions as having been made without jurisdiction. The Tribunal followed binding and persuasive authorities which held that a reassessment completed pursuant to an invalid/time-barred notice is void ab initio. The Tribunal noted that other grounds raised on merits became academic once the reopening was quashed.

Conclusion: The reassessment orders passed pursuant to the quashed section 148 notices are void and are quashed. This conclusion is in favour of the assessee.

Final Conclusion: The legal effect of the decision is that the reopening notices issued beyond the surviving limitation period under the Ashish Agarwal legal fiction and Rajiv Bansal clarification are invalid; consequential reassessment orders based on such notices are quashed and the appeals are allowed, with other grounds rendered academic.

Ratio Decidendi: Notices issued in pursuance of deemed show-cause notices (under the Ashish Agarwal legal fiction) must be issued within the surviving time limit computed by excluding the stay period and the time allowed to the assessee to respond; notices issued beyond that surviving limitation period are time barred and any reassessment completed thereon is void ab initio.

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