Limitation for reassessment notice under sections 148 and 149 led to quashing where the fresh notice was issued late.

A reassessment notice for assessment year 2014-15 was challenged on limitation, with the issue turning on whether the original notice issued on 17.06.2021, treated as a deemed notice under section 148A(b) after the Supreme Court's transitional directions, left time for a valid fresh notice under section 148. The applicable limitation under section 149, as extended by those directions, expired on 28.06.2022, but the fresh notice was issued on 29.07.2022. On that factual and statutory basis, the notice was held time-barred and the reassessment was quashed in favour of the assessee.

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Issues: Whether the notice issued under section 148 of the Income-tax Act, 1961 for the assessment year 2014-15 was barred by limitation and, if so, whether the reassessment assessment could be sustained.

Analysis: The original notice was issued on 17.06.2021 and, after the Supreme Court's directions in the reassessment regime, was treated as a deemed notice under section 148A(b) of the Income-tax Act, 1961. The limitation under section 149 of the Income-tax Act, 1961, as extended by the applicable transitional directions, left only a limited surviving period for issuance of the fresh notice. On the facts found, the fresh notice under section 148 was issued on 29.07.2022, beyond the extended period ending on 28.06.2022.

Conclusion: The notice under section 148 of the Income-tax Act, 1961 was time-barred, the ground was accepted, and the reassessment was quashed in favour of the assessee.

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