Reassessment notice under section 148 invalidated as issued beyond surviving limitation period; time-barred notice quashed

ISSUES PRESENTED AND CONSIDERED

1. Whether a notice issued under section 148 of the Income Tax Act, 1961 between 01.04.2021 and 30.06.2021 pursuant to the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance/Act (TOLA) must be treated as a notice under section 148A(b) with effect from 01.04.2021 and, if so, whether a subsequent notice under section 148 issued after supply of information to the assessee complies with the time limits preserved as "surviving time."

2. Whether an assessment notice under the new regime (post-Ashish Agarwal directions) issued beyond the period of "surviving time" (computed having regard to issuance-date under TOLA up to 30.06.2021, supply of information and two-week response period) is time-barred and therefore invalid.

ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Legal character of notices issued between 01.04.2021 and 30.06.2021 under TOLA and applicability of section 148A(b)

Legal framework: The provisions of section 148 and the newly enacted section 148A(b) (effective 01.04.2021) govern issuance of reassessment notices; TOLA relaxed limitation periods for matters falling within 01.04.2021-30.06.2021. The Apex Court's decision in Ashish Agarwal treated notices issued in the TOLA window as required to be read with section 148A(b) and mandated supply of relevant information to the assessee before further steps.

Precedent treatment: The Court follows the principle in Ashish Agarwal that a notice issued under TOLA in the specified window is to be treated as a notice under section 148A(b). The subsequent Rajeev Bansal decision delineates the concept of "surviving time" and requires reassessment notices under the new regime to be issued within the time left after accounting for the TOLA period and the stay period until supply of information and the assessees' response period.

Interpretation and reasoning: The Court applies the two-tiered approach from Ashish Agarwal and Rajeev Bansal: first, notices issued during the TOLA window are to be treated under the regime of section 148A(b); second, any reassessment notice issued after supply of information must be within the residual limitation period ("surviving time") computed from the original TOLA notice date up to 30.06.2021. The assessment of validity thus requires calculation of days of surviving time and comparison with the date on which the reassessment notice under the new regime was issued.

Ratio vs. Obiter: Ratio - Notices issued under TOLA (01.04.2021-30.06.2021) are to be treated as notices under section 148A(b) and further reassessment notices must respect the surviving limitation as clarified by Rajeev Bansal. Obiter - Explanatory remarks about categorisation of various assessment years and illustrative computations in precedent judgments are ancillary.

Conclusions: The Court holds that a TOLA-period notice is to be treated as a section 148A(b) notice and that the subsequent reassessment notice must be tested against the surviving time doctrine laid down in Rajeev Bansal.

Issue 2 - Computation of surviving time and effect of issuance beyond surviving time

Legal framework: Limitation for issuance of reassessment notices under the Income-tax Act read with TOLA; the Apex Court's directions that show-cause notices were deemed stayed until the supply of information and a two-week response period; requirement that reassessment notices under the new regime be issued within the surviving limitation period.

Precedent treatment: The Court adheres to Rajeev Bansal which held (inter alia) that the stay period runs from the date of issuance of the deemed notice in the TOLA window until supply of information and two weeks allowed to assessee to respond, and any notice issued beyond the surviving period is time barred.

Interpretation and reasoning: The Court applies the methodology prescribed by the precedent: (a) determine original date of TOLA notice and calculate number of days remaining in limitation as at 30.06.2021 (surviving time), (b) determine date of supply of information to the assessee and add two weeks to ascertain last permissible date for issuance of reassessment notice, and (c) compare the actual date of the subsequent section 148 notice with that permissible last date. Where the subsequent notice is dated after the permitted last date (i.e., after surviving time expires), the notice is invalid. The Court exemplifies this method with tabulated facts showing specific surviving-time calculations and demonstrates that in multiple matters the reassessment notices were issued beyond the surviving-time cutoff.

Ratio vs. Obiter: Ratio - Notices issued under the new regime after supply of information and beyond the computed surviving time are time barred and invalid. Obiter - Specific numeric examples and categorisation of assessment years (e.g., effect of three-year and six-year limitation expiry timings) are explanatory of application but not novel legal propositions beyond the Apex Court rulings followed.

Conclusions: Applying the above computation, the Court concludes that the impugned reassessment notice was issued after the surviving-time cutoff and is therefore invalid. Consequently, the order passed under section 148A(d) and all consequential proceedings are quashed and set aside as they cannot survive an invalid notice.

Ancillary findings and remedies

Legal framework and reasoning: Where a reassessment notice is invalid as time barred, any consequential order under section 148A(d) and further proceedings predicated on the invalid notice also fall. The Court verifies dates supplied by Revenue and notes no contrary claim affecting the computation.

Conclusion: The notice under section 148 issued after the surviving-time period is quashed; the order under section 148A(d) and all consequential and subsequent proceedings arising from that notice are quashed and set aside. No costs were imposed.