Notices under section 148 limited to surviving time up to 30.06.2021; notices issued beyond that are invalid

The HC held that notices issued under section 148 read with the transitional provision were to be assessed by reference to the "surviving time" left up to 30.06.2021; where issuance occurred beyond that surviving period the notices are invalid. Applying the Apex Court directions, the impugned section 148 notices were quashed as having been issued beyond the surviving time, and consequential orders under section 148A(d) were set aside. The court rejected the petitioners' contention only insofar as approval under section 151(i) was concerned on the facts.

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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 under the Taxation and Other Laws (Relaxation and Certain Provisions) Ordinance/Act (TOLA) must be treated as a notice under section 148A(b) (new regime) with effect from 01.04.2021 and, if so, whether such subsequent reassessment notice under the new regime is time-barred.

2. How to compute the period of "surviving time" available for issuance of a reassessment notice under the new regime where an initial notice was issued during the TOLA period, including the effect of (a) the date on which the Assessing Officer supplies relevant information to the assessee and (b) the response period afforded to the assessee.

3. Whether an order passed under section 148A(d) and any consequential proceedings survive where the reassessment notice under section 148 is held to be issued beyond the surviving period.

ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Treating TOLA-period notices as notices under the new regime and validity of subsequent reassessment notices

Legal framework: Section 148 (reopening) and the newly incorporated section 148A (procedural safeguards) govern reassessment. TOLA extended certain limitation periods and created a deemed stay of notices issued between 01.04.2021 and 30.06.2021, which must be reconciled with the post-01.04.2021 statutory regime.

Precedent Treatment: The Court applies the binding principles laid down by the Supreme Court (as set out in the judgment treating TOLA-period notices as attracting section 148A requirements) and the later authoritative ruling defining the concept of "surviving time" and consequences for notices issued beyond it. The High Court follows those precedents rather than distinguishing or overruling them.

Interpretation and reasoning: A notice issued under section 148 during the TOLA period is to be treated as having been issued subject to the procedures and timelines of section 148A of the new regime from 01.04.2021. The validity of any subsequent notice under section 148 (post supply of information and post section 148A(d) order) must be tested against the remaining limitation period that survived as at 30.06.2021 (the end of the TOLA extension), as articulated by the apex authority. If the subsequent notice is issued after the expiry of that surviving period it is time-barred.

Ratio vs. Obiter: Ratio - Notices issued under TOLA must be treated as within the scope of section 148A and any reassessment notice under the new regime must be issued within the surviving limitation period; otherwise it is invalid. (This follows and applies the apex legal ratio.)

Conclusions: The Court concludes that the TOLA-period notice invokes the section 148A regime and that validity of later reassessment notices depends on surviving time calculations; any reassessment notice beyond that period is invalid.

Issue 2 - Computation of "surviving time": supply of information date, reply period, and application to the facts

Legal framework: The surviving time is computed by reference to (a) limitation periods under the Income-tax Act as they stood, (b) the date of the original TOLA-era notice (deemed stayed period), (c) the date when the Assessing Officer supplies relevant information/material to the assessee pursuant to directions, and (d) the period allowed to the assessee to reply (two weeks as per apex directions, but applied as 15 days in the instant facts).

Precedent Treatment: The Court applies the apex ruling which (i) treats the stay period as running from the date of the TOLA notice until supply of information and the reply period, and (ii) requires that any new reassessment notice be issued within the limitation time that survived as at 30.06.2021. The High Court also relies on its prior detailed consideration of these principles in similar matters, adopting its methodology for computing surviving days case-by-case.

Interpretation and reasoning: The Court reiterates that the Supply Date + Assessee's Reply Period creates the end of the deemed stayed interval; the Assessing Officer then must issue the reassessment notice within the number of days that remained of the statutory limitation as at 30.06.2021. The Court applies this to the present facts: information was supplied on 27.05.2022; allowing 15 days for reply yields a due reply date of 10.06.2022; the surviving cut-off (calculated from the original TOLA notice and statutory timelines) was 17.06.2022 for the assessment year in question. The reassessment notice was issued on 24.08.2022, which is beyond the surviving cut-off.

Ratio vs. Obiter: Ratio - The correct method of computing surviving time requires (i) identifying days remaining as at 30.06.2021, (ii) treating the period of stay as continuing until supply of information and the statutorily/ judicially prescribed reply period, and (iii) mandating issuance of the new notice within the previously surviving period. Observations applying the specific calendar calculations to different assessment years in earlier petitions are explanatory of the ratio and serve as direct application to similar factual matrices (binding as applied to like facts in this judgment).

Conclusions: Applying the prescribed computation, the Court finds the reassessment notice issued on 24.08.2022 to be outside the surviving time (cut-off 17.06.2022) and therefore time-barred and invalid.

Issue 3 - Consequences for section 148A(d) orders and consequential proceedings when reassessment notice is invalid

Legal framework: Section 148A(d) is a procedural step that may culminate in issuance of a fresh section 148 notice. If a subsequent section 148 notice is invalid for being time-barred, the legal viability of the preceding section 148A(d) order and any consequential actions must be assessed.

Precedent Treatment: The Court follows the logical corollary of the apex directions and prior High Court decisions: where the later substantive notice is invalid for being beyond surviving time, antecedent procedural orders that led to that notice cannot survive either.

Interpretation and reasoning: Since the reassessment notice under section 148 is quashed as time-barred, the Court holds that the order under section 148A(d) and all subsequent proceedings flowing from the invalid notice lack legal foundation and must be set aside. The Court therefore quashes both the notice and the section 148A(d) order and annuls consequential proceedings.

Ratio vs. Obiter: Ratio - An invalid reassessment notice (issued beyond surviving time) renders the antecedent section 148A(d) order and all consequential proceedings non-established and liable to be quashed.

Conclusions: The Court quashes the impugned section 148 notice as time-barred, quashes the section 148A(d) order, and sets aside all consequential proceedings; no costs were ordered.

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