Reassessment notice under Sections 148 and 148A held time-barred; surviving period under TOLA expired before issuance

HC applied SC's ruling in Rajeev Bansal to determine the "surviving period" for reassessment under the amended Sections 148/148A read with TOLA. It held that, after excluding the periods deemed stayed and the statutory response time under Section 148A(b), only one day remained for completing the 148A(d) procedure and issuing notice under Section 148. That one day expired on 9 June 2022, whereas the reassessment notice was issued on 25 July 2022 and was therefore time-barred and without jurisdiction. HC rejected Revenue's contention that absence of assessee's reply nullified the surviving-period concept, and quashed the impugned notice.

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1. ISSUES PRESENTED AND CONSIDERED

(1) Whether a reassessment order under Section 147, passed pursuant to a notice under Section 148 and an order under Section 148A(d) which had already been quashed by the Court and had attained finality, is without jurisdiction.

(2) Whether the decision of the Supreme Court in the matter concerning limitation for reassessment proceedings (popularly referred to as the "Rajeev Bansal" decision) automatically revived or validated reassessment proceedings in all cases across India, including those where notices under Section 148 and orders under Section 148A(d) had already been quashed and not appealed.

(3) Whether the notice under Section 148 dated 25.07.2022 for A.Y. 2014-15 was barred by limitation, applying the "surviving period" concept as laid down by the Supreme Court, having regard to Section 149, the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA), and the decision in Ashish Agarwal.

(4) Whether the absence of a reply by the assessee to the show-cause notice under Section 148A(b) affects the computation of limitation and the "surviving period" for issuance of a notice under Section 148 under the new regime.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (1): Validity of reassessment order based on quashed Section 148 notice and Section 148A(d) order

Interpretation and reasoning

The Court noted that the notice under Section 148 and the order under Section 148A(d), both dated 25.07.2022 for A.Y. 2014-15, had been quashed by the Court in an earlier writ petition by order dated 03.04.2024 on the ground of limitation. That order was not challenged before the Supreme Court and hence attained finality. Despite this, the Assessing Officer proceeded to issue a notice under Section 142(1), and ultimately passed a reassessment order under Section 147 on 17.10.2025 relying on paragraph 115 of the Supreme Court's judgment in the case referred to as "Rajeev Bansal" to justify "revival" of the case.

The Court examined paragraph 115 of that judgment and found that it merely set aside or modified certain specified High Court judgments "to the extent of the observations made" in the Supreme Court's judgment and did not state that all pending cases across India, irrespective of their stage or status, would stand automatically governed or revived. The Court emphasised that there was no direction in that judgment similar to the explicit "PAN India" applicability direction that had been given by the Supreme Court in Ashish Agarwal. The Court also observed that the Revenue continued to file special leave petitions in other, similar matters after the "Rajeev Bansal" decision, which indicated that even the Revenue did not treat that judgment as automatically covering all reassessment matters nationwide.

Conclusions

The Court held that once the notice under Section 148 and the order under Section 148A(d) were quashed by the High Court and that order attained finality, the Assessing Officer could not proceed to pass a reassessment order pursuant to such quashed notice. The impugned assessment order dated 17.10.2025, being founded on the quashed Section 148 notice dated 25.07.2022 and the quashed Section 148A(d) order of the same date, was held to be wholly without jurisdiction and liable to be quashed.

Issue (2): Scope of applicability of the Supreme Court's "Rajeev Bansal" decision

Legal framework discussed

The Court referred to paragraph 115 of the "Rajeev Bansal" judgment, in which specified High Court judgments were set aside "to the extent of the observations made" in that judgment. The Court contrasted this with paragraph 92 of the Supreme Court's decision in Ashish Agarwal, where the Supreme Court expressly stated that its directions would apply to designated categories of cases and added that "the present order shall be applicable PAN INDIA."

Interpretation and reasoning

The Court held that, unlike Ashish Agarwal, the "Rajeev Bansal" judgment did not contain a statement that it would apply PAN India or that it would revive or govern all cases irrespective of the status of the notices. The reference in paragraph 115 to specified existing judgments and "other judgments ... which relied on these judgments" was read as confined to the approximately 900 cases listed and tagged along with that batch, and not as a blanket directive covering all reassessment disputes.

The Court also reasoned that if "Rajeev Bansal" were meant to apply universally to all similar reassessment cases, there would have been no necessity for the Revenue to continue challenging other High Court judgments in the Supreme Court on the very same issues; the fact that such SLPs continued indicated that "Rajeev Bansal" was not of universal automatic application of the type asserted by the Assessing Officer.

Conclusions

The Court concluded that the Supreme Court's decision in "Rajeev Bansal" could not be invoked to revive or reopen reassessment proceedings that had already been quashed by a final High Court order in the present case. It did not confer jurisdiction on the Assessing Officer to ignore or override the final order dated 03.04.2024 of the High Court quashing the Section 148 and Section 148A(d) proceedings.

Issue (3): Limitation and "surviving period" for issuance of notice under Section 148 dated 25.07.2022 for A.Y. 2014-15

Legal framework discussed

The Court applied and relied on:

(i) Section 149(1) and its first proviso, which requires that a notice issued on or after 1 April 2021 must be within the time permissible under the unamended Section 149(1);

(ii) TOLA, which extended time limits for issuing reassessment notices up to 30.06.2021;

(iii) The Supreme Court's decisions in Ashish Agarwal and "Rajeev Bansal", particularly paragraphs 108 to 114 of "Rajeev Bansal", which clarified the effect of the legal fiction deeming old Section 148 notices to be show-cause notices under Section 148A(b), and laid down the manner of computing the "surviving" limitation period after exclusion of specified time segments.

Interpretation and reasoning

The Court summarised the Supreme Court's reasoning in "Rajeev Bansal" as follows:

* Old regime Section 148 notices issued between 01.04.2021 and 30.06.2021 are deemed to be notices under Section 148A(b);

* The "legal fiction" created in Ashish Agarwal stops the limitation clock from the date of the old Section 148 notice until specified milestones are completed; the remaining (surviving) period under the Act read with TOLA is then available for completing the Section 148A procedure and issuing a fresh Section 148 notice under the new regime;

* The period to be excluded for computing limitation includes: (a) the time from the date of the deemed notice under Section 148A(b) until supply of information/material to the assessee in terms of Ashish Agarwal; and (b) a further two weeks granted to the assessee to respond to such material, as recognised by the third proviso to Section 149;

* After expiry of the excluded period, the "surviving" time, calculated as the number of days between the date of the deemed notice and 30.06.2021, begins running from the date of receipt of the assessee's reply (or, where no reply is filed, from the last date by which such reply could have been filed); within this surviving time, the Assessing Officer must (i) consider the reply or absence thereof, (ii) pass an order under Section 148A(d), and (iii) issue a notice under Section 148 of the new regime; any notice beyond this surviving period is time-barred.

The Court also recorded that, for A.Y. 2014-15, under unamended Section 149(1)(b), the last permissible date for issuing a notice under the old regime was 31.03.2021, and the Supreme Court, in "Rajeev Bansal", had accepted the principle that, post-1 April 2021, the validity of a Section 148 notice must be tested with reference to the law then in force, including the first proviso to Section 149(1)(b) and TOLA.

Applying the above framework to the present facts, the Court laid out the chronology:

* 30.06.2021 - old Section 148 notice (deemed Section 148A(b) notice);

* 25.05.2022 - information and reasons for reopening supplied to the assessee, granting two weeks' time to reply;

* 08.06.2022 - expiry of the two weeks allowed for reply; no reply was filed;

* 25.07.2022 - order under Section 148A(d) and fresh Section 148 notice issued.

The Court, following the method prescribed in "Rajeev Bansal", computed that only one day of the "surviving period" remained for the Revenue to complete the Section 148A(d) procedure and issue a fresh Section 148 notice. That one day expired on 09.06.2022 (i.e., the day after the last date for filing the reply, 08.06.2022). Thus, any notice under Section 148 issued after 09.06.2022 would be beyond the surviving period.

Conclusions

The Court held that the notice under Section 148 dated 25.07.2022 was issued after expiry of the surviving period, was therefore barred by limitation, and was liable to be set aside. Consequently, even apart from the earlier quashing order, the foundation for the impugned reassessment order failed on limitation grounds.

Issue (4): Effect of non-filing of reply to Section 148A(b) notice on limitation and "surviving period"

Interpretation and reasoning

The Revenue argued that since the assessee did not file any reply to the notice issued on 25.05.2022 under Section 148A(b), the limitation computation and the notion of "surviving period" as set out in "Rajeev Bansal" would not apply, and consequently the Section 148 notice could not be treated as time-barred. It was contended that under Section 148A(d) the order was to be passed within one month from the end of the month in which the reply was to be filed, and since no reply was actually filed, the limitation constraint should be deemed inapplicable.

The Court rejected this contention. It noted that "Rajeev Bansal" expressly held that: (i) the period from the deemed Section 148A(b) notice until supply of information/material under Ashish Agarwal, and (ii) a further two weeks for the assessee to respond, were to be excluded from the computation of limitation. There was no indication in "Rajeev Bansal" that if no reply was filed by the assessee, the limitation period would become open-ended or that the surviving period would cease to exist.

The Court held that where no reply is filed, the surviving period must be computed as beginning from the last date on which the reply could have been filed (in this case, 08.06.2022). The Assessing Officer is then required to complete all subsequent steps-consideration of material, passing of an order under Section 148A(d), and issuance of a Section 148 notice-within the balance surviving period calculated in accordance with "Rajeev Bansal".

Conclusions

The Court concluded that non-filing of a reply by the assessee to the show-cause notice under Section 148A(b) does not suspend, extend, or eliminate the limitation period. The surviving period starts from the expiry of the time granted to reply and continues to bind the Assessing Officer. Accordingly, in the present case, the Section 148 notice dated 25.07.2022 remained time-barred despite the absence of a reply.

Final operative outcome

Conclusions

On both jurisdictional and limitation grounds, the Court quashed and set aside:

* the assessment order under Section 147 dated 17.10.2025, together with the computation sheet, notice of demand, and consequential penalty show-cause notice; and

* the notice under Section 148 dated 25.07.2022, the order under Section 148A(d) of the same date, and the original show-cause notice under Section 148A(b) dated 30.06.2021.

No order as to costs was made.

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