Reassessment under section 147 quashed as time-barred notice under sections 148A(b) and 149 invalid for limitation

The ITAT Ahmedabad held the reassessment proceedings invalid and without jurisdiction as the notice issued under section 148A(b) was time-barred under section 149. The original notice was dated 29-06-2021, and under the proviso to section 149, the last permissible date for issuance was 27-06-2022. The subsequent notice dated 30-08-2022, being beyond the statutory limitation, rendered the reopening under section 147 unsustainable. Consequently, the reassessment order was quashed in entirety, and the assessee's appeal was allowed on the jurisdictional ground without examining merits raised by either party.

---

---

1. ISSUES PRESENTED AND CONSIDERED

1.1 Whether the notice issued under section 148 on 30-08-2022, pursuant to earlier notices covered by TOLA and the directions in Union of India v. Ashish Agrawal, was within the period of limitation read with section 149 and the doctrine of "surviving time" as explained in later judicial precedents.

1.2 Consequences for the reassessment order and for the appeals on merits, if the notice under section 148 is held to be time-barred and without jurisdiction.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity and limitation of notice under section 148 dated 30-08-2022

Legal framework

2.1 The Tribunal examined the validity of the reassessment notice in the context of: (i) section 147, section 148, section 148A, section 149 of the Act; (ii) Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (TOLA); (iii) the Supreme Court decisions in Union of India v. Ashish Agrawal and Union of India v. Rajeev Bansal; and (iv) the jurisdictional High Court decisions in Dhanraj Govindram Kella v. ITO and Rakesh Rameshchandra Patel v. ITO.

2.2 The concept of "surviving time" for limitation was applied as clarified in Rajeev Bansal and as worked out by the jurisdictional High Court in Dhanraj Govindram Kella and followed in Rakesh Rameshchandra Patel, whereby the validity of notices issued under the new regime is tested with reference to the remaining period of limitation available as on 30-06-2021, after giving effect to TOLA and Ashish Agrawal.

Interpretation and reasoning

2.3 The Tribunal noted that, in line with the jurisdictional High Court, each case has to be examined individually on the basis of dates: (i) original notice under section 148 under TOLA (old regime), (ii) surviving time available as on 30-06-2021, (iii) date of providing information under section 148A(b), (iv) due date and actual date of reply, and (v) date of order under section 148A(d) and fresh notice under section 148 (new regime).

2.4 Relying on the High Court's tabular analysis approach in Dhanraj Govindram Kella and its application in Rakesh Rameshchandra Patel, the Tribunal reproduced and applied the same methodology, including the principle that reassessment notices under the new regime must be issued within the "surviving time" computed as per Rajeev Bansal.

2.5 The Tribunal recorded the undisputed factual matrix in the present case as follows: (i) Original notice under section 148 issued on 29-06-2021; (ii) surviving days as on 30-06-2021: 2 days; (iii) information under section 148A(b) furnished on 30-05-2022; (iv) due date for reply: 20-06-2022; (v) actual reply filed on 24-06-2022; (vi) order under section 148A(d) and fresh notice under section 148 issued on 30-08-2022; (vii) last permissible date for issuing notice under section 148 as per proviso to section 149 and surviving time: 27-06-2022.

2.6 The assessee contended that, applying the above framework and jurisdictional precedents, the notice dated 30-08-2022 was issued beyond the limitation/surviving time and hence was invalid and without jurisdiction; consequently, the entire reassessment proceedings were void.

2.7 The Revenue argued that a fresh notice under section 148A(b) dated 27-08-2022 was issued only because of an inadvertent mistake in the reasons uploaded for the original notice dated 26/29-06-2021, and therefore the reassessment was within the provisions of the Act.

2.8 The Tribunal held it to be an undisputed fact that the original notice was issued on 29-06-2021 and that, as per the proviso to section 149, the last date for issuing a valid notice under section 148, after considering TOLA and surviving time, was 27-06-2022. Since the effective notice under section 148 was actually issued on 30-08-2022, it fell beyond the permissible limitation period.

2.9 Applying the binding decisions of the Supreme Court in Ashish Agrawal and Rajeev Bansal and the jurisdictional High Court in Dhanraj Govindram Kella and Rakesh Rameshchandra Patel, the Tribunal concluded that any notice issued beyond the surviving period is time-barred and invalid, and that orders under section 148A(d) and all consequential reassessment proceedings cannot survive.

Conclusions

2.10 The Tribunal held that the notice under section 148 dated 30-08-2022 was issued beyond the limitation period/surviving time prescribed by section 149 read with TOLA and the binding judicial precedents, and therefore was invalid in law.

2.11 Consequently, the reassessment proceedings initiated on the basis of such time-barred notice were held to be without jurisdiction, and the entire reassessment order was quashed.

Issue 2: Effect of invalid reassessment notice on merits of additions and cross-appeals

Interpretation and reasoning

2.12 Having quashed the reassessment on the jurisdictional/limitation ground, the Tribunal held that it was unnecessary to adjudicate the remaining grounds raised by the assessee (including grounds on merits under sections 68 and 69C) and by the Revenue (challenging deletions by the first appellate authority).

Conclusions

2.13 The assessee's appeal was allowed on the jurisdictional ground by quashing the reassessment order.

2.14 The Revenue's appeal, being directed against an order that itself stood quashed for want of jurisdiction, was dismissed.

---