Income-tax reassessment notices spanning old and new regimes: 30.06.2021 deemed 148A(b); later s.148 upheld within limitation

The dominant issue was whether a reassessment notice issued under the post-01.04.2021 regime was barred by limitation under ss. 149 and 151, given that an earlier notice had been issued under the pre-amendment regime. Applying SC rulings in Ashish Agarwal and the LB decision in Rajeev Bansal, the HC held that a notice issued between 01.04.2021 and 30.06.2021 under the old regime is deemed a s. 148A(b) notice, and limitation must be computed by reading s. 149 with TOLA extensions and the first proviso to s. 149. Since alleged escapement exceeded ?50 lakh and the old-regime notice dated 30.06.2021 was within extended time, the subsequent s. 148 notice dated 29.07.2022 was within time and validly approved under s. 151; writ petition dismissed.

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1. ISSUES PRESENTED AND CONSIDERED

(i) Whether the reassessment notice issued under Section 148 (new regime) for the relevant assessment year was barred by limitation, having regard to Section 149 (including the first proviso), the effect of the earlier notice issued under the old regime within the period April-June 2021, and the operative directions governing such notices.

(ii) Whether the statutory pre-condition of obtaining approval from the "specified authority" under Section 151 (as applicable to the new regime) was satisfied for passing the order under Section 148A(d) and issuing the consequential notice under Section 148.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (i): Limitation for issuance of notice under Section 148 (new regime)

Legal framework (as discussed by the Court): The Court examined the post-01.04.2021 reassessment regime, including the amended time limits under Section 149 (3 years/10 years), the first proviso restricting issuance where notice would have been time-barred under the pre-amendment regime, and the manner in which notices issued under the old regime after 01.04.2021 are to be treated as show-cause notices under Section 148A(b), with computation of surviving limitation time as per the governing directions applied by the Court.

Interpretation and reasoning: The Court held that the earlier notice issued under Section 148 (old regime) on 30.06.2021 fell within the extended outer limit applicable under the old regime (six years as extended up to 30.06.2021). Consequently, the first proviso to Section 149 did not bar further action under the new regime. Since the alleged escaped income exceeded the threshold for the extended period, the case fell within the ten-year window under Section 149(1)(b) (new regime). On this basis, issuance of the notice under Section 148 (new regime) on 29.07.2022 was treated as within time, and the limitation challenge failed.

Conclusion: The impugned notice under Section 148 (new regime) dated 29.07.2022 was held to be within limitation because the old-regime notice dated 30.06.2021 was itself within the surviving/extended limitation, and the reassessment fell within the ten-year time limit applicable where escaped income exceeded the monetary threshold.

Issue (ii): Compliance with approval requirement under Section 151

Legal framework (as discussed by the Court): The Court considered that, under the amended reassessment regime, passing an order under Section 148A(d) and issuing notice under Section 148 require prior approval of the specified authority under Section 151.

Interpretation and reasoning: The Court noted that the impugned proceedings were preceded by approval from the specified authority, namely the Principal Chief Commissioner of Income Tax, granted before passing the order under Section 148A(d) and issuing the notice under Section 148. The Court treated this as satisfying the statutory requirement under Section 151 as applicable after 01.04.2021.

Conclusion: The sanction/approval requirement under Section 151 was held to be complied with; therefore, the jurisdictional challenge based on lack of approval failed.

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