Validity of notice under section 148 in new reassessment regime for AY2013-14 held time-barred, re-assessment quashed

Validity of a notice issued under section 148 is tested against the statutory time bar introduced by the new reassessment regime; the first proviso limits issuance to the prescribed period and does not refer to show-cause or similar preliminary notices, so later provisos cannot extend that initial limitation. Applying prior high court and supreme court authority and the statutory text, the notice dated 20.07.2022 for the relevant assessment year was issued after the six-year limitation expired and thus was time-barred; consequence: the notice, ensuing reassessment proceedings and resulting assessment order are quashed.

---

---

Issues: (i) Whether the notice issued under section 148 dated 20.07.2022 for Assessment Year 2013-14 is barred by limitation under Section 149 read with the first proviso (Finance Act, 2021) and consequently whether the reassessment proceedings and order under section 147 r.w.s.143(3) are void and liable to be quashed.

Analysis: The applicable limitation framework introduced by the Finance Act, 2021 (section 149) and the mandatory procedural pre-condition in section 148A are examined. Section 149(1)(b) and its first proviso restrict issuance of notices under section 148 for assessment years beginning on or before 1 April 2021 if a notice could not have been issued at that time under the old six-year rule. The interplay between the first proviso and the extension provisos (fifth and sixth) is considered, with reliance on governing precedent interpreting the proviso to refer to the date of issuance of the section 148 notice and to preclude extension of the restriction period by the later provisos. The facts show the impugned notice under section 148 was issued on 20.07.2022 whereas the six-year period for AY 2013-14 expired on 31.03.2020. On this factual matrix and in light of the cited authorities, the notice falls outside the period permitted by the first proviso to section 149 and is therefore time-barred. Because the notice under section 148 is invalid for being barred by limitation, the consequent reassessment proceedings under section 147 and the assessment order framed under sections 147 r.w.s.143(3) are rendered invalid without adjudication on merits of the substantive grounds.

Conclusion: The notice under section 148 dated 20.07.2022 for AY 2013-14 is barred by limitation and is invalid; the reassessment proceedings under section 147 and the assessment order under section 147 r.w.s.143(3) are quashed. The assessee succeeds on the primary ground and the appeal is allowed.

---