2026 (2) TMI 448 - AT - Income Tax

Reassessment notice validity and TOLA applicability: notices held time barred and reassessment quashed for lack of limitation

TOLA was held inapplicable to the relevant assessment year, so the regular limitation for issuing reassessment notices remained in force and expired on 31 ... Validity of reopening of assessment - application of TOLA - Period of limitation - surviving limitation for reassessment - scope of notice beyond surviving period in view of section 149(1) r.w. relaxation granted under TOLA HELD THAT:- We find force in the contention of the Ld. AR that TOLA does not apply to the assessment year and the regular limit for issuing notice u/s. 148 of the Act was available until 31.3.2022, the notices issued of the assessment year 2015-16 under the old law between 1st April, 2021 and 30th June, 2021 would not receive an extended period of validity. These notices would be considered invalid as they were issued under the old law which was impermissible since the new laws had kicked in from 1st April, 2021 and they did not receive a fresh lease of life under TOLA since the time limit available for reopening the said year was till 31.3.2022. It is noted that in the case of IBIBO Group Pvt Lgd. [2024 (12) TMI 1269 - DELHI HIGH COURT] and quashed the reassessment proceedings for AY 2015-16 on identical facts relying on the decision of the UOI vs. Rajeev Bansal [2024 (10) TMI 264 - SUPREME COURT (LB)] We also note that in view of the Hon’ble Supreme Court decision in the case of Rajeev Bansal(Supra) the extended due date for issuance of notice u/s 148 of the Act expired on 18.6.2022 and since, the notice is u/s 148 of the Act is issued on 21-07-2022, thus the said notice was time barred by limitation. Respectfully following the aforesaid decision of the Hon’ble Supreme Court, we hold that the notice issued u/s 148 of the Act on 21.7.2022 is time barred by limitation, hence, the same is quashed and consequently, the reassessment also quashed. Accordingly the legal issues raised by the assessee is allowed. Issues: Whether the notice issued under section 148 of the Income-tax Act, 1961 on 21.07.2022 for assessment year 2015-16 is time-barred and consequently whether the reassessment proceedings and consequent reassessment are void ab initio.Analysis: The Tribunal examined applicability of the Taxation and Other Laws (Relaxation of Certain Provisions) Act, 2020 (TOLA) and the effect of the Supreme Court's decision in Union of India v. Rajeev Bansal on the computation of surviving limitation for issuance of reassessment notices. Applying the legal framework set out in Rajeev Bansal, the period between issuance of the deemed show-cause notice under the old regime and the receipt of the assessee's response is to be excluded and the assessing officer must complete the mandated steps within the surviving time limit. For AY 2015-16 the regular limitation under the Income-tax Act read with TOLA did not extend the validity of notices issued under the old law between 1.4.2021 and 30.6.2021, and the surviving time limit for issuance of a fresh notice expired before 21.07.2022. The Tribunal relied on the chronology of notices, replies and orders in the record and respectfully followed the Supreme Court's computation and the reasoning in Rajeev Bansal and related High Court authority to hold that the notice dated 21.07.2022 fell outside the surviving limitation.Conclusion: The notice issued under section 148 on 21.07.2022 is time-barred; the notice is quashed and the consequent reassessment is quashed. The assessee's challenge is allowed and the appeal is allowed.