Limitation on reassessment: surviving time runs from deemed pre-notice and opener upon assessee's reply, or notice is time-barred.

Reassessment notice validity turned on computation of surviving limitation where an earlier notice was treated as a deemed pre-notice; the applicable principle excludes the stay period from limitation and preserves only the days between the deemed notice and the cut-off, with the surviving period beginning when the assessee's reply is received. Applying that test, the deemed pre-notice yielded a 14-day surviving period; the assessing officer's power window opened on receipt of the assessee's response and expired before the notice dated 19.07.2022. Result: the reassessment notice was time-barred and set aside in favour of the assessee.

---

---

Issues: Whether the reassessment notice under Section 148 of the Income-tax Act, 1961 issued on 19.07.2022 (new regime) is time barred and whether the Tribunal should set aside the reassessment on the ground of limitation in view of the Supreme Court rulings in Ashish Agarwal and Union of India v. Rajeev Bansal and CBDT Instruction No. 01/2022.

Analysis: The issue arises from an original notice dated 17.06.2021 (old regime) which, by virtue of the Supreme Court's decision in Ashish Agarwal and subsequent CBDT instruction, was deemed to be a notice under Section 148A of the Income-tax Act, 1961. The Apex Court in Union of India v. Rajeev Bansal clarified that the period during which proceedings under Section 148A were stayed is excluded for computing limitation and that the assessing officer retains only the surviving time computed as the number of days between the date of issuance of the deemed notice and 30.06.2021. The surviving time begins to run only after the assessee's response to the deemed notice is received. Applying these principles to the facts, the original notice date of 17.06.2021 yields a surviving period of 14 days (up to 30.06.2021). The assessee submitted his reply on 26.06.2022, so the assessing officer had 14 days from that date, i.e. up to 09.07.2022, to issue a reassessment notice under Section 148 of the new regime. The assessing officer issued the reassessment notice on 19.07.2022, which is beyond the computed surviving time and therefore barred by limitation under the framework laid down by the Supreme Court.

Conclusion: The reassessment notice under Section 148 of the Income-tax Act, 1961 dated 19.07.2022 is time barred and set aside; the Revenue's appeal is dismissed (decision in favour of the assessee).

---