2026 (3) TMI 235 - HC - Income Tax

Surviving period computation cannot be extended beyond the one time 30 day window; post-window reopening notices are time barred.

The note addresses limitation for reopening assessments under Section 148, holding that a one-time 30-day window granted to the Revenue to furnish ... Validity of reopening pf assessement u/s 147 - Limitation for issuance of notice under Section 148 - TOLA - Scope of new tax regime - surviving period computation under Rajeev Bansal [2024 (10) TMI 264 - SUPREME COURT (LB)] - invalidity of notices issued beyond Ashish Agarwal [2022 (5) TMI 240 - SUPREME COURT] timeline - fourth proviso to Section 148A not extending surviving period HELD THAT: - By issuing a notice beyond the prescribed period, the time-barring dates cannot be extended. This amounts to an artificial extension of time limits which is not permissible in law. The second notice dated 26th July 2022 is therefore, bad in law. Even assuming such notice is valid, still the limitation period has to be counted as per the decision in case of Rajeev Bansal (supra) i.e., on expiry of 30 days (time given to the Department to provide material to the assessees) and a further period of 2 weeks which was the time given to the assessees to file its reply. The second notice which is issued beyond the period for 4 weeks from the date of the decision in case of Ashish Agarwal (supra), and the due date to reply to such notice or the date of actual filing of reply to such notice, cannot be taken into account for computing the surviving period. 19. Regarding the Respondent’s reliance on the fourth proviso to Section 148A for a further extension of 7 days, we are unable to accept this submission. The Hon’ble Supreme Court in Rajeev Bansal (supra) have duly considered the proviso and statutory extensions available under the IT Act including the special extension granted by TOLA. Having considered the same, the Court derived a specific mechanism to calculate the “surviving period”. The Court has categorically held that the limitation period has to be counted on expiry of 6 weeks period (4 weeks for the Department to provide material and 2 weeks for the assessees to file reply). As applying the law laid down by the Hon’ble Supreme Court in Rajeev Bansal (supra) the remaining days for conclusion of the procedure for passing of an order in terms of Section 148A(d) and issuance of notice under Section 148 of the Act would be 2 days. As evident from the table above, the surviving period of 2 day expired on or about 3rd June 2022 (calculating from the date of reply/last date to file reply). The impugned notice under Section 148 was issued on 30th July 2022, which is patently beyond the limitation period prescribed by the Hon’ble Supreme Court. The issuance of the second notice on 26th July 2022 and time granted in the said notice upto 28th July 2022 cannot save the proceedings. Final Conclusion: The Writ Petition is allowed on the ground of limitation: the notice under Section 148 dated 30.07.2022, the order under Section 148A(d) dated 30.07.2022, the second Section 148A(b) notice dated 26.07.2022 and the consequential assessment order are quashed as time barred; no order as to costs. Issues: Whether the notice under Section 148 of the Income-tax Act, 1961 dated 30.07.2022 and the consequential assessment and related orders are time-barred under the limitation calculus (surviving period) as laid down by the Supreme Court in Rajeev Bansal, having regard to the 30-day window granted in Ashish Agarwal for providing reasons/material.Analysis: The controlling authorities establish a two-step timeline: (i) Ashish Agarwal granted a one-time 30-day period from 04.05.2022 for the Revenue to furnish information/material, and (ii) Rajeev Bansal prescribes computation of the surviving period by adding the period allowed to the Department and the period allowed to the assessee to reply (four weeks plus two weeks). Any notice issued by the Department beyond the one-time 30-day window under Ashish Agarwal cannot be used to extend or reset the surviving period. A fresh notice dated 26.07.2022 issued after the Ashish Agarwal window cannot lawfully extend limitation; reliance on the fourth proviso to Section 148A to claim an additional seven days is inconsistent with the Rajeev Bansal mechanism which defines the surviving period without such further extension.Conclusion: The notice under Section 148 dated 30.07.2022 and the consequential orders, including the assessment order dated 29.01.2026, are time-barred and are quashed. The writ petition is allowed insofar as it seeks quashing of the said notice, the order under Section 148A(d), the second notice dated 26.07.2022, the order disposing objections dated 13.01.2026, the assessment order dated 29.01.2026 and consequential demand and penalty notices.