Surviving period under section 148 requires AO action within two days of a reply; notice issued beyond period, assessment quashed.

Notice under section 148 was held time-barred because the initial notice functioned as a deemed show-cause notice and created a surviving period; applying the surviving-period computation in Rajeev Bansal, the Assessing Officer was required to issue any further notice or the order within two days of the assessee's reply, but the impugned notice was issued after that period. Consequently the subsequent assessment framed on that notice was quashed for limitation; the tribunal decided solely on the limitation defect and did not examine the merits of the additions.

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Issues: Whether the notice issued under section 148 of the Income-tax Act, 1961 dated 29.07.2022 and the assessment framed thereunder are time-barred and liable to be quashed in view of the surviving period computed following the decision in Rajeev Bansal v. Union of India (03.10.2024).

Analysis: The initial notice under section 148 was issued on 28.06.2021 which, following the precedent treating that notice as a deemed show-cause notice, created a surviving period. The assessee responded to the show-cause/148A(b) notice by filing a reply received by the Assessing Officer on 10.06.2022. Applying the surviving-period computation in Rajeev Bansal, the Assessing Officer was required to issue the order under section 148A(d) and any notice under section 148 within two days from the date the reply was furnished, i.e., by 12.06.2022. The Assessing Officer issued the impugned notice under section 148 on 29.07.2022, beyond the surviving period. Given that the appeal was decided on this legal ground, the Tribunal did not adjudicate the merits of the additions and relied solely on the limitation defect to determine validity of the proceeding.

Conclusion: The notice dated 29.07.2022 under section 148 of the Income-tax Act, 1961 and the assessment order framed pursuant thereto are time-barred and are quashed. The assessee's ground challenging the validity of the notice is allowed and the assessment is quashed; no merit adjudication was undertaken.

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