Reassessment limitation under TOLA: a fresh notice issued after the computed deadline was time-barred and void.

The reassessment notice issued on 31.07.2022 for assessment year 2013-14 was held to be beyond limitation after applying the TOLA exclusion and the Supreme Court's reassessment directions. The earlier notice dated 21.06.2021 was treated as a deemed notice under section 148A(b), and the time spent under the stay and the additional two weeks for response had to be excluded when computing the fresh limitation period. On that computation, the remaining time expired before 31.07.2022, making the later notice time-barred. As the foundation notice was invalid, the reassessment proceedings and consequential assessment could not survive.

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Issues: Whether the notice issued under section 148 of the Income-tax Act, 1961 on 31.07.2022 for the assessment year 2013-14 was barred by limitation in the light of the exclusion of time under the TOLA regime and the Supreme Court rulings on the reassessment framework.

Analysis: The reassessment notice dated 21.06.2021 was treated as a deemed notice under section 148A(b) after the Supreme Court's directions, and the assessee was then supplied the material and given time to reply. The limitation for issuance of a fresh notice under section 148 had to be computed by excluding the period during which the deemed show-cause notice remained stayed and the further two weeks allowed for response. Applying that computation, the remaining time available to the Revenue expired before 31.07.2022. The later notice was therefore beyond the permissible limitation period. Since the foundation notice was time-barred, the reassessment proceedings and the consequential assessment could not survive. The cross-objection on merits did not require adjudication after the reassessment itself was quashed.

Conclusion: The notice under section 148 dated 31.07.2022 was barred by limitation and void ab initio, and the quashing of the reassessment was upheld in favour of the assessee.

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