Reassessment limitation under transitional regime: notice issued beyond the surviving balance period was held time-barred and invalid.

In computing limitation for a reassessment notice under the transitional regime, the period covered by the stayed deemed show-cause notice and the time granted for response had to be excluded, leaving only the surviving balance time to issue notice under section 148. On the facts, the Revenue was required to act within that remaining period after the section 148A(b) process, but the notice issued on 27 July 2022 fell beyond the permissible time. The notice was therefore time-barred, void ab initio and bad in law, and the reassessment proceedings and assessment order were quashed.

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Issues: Whether the reassessment notice issued under section 148 of the Income-tax Act, 1961 was barred by limitation and, if so, whether the reassessment proceedings and assessment order were liable to be quashed.

Analysis: The limitation for issuance of the reassessment notice had to be computed in the light of the Supreme Court's directions governing notices transitioning from the old regime to the new regime. The time during which the deemed show-cause notice remained stayed and the further time allowed to respond were to be excluded. On the facts, the original notice dated 22 June 2021 left only nine days of surviving time beyond 30 June 2021. After the notice under section 148A(b) and expiry of the time granted for response, the Revenue was required to issue the reassessment notice within that surviving period. The notice actually issued on 27 July 2022 was beyond that permissible time.

Conclusion: The notice under section 148 was time-barred, void ab initio, and bad in law. The reassessment proceedings and the assessment order were quashed.

Final Conclusion: The assessee succeeded on the jurisdictional objection, and the appeal was allowed with the reassessment action set aside.

Ratio Decidendi: In computing limitation for a reassessment notice under the transitional regime, the surviving time after exclusion of the stayed period and response period must be strictly applied, and any notice issued beyond that balance period is invalid.

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