CIT ( Appeal) disallowed ground for validity of 148 Notice post Rajeev bansal case

[Ajay Ajmera]

Dear all

In one of my client case for A.Y. 213-14, the Ground of appeal we have challenged the validity of 148 issued on 14.07.2022. the facts of the case are as below:-

1. Date of Original 148: 28.05.2021

2.Date of 148A(b): 20.05.22

3. time to allow replies: 15 days

4. date of 148a(1)(d) and 148: 14.07.2022

The CIT (Appeal) has also mentioned the date of 148A(1)(b) is 20.05.2022, however at the time of calculating the validity period he wrongly considered the date of issue as 28.05.2022. Therefore, he held that the 148 was issued in time.

Now i seek your expert advice for option available to us. The CIT(Appeal) has also remanded the case to ITO for verification evidences for cash deposit in the Bank.

Thanks

Awaiting your advice

[Ryan Vaz]

Applicable Law / Judicial Position

1. Section 149(1)(b) (as substituted by Finance Act, 2021)
   – For AY 2013-14, notice u/s 148could be issued only up to 31.03.2022 (10 years limit applies only if escapement = Rs. 50 lakh represented in asset).

2. Supreme Court – Union of India v. Ashish Agarwal (2022 (5) TMI 240 - Supreme Court)
   – Old 148 notices issued between 01.04.2021 to 30.06.2021 deemed to be 148A(b) show-cause notices.

3. CBDT Instruction No. 1/2022 dated 11.05.2022
   – Fresh 148 could be issued only if within limitation prescribed under section 149.

4. Section 148A(d)
   – Order u/s 148A(d) is mandatory and must precede valid 148.

5. Jurisdictional Defect Principle
   – A time-barred 148 is void ab initio and cannot be cured by remand or participation.

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Short Practical Answer

• The 148 dated 14.07.2022 for A.Y. 2013-14 is ex-facie time-barred.

• CIT(A) committed a legal error by:

  • Treating 28.05.2021 (old 148) as the operative date, instead of

  • 20.05.2022 (actual 148A(b) issued post-Ashish Agarwal).

• The remand on merits does not cure jurisdictional illegality.

• You have strong grounds to challenge the CIT(A) order before ITAT or High Court.

For AY 2013-14, the outer time limit expired on 31.03.2022.

Hence, 148 issued on 14.07.2022 is barred by limitation.

AI Summary

Notice under section 148 held time barred when the operative show cause date made issuance beyond limitation. A notice under section 148 dated 14.07.2022 for AY 2013-14 is ex facie time barred where the operative post Ashish Agarwal show cause communication was issued on 20.05.2022; limitation under Section 149(1)(b) and CBDT instructions make fresh reassessment notices valid only within the prescribed outer limit, and remand or merits proceedings do not cure a jurisdictional defect.