Validity of Reassessment Notices Post-Ashish Agarwal and TOLA: Limitation and Sanction u/ss 149 and 151

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....es the Supreme Court's directions in Ashish Agarwal and Rajeev Bansal at the High Court level and clarifies how "surviving time" u/s 149, read with TOLA and the third proviso to section 149(1), is to be computed. It also addresses which authority must grant sanction u/s 151 in transitional reassessment cases, and whether defects in sanction can render reassessment notices void. Key Legal Issues 1. Validity of sanction u/s 151 (new regime) The first issue was whether notices u/s 148 issued between July and September 2022, pursuant to the Supreme Court's decision in Ashish Agarwal, suffered from lack of valid "sanction" u/s 151. The question turned on: * whether the competent "specified authority" was that u/s 151(i) (cases within three years) or section 151(ii) (cases beyond three years); and * whether the relevant temporal reference for determining the "three years" threshold was the date of the original notice under the old regime (issued between 1.4.2021 and 30.6.2021 under TOLA) or the date of the fresh notice u/s 148 (new regime) issued in 2022. This is fundamentally a question of statutory interpretation of section 151 (post-1.4.2021) as read with TOLA and the ....

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....tions emerge: * TOLA applies to the operation of the new regime (post-1.4.2021) where the three-year time-limit u/s 149(1)(a) or the corresponding pre-amendment periods fell for completion between 20.3.2020 and 31.3.2021. In that situation, the sanctioning authority u/s 151(i) has time till 30.6.2021 to grant sanction. * The Supreme Court uses the example of AY 2017-18 (para 78): the three-year period expired on 31.3.2021 (within the TOLA window); therefore, approval u/s 151(i) could be granted till 30.6.2021. This explicitly recognises that for these transitional years, the appropriate authority is still that u/s 151(i), not 151(ii). The High Court adopts this reading. It notes that the Supreme Court in Rajeev Bansal deliberately framed a test: if "the time limit of three years from the end of an assessment year falls between March 20, 2020 and March 31, 2021, then the specified authority u/s 151(i) has extended time till June 30, 2021 to grant approval" (para 77). In these petitions: * for AY 2016-17 and AY 2017-18, three years from the end of the AY expired on 31.3.2020 and 31.3.2021 respectively - both dates within or at the edge of the TOLA period; and * the original ....

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....f the response period u/s 148A(b). The "surviving" or "balance" time which remained as of 30.6.2021 (when TOLA's extension ended) is then available for the Revenue to issue a valid notice u/s 148 (new regime) (paras 108-110, 114(h)). Applying these principles, the High Court structures a two-step computation: * First, compute the "surviving time" as of 30.6.2021, i.e., the number of days between the date of the original notice u/s 148 (old regime, issued relying on TOLA between 1.4.2021 and 30.6.2021) and 30.6.2021. * Second, examine whether the fresh order u/s 148A(d) and the new section 148 notice were issued within that surviving time, after excluding the period from the original notice (treated as a deemed section 148A(b) notice) till supply of information and the further two weeks allowed to reply, as per Rajeev Bansal. The Court then applies this to each of the four petitions and summarises the material dates in tabular form. A crucial part of the reasoning is recognising that for: * AY 2013-14 and 2014-15 - the three-year period u/s 149(1)(a) had already expired before 20.3.2020, but the extended six-year window (under the pre-2021 law) expired between 20.3.2020 ....

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....in 2022 are to be viewed as part of the same continuum, not as fresh and independent proceedings for purposes of determining the proper sanctioning authority. This is a straightforward application of the Supreme Court's ratio in Rajeev Bansal, particularly paras 77-78 and 114(d). The Court rejects the contrary view that the mere fact that the section 148 notice was actually issued in 2022 automatically invokes section 151(ii). In effect, the ratio is that the identity of the sanctioning authority in transitional reassessment depends on when the three-year period originally expired and how TOLA operates on that expiry, not on the mechanical date of the final section 148 notice. 2. Ratio on limitation and surviving time The central holding is that: * Once the legal fiction in Ashish Agarwal is given full effect in the manner clarified by Rajeev Bansal, the only time available to the Revenue to complete the section 148A(d) stage and issue a new notice u/s 148 is the "surviving time" as on 30.6.2021, computed from the date of the original section 148 notice under TOLA. * The period between the original notice (deemed section 148A(b) notice) and (i) the date of supply of info....