TaxTMI 
TaxTMI 
2026 (3) TMI 135
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....48 of the Income Tax Act and not to pass any adverse order against the petitioner in any manner whatsoever. 2. The impugned proceedings relate to Financial Year 2012-13, relevant to Assessment Year 2013-14. The record reveals that an initial notice under Section 148 of the Act for Assessment Year 2013-14 was issued to the petitioner on 31.05.2021. Subsequently, pursuant to the judgment of the Hon'ble Supreme Court in "Union of India v. Ashish Agarwal", Civil Appeal No. 3005 of 2022, dated 04.05.2022, the Assessing Officer (respondent No. 4) issued a communication dated 24.05.2022, providing information suggesting that some income may have escaped assessment under Section 147 of the Act and asked the petitioner to show cause as to why an order under Section 148A(d) should not be passed. 3. In the said show cause notice alleged escapement of income to the extent of Rs. 1,30,00,000/- and provided fifteen days' time from the date of receipt of the notice to submit a response, and the compliance was required to be made on or before 08.06.2022. However, no response was filed by the petitioner to the aforesaid show cause notice. Consequently, the Assessing Officer passed an order da....
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....for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year: Provided further that nothing contained in the first proviso shall apply in a case where any income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment for any assessment year: Provided also that the Assessing Officer may assess or reassess such income, other than the income involving matters which are the subject matters of any appeal, reference or revision, which is chargeable to tax and has escaped assessment." "Time limit for notice- 149. (1) No notice under section 148 shall be issued for the relevant assessment year,- (a) if four years have ....
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.... more for that assessment year. 11. Significantly, the Legislature introduced an additional statutory embargo by insertion of the first proviso to Section 149(1), whereby it was expressly stipulated that no notice under Section 148 shall be issued at any time for any assessment year beginning on or before 1 April 2021, if such notice could not have been issued on that date owing to the expiry of the limitation period prescribed under clause (b) of sub-section (1) of Section 149, as it stood prior to the commencement of the Finance Act, 2021. 12. The relevant amended statutory provisions, as introduced by the Finance Act, 2021, are reproduced as under: "Conducting inquiry, providing opportunity before issue of notice under section 148 - 148A. The Assessing Officer shall, before issuing any notice under section 148,- (a) conduct any enquiry, if required, with the prior approval of specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment; (b) provide an opportunity of being heard to the assessee, with the prior approval of specified authority, by serving upon him a notice to s....
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....notice under section 148 shall be issued for the relevant assessment year,- (a) if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b); (b) if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more for that year : Provided that no notice under section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April, 2021, if such notice could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause (b) of sub-section (1) of this section, as they stood immediately before the commencement of the Finance Act, 2021 : Provided further that the provisions of this sub-section shall not apply in a case, where a notice under section 153A, or section 153C read with section 153A, ....
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.... Hon'ble Supreme Court invoked its powers under Article 142 of the Constitution of India to balance the equities between the Revenue and the assessees. 15. Accordingly, the Supreme Court directed that the reassessment notices issued under the erstwhile regime shall be deemed to have been issued under Section 148A(b) of the Act, as substituted by the Finance Act, 2021, and issued the following directions: 10. In view of the above and for the reasons stated above, the present Appeals are ALLOWED IN PART. The impugned common judgments and orders passed by the High Court of Judicature at Allahabad in W.T. No. 524/2021 and other allied tax appeals/petitions, is/are hereby modified and substituted as under:- (i) The impugned section 148 notices issued to the respective assessees which were issued under unamended section 148 of the IT Act, which were the subject matter of writ petitions before the various respective High Courts shall be deemed to have been issued under section 148A of the IT Act as substituted by the Finance Act, 2021 and construed or treated to be show-cause notices in terms of section 148A(b). The assessing officer shall, within thirty days from today ....
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....s of which are mentioned hereinabove, shall stand modified/substituted to the aforesaid extent only. 16. On 11.05.2022, the Central Board of Direct Taxes issued Instruction No. 01/2022 to implement the decision in Union of India v. Ashish Agarwal (supra) prescribing inter alia that for Assessment Year 2013-14, Assessment Year 2014-15 and Assessment Year 2015-16, fresh notice under Section 148 of the Act may be issued, subject to the approval of the specified authority, if the case satisfies the conditions laid down in clause (b) of sub-section (1) of Section 149, as amended by the Finance Act, 2021. 17. The validity of the reassessment notices issued under section 148 of the new regime between July and September 2022 was once again subject to challenge before High Courts which declared the notices to be invalid on the ground that they were: (i) time-barred; and (ii) issued without the appropriate sanction of the specified authority. The issue again travelled to the Hon'ble Supreme Court in the Union of India vs. Rajeev Bansal [2024] 469 ITR 46 (SC)[03-10-2024] where in the Hon'ble has laid down the law to consider such notice as valid notice or invalid notic....
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....of the reassessment notices. The effect of creating the legal fiction is that this Court has to imagine as real all the consequences and incidents that will inevitably flow from the fiction. East End Dwellings Co. Ltd. v. Finsbury Borough Council [1952] AC 109. [Lord Asquith, in his concurring opinion, observed: "If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it."] Therefore, the logical effect of the creation of the legal fiction by Ashish Agarwal (supra) is that the time surviving under the Income-tax Act read with TOLA will be available to the Revenue to complete the remaining proceedings in furtherance of the deemed notices, including issuance of reassessment notices under section 148 of the new regime. The surviving or balance time limit can be calculated by computing the number of days between the date of issuance of the deemed notice and 30 June 2021. 109. If this Court had not created the legal fiction and the original reassessmen....
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....ing officers to issue the reassessment notices under section 148 of the new regime. 112. Let us take the instance of a notice issued on 1 May 2021 under the old regime for a relevant assessment year. Because of the legal fiction, the deemed show cause notices will also come into effect from 1 May 2021. After accounting for all the exclusions, the assessing officer will have sixty-one days [days between 1 May 2021 and 30 June 2021] to issue a notice under section 148 of the new regime. This time starts ticking for the assessing officer after receiving the response of the assessee. In this instance, if the assessee submits the response on 18 June 2022, the assessing officer will have sixty-one days from 18 June 2022 to issue a reassessment notice under section 148 of the new regime. Thus, in this illustration, the time limit for issuance of a notice under section 148 of the new regime will end on 18 August 2022. 113. In Ashish Agarwal (supra), this Court allowed the assesses to avail all the defences, including the defence of expiry of the time limit specified under section 149(1). In the instant appeals, the reassessment notices pertain to the assessment years 2013....
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....from the date of issuance of the deemed notice between 1 April 2021 and 30 June 2021 till the supply of relevant information and material by the assessing officers to the assesses in terms of the directions issued by this Court in Ashish Agarwal (supra), and the period of two weeks allowed to the assesses to respond to the show cause notices; and h. The assessing officers were required to issue the reassessment notice under section 148 of the new regime within the time limit surviving under the Income-tax Act read with TOLA. All notices issued beyond the surviving period are time barred and liable to be set aside; 21. In view of the aforesaid legal position, the issue arising in the present writ petition stands squarely covered by the judgment of the Hon'ble Supreme Court in Union of India v. Rajeev Bansal (supra). In the facts of the present case, the last date for issuance of a notice under Section 148 of the Act for Assessment Year 2013-14, under the statutory framework as it existed prior to 01.04.2021, was 31.03.2020, being six years from the end of the relevant assessment year. 22. By virtue of Section 3(1) of the Taxation and Other Laws (Relaxation of Certain Pro....