TaxTMI 
TaxTMI 
2026 (6) TMI 134
X X X X Extracts X X X X
X X X X Extracts X X X X
....deposit of Rs. 50,65,000/- is out of genuine and explained sources. 4. The appellant craves its right to add to or alter the Grounds of Appeal at any time before or during the course of hearing of the case." 3. Facts of the case, in brief, are that the assessee is an individual engaged in the business activity such as dairy farming, hiring of tractors, agricultural equipment and also having rental income from marriage hall and has not furnished his return of income for the year under consideration. On the basis of information available with the Department that the assessee has deposited cash of Rs. 50,65,000/- in his bank account maintained with PDCC Bank Ltd., Pune, during the year under consideration, however, no return of income was furnished, the case of the assessee was reopened u/s 147 of the IT Act. After passing order u/s 148A(d) of the IT Act on 18.07.2022, notice u/s 148 of the IT Act was issued on 19.07.2022. Assessee furnished return of income on 27.09.2022 in response to above notice by declaring income of Rs. 8,85,570/-. Subsequently, notices u/s 143(2), 142(1) and show cause notice respectively were issued to the assessee. After considering the reply and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Act. Thereafter, on 19.07.2022, notice u/s 148 of the IT Act was issued by the Jurisdictional Assessing Officer. Now, through ground no.1 the assessee is challenging the above notice dated 19.07.2022 issued u/s 148 of the IT Act being issued beyond the surviving period as prescribed by Hon'ble Supreme Court of India in the case of Union of India vs. Rajeev Bansal (supra). 10. In support of his contentions, Ld. AR submitted that for assessment year 2014-15 which is the year under consideration, the limitation period available with the Assessing Officer u/s 149 for issuance of notice u/s 148 of the IT Act was till 31.03.2021 (since within six years from the relevant assessment year), and even if in the light of decision of the Hon'ble Supreme Court in the case of Union of India vs. Rajeev Bansal (supra), the surviving period is considered, the Assessing Officer had time only till 16.06.2022 to issue notice u/s 148 of the IT Act. Since Hon'ble Supreme Court in the case of Rejeev Bansal (supra) has categorically held that 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 30.06.2021. In this re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t vide its decision in Ashish Agarwal (supra), and therefore, all the proceedings subsequent thereto are pursuant to the directions of the Hon'ble Supreme Court. Thus, Ld. DR submitted that the notice dated 19.07.2022 issued u/s 148 of the IT Act cannot be challenged on the ground of limitation, as the same was issued pursuant to the guidelines laid down by Hon'ble Supreme Court in Ashish Agarwal (supra), which were not amended in the subsequent decision of Hon'ble Supreme Court in Rajeev Bansal (supra). Ld. DR further submitted that as per the third proviso to section 149 of the IT Act, as amended by the Finance Act, 2021, the time period from the date of issuance of deemed show cause notice till the date of filing of response by the assessee shall be excluded for the purpose of computation of time limit for issuance of notice u/s 148 of the IT Act. Ld. DR submitted that as per the fourth proviso to section 149 of the IT Act if after exclusion of the aforesaid time period, the period of limitation available to the Assessing Officer is less than 7 days, then such remaining period shall be extended to 7 days and the period of limitation u/s 149 of the IT Act shall be deemed to be ex....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sued on 29.06.2021, which was deemed to be noticed u/s 148A(b) of the IT Act, is covered under the extended time limit till 30.06.2021 provided under the TOLA. 15. As regards the submission of Ld. DR that the time period from the date of issuance of the deemed show cause notice till the date of filing of response by the assessee shall be excluded under the third proviso to section 149 of the Act, we find that the Hon'ble Supreme Court in paragraph-106 and 107 of its decision in Rajeev Bansal (supra), observed as follows :- "106. In Ashish Agarwal (supra), this Court directed the assessing officers to provide relevant information and materials relied upon by the Revenue to the assesses within thirty days from the date of the judgment. A show cause notice is effectively issued in terms of Section 148A(b) only if it is supplied along with the relevant information and material by the assessing officer. Due to the legal fiction, the assessing officers were deemed to have been inhibited from acting in pursuance of the Section 148A(b) notice till the relevant material was supplied to the assesses. Therefore, the show cause notices were deemed to have been stayed until the asse....
X X X X Extracts X X X X
X X X X Extracts X X X X
....preme Court in Rajeev Bansal (supra), analyzing the interplay of Ashish Agarwal (supra) with the TOLA, in paragraph-108 of its judgment observed as follows :- "108. The Income Tax Act read with TOLA extended the time limit for issuing reassessment notices under Section 148, which fell for completion from 20 March 2020 to 31 March 2021, till 30 June 2021. All the reassessment notices under challenge in the present appeals were issued from 1 April 2021 to 30 June 2021 under the old regime. Ashish Agarwal (supra) deemed these reassessment notices under the old regime as show cause notices under the new regime with effect from the date of issuance 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. 163 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 reg....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 18.07.2022 12 Second notice u/s 148 19.07.2022 19. Therefore, computing the surviving/balance time limit, as per the decision of the Hon'ble Supreme Court in Rajeev Bansal (supra), we find that the Revenue had only 2 days (i.e., between 29.06.2021 to 30.06.2021) to issue notice u/s 148 of the IT Act of the new regime in the present case, i.e. till 09.06.2022, after scheduled date of receipt of the response from the assessee on 07.06.2022 to the show cause notice dated 23.05.2022 issued u/s 148A(b) of the IT Act. However, undisputedly, in the present case, the notice u/s 148 of the IT Act was issued on 19.07.2022, i.e., 32 days after the surviving/balance time period as per the decision of the Hon'ble Supreme Court in Rajeev Bansal (supra). 20. From the above chart, we find that even if the benefit of the fourth proviso to section 149 of the IT Act is granted to the Revenue, since the remaining period in the present case, after the exclusion of time period as provided in the third proviso to section 149, is less than 7 days, even then the notice dated 19.07.2022 u/s 148 of the IT Act was issued much beyond the 7 days' extension provided in the fourth proviso to secti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iod from the date of issuance of the deemed notice under section 148A(b) and the date of the decision of this Court in Ashish Agarwal (supra), the assessing officers were deemed to have been prohibited from passing a reassessment order. Resultantly, the show cause notices were deemed to have been stayed by order of this Court from the date of their issuance (somewhere from 1 April 2021 till 30 June 2021) till the date of decision in Ashish Agarwal (supra), that is, 4 May 2022 106. In Ashish Agarwal (supra), this Court directed the assessing officers to provide relevant information and materials relied upon by the Revenue to the assesses within thirty days from the date of the judgment. A show cause notice is effectively issued in terms of Section 148A(b) only if it is supplied along with the relevant information and material by the assessing officer. Due to the legal fiction, the assessing officers were deemed to have been inhibited from acting in pursuance of the Section 148A(b) notice till the relevant material was supplied to the assesses. Therefore, the show cause notices were deemed to have been stayed until the assessing officers provided the relevant information or ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 reassessment notices were validly issued according to the provisions of the new regime, the notices under section 14....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ay 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 2013-2014, 2014-2015, 2015-2016, 2016-2017, and 2017-2018. To assume jurisdiction to issue notices under section 148 with respect to the relevant assessment years, an assessing officer has to: (i) issue the notices within the period prescribed under section 149(1) of the new regime read with TOLA; and (ii) obtain the previous approval of the authority specified under section 151. A notice issued without complying with ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nse to the notice under Section 148A(b) of the Act on 13.06.2022. Thus, the period of limitation began running from that date. 69. As noted above, by virtue of TOLA, the AO had period of twenty-nine days limitation left on the date of commencement of the reassessment proceedings, which began on 01.06.2021, to issue a notice under Section 148 of the Act. The said notice was required to be accompanied by an order under Section 148A(d) of the Act. Thus, the AO was required to pass an order under Section 148A(d) of the Act within the said twenty-nine days notwithstanding the time stipulated under Section 148A(d) of the Act. This period expired on 12.07.2022. 70. Since the period of limitation, as provided under Section 149(1) of the Act, had expired prior to issuance of the impugned notice on 30.07.2022. The said is squarely beyond the period of limitation. " 22. The Gujarat High Court in Dhanraj Govindram Kella (supra) while considering the issue held as under:- ".65. The alternative contention of the petitioner as to whether notices would be valid notice or invalid notice considering 'surviving time' between the date of the issuance of noti....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 1 24.05.2022 SCA NO Due date of filing reply Date of reply:- Date of order under section 148A(d) and notice under section 148:- Last date for issuance of notice under section 148 as per surviving time:- 6387/2023 09.06.2022 04.06.2022 29.07.2022 22.06.2022 5688/2023 06.06.2022 - 27.07.2022 27.06.2022 22260/2022 07.06.2022 06.07.2022 30.07.2022 14.06.2022 996/2023 11.06.2022 10.06.2022 19.07.2022 18.06.2022 68. It is apparent from the above details that impugned notice under section 148 of the Act is issued beyond the period of 'surviving time' as per the direction of Hon'ble Apex Court in case of Rajeev Bansal (supra)and therefore, such notices would be invalid notices. " 23. The Madras High Court in Mrs. Thulasidass Prabavathi (supra), while considering the issue held as under:- "....17. Dealing with almost an identical situation pursuant to the decision of the Hon'ble Supreme Court in Union of India v. Rajeev Bansal, 2024 SCC OnLine SC 2693, the Delhi High Court quashed the notice dated 31.03.2021 issued to the assessee under Section 148 of the Act a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n 149(1) and/or has a bearing on the time under Section 149(1) is a submission which is misconceived and lacks legal sanctity." emphasis supplied 26. After considering the above exclusion period, we observe that the remaining days for conclusion of the procedure for passing of an order in terms of Section 148A(d) and issuance of the notice under Section 148 of the Act would be two days. In the present case, whichever way we see it, the period of two days would expire on 10 June 2022 or 27 June 2022 respectively and, therefore, the notice under Section 148 of the Act issued on 27 July 2022 is time barred, inasmuch as it is issued much after the surviving period. We concur with the judgments of the co-ordinate bench in Gurpreet Singh (supra), of the Delhi High Court in Ram Balram Buildhome (P.) Ltd (supra) and the Gujarat High Court in Dhanraj Govindram Kalle (supra) which have dealt with the surviving period and quashed the notices issued under Section 148 of the Act passed beyond the surviving period. 27. In view of the above, it is apparent that Respondent No.1 has acted beyond jurisdiction and we accordingly set aside the impugned notice issued under Section ....