SUNIL GOYAL HUF,DELHI V. ACIT CIRCLE 34 1, DELHI

CO 102/DEL/2025

AI Insights

The case involves an appeal by the Revenue and a cross objection by the assessee, Sunil Goyal (HUF), against the order of the National Faceless Appeal Centre (NFAC), Delhi, concerning the assessment year 2014-15. The Revenue challenged the deletion of an addition made towards the difference in the cost of construction estimated by the District Valuation Officer (DVO) and reported by the assessee. The assessee, in his cross objection, contested the validity of the notice issued under section 148 of the Income Tax Act, claiming it was time-barred based on the Supreme Court's decision in Union of India vs. Rajeev Bansal. The Tribunal, after considering the arguments and relevant legal provisions, quashed the reassessment order due to the notice being issued beyond the permissible time limit.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 717664 (ITAT-DELHI)
• Duration Of Justice: 22 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 13-08-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Assessment Year: 2014-2015
• Appeal Filed On: 22-07-2025
• Other Referred Cases: Union of India vs. Rajeev Bansal, Union of India vs. Ashish Agarwal, Ram Balram Buildhome (P) Ltd. vs. ITO, Sushil Kumar vs. ACIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANISH GUPTA
• Assessee Lawyers: RAJAT GARG
• Keywords: Set aside; Reassessment proceedings; Period of limitation; Reason to believe; Time period of passing order; Tangible material
• Section: 147; 148; 144; 145

Judgement Text

"ITA No.4033/Del/2024 & CO No.102/Del/2025 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “G” NEW DELHI BEFORE SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER AND SHRI BRAJESH KUMAR SINGH, ACCOUNTANT MEMBER आ.अ.सं/.I.T.A No. 4033/Del/2024 िनधा रणवष /Assessment Year: 2014-15 ACIT, Circle-34(1), E-2 Block, 8th Floor, Room No.804, Civic Centre, New Delhi. PAN No.AACHS1532D बनाम Vs. SUNIL GOYAL (HUF), 4378/4B, Murari Lal Street, Ansari Road, Dariyaganj, Delhi. अपीलाथ\u0014 Appellant \u0016\u0017यथ\u0014/Respondent & Cross Objection No.102/Del/2025 (Arising out of ITA No. 4033/Del/2024) िनधा रणवष /Assessment Year: 2014-15 SUNIL GOYAL (HUF), 4378/4B, Murari Lal Street, Ansari Road, Dariyaganj, Delhi. बनाम Vs. ACIT, Circle-34(1), E-2 Block, 8th Floor, Room No.804, Civic Centre, New Delhi. PAN No.AACHS1532D अपीलाथ\u0014 Appellant \u0016\u0017यथ\u0014/Respondent Assessee by Shri Rajat Garg, CA Revenue by Shri Manish Gupta, Sr. DR सुनवाईक\bतारीख/ Date of hearing: 31.07.2025 उ\u000eोषणाक\bतारीख/Pronouncement on 13.08.2025 Printed from counselvise.com ITA No.4033/Del/2024 & CO No.102/Del/2025 2 आदेश /O R D E R PER C.N. PRASAD, J.M. The appeal and cross objection are filed by the Revenue and Assessee respectively against the order of the NFAC, Delhi dated 02.07.2024 for the AY 2014-15. 2. The Revenue challenged the order of the Ld. CIT(Appeals), NFAC in deleting the addition made towards difference in cost of construction as estimated by the DVO and as reported by the assessee. In the cross objection the assessee challenged the order of the Ld. CIT(Appeals), NFAC in upholding the validity of notice dated 28.07.2022 issued u/s 148 of the Act and the consequential assessment, as the same being time barred in the light of the decision of the Hon’ble Supreme Court in the case of Union of India vs. Rajeev Bansal (469 ITR 46). 3. Since the assessee has challenged the very validity of notice issued u/s 148 and the consequential assessment proceedings, we first adjudicate the following ground no.2 raised by the assessee in its cross objection: “2. That the CIT(A) has erred in law and on facts in upholding the validity of the reassessment notice dated 28.07.2022 issued u/s 148, despite the same being time-barred in light of the decision of Union of India vs. Rajeev Bansal [2024] 167 taxmann.com 70 (SC).” Printed from counselvise.com ITA No.4033/Del/2024 & CO No.102/Del/2025 3 4. The Ld. Counsel for the assessee, at the outset, submits that in the case of the Assessee a notice u/s 148 of the Act was issued on 29.06.2021 under un-amended scheme of section 148. Ld. Counsel submits that by virtue of decision of the Hon’ble Supreme Court in the case of Union of India vs. Ashish Agarwal (444 ITR 1) the Assessing Officer issued notice u/s 148A(b) on 01.06.2022 validating the notice issued u/s 148 dated 29.06.2021 under un-amended provisions of section 148 and gave assessee time till 15.06.2022 to file its reply. However, since the assessee did not file reply to the said notice, the Assessing Officer passed order u/s 148A(d) on 28.07.2022 which is barred by limitation in view of the judgment of the Hon’ble Supreme Court in the case of Union of India vs. Rajeev Bansal (supra), and the Assessing Officer ought to have issued notice under 148A(d) of the Act and notice u/s 148 on or before 22.06.2022. 5. Ld. Counsel for the Assessee also placed reliance on the decision of the Hon’ble Delhi High Court in the case of Ram Balram Buildhome (P) Ltd. vs. ITO (2025) 171 taxmann.com 99. 6. Ld. Counsel for the assessee further placed reliance on the decision of the coordinate bench, Delhi in the case of Sushil Kumar vs. ACIT in ITA No.3481/Del/2024 dated 04.05.2025, wherein the coordinate bench following the decision of the Hon’ble Supreme Printed from counselvise.com ITA No.4033/Del/2024 & CO No.102/Del/2025 4 Court in the case of Union of India vs. Rajeev Bansal (supra) held that the notice issued u/s 148 beyond the time limits set by the Hon’ble Supreme Court was held to be bad in law and consequently the reassessment proceedings based on such notice was quashed. 7. Heard rival contentions, perused the orders of the authorities below and the materials placed before us. It is the contention of the Ld. Counsel for the assessee that the notice issued originally u/s 148 dated 29.06.2021 under pre-amended provisions which was validated by virtue of the decision of the Hon’ble Supreme Court in the case of Ashish Agarwal and the time limits set by the Hon’ble Supreme Court in the case of Union of India vs. Rajeev Bansal (supra) for issuing fresh notice under new regime, since final notice issued u/s 148 on 28.07.2022 is barred by limitation as it was issued beyond the time limits set by the Hon’ble Supreme Court in the case of Union of India vs. Rajeev Bansal and accordingly the reassessment framed pursue to such notice is bad in law. 8. We observe that the Hon’ble Supreme Court in the case of Union of India vs. Rajeev Bansal affirming the decision of the Hon’ble Supreme Court in the case of Ashish Agarwal and validating the notices issued u/s 148 of the Act during the period from 01.04.2021 to 30.06.2021 had set time limits for treating such notices as deemed Printed from counselvise.com ITA No.4033/Del/2024 & CO No.102/Del/2025 5 to have been issued under the amended provisions of section 148A of the Act w.e.f. 1.4.2021 for issuing such notices by the Assessing Officer observing as under: “105. A direction issued by this court in exercise of its jurisdiction under article 142 is an order of a court. The third proviso to section 149 of the new regime provides that the period during which the proceedings under section 148A are stayed by an order or injunction of any court shall be excluded for computation of limitation. During the period from the date of issuance of the deemed notice under section 148A(b) and the date of the decision of this court in Union of India v. Ashish Agarwal, 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 (some-where from April 1, 2021 till June 30, 2021) till the date of decision in Union of India v. Ashish Agarwal, that is, May 4, 2022. 106. In Union of India v. Ashish Agarwal, this court directed the Assessing Officers to provide relevant information and materials relied upon by the Revenue to the assessees 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 assessees. Therefore, the show-cause notices were deemed to have been stayed until the Assessing Officers provided the relevant information or material to the assessees in terms of the direction issued in Union of India v. Ashish Agarwal. To summarize, the combined effect of the legal fiction and the directions issued by this court in Union of India v. Ashish Agarwal is that the show- cause notices that were deemed to have been issued during the period between April 1, 2021 and June 30, 2021 were stayed till the date of supply of the relevant information and material by the Assessing Officer to the assessee. After the supply of the relevant material and information to the assessee, time begins to run for the assessees to respond to the show-cause notices. 107. The third proviso to section 149 allows the exclusion of time allowed for the assessees to respond to the show-cause notice under section 149A(b) to compute the period of limitation. The third proviso excludes \"the time or extended time allowed to the assessee\". Resultantly, the entire time allowed to the assessee to Printed from counselvise.com ITA No.4033/Del/2024 & CO No.102/Del/2025 6 respond to the show-cause notice has to be excluded for computing the period of limitation. In Union of India v. Ashish Agarwal, this court provided two weeks to the assessees to reply to the show- cause notices. This period of two weeks is also liable to be excluded from the computation of limitation given the third proviso to section 149. Hence, the total time that is excluded for computation of limitation for the deemed notices is: (i) the time during which the show-cause notices were effectively stayed, that is, from the date of issuance of the deemed notice between April 1, 2021 and June 30, 2021 till the supply of relevant information or material by the Assessing Officers to the asses-sees in terms of the directions in Union of India v. Ashish Agarwal; and (ii) two weeks allowed to the assessees to respond to the show-cause notices. (b) Interplay of Union of India v. Ashish Agarwal with Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 108. The Income-tax Act read with Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 extended the time limit for issuing reassessment notices under section 148, which fell for completion from March 20, 2020 to March 31, 2021, till June 30, 2021. All the reassessment notices under challenge in the present appeals were issued from April 1, 2021 to June 30, 2021 under the old regime. Union of India v. Ashish Agarwal 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. (East End Dwellings Co. Ltd. v. Finsbury Borough Council) Therefore, the logical effect of the creation of the legal fiction by Union of India v. Ashish Agarwal is that the time surviving under the Income-tax Act read with Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 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 June 30, 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 148 of the new regime would have to be issued within the time limits extended by Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. As a corollary, the reassessment notices to be issued in pursuance of the deemed notices must also be within the time limit surviving under the Income-tax Act read Printed from counselvise.com ITA No.4033/Del/2024 & CO No.102/Del/2025 7 with Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. This construction gives full effect to the legal fiction created in Union of India v. Ashish Agarwal and enables both the assessees and the Revenue to obtain the benefit of all consequences flowing from the fiction. (See State of A. P. v. A. P. Pensioners' Association) 110. The effect of the creation of the legal fiction in Union of India v. Ashish Agarwal was that it stopped the clock of limitation with effect from the date of issuance of section 148 notices under the old regime [which is also the date of issuance of the deemed notices). As discussed in the pre-ceding segments of this judgment, the period from the date of the issuance of the deemed notices till the supply of relevant information and material by the Assessing Officers to the assessees in terms of the directions issued by this court in Union of India v. Ashish Agarwal has to be excluded from the computation of the period of limitation. Moreover, the period of two weeks granted to the assessees to reply to the show-cause notices must also be excluded in terms of the third proviso to section 149. 111. The clock started ticking for the Revenue only after it received the response of the assessees to the show-causes notices. After the receipt of b the reply, the Assessing Officer had to perform the following responsibilities: (i) consider the reply of the assessee under section 149A(c); (ii) take a decision under section 149A(d) based on the available material and the reply of the assessee; and (iii) issue a notice under section 148 if it was a fit case for reassessment. Once the clock started ticking the Assessing Officer was required to complete these procedures within the surviving time limit. The surviving time limit, as prescribed under the Income-tax Act read with Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, was available to the Assessing Officers to issue the reassessment notices under section 148 of the new regime. 112. Let us take the instance of a notice issued on May 1, 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 May 1, 2021. After accounting for all the exclusions, the Assessing Officer will have sixty-one days (days between May 1, 2021 and June 30, 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 June 18, 2022, the Assessing Officer will have sixty-one days from June 18, 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 August 18, 2022. Printed from counselvise.com ITA No.4033/Del/2024 & CO No.102/Del/2025 8 113. In Union of India v. Ashish Agarwal, this court allowed the asses-sees to avail of all the defenses, including the defense of expiry of the time limit specified under section 149(1). In the instant appeals, the reassessment notices pertain to the assessment years 2013-14, 2014-15, 2015-16, 2016-17, and 2017-18. 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 Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020; and (ii) obtain the previous approval of the authority specified under section 151. A notice issued with-out complying with the preconditions is invalid as it affects the jurisdiction of the Assessing Officer. Therefore, the reassessment notices issued under section 148 of the new regime, which are in pursuance of the deemed notices, ought to be issued within the time limit surviving under the Income-tax Act read with Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. A reassessment notice issued beyond the surviving time limit will be time-barred. G. Conclusions 114. In view of the above discussion, we conclude that: (a) After April 1, 2021, the Income-tax Act has to be read along with the substituted provisions; (b) Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 will continue to apply to the Income-tax Act after April 1, 2021 if any action or proceeding specified under the substituted provisions of the Income-tax Act falls for completion between March 20, 2020 and March 31, 2021; (c) Section 3(1) of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 overrides section 149 of the Income-tax Act only to the extent of relaxing the time limit for issuance of a reassessment notice under section 148; (d) Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 will extend the time limit for the grant of sanction by the authority specified under section 151: The test to determine whether Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 will apply to section 151 of the new regime is this 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 under section Printed from counselvise.com ITA No.4033/Del/2024 & CO No.102/Del/2025 9 151(1) has extended time till June 30, 2021 to grant approval; (e) In the case of section 151 of the old regime, the test is if the time limit of four years from the end of an assessment year falls between March 20, 2020 and March 31, 2021, then the specified authority under section 151(2) has extended time till March 31, 2021 to grant approval; (f) The directions in Union of India v. Ashish Agarwal will extend to all the ninety thousand reassessment notices issued under the old regime during the period April 1, 2021 and June 30, 2021; (g) The time during which the show-cause notices were deemed to be stayed is from the date of issuance of the deemed notice between April 1, 2021 and June 30, 2021 till the supply of relevant information and material by the Assessing Officers to the assessees in terms of the directions issued by this court in Union of India v. Ashish Agarwal, and the period of two weeks allowed to the assessees 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 the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. All notices issued b beyond the surviving period are time barred and liable to be set aside; 115. The judgments of the High Courts rendered in Rajeev Bansal v. Union of India (Writ Tax No. 1086 of 2022 (Allahabad High Court)), Keenara Industries Pvt. Ltd. v. ITO (R/Special Civil Application No. 17321 of 2022 (High Court of Gujarat)), J. M. Financial and Investment Consultancy o Services Pvt. Ltd. v. Asst. CIT (W. P. No. 1050 of 2022 (High Court of Judicature at Bombay)), Siemens Financial Services Pvt. Ltd. v. Dy. CIT, (High Court of Judicature at Bombay), Geeta Agarwal v. ITO (D. B. Civil Writ Petition No. 14794 of 2022 (High Court of Judicature at Rajasthan)), Ambika Iron and Steel Pvt. Ltd. v. Pr. CIT (W. P. (C) No. 20919 of 2021 (High Court of Orissa)), Twylight Infrastructure Pvt. Ltd. v. ITO, Ganesh Dass Khanna v. ITO and other judgments of the High Courts which relied on these judgments, are set aside to the extent of the observations made in this judgment. 116. The appeals filed by the Revenue are accordingly allowed. The appeals filed by the assessees will be governed by reasons discussed in this judgment.” Printed from counselvise.com ITA No.4033/Del/2024 & CO No.102/Del/2025 10 9. We also observe that the Hon’ble Jurisdictional High Court in the case of Ram Balram Buildhome (P) Ltd. vs. ITO (2025) 171 taxmann.com 99 (Delhi) following the decision of the Hon’ble Supreme Court in the case of Union of India vs. Rajeev Bansal (supra), on identical circumstances set aside the notice issued u/s 148 dated 30.07.2022 as barred by limitation and quashed the reassessment observing as under: - “HELD The question that falls for consideration of this court is whether the impugned order and the impugned notice were issued beyond the period as stipulated for passing such an order or issuance of such a notice. [Para 14] Section 149(1) of the Act as in force with effect from 01-04-2021 and prior to its substitution with effect from 01-09-2024 by the Finance (No.2) Act, 2024, expressly provided that no notice under Section 148 of the Act can be issued for the relevant assessment year if three years had elapsed from the end of the relevant assessment year unless the case fell within Clause (b) of the said sub-section. Clause (b) proscribed issuance of notice if three years, but not more than ten years, had elapsed from the end of the relevant assessment year unless the AO had in its possession books of account, other documents, or evidence, which revealed that the income chargeable in the form as stipulated, had escaped assessment. And, such income amounted to or was likely to 750 lacs or more. Thus, no notice under Section 148 of the Act could be issued beyond the period of ten years from the end of the relevant assessment year. However, in terms of the first proviso to Section 149(1) of the Act, no notice under Section 148 of the Act could be issued in respect of the relevant assessment year beginning on or before 01-04-2021, if such a notice could not be issued, inter alia, under Section 148 of the Act. [Para 15] Concededly, no notice under Section 148 of the Act could be issued under the provisions of Section 149(1) of the Act as was in force prior to 01-04-2021 if, (i) four years had elapsed from the end of Printed from counselvise.com ITA No.4033/Del/2024 & CO No.102/Del/2025 11 the relevant assessment year, (ii) four years but not more than six years had elapsed from the end of the relevant assessment year if the income chargeable to tax, which had escaped assessment, amounted to or was likely to amount to 1 lac or more for that year, or (iii) four years but not more than sixteen years had elapsed from the end of the relevant assessment year if the income in relation to any asset (including financial interest) in any entity located outside India and chargeable to tax had escaped assessment. [Para 16] In the present case, there is no allegation that the Assessee's income that had escaped assessment in respect of assessment year 2013-14 was in relation to any asset located outside India. Thus, in terms of Section 149(1)(b) of the Act as in force prior to 01-04- 2021, no notice under Section 148 of the Act could have been issued beyond the period of six years from the end of the relevant assessment year. [Para 17] In view of the above, no notice under Section 148 of the Act could have been issued in this case after 31.03.2020 in respect of AY 2013-14, [Para 18] However, it is the Revenue's case that the impugned notice is within the time as extended by virtue of the TOLA Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020] and the decision of the Supreme Court in Union of India v. Ashish Agarwal [2022] 138 tasmann.com 64/286 Taxman 183/444 ITR 1. The Revenue contends that the impugned notice has been issued within the time as prescribed under Section 149(1) of the Act computed in accordance with the third and fourth proviso to Section 149 of the Act as was in force at the material time. [Para 19] Thus, the central question to be addressed is whether the impugned notice was issued within the extended time as available to the Assessing Officer by virtue of the provisions of the TOLA, the directions issued under Article 142 of the Constitution of India by the Supreme Court in the case of Ashish Agarwal (supra) and the timelines as in force with effect from 01-04-2021 but prior to 01-04- 2023[Para 20] In terms of Section 147 of the Act as in force prior to 01.04.2021, an AO would assess/reassess the income of an assessee for the relevant assessment year if he had reason to believe that the income chargeable to tax for the said relevant AY had escaped assessment. However, this power was not open ended and the period, which an officer could travel back for reopening the assessment was not indefinite. Section 149(1) of the Act proscribed the issuance of notice under Section 148 of the Act-which was necessary for initiating the assessment/re-assessment proceedings under Section 147 of the Act-beyond the period of four years from the end of the relevant assessment year. This period was extended to six years if Printed from counselvise.com ITA No.4033/Del/2024 & CO No.102/Del/2025 12 the amount, that has, escaped assessment was ?1 lac or more, and to sixteen years if the income that has escaped assessment was in relation to any asset located outside India. Additionally, the Assessing Officer could assume jurisdiction to reopen assessments under Section 147 of the Act only where he had reason to believe that the income had escaped assessment. The reason to believe was not construed expansively. It was necessarily required to be based on tangible material having nexus with the view that an assessee's income had escaped assessment [Para 31] The procedure for reassessment was substantially amended by virtue of the Finance Act, 2021. Section 148A of the Act was introduced, which included the procedure for providing the assessee an opportunity to address any information available with the Assessing Officer, which was suggestive of the assessee's income escaping assessment for any, relevant year. The procedure enabled the AO to take an informed decision whether it was a fit case for issuance of a notice under Section 148 of the Act after considering the material on record including responses furnished by the assessee. [Para 33] Subsequent to the Finance Act, 2021, the Finance Act, 2023 was brought into force with effect from 01-04-2023, wherein two additional provisos were added before the third and fourth proviso to Section 149(1) of the Act, making the existing third and fourth provisos to fifth and sixth. In addition, by the Finance Act, 2023, the words \"is less than seven days\" were replaced by the words \"does not exceed seven days\" in the sixth proviso to Section 149(1) of the Act. [Para 35] In exercise of the powers under section 3(1)(a) of the TOLA, the Government of India issued three notifications successively extending the time for completion of the specified acts. In terms of the Notification No.93/2020 dated 31.12.2020, the time limit for completion of the specified acts which fell within the period of 20- 03-2020 to 31-12-2020 was extended till 31-03-2021. The said period thereafter was extended till 30.04.2021 by the Notification No.20/2021 dated 31.03.2021 and further stood extended till 30.06.2021 by the notification No.38/21 dated 27.04.2021. [Para 37] Thus, by virtue of the provisions of the TOLA and the notifications issued by the Government of India, the time limit for completion of the specified acts [as defined under Section 3(1)(a) of the TOLA] stood extended till 30.06.2021. [Para 38] Clause (b) of Section 148A of the Act expressly provides that the Assessing Officer is required to give a notice to the assessee to show cause why a notice under Section 148 of the Act not be issued, within such time as may be specified in the notice. This time is required to be not less than seven days but not more than thirty Printed from counselvise.com ITA No.4033/Del/2024 & CO No.102/Del/2025 13 days. This time can be further extended by the Assessing Officer, if an application is made by the assessee in this regard. [Para 40] In terms of Sub-clause (c) of Section 148A of the Act, the Assessing Officer is required to consider the response to the show cause notice furnished by the Assessee. [Para 41] Clause (d) of Section 148A of the Act requires the Assessing Officer to decide on the basis of the material on record, including the response furnished by the assessee to the notice issued under Section 148A(b) of the Act, whether it is a fit case for issuance of notice under Section 148 of the Act. The said clause also stipulates that such a decision is required to be made within one month from the end of the month in which a reply referred to Clause (c) is received by the Assessing Officer or in case where no reply is furnished by the assessee, within one month from the end of the month in which time or extended time to furnish the reply expires. Section 148 requires the Assessing Officer to serve a copy of the notice under Section 148 along with an order passed under Clause (d) of Section 148A. As is apparent from the above, the procedures as prescribed under Section 148A including holding of inquiry as contemplated under Clause (a) of Section 148A; issuance of a show cause notice under Section 148A(b); considering the reply of the assessee under Clause (c) of Section 148A; and deciding in terms of Clause (d) of Section 148A, whether it is a fit case for issuance of notice under Section 148, is required to be completed prior to issuance of notice under Section 148. [Para 43] Section 149(1) of the Act prohibits issuance of notice beyond the time period as specified. In terms of Clause (a) of Section 149(1) of the Act, a notice cannot be issued for relevant assessment year if more than three years had elapsed from the end of the relevant assessment unless the case falls under Clause (b) of the said sub- section. [Para 44] In terms of Clause (b) of Section 149(1) of the Act, the following conditions are required to be satisfied: (i) that the Assessing Officer has in its possession books of account or other documents or evidence, which reveal that the income had escaped assessment, (ii) that such income chargeable to tax, which is revealed from the material available with the Assessing Officer is in the form of (a) an asset; or (b) expenditure in respect of transaction or in relation to an event or occasion, or (c) an entry of entries in the books of account, (iii) that the income which has escaped assessment amounts to or is likely to amounts to ?50 lacs or more. [Para 45] If the aforesaid conditions are satisfied, a notice under Section 148 can be issued beyond the period of three years but not beyond the period of ten years. [Para 46] Printed from counselvise.com ITA No.4033/Del/2024 & CO No.102/Del/2025 14 The opening sentence of Section 149(1) clearly indicates that the time limit as prescribed under Section 149(1) is a hard stop. Therefore, the procedure that is required to be completed for issuance of notice under Section 148 is required to be completed prior to the expiry of the time limit as prescribed under Section 149(1). Such time limit cannot be breached on account of the Assessing Officer not completing the procedure required for issuance of notice under Section 148. There is no ambiguity in this regard given the construct of Section 149(1), which is not in the nature of enabling provision but a provision that proscribes an action. [Para 47] Having stated the above, it is also important to note the provisos to Section 149(1) of the Act also provide for exclusion of that certain time periods for the purposes of computing the period of limitation as prescribed under Section 149(1) of the Act as well as for extending the period of limitation. [Para 481 As is apparent from the above, third proviso to Section 149(1), provides for exclusion of time in computing of the limitation period to the aforesaid extent: (i) the time or extended time allowed to the assessee in the show cause notice issued under Section 148A(b) of the Act; and (ii) the period during which proceedings under Section 148A of the Act are stayed by an order or injunction by any court, are required to be excluded. Thus the period of three years or ten years from the end of the relevant assessment year, as the case may be, is required to be computed after excluding the time allowed to an assessee as per the show cause notice issued under Section 148A(b) of the Act or if there is a stay order or injunction passed by any court staying the proceedings under Section 148A of the Act, the period during which the proceedings are so stayed. [Para 51] As is apparent from the plain language of the fourth proviso to Section 149(1) of the Act, it extends the period of limitation for issuing a notice under Section 148 of the Act so as to provide the AO a minimum of seven days to pass an order under Section 148A(d) of the Act. If the time available to the AO to decide whether it is a fit case for issuance of notice under Section 148 of the Act in terms of Section 148A(d) of the Act is less than seven days after excluding the period a provided under the third proviso, then the period of three years or ten years as prescribed is required to be extended by such period so as to make available to the AO at least seven days to pass an order u/s 148A(d) of the Act and issue a notice u/s 148 of the Act. Illustratively, if the show cause notice under Section 148A(b) of the Act is led to an assessee, on the last date on which issuance of such a notice under Section 145 of the Act is permissible, that is, on the last day of expiry of three years from the end of the relevant assessment year of ten from the end of the assessment year as the case may be, the time made available to the Printed from counselvise.com ITA No.4033/Del/2024 & CO No.102/Del/2025 15 assessee to respond to a notice under Section 148A(b) of the Act (being a minimum of se as provided in the notice plus such farther time as extended pursuant to an excluded for the calculation of the period of three years or ten years as the case may be. And, an additional ten years period of seven days is made available for the AD to pass an order. Thus, the period of limitation in such seven days but not exceeding thirty days case would be three years (after excluding the time provided to the assessee to respond to the notice under Section 148A(b) of the Act) and seven days, or an application), is required to be the assessee to respond to the notice under Section 148A(b) of the Act) and seven days as the case way be. [Para 53] It is obvious, that in such a case, the AO would not have a time for passing an order under Section 148Aid) of the Act as stipulated under the said Clause, that is, one month from the end of the month in which the assessee furnishes a reply to the notices issued under Section 148A(b) of the Act. As noted above, the AO is required to complete the entire procedure for issuance of notice under Section 148 of the Act within the period as prescribed under Section 149 of the Act. Plainly, if the AO is unable to complete such procedure within the period of limitation, the AO would cease to have the jurisdiction to issue such a notice [Para 54] The Supreme Court had in unambiguous terms held that (a) the date of notices issued under Section 148 of the Act, under the old regime which was subject matter of challenge in Ashish Agarwal (supra), has not been struck off and further notices and orders issued under Section 148 of the Act were in continuance of the proceedings that had commenced on the date of issuance of such notices; (b) the period from the date of issuance of such notices till the date of the decision in the case of Ashish Agarwal (supra), that is 04.05.2021, was required to be excluded for the period of calculation of limitation by virtue of the third proviso to Section 149(1) of the Act. The AO could not continue any proceeding till the Supreme Court rendered its decision to treat the notices issued under Section 148 of the Act as notices issued under Section 148A(b) of the Act, and, (c) the period from the date of the decision in Ashish Agarwal (supra), that is 04-05-2022, to the date when the material was supplied by the AO to the Assessee, as was required under Section 148A(b) of the Act, was also required to be excluded. The Supreme Court reasoned that the AO could not proceed further till the said material was supplied. Therefore, the said period is also required to be excluded by virtue of the third proviso to Section 149(1) of the Act [Para 63] It is material to note that the Supreme Court had also explained that provision of TOLA would be applicable to notices which were subject matter of challenge in Ashish Agarwal (supra). [Para 64] Printed from counselvise.com ITA No.4033/Del/2024 & CO No.102/Del/2025 16 The last date for issuance of notice under section 148 for assessment year 2013-14 under the statutory framework, as was existing prior to 1-4-2021 was 31-3-2020, that is, six years from the end of the relevant assessment year. [Para 65] By virtue of section 3(1) of TOLA time for completion of specified acts, which fell during the period 20-3-2020 to 31-12-2020 were extended till 30-6-2021. Thus, the notice dated 1-6-2021 was issued twenty-nine days prior to the expiry of period of limitation for issuing a notice under section 148 as was extended by TOLA. As noted above, the period from 1-6-2021, the date of issuance of notice, and 4-5-2022, being the date of decision of the Supreme Court in Ashish Agarwal (supra) is required to be excluded by virtue of the third proviso to section 149(1). [Para 66] Additionally, the period from the date of decision in Ashish Agarwal (supra) till the date of providing material, as required to the accompanied with a notice under section 148A(b), is required to be excluded. Thus, the period between 4-5-2022 to 30-5-2022, the date on which the Assessing Officer had issued the notice under section 148A(b) in furtherance of his earlier notice dated 1-6-2021, is also required to be excluded by virtue of the third proviso to section 149(1). [Para 67] In addition to the above, the time granted to the petitioner to respond to the notice dated 30-5-2022 the period of two weeks is also required to be excluded by virtue of the third proviso to section 149(1). The petitioner had furnished its response to the notice u/s 148A(b) on 13.6.2022. Thus, the period of limitation began running from that date. [Para 68] As noted above, by virtue of TOLA, Assessing Officer had period of twenty-nine days limitation left on the date of commencement of the reassessment proceedings, which began on 1.6.2021, to issuea notice u/s 148. The said notice was required to be accompanied by an order u/s 148A(d). Thus, the Assessing Officer was required to pass an order u/s 148A(d) within the said twenty nine days notwithstanding the time stipulated u/s 148A(d). This period expired on 12.7.2022. [Para 69] Since the period of limitation, as provided u/s 149(1), had expired prior to issuance of the impugned notice on 30-7-2022. The said is squarely beyond the period of limitation. (Para 70] It is contended on behalf of the revenue that the Assessing Officer is required to pass an order u/s 148A(d) by the end of the month following the month on which the reply to the notice u/s 148A(b) was received. Thus, the order u/s 148A(d) was well as the notice u/s 148 (both dated 30.7.2022) are within the prescribed period. This contention is without merit as it does not take into account Printed from counselvise.com ITA No.4033/Del/2024 & CO No.102/Del/2025 17 that proceedings u/s 148A necessarily required to be completed within the period available for issuing notice u/s 148, as prescribed under section 149. Thus, the time available to the AO to pass an order u/s 148A(d) was necessarily truncated and the same was required to be passed on or before 12-7-2022) The fourth proviso to section 149 did not come into play as the time period available for the AO to pass an order under section 148A(d) was in excess of the seven days. [Para 71] In view of the above, the impugned notice dated 30-7-2022 has been issued beyond the period of limitation [Para 72] The petition is accordingly allowed and the impugned order dated 30-7-2022 passed under section 148A(d); the impugned notice dated 30-7-2022 issued under section 148, and the assessment order dated 30-5-2013 framed under section 147 pursuant to the notice dated 30-7-2022 for assessment year 2013-14, are set aside (Para 73]” 10. As illustrated by the Hon’ble Supreme Court in the case of Union of India vs. Rajeev Bansal (supra) at para 112 of the judgment the Hon’ble Supreme Court had clearly set the time limit for issue of notices u/s 148 under amended provisions and applying the illustration to the case on hand before us, the notice issued u/s 148A dated 28.07.2022 under amended scheme (new regime) is barred by limitation in view of the following sequence of events took place in this case: Printed from counselvise.com ITA No.4033/Del/2024 & CO No.102/Del/2025 18 11. The sequence of events are not in dispute before us. Applying the ratio of the decision in the case of Union of India vs. Rajeev Bansal (supra) to the above events the surviving time available as per TOLA after the time allowed to file reply by the assessee was left with only one day and therefore the notice u/s 148 under new regime should have been issued not later than 16.06.2022, however, the notice u/s 148 was issued on 28.07.2022 which is clearly barred by limitation and consequently the reassessment proceedings pursue to such notices are bad in law. Thus, applying the ratio of the decision of the Hon’ble Supreme Court in the case of UOI vs. Rajeev Bansal (supra) and the decision of the Hon’ble Delhi High Court in the case of Ram Balram Buildhome (P) Ltd. vs. ITO (supra), the reassessment order passed by the Assessing Officer u/s 147 r.w.s. 144 r.w.s. 144B of the Act dated 26.05.2023 pursuant to the notice issued u/s 148 Printed from counselvise.com ITA No.4033/Del/2024 & CO No.102/Del/2025 19 dated 28.07.2022 is hereby quashed. Ground no.2 of the cross objection of the assessee is allowed. 12. Since we have quashed the reassessment order on one of the legal issues, all other grounds in the cross objection are not adjudicated as they become only academic in nature at this stage and are left open. Also since we have quashed the reassessment order as bad in law the appeal of the Revenue became infructuous and the same is liable to be dismissed. 13. In the result, the cross objection of the assessee is partly allowed and the appeal of the Revenue is dismissed as infructuous. Order pronounced in the open court on 13.08.2025 Sd/- Sd/- (BRAJESH KUMAR SINGH) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 13.08.2025 *Kavita Arora, Sr. P.S. Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI Printed from counselvise.com "