Reassessment notices issued under the new regime following the Ashish Agarwal legal fiction must be issued within the 'surviving period' (the time remaining between the original notice and the limitation deadline, plus statutory exclusions). Notices issued beyond this period are time-barred and void ab initio.

O R D E R

PER WASEEM AHMED, ACCOUNTANT MEMBER:

The present appeal filed by the assessee is directed against the order passed under section 250 of the Income Tax Act, 1963 (hereafter the Act) dated 16-05-2025 by the Learned Commissioner of Income Tax (Appeal) (hereafter the learned CIT(A)) at National Faceless Appeal Centre-NFAC, for the A.Y. 2016-17.

The assessee in the appeal memo has raised several grounds of appeal which are numbered as Ground Nos. 1 to 8. The assessee vide application dated 16th June 2025 raised various additional grounds challenging the validity of the assessment including the time barring of the notice issued under section 148 of the Act.

The assessee, in the application for admission of additional grounds, submitted that the issues raised do not specifically arise from the appellate order of the learned CIT(A) but the same is purely legal in nature and fundamental to the resolution of the case. Consequently, the assessee's learned AR requested that the additional ground be admitted for adjudication.

On the other hand, the learned (DR) opposed the admission of the additional grounds of appeal, arguing that these grounds had not been raised before the lower authorities.

We have heard the rival submissions of both the parties and perused the materials available on record. The Hon’ble Supreme Court in the case of National Thermal Power Co. Limited vs. CIT reported in 229 ITR 383 has held as under:

“ Under section 254 of the Income-tax Act, 1961, the Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. The power of the Tribunal in dealing with appeals is thus expressed in the widest possible terms. The purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assessee in accordance with law. If, for example, as a result of a judicial decision given while the appeal is pending before the Tribunal, it is found that a non-taxable item is taxed or a permissible deduction is denied, there is no reason why the assessee should be prevented from raising that question before the Tribunal for the first time, so long as the relevant facts are on record in respect of the item. There is no reason to restrict the power of the Tribunal under section 254 only to decide the grounds which arise from the order of the Commissioner of Income-tax (Appeals). Both the assessee as well as the Department have a right to file an appeal/cross-objections before the Tribunal. The Tribunal should not be prevented from considering questions of law arising in assessment proceedings, although not raised earlier.”

From the above, it is evident that the view limiting the Tribunal’s jurisdiction to the issues arising solely from the appeal before the Commissioner (Appeals) is too restrictive to define the Tribunal’s powers. The Tribunal undoubtedly has the discretion to permit or decline the raising of a new ground. Since the issue raised on the additional ground of appeal is purely legal in nature and necessary to consider assessing the income of the assessee correctly, and in light of the judgment cited above, we admit the additional ground raised by the assessee. Having admitted the additional grounds of appeal, now we proceed to adjudicate specific issues raised by the assessee through grounds of appeal and additional grounds of appeal.

As the issue raised by the assessee on additional grounds of appeal is legal in nature, we first proceed to adjudicate the additional ground specifically the issue raised through Ground No. 1(e) of the additional ground of appeal that notice issued under section 148 of the Act is time barred.

The facts in brief are that the assessee is an individual who did not file return of income for the year under dispute. The AO received information that a sale agreement dated 04th February 2016 was entered into betw