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2025 Supreme(Online)(MP) 4907
Reserved on : 27th June, 2025 Delivered on : 25th July, 2025
For the Appellants/Petitioners: P.M. Choudhary, Anand Prabhawalkar, Ashish Goyal, Ibrahim Kannodwala, Aditya Goyal, Arun Dwivedi, Jatin Sehgal, Vijay Kumar Asudani
For the Respondents: Harsh Parashar, Yashika Bondwal
Reassessment notices issued under Section 148 must comply with amended Section 149 timelines; notices issued beyond limits are time-barred and invalid.
Headnote:The decision addresses reassessment proceedings initiated under Section 148 of the Income Tax Act, alleging limitation issues and compliance with amended provisions per Finance Act, 2021. The court found the reassessment notices time barred based on assessment year compliance with Section 149 limits. The court addressed the applicability of TOLA and reiterated the thorough requirement for jurisdictional compliance in issuing notices. The court ultimately quashed the impugned notices confirming they were issued beyond the prescribed limits.
Reserved on : 27th June, 2025 Delivered on : 25th July, 2025 O R D E R Per : Justice Vivek Rusia This batch of writ petitions have been filed under Article 226 of the Constitution of India challenging the validity of reassessment Signature Not Verified proceedings initiated under Section 148 of the Income Tax Act, 1961 (hereinafter referred to as “the IT Act”) on the ground that the same are barred by limitation and are contrary to the scheme of the IT Act post the Finance Act, 2021.
02. In all the present cases, the respective Assessing Officers had issued notices under the erstwhile Section 148 of the IT Act between 01.04.2021 and 30.06.2021 purportedly relying upon the relaxations under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA). These notices were, later on, treated to be notices issued under Section 148 A(b) of the IT Act in view of the judgment of the Hon’ble Apex Court in Union of India v/s Ashish Agrawal reported in (2022) 444 ITR 1 (SC) Subsequently, reply and objections were submitted by assesses and orders under Section 148 A (d) were passed which further led to issuance of fresh notices under Section 148 of the IT Act.
03. The petitioners in all these cases have challenged the impugned notices issued under Section 148 and the preceding orders under Section 148 A (d) primarily on the ground that the reassessment proceedings are barred by limitation under the amended provisions of Section 149 of the IT Act as inserted by the Finance Act, 2021 and clarified by the Hon’ble Apex Court in Union of India v/s Rajeev Bansal reported in (2024) 469 ITR 46 (SC)
LEGAL BACKGROUND
04. The Finance Act, 2021 brought into force a new regime (Sections 147 to 151 of the IT Act) for reassessment with effect from 01.04.2021. The amended Section 149 of the IT Act provided the time limit for issuance of notice under Section 148 . Section 149 is as Signature Not Verified follows:-
149.(1) No notice under section 148 shall be issued for the relevant assessment year,—
(a) if three years and three months have elapsed from the end of the relevant assessment year, unless the case falls under clause (b);
(b) if three years and three months, but not more than five years and three months, 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 related to any asset or expenditure or transaction or entries which show that the income chargeable to tax, which has escaped assessment, amounts to or is likely to amount to fifty lakh rupees or more.
(2) No notice to show cause under section 148A 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 five years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment, as per the information with the Assessing Officer, amounts to or is likely to amount to fifty lakh rupees or more.''
05. The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) was enacted to extend limitation periods during the COVID-19 pandemic under the old law. It applied only to proceedings under the unamended Income Tax Act prior to 01.04.2021.
06. The Hon’ble Apex Court in Ashish Agrawal (supra) held the reassessment notices issued between 01.04.2021 and 30.06.2021 under the old regime as deemed notices under Section 148A(b). However, the Court preserved all statutory defences, holding that: “All defences which may be available to the assessee under Section 149 and/or which may be available under the Finance Act, 2021 and in law and whatever rights are available to the Assessing Officer under the Finance Act, 2021 are kept open…” Thus, the timeline Signature Not Verified restrictions under Section 149 as amended were untouched.
