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Judgment
PER VIMAL KUMAR, JM:
The appeal filed by the Appellant/assessee is against order dated 13.03.2026 of ld. Commissioner of Income Tax (Appeals)/NFAC, Delhi [hereinafter referred to as “the CIT(A)”] under section 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) arising out of assessment order dated 30.05.2023 of Ld. Assessing Officer/ Assessment Unit (hereinafter referred to as ‘the AO’) u/s 147 r.w.s. 144B of the Act for A.Y. 2014-15.
Brief facts of the case are that the assessee company filed return of income of Rs. 30,812/- on 29.09.2014. On basis of credible information after due process, the case was reopened for reassessment. Notice u/s 148 of the Act dated 30.07.2022 was issued. The assessee filed return of income on 26.08.2023 declaring income of Rs. 30810/-. Notice u/s 143(2) of the Act dated 05.01.2023 was issued. The assessee raised objections against reopening which were disposed of vide letters dated 28.04.2023 and 15.05.2023. On completion of proceedings, ld. AO vide order dated 30.05.2023 made additions of Rs. 20 lacs, 1,14,50,000/-.
Against order dated 30.05.2023 of ld. AO, the assessee filed appeal before ld. CIT(A) which was dismissed vide order dated 13.03.2026.
Being aggrieved, the appellant/assessee preferred present appeal on following grounds:
“1.That the order passed by the learned CIT(A) under section 250 is 1 bad in law, contrary to facts, and liable to be quashed
2.That the learned CIT(A) has erred in law and on facts in upholding the reopening under section 147/148, without appreciating that the notice issued under section 148 is barred by limitation and hence void ab initio
3.That the learned CIT(A) failed to appreciate that the reassessment proceedings were initiated beyond the permissible 3 time limit, even after considering the benefit (if any) of the judgment of Union of India v. Ashish Agarwal, and thus the entire proceedings are without jurisdiction
4.That the learned CIT(A) grossly erred in not adjudicating the specific ground of limitation raised by the appellant in light of the binding decision of Rajeev Bansal v. UOI, thereby rendering the order non speaking and invalid
5.That the learned CIT(A) erred in upholding the reassessment without appreciating that jurisdictional conditions for reopening were not satisfied, and hence the reassessment deserves to be quashed
6.That the learned CIT(A) failed to appreciate that the Assessing Officer did not dispose of the objections raised by the appellant 6 against reopening, in violation of the law laid down in GKN Driveshafts (India) Ltd v. ITO, thereby vitiating the reassessment proceedings
7.That the learned CIT(A) erred in not adjudicating the ground that the reassessment order was passed in the name of a non-existing entity (on account of conversion into LLP) and is therefore void in law
8.That the learned CIT(A) erred in confirming the addition without appreciating that no opportunity of cross examination of the alleged entry operators / third parties was provided, thereby violating principles of natural justice
9.That the learned CIT(A) erred in confirming the addition of 13450000 under section 68 without appreciating that a the appellant had duly explained the nature and source of transactions, the transactions were routed through banking channels, and necessary evidences were furnished
10.That the learned CIT(A) failed to appreciate that the addition has been made merely on assumptions, suspicion and general investigation reports, without bringing any direct adverse material on record.”
Ld. Authorized Representative for appellant/assessee submitted that ld. CIT(A) failed to consider written submissions dated 07.03.2026 and 13.03.2026. The written submissions dated 13.03.2026 are as below:
“1 Background of Reassessment Proceedings
The reassessment proceedings have been initiated pursuant to a notice issued under section 148 during the period between 01.04.2021 and 30.06.2021 under the old reassessment regime.
Subsequently, the Hon'ble Supreme Court in the case of Union of India vs Ashish Agarwal (2022) 444 ITR 1 (SC) held that such notices issued during the transition period shall be deemed to be notices issued under section 148A(b) of the new reassessment regime and the Assessing Officer was directed to follow the procedure prescribed under section 148A.
Accordingly, the Assessing Officer proceeded under section 148A and passed the order under section 148A(d) followed by issuance of notice under section 148.
However, the said proceedings suffer from a fatal jurisdictional defect as the notice under section 148 has been issued beyond the limitation period permitted under law.
2. Statutory Limitation Applicable for AY 2014-15
Under the erstwhile provisions of section 149(1)(b) (as applicable prior to the Finance Act, 2021), a notice under section 148 could be issued within six years from the end of the relevant assessment year.
For Assessment Year 2014-15, the normal limitation would therefore expire on 31.03.2021
However, due to the pandemic, the limitation for issuing notice under section 148 was extended by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) and the notifications issued thereunder.
By virtue of these extensions, the outer date for issuing notice under the old law stood extended only up to: 30.06.2021
Thus, 30.06.2021 was the final extended limitation date available to the Revenue under the unamended provisions.
3. Effect of the Supreme Court Judgment in Ashish Agarwal
Subsequently, a large number of notices were issued by the department under the old provisions of section 148 between 01.04.2021 and 30.06.2021, even though the Finance Act, 2021 had already introduced the new reassessment regime.
In order to resolve the controversy, the Hon'ble Supreme Court in Union of India v. Ashish Agarwal (2022) 444 ITR 1 (SC) held that such notices issued under the old law would be treated as show cause notices under section 148A(b) of the new regime.
However, the Hon'ble Court specifically clarified that:
the said judgment was issued as a one-time measure, and the Revenue must still comply with the requirements of section 149 and all other statutory safeguards.
Thus, the judgment did not revive or extend the limitation period prescribed under section 149.
4. Clarification by the Supreme Court in Rajeev Bansal
The legal position was further clarified by the Hon'ble Supreme Court in Union of India v. Rajeev Bansal (2024) 466 ITR 1 (SC).
The Hon'ble Court held that:
(a)The judgment in Ashish Agarwal merely converted the notices issued under the old law into notices under section 148A(b).
(b)The said judgment did not extend the limitation period prescribed under section 149.
(c)The Revenue could proceed only within the surviving limitation period available under the unamended provisions of section 149 read with the extensions granted under TOLA.
(d)While computing limitation, the department may be allowed the minimum reasonable time required to complete the procedure under section 148A, but such procedural allowance cannot have the effect of reviving a limitation period that has already expired.
Thus, the principle laid down by the Hon'ble Supreme Court is that only the balance / surviving limitation available as on 30.06.2021 can be utilised by the department.
It clarified the calculation of the "surviving period" (or balance/surviving time limit) for completing reassessment proceedings under the Income Tax Act, 1961, particularly in the context of notices issued between April 1, 2021, and June 30, 2021, under the old regime, which were deemed show-cause notices under the new regime (post-Finance Act, 2021 amendments) following the earlier judgment in Union of India v. Ashish Agarwal. This ruling addressed the interplay between the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA), the substituted provisions of Sections 148, 148A, and 149 (new reassessment regime effective April 1, 2021), and the legal fiction created in Ashish Agarwal.
Key Principles from the Judgment on Surviving Period Calculation The Supreme Court held that the legal fiction in Ashish Agarwal (deeming old Section 148 notices as Section 148A(b) show-cause notices) requires imagining all logical consequences, including limitation periods. Notices or actions beyond the surviving time are time-barred.
The surviving or balance time limit is calculated by computing the number of days between:
The date of issuance of the deemed notice (i.e., the original invalid Section 148 notice issued between April 1, 2021, and June 30, 2021), and June 30, 2021 (the outer extended date under TOLA for certain actions). This surviving period represents the time available to the Revenue to complete remaining steps under the new regime (e.g., issuing a fresh Section 148 notice after following Section 148A procedures).
The clock of limitation stops from the date of the deemed notice until:
The supply of relevant information/material by the Assessing Officer to the assessee (post-Ashish Agarwal directions, typically 30 days from May 4, 2022), and The two weeks granted to the assessee to reply (excludable under the third proviso to Section 149(1)).
Additional exclusions apply for periods stayed by court orders/injunctions (third proviso to Section 149).
The clock starts ticking again only after receipt of the assessee's response to the show-cause notice.
Any fresh notice under Section 148 (new regime) must be issued within this surviving period (added to the date the clock restarts). Beyond that, it is invalid and time-barred.
Direct quotes from the judgment (Union of India v. Rajeev Bansal, 2024 INSC 754):
"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."
"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 effect of the creation of the legal fiction in Ashish Agarwal (supra) 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]."
"The clock started ticking for the Revenue only after it received the response of the assesses to the show cause notices."
"A reassessment notice issued beyond the surviving time limit will be time barred."
This framework has been applied in subsequent High Court and ITAT decisions, often resulting in quashing of notices issued beyond the computed surviving period (e.g., where surviving days were as low as 2-30, depending on the original notice date in June 2021). The ruling balances taxpayer protections under the new regime's shorter timelines and procedural safeguards with Revenue's ability to act on pandemic-era extensions under TOLA, but strictly enforces that no indefinite extension exists-actions must fit within the surviving window.
Chronology of Events in the Present Case
We have tried to explained the Concept of “Surviving Period” and limitation period, in the following table by taking the case of assessee:
Undisputedly, in the present case, the notice under section 148 of the Act was issued on 30/07/2022, i.e., 38 days after the surviving/balance time period as per the decision of the Hon'ble Supreme Court in Rajeev Bansal (supra).
6. Order Passed Beyond Surviving Limitation
From the above chronology it becomes evident that the assessee filed its detailed reply on 9/15.06.2022. However, the Assessing Officer passed the order under section 148A(d) only on 30.07.2022, i.e., more than 38 days after the reply of the assessee.
Even assuming that the department is entitled to the minimum reasonable period required to complete the procedure under section 148A, as recognised by the Hon'ble Supreme Court in Rajeev Bansal, the delay of more than 38 days in passing the order is far beyond any reasonable procedural time contemplated under the statute.
The concept of "minimum time required to complete the procedure" cannot be interpreted so as to grant the department an indefinite or extended period to pass the order.
Once the surviving limitation period available under section 149 read with TOLA had expired, the jurisdiction of the Assessing Officer to proceed further stood extinguished.
7. Administrative Delay Cannot Extend Statutory Limitation
It is a settled principle of law that limitation provisions governing reassessment are jurisdictional in nature and must be strictly complied with.
The Hon'ble Delhi High Court in CIT v. Bhanji Lavji (79 ITR 582) and several subsequent judgments has consistently held that where the notice initiating reassessment is issued beyond the prescribed limitation, the entire proceedings are void.
Similarly, in PCIT v. Meenakshi Overseas Pvt. Ltd. (395 ITR 677) (Delhi HC), it has been held that reassessment proceedings must strictly conform to the statutory framework and cannot be sustained if jurisdictional conditions are not satisfied.
Therefore, administrative delay or inaction on the part of the department cannot have the effect of enlarging or reviving the statutory limitation.
8. Jurisdictional Defect Renders Entire Proceedings Void
Once the notice initiating reassessment proceedings is found to be barred by limitation, the entire proceedings become void ab initio.
The Hon'ble Supreme Court has repeatedly held that where jurisdiction itself is lacking, the entire proceedings are liable to be quashed without examining the merits of the additions.
In the present case, since the order under section 148A(d) dated 26.07.2022 and the consequential notice under section 148 dated 27.07.2022 have been issued beyond the surviving limitation period, the assumption of jurisdiction itself is invalid.
9. Conclusion
In view of the law laid down by the Hon'ble Supreme Court in Ashish Agarwal and Rajeev Bansal, it is clear that the Revenue could proceed only within the surviving limitation available under section 149 read with TOLA.
In the present case, the order under section 148A(d) dated 30.07.2022 and the notice under section 148 dated 30.07.2022 have been issued long after the expiry of the permissible period.
Accordingly, the reassessment proceedings initiated for Assessment Year 2014-15 are barred by limitation and void ab initio.
10. Prayer
It is therefore most respectfully prayed that the impugned reassessment proceedings including the notice issued under section 148, the order passed under section 148A(d), and the consequent assessment order be quashed in toto as being without jurisdiction and barred by limitation.”
Reliance was placed on order dated 18.02.2026 in ITA No. 4725/Del/2025 titled as Dy. Commissioner of Income Tax vs. Sterling Agro Industries Limited.
Ld. Departmental Representative relied on impugned order.
From examination of record in light of aforesaid rival contention, it is crystal clear that Ld. CIT(A) vide order dated 13.03.2026 confirmed assessment order dated 30.05.2023. The assessment order was in pursuance to reopening of assessment u/s 148 of the Act and issuance of notice dated 30.07.2022.
For the assessment year 2014-15, the material chronological events and computation of limitation for the assessment year 2014-15 is as under:
In view of above undisputed facts, it is evident that the notice u/s 148 of the Act dated 30.07.2022 was issued after expiry of limitation.
A co-ordinate Bench in order dated 18.02.2026 in ITA No. 4725/Del/2025 titled as Dy. Commissioner of Income Tax vs. Sterling Agro Industries Limited in para 8 to 12 observed as under:
“8.Firstly we take the ground of the cross objection which is legal. The Ld. AR for the assessee has raised the legal issue and stated that the notice dated 27-07-2022 issued by AO u/s 148 of the Act is time barred. In this regard he has submitted as under :
original notice u/s 148 of the Act(old Regime) was issued on 29-06-2021
Extended deadline to issue notice u/s 148 of the Act old regime As per TOLA 30-06-2021
Time remaining till 30-06-2021 01 days
Letter issued by AO supplying information with reference to section 148A(b) in consequence to Hon’ble Supreme Court Order in Ashish Agarwal dated 04-05-2022 27-05-2022
Replied filed before AO 10 -06-2022
Extended date by which notice should have 7 days been issued u/s 148 as per section 149 (17-06-2022)
Order u/s 148 A(d) 27-07-2022
Notice u/s 148 of the Act 27-07-2022 7
9.In consequence to the directions issued by the Hon’ble Supreme court in the case of Union of India vs. Ashish Agarwal dated 04-05- 2022 the Assessing Officer issued the fresh notice u/s 148 of the Act on 27-07-2022. He further submitted that as per the section 149 of the Act the notice u/s 148 of the Act could be issued within a period of six years from the end of the relevant assessment year i.e 2014-15. In the present case the notice u/s 148 of the Act was issued on 27-07-2022 which is beyond time. Reliance has placed on the decisions of Union of India & Ors Vs. Rajeev Bansal 2024 (10) TMI 264 Supreme Court (LB) in this Case the Hon’ble Supreme Court held as under:
“110.The effect of the creation of the legal fiction in Ashish Agarwal (Supra) 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 preceding segment of the judgment, the period from the date of the issuance of the deemed notices till the supply of relevant information and material by the assessing officer to the assessee in terms of the direction issued by this court in Ashish Agarwal (Supra) has to be excluded from the computation of the period of limitation. Moreover, the period of two weeks granted to the assessee to reply to the cause notices must 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 assessee to the show cause notices. After the receipt of the reply, the assessing officer had to perform the following responsibilities; (i) consider the reply of the assessee under section 8 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 see State of AP v. AP Pensioners Association, (2005) 13 SCC 161 [28]. [This court observed that the “legal fiction undoubtedly is to be construed in such a manner so as to enable a person, for whose benefit such legal fiction has been created, to obtain all consequences flowing there form.”] PART F required to complete these procedures within the surviving time limit. The surviving time limit, as prescribed under the Income Tax Act read with TOLA, 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 1 May 2021 under the old regime for a relevant assessment year. Because of the legal fiction, the deemed show cause, notice 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 202 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.”
10.In the above sited case, the revenue concedes that for the assessment year 2015-16, all notices issued on or after 1st April 2021 will have to be dropped as they will not fall for completion during the period prescribed under TOLA.
11.The Ld. DR has submitted that assessee, company has never raised this issue that the assessment, is time barred before the Ld.AO during the re-assessment proceedings. The notice was issued within time in the pursuant to the judgment of the Hon’ble Supreme Court in Union of India v. Ashish Agarwal after complying the all conditions. She relied the order of the Assessing Officer.
12.We have heard the parties and perused the material available on record. In view of the observation of the Hon’ble Supreme Court in the case of Rajeev Bansal (Supra) the extended due date for issuance of notice u/s 148 of the Act expired on 17-06-2022 and since, the notice is u/s 148 of the Act was issued on 27-07-2022 the said notice is to be treated as time barred by limitation and consequentially reassessment proceedings would be liable to be quashed as void ab initio. Respectfully following the decision of the Hon’ble Supreme Court, we hold that the notice issued u/s 148 of the Act on 27-07-2022 is time barred by limitation. Accordingly the legal issue raised by the assessee is allowed.”
In view of above material facts, notice u/s 148 of the Act dated 30.07.2022 by following the judicial precedents is held to be barred by limitation. The grounds of appeal of the assessee are accepted.
In the result, the appeal of assessee is allowed.