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Judgment
PER SANJAY AWASTHI, ACCOUNTANT MEMBER:
This appeal arises from order dated 24.12.2025, u/s 250 of the Income Tax Act, 1961 (hereafter as “the Act”), by NFAC.
In this case, the Ld. AO passed an order dated 30.05.2023 u/s 147 r.w.s. 144B of the Act. The case of the assessee was reopened through issuance of notice u/s 148 of the Act on account of Long Term Capital Gains (LTCG) of Rs.2,55,98,560/- claimed as exempt by the assessee. Thereafter, the Ld. AO completed the assessment by making an addition of Rs.2,55,98,560/- on account of LTCG and also added an amount of Rs.12,79,928/- on estimate basis for alleged commission paid for arranging bogus entries.
The assessee approached the CIT(A) where he could not succeed on either of the two additions. It is seen that the assessee had challenged even before the Ld. CIT(A) that the assessment order was barred by limitation, however, after a short discussion on page 19 of the impugned order this ground has been dismissed. The aggrieved assessee has approached the ITAT with several grounds challenging the action of authorities below on merit as well as on the ground of limitation.
The Ld. AR argued with the help of written submissions and detailed paper book. It was requested that grounds 1, 2 & 6 challenging the assumption of jurisdiction needed to be decided before proceeding any further in the matter. It was argued that the impugned notice issued under section 148 of the Act dated 20.07.2022 is barred by the limitation in view of the principle of surviving period laid down by the Hon'ble Supreme Court in the case of Union of India vs. Rajeev Bansal [2024] 167 taxmann.com 70 (SC) This was explained as under: -
The Notice u/s 148 of the Act, as per amended provisions of section 149(1), could have been issued within 6 years from the end of assessment year i.e., on or before 31.03.2020. However, as per TOLA, this date was extended till 30.06.2021.
Thereafter, the Hon'ble Supreme Court of India in the case of Ashish Agarwal [2022], reported in 138 taxmann.com 64 (SC) [04-05-2022], held that notice u/s 148 issued under pre-amended law between 01.04.2021 to 30.06.2021 shall be treated as notice u/s 148A(b) as per the amended law.
Accordingly, Ld. AO supplied the material to the assessee vide notice dated 29.05.2022, which was replied by letter dated 14.06.2022.
Thereafter, Ld. A.O. was required to issue notice within the surviving period between the date of issuance of notice u/s 148 under pre-amended law and the period of limitation i.e., 30.06.2021 after exclusion of period as per 3rd proviso to section 149(1) i.e., date from the issuance of notice u/s 148A(b) to the time allowed to the assessee in the said notice. Thus, it was contented by the Ld. AR that the notice u/s 148 dated 20.07.2022 was barred by limitation. This was further explained in the form of following chart:
| Assessment Year | 2013-14 |
| Last date to issue notice u/s 148 as per amended Law s. 149 and as per 1st proviso to amended s. 149 | 31.03.2020 |
| Extended deadline to issue notice u/s 148 as per TOLA and notifications issued therein | 30.06.2021 |
| Notice u/s 148 issued under Old Law | 21.06.2021 |
| Notice providing material in pursuance of Hon’ble Supreme Court order in Ashish Agarwal’s case. | 29.05.2022 |
| Reply filed by the assessee on | 14.06.2022 |
| Time excluded as per third proviso to section 149(1) as per Rajeev Bansal’s case i.e. from the date of original 148 notice which was deemed as show cause notice u/s 148A(b) by the decision of Ashish Agarwal till the supply of the material and time allowed to the assessee to file the reply | 21.06.2021 To 15.06.2022 |
| Time that was available/left to issue notice u/s 148 as per section 149 read with TOLA | 10 days (21.06.2021 to 30.06.2021) |
| Time limit to issue notice u/s 148 as per section 149 as amended by Finance Act, 2021 as per Rajeev Bansal’s case | 24.06.2022 (10 days from 15.06.202) |
| Date of notice u/s 148 | 20.07.2022 |
The Ld. AR pleaded for quashing the assessment order.
The Ld. DR relied on the orders of the authorities below.
We have considered the rival submissions and have gone through the records before us. We have perused the judgment of the Hon’ble Apex Court in the case of Rajeev Bansal (supra). It is clear that the maximum time available for issuing a notice u/s 148 after the amended section 149 of the Act would be 24.06.2022. Admittedly, this notice was issued on 20.07.2022, thus clearly the notice was issued beyond the time permissible to do so. Accordingly, since the notice has been issued beyond the time permissible under law, the subsequent assessment proceedings are also barred and deserve to be quashed.
In the result, the appeal of the assessee is allowed.