Clipped from: https://taxguru.in/income-tax/itat-chennai-quashes-time-barred-reassessment-citing-scs-rajeev-bansal-ruling.html
Smt. Lakshmi Narasimhan Santhi Vs ACIT (ITAT Chennai)
In a significant ruling dated 3rd July 2025, the Chennai Bench of the Income Tax Appellate Tribunal (ITAT) allowed the appeal filed by Smt. Lakshmi Narasimhan Santhi against the reassessment order issued under Section 147 of the Income Tax Act for the Assessment Year (AY) 2013–14. The ITAT held that the reassessment notice issued on 28th July 2022 was beyond the permissible time limit laid down by the Supreme Court in Union of India v. Rajeev Bansal (469 ITR 46) and therefore void ab initio.
Background and Timeline of Events
The assessee, an individual taxpayer, had filed her return for AY 2013–14 on 26th March 2024, declaring an income of ₹14.19 lakhs. The reassessment proceedings were initiated after the Assessing Officer (AO) noted that the assessee, along with co-owners, had sold an immovable property during the year, and alleged that capital gains income had escaped assessment.
Initially, a notice under Section 148 was issued on 30th June 2021 under the old regime of reassessment provisions. The extended deadline was in line with the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (TOLA), issued due to COVID-19 disruptions.
However, the legal framework shifted significantly with the enactment of the Finance Act, 2021, which revamped Sections 147–151 of the Act, effective from 1st April 2021. This gave rise to legal ambiguity around the validity of notices issued during the transitional period from 1st April to 30th June 2021.
The Supreme Court, in Union of India v. Ashish Agarwal (444 ITR 1), addressed this ambiguity, holding that notices issued under the old law during this transitional period would be deemed as show cause notices under Section 148A(b) of the new law. The CBDT, in Instruction No. 1/2022, guided tax authorities to comply with the procedural safeguards of the new law in such cases.
Accordingly, the AO issued a letter dated 2nd June 2022 disclosing the information used to reopen the case. The assessee replied on 11th June 2022. Based on this, the AO issued an order under Section 148A(d) and a fresh notice under Section 148 on 28th July 2022.
Grounds of Appeal
The assessee contested the validity of the reassessment on multiple grounds, particularly focusing on the jurisdictional issue regarding the timing of the reassessment notice. Citing the decision of the Supreme Court in Rajeev Bansal, the assessee argued that the 28th July 2022 notice was issued beyond the permissible “surviving period” and was therefore time-barred.
Supreme Court’s Framework in Rajeev Bansal
In Rajeev Bansal, the Apex Court held that:
1. The period between the original notice (under the old law) and 30th June 2021 must be computed.
2. This remaining period—termed the “surviving period”—starts ticking again from the date the AO receives the assessee’s reply.
3. The AO must pass the order under Section 148A(d) and issue the fresh notice under Section 148 within this surviving period.
The ruling effectively shortened the time window available to the department for completing procedural steps under the new law.
Computation and Legal Analysis by ITAT
Applying the principles of Rajeev Bansal, the Tribunal performed a detailed computation:
- Original notice under old law: 30th June 2021
- Date of assessee’s reply: 11th June 2022
- Deemed end of the two-week reply period: 16th June 2022
- Maximum “surviving period” from old regime (inclusive of a seven-day cushion): 7 days
- Last permissible date to issue valid notice under Section 148: 23rd June 2022
- Actual date of notice issued under Section 148: 28th July 2022
- Result: Time-barred by 35 days
The Tribunal rejected the department’s contention that Section 148A(d) granted a one-month period from the end of June 2022 for issuing the order and notice, holding that this was “necessarily truncated” by the surviving period computation per Rajeev Bansal.
Supporting Judicial Precedents
The Tribunal relied on a host of judgments reinforcing its view:
- Madras High Court in Mrs. Thulasidass Prabavathi v. ITO – Held that even if the statutory time under Section 148A(d) was available, it had to be completed within the surviving period.
- Delhi High Court in Ram Balram Buildhome Pvt. Ltd. v. ITO – Clarified that procedural deadlines under the new regime cannot override the limitation principles laid down in Rajeev Bansal.
- ITAT Mumbai in Ramchand Thakurdas Jhamtani, Sumitra Rajeshbhai Jain, and Nilanjana Arvinder Singh – All three held reassessment notices issued beyond surviving periods as time-barred.
- ITAT Pune in DCIT v. Kolte Patil Developers and ITAT Raipur in Kachrulal Jitendra Kumar and Vinay Agrawal – Affirmed similar computations and invalidated reassessment proceedings initiated outside of surviving periods.
Interestingly, ITAT Pune’s earlier ruling in Pushpadevi Shivlal Rathi was against the assessee, but the later larger Bench decision in Kolte Patil overruled this, aligning with the majority view in favor of taxpayers.
Department’s Argument and Tribunal’s Rebuttal
The department argued that the reassessment process, including passing of order under Section 148A(d), was completed within one month of the assessee’s reply, as permitted by the statute. However, the Tribunal held that this one-month period was subject to the overarching limitation structure laid down in Rajeev Bansal. It stressed that procedural timelines cannot extend the limitation already exhausted.
Final Ruling
In view of the above analysis, ITAT Chennai held that:
- The reassessment notice dated 28th July 2022 was issued beyond the legally permissible period.
- Consequently, the reassessment order passed under Section 147 read with Section 143(3) was invalid.
- The appeal of the assessee was allowed, and the reassessment order set aside.
Conclusion
The decision in Smt. Lakshmi Narasimhan Santhi v. ACIT reaffirms the judiciary’s consistent interpretation of limitation rules in the post-2021 reassessment regime. The ITAT Chennai ruling adds to a growing body of jurisprudence that prioritizes statutory timelines over procedural flexibilities, particularly when the reassessment proceedings are initiated during the TOLA extension phase but completed under the new legal regime.
With courts across jurisdictions aligning on this issue, the ruling provides further clarity and relief to assessees facing reassessment notices issued beyond the calculated “surviving period”—ensuring procedural fairness and adherence to statutory mandates in tax administration.
Appellant was represented by : Shri S.R. Srikrishna, CA
Respondent was represented by : Shri Kumar Chandan, JCIT
FULL TEXT OF THE ORDER OF ITAT CHENNAI
This appeal filed at the instance of the assessee is directed against the order of Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi dated 04.09.2024 passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2013-14.
2. Brief facts of the case are as follows: The assessee is an individual. For the assessment year 2013-14, the return of income was filed on 26.03.2024 declaring total income of Rs.14,19,860/-. Subsequently, a notice u/s.148 of the Act was issued on 30.06.2021 as per the old regime within the extended time limit in view of Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (TOLA). The reason for issuing notice u/s.148 of the Act was that assessee along with seven co-owners had sold an immovable property during the relevant assessment year, which suggested escapement of income. Later on, as per CBDT’s instruction No. 1/2022 of F.No.279 /Misc. /M-51/2022-ITJ dated 11th May 2022 on Implementation of judgment of Hon’ble Supreme Court dated 04.05.2022 in the case of Union of India Vs. Ashish Agarwal reported in 441 ITR 1, adjudicated on the validity of issue of reassessment notice issued during the period from 01.04.2021 to 30.06.2021 within the time extended by TOLA, 2020, the information and material relied upon for issuance of extended reassessment notice dated 30.06.2021 was communicated to the assessee vide letter dated 02.06.2022. In response to the said communication issued on 02.06.2022 in accordance with directions issued by CBDT in implementation of judgment of Hon’ble Supreme Court, the assessee submitted response on 11.06.2022 which was duly considered while passing order u/s 148A(d) dated 28.07.2022 followed by issue of notice u/s 148 dated 28.07.2022 with prior approval of the competent authority. The assessment proceeding for the AY 2013-14 was completed u/s 143(3) r.w.s 147 of the Act on 24.05.2023 wherein addition of Rs. 97,09,569/- was made on account of long term capital gains which the assessee failed to offer in ITR filed for the AY 2013-14.
3. Aggrieved by the said assessment order the assessee filed appeal before the First Appellate Authority (FAA) raising several grounds of appeal. The FAA after considering all the aspects (factual and legal) of the case, partly allowed the appeal of the assessee subject to verification by the AO on certain aspects before allowing such reliefs.
4. Aggrieved by the order of the FAA dated 04.09.2024, the assessee filed appeal before the Tribunal. The assessee, vide additional submissions dated 18.03.2025 and 24.04.2025 questioned the jurisdictional issues relying on the Hon’ble Apex Court’s judgment in the case of Rajiv Bansal vs Union of India reported in 469 ITR 46 (SC).
5. The Ld.AR submitted that notice u/s.148 of the Act dated 28.07.2022 is time barred and liable to be set aside as the said notice is beyond “surviving period” as specified in para 114(g) and 114(h) in the judgment of the Hon’ble Apex Court in the case of Rajeev Bansal, supra.
6. The Ld.DR submitted that the notice u/s.148 of the Act as per the old regime read with TOLA 2022 was issued on 30.06.2021. The AO considering the Hon’ble Apex Court Judgment in the case of Union of India vs. Ashish Agarwal reported in 441 ITR 1 and the CBDT Instruction No.1/2022 dated 11.05.2022 had followed the procedure laid down by the Hon’ble Apex Court. Hence, the notice issued is not barred by limitation.
7. We have heard rival submissions and perused the material on record. The Finance Act, 2021 revamped the entire scheme of reassessment procedure u/s 147 to 151, w.e.f 01.04.2021. Thus, the old regime of re-assessment ended on 31.03.2021 and the new regime of re-assessment started from 01.04.2021. Due to COVID-19, the Government introduced the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (TOLA), extending time limits. Accordingly, the time available for the Department to issue notice u/s 148 of the Act under Old Regime, falling during the period from 20.03.2020 till 31.03.2021, were extended till 30.06.2021. The starting point of these entire chain of litigation was that, since the Old regime of re-assessment had ended on 31.03.2021, was it valid to issue notice based on an ended regime during the extended period of 01.04.2021 to 30.06.2021. Further, to issue notice under New Regime, required a notice u/s 148A(b) and an order passed u/s 148A(d).
8. The Hon’ble Supreme Court resolved this issue in the case of UOI & Ors Vs Ashish Agarwal reported in 444 ITR 1, by exercising powers under Article 142 of the Constitution of India. The Hon’ble Supreme court in Para-10(i) held that the notice u/s 148 of the Act issued under Old Regime between the period of 01.04.2021 to 30.06.2021, shall be deemed to be a show cause notice u/s 148A(b) of the New Regime and that the AO shall provide information and materials relied upon by revenue within 30 days of the judgment, so that assessee can reply within two weeks thereafter. Accordingly, the revenue assumed jurisdiction for all such cases, based on the judgment of Hon’ble Supreme Court in the case of Ashish Agarwal (supra) and went ahead with procedures culminating in assessment.
9. These assessments triggered a second round of litigation, primarily on the fact that, if the re-assessment notices issued u/s 148 of the New Regime were valid or not. In the Second round, the Hon’ble Supreme Court in the case of UOI & Ors Vs Rajeev Bansal, reported in 469 ITR 46, held that after exclusion of limitations, the notices u/s 148 of New Regime should be issued within the “SURVING PERIOD” and anything issued beyond surviving period is time barred and liable to be set-aside.
10. The Submission made before us is that the notice issued u/s 148 of the Act dated 28.07.2022, for AY-2013-14, in the case of the assessee is time barred as it was issued beyond the surviving period as specified in the case of Rajeev Bansal (supra). The relevant dates in the case of assessee are as follows:-
| Serial | Particulars | Date |
| 1) | Date of issue of Notice u/s 148 of OLD regime during the period 01.04.2021 to 30.06.2021 | 30.06.2021 |
| 2) | Date of supply of information as per judgment of Asish Agarwal | 02.06.2022 |
| 3) | Date of reply filed by the Assessee for the above | 11.06.2022 |
| 4) | Date of passing of order u/s 148A(d) | 28.07.2022 |
| 4) | Date of issue of notice u/s 148 of New Regime | 28.07.2022 |
11. The manner of computation of surviving period and limitation, as provided in case of Rajeev Bansal (supra), are as follows:
1st. Surviving period is calculated by computing the number of days between the date of issuance of the deemed notice and 30th June, 2021 (Para-108)
2nd. The surviving period starts ticking from the date of receipt of response by AO (Para-111 & 112)
3rd. The AO has to consider response of the Assessee u/s 148A(c), pass order u/s 148A(d) and issue notice u/s 148 of New regime, all these procedures has to happen within the surviving period (Para-111)
4th. Only notices issued within the surviving period calculated from the date of receipt of response by AO is valid. The notices issued beyond surviving period is time barred and liable to be set-aside (Para-113 and 114(g) & 114(h))
12. Applying the above principles laid down by the Hon’ble Supreme Court to the facts of the instant case and adopting a conservative computation, notice issued u/s.148 of the Act will time barred by 35 days as detailed below (The judgment of Hon’ble Apex Court in the case of Rajeev Bansal, supra does not specify the application of fourth proviso of section 149(1), which governs time limit for notice u/s.148 of the Act. Still in the below computation, we have taken the outer limit of 7 days extension)
| Serial | PARTICULARS | COMPUTATION | DATES |
| 1 | Date of issue of Original Notice u/s 148 within TOLA Period | A | 30-06-2021 |
| 2 | Last date of TOLA | B | 30-06-2021 |
| 3 | Balance (On Inclusive method) | C = B -A | 1 |
| 4 | Minimum days available as per 4th Proviso of Section 149(1) | D | 7 |
| 5 | Then SURVIVING PERIOD (Para-108 to 113 of Rajeev Bansal) | E (Higher of C &D) | 7 |
| 6 | Date of response filed by Appellant to 148A(b) notice | F | 11-06-2022 |
| 7 | Date on which Period of two weeks allowed to assessee to respond to notice ends (deemed stay as per 3rd proviso to section 149 and Para 114 (g) of Rajeev Bansal) | G | 16-06-2022 |
| 8 | Last date for issuing notice u/s 148 [i.e., 16.06.2022+ 7 days] | H = E + G | 23-06-2022 |
| 9 | Actual date of issuance of notice u/s 148 | H | 28-07-2022 |
| 10 | Then Notice is time Barred by (Para 114 (H) of Rajeev Bansal) | I = H – G | 35 |
13. The judicial precedents upholding the above proposition are as follows:-
i. Judgment of Jurisdictional Madras High Court in Mrs.Thulasidass Prabavathi Vs ITO [W.P.No.19010 of 2022] (Para-16 & 17)
ii. Judgment in ACIT Vs Amit Jain SLP (Supreme Court) (Civil) Diary No.32211/2024 (303 taxman 163) (Para-2 to 4)
iii. Judgment of KULWANT SINGH & ORS. vs. UNION OF INDIA & ORS (341 CTR (P&H) 700) (Para-6 & 8)
vi. Order of ITAT Raipur in M/s. Kachrulal Jitendra Kumar Vs The ITO [ITA No.307/RPR/2024] (Para-23 to 25)
vii. Order of ITAT Raipur in DCIT VS Shri Vinay Agrawal [ITA No: 29 & 30/RPR/2025] (Para-19 & 20)
viii. Order of ITAT Mumbai in ACIT Vs Ramchand Thakurdas Jhamtani [ITA No. 3553/MUM/2024] (Para-9 & 10)
ix. Order of ITAT Mumbai in ITO Vs Sumitra Rajeshbhai Jain [ITA No. 3553/MUM/2024] (Para-22 & 23)
x. Order of ITAT Mumbai in Nilanjana Arvinder Singh Vs DCIT [ITA No.6140/MUM/2024] (Para-30 & 31)
xi. Order of ITAT Mumbai, in DCIT Vs Larsen & Toubro Ltd in ITA No-5743 & 5745 of 2024, reported in 173 com 582 (para-10.2)
xii. Order of ITAT Pune in DCIT VS Kolte Patil [ITA Nos. 2011 & 2023/Pune/2024; Asst. yrs. 2014-15 & 2016-17], reported in (2025) 235 TTJ (Pune) 113 : (2025) 39 NYPTTJ 552 (Pune) (Para-45)
14. The above judicial precedents have categorically upheld the above proposition and has held the notice to be time barred if they are beyond surviving period. We notice that ITAT Pune SMC Bench, in the case of Pushpadevi Shivlal Rathi Vs ITO in ITA No.1995/PUN/2024 for AY-2014-15, had held against the assessee. However, subsequently co-ordinate Bench of ITAT Pune in the case of DCIT VS Kolte Patil reported in (2025) 235 TTJ (Pune) 113 had decided the issue in favour of assessee.
15. Report of AO dated 09.06.2025 before us confirms the relevant dates and AO has not contradicted the ratio laid down in case Rajeev Bansal, supra. The AO has only stressed that the 148A(d) order and the notice u/s 148 of new regime, both dated 28.07.2022, were within the period, as specified in 148A(d), of one month from the end of the month in which reply is received. However, this issue has been elaborately dealt with by Hon’ble Supreme Court in the case of Rajeev Bansal (Supra) and also by other judicial forums. The Hon’ble Delhi High Court at Para-71 in the case of Ram Balram Buildhome (Supra), has held that the time available u/s 148A(d) was “necessarily truncated” and the same was required to be passed within the surviving period.
16. Further, Hon’ble jurisdictional Madras High Court in the case of Mrs.Thulasidass Prabavathi (Supra) has held the notice u/s 148 issued beyond surviving period to be time barred. In Para-4 & 5 of the judgment, clearly specify the dates and events. In that case, the notice u/s 148 of old regime was on 21.06.2021, the reply was filed by assessee on 31.05.2022 and the order u/s 148A(d) / 148 Notice was issued on 30.06.2022. Even though as per 148A(d), the AO had time of one month from the end of the month to pass the order (In this case such time happens to be 30.06.2022), the same was truncated to the extent of surviving period and the notice was held to be time barred. Hence, legal contention raised by Ld.AR is squarely covered in favour of assessee.
17. In view of the above judgment of Hon’ble Supreme Court and Hon’ble Jurisdictional Madras High Court, we hold that the notice dated 28.07.2022 issued u/s 148 of the New Regime in respect of assessment year 2013-14 is time barred and re-assessment order pursuant to the same is set-aside.
18.In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on 3rd July, 2025 at Chennai.
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