The Gujarat High Court has allowed a writ petition challenging a reassessment notice issued under Section 148 of the Income Tax Act, 1961, holding it to be invalid and time-barred. The Division Bench, comprising Justice A.S. Supehia and Justice Pranav Trivedi, ruled that the notice issued on June 30, 2022, was beyond the “surviving time” available to the Revenue Department, as mandated by the Supreme Court in Union of India v. Rajeev Bansal.
Background of the Case
The petitioner, Ashaben Chandrakant Ashar, approached the High Court under Article 226 of the Constitution of India, challenging the validity of the notice dated June 30, 2022, issued under Section 148 of the Act for the Assessment Year 2017-2018.
The facts reveal that the respondent Assessing Officer initially issued a notice on June 11, 2021, under Section 148 of the Act during the extended time period provided by the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (“TOLA”). Following the Supreme Court’s decision in Union of India v. Ashish Agarwal (2022), this notice was treated as a show-cause notice under Section 148A(b) of the Act.
Pursuant to the directions in Ashish Agarwal, the Assessing Officer provided the relevant information to the petitioner on May 17, 2022. The petitioner subsequently filed a reply on May 30, 2022. Following this, the Assessing Officer passed an order under Section 148A(d) and issued the impugned notice under Section 148 on June 30, 2022.
Arguments
The primary contention of the petitioner was that the notice dated June 30, 2022, was invalid and time-barred. The petitioner argued that the issuance of the notice exceeded the limitation period prescribed by law, specifically violating the “surviving time” principle established by the Supreme Court.
On behalf of the respondent authorities, learned Senior Standing Counsel Mr. Maunil Yajnik appeared. Upon verification of the dates involved in the proceedings, the counsel “could not controvert the same.”
Court’s Analysis
The High Court anchored its analysis on the legal principles laid down by the Supreme Court in Union of India v. Rajeev Bansal (2024) regarding the validity of notices based on the “surviving time” left between the issuance of the initial notice under TOLA and June 30, 2021.
The Court also referred to its own recent judgment in Dhanraj Govindram Kella v. Income Tax Officer (SCA No. 6387 of 2023, decided on July 8, 2025), which exhaustively dealt with similar issues. In that case, the Court held:
“The notices issued under section 148 of the Act under old regime between 01.04.2021 and 30.06.2021 as per TOLA, will be a valid notice if the notice under section 148 of the Act under new regime is issued within the period of ‘surviving time’ as per the directions issued by Hon’ble Apex Court in case of Rajeev Bansal (supra).”
Applying these principles to the facts at hand, the Bench calculated the limitation period as follows:
- Date of Information Supply: May 17, 2022.
- Time to Reply: 15 days (Due date: June 1, 2022).
- Surviving Time Expiry: Considering the limitation from the date of issuance of the original notice read with TOLA up to June 30, 2021, the Court determined that the limitation for issuing the Section 148 notice under the new regime expired on June 18, 2022.
The Court observed:
“In the facts of the case… the impugned notice dated 30.06.2022 issued under section 148 of the Act would be invalid notice as the said notice is issued after 18.06.2022 as per the decision of Hon’ble Apex Court in the case of Ashish Agarwal (supra).”
The Bench cited the specific conclusion from the Rajeev Bansal judgment (Paragraph 114(h)):
“The Assessing Officers were required to issue the reassessment notice under section 148 of the new regime within the time limit surviving under the Income-tax Act read with the Taxation and other Laws… All notices issued beyond the surviving period are time barred and liable to be set aside.”
Decision
Finding that the notice was issued beyond the permissible timeframe, the High Court allowed the petition. The Court held:
“The impugned notice dated 30.06.2022 is hereby quashed and set aside and all consequential proceedings are also quashed and set aside.”
Rule was made absolute with no order as to costs.
Case Details:
- Case Title: Ashaben Chandrakant Ashar v. Income Tax Officer, Ward 1
- Case Number: R/Special Civil Application No. 17566 of 2022
- Coram: Justice A.S. Supehia and Justice Pranav Trivedi
