Gujarat High Court
Tyrone Patrick Lemos vs The Deputy Commissioner Of Income Tax ... on 24 June, 2025
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/SCA/113/2025 JUDGMENT DATED: 24/06/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 113 of 2025
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
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Approved for Reporting Yes No
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TYRONE PATRICK LEMOS
Versus
THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 2(1)(1),
VADODARA
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Appearance:
MR. TUSHAR HEMANI, SENIOR COUNSEL WITH PARIMALSINH
PARMAR(7296) for the Petitioner(s) No. 1
KARAN G SANGHANI, SENIOR STANDING COUNSEL for the
Respondent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
Date : 24/06/2025
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE PRANAV TRIVEDI)
1. Heard learned Senior Counsel Mr.Tushar Hemani
appearing with Mr.Parimalsinh Parmar, advocate
for the petitioner and learned Senior Standing
Counsel Mr.Karan Sanghani, for the respondent.
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2. Having regard to the controversy involved
which is in narrow compass, with the consent of
the learned advocates for the respective parties,
the matter is taken up for hearing.
3. Rule returnable forthwith. Learned Senior
Standing Counsel Mr.Karan Sanghani, waives
service of notice of rule.
4. By this petition under Article 226/227 of the
Constitution of India, the petitioner has
challenged assessment order dated 27.07.2022
passed by Respondent No.1 under Section 148A(d)
of the Income Tax Act, 1961 (For short "the Act")
which inter alia propose to re-open the
assessment.
5. The brief facts are as under:
6. The petitioner filed return of income for the
Assessment Year 2013-14 on 28.04.2016.
7. A notice dated 30.6.2021 was issued under
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Section 148 of the Act under the provisions of
the Taxation and Other Laws (Relaxation and
Amendment of Certain Provisions) Act, 2020 (For
short "TOLA").
8. Pursuant to the decision of the Hon'ble
Supreme Court in case of Union of India vs.
Ashish Agarwal reported in [2022] 138 taxmann.com
64, the respondent issued notice dated 21.05.2022
under Section 148A(b) of the Act. The respondent
thereafter passed an order dated 27.07.2022 under
Section 148A(d) of the Act alleging that income
to the extent of Rs.1,80,60,000/- had escaped
assessment. Pursuant to the order dated
27.07.2022, notice u/s. 148 came to be issued on
27.07.2022. This order u/s.148A(d) as well as
notice u/s.148 are challenged in the present
petition.
9. Learned Senior Counsel Mr.Tushar Hemani, at
the outset, submitted that during the pendency of
this petition, the Apex Court in case of Union of
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India v. Rajeev Bansal, reported in 469 ITR 46
(SC) has reversed the decision tendered by this
Court in Keenara Industries Pvt. Ltd. v. Income
Tax Officer (Supra) and has prescribed the
modalities to consider validity of the notice
issued under TOLA between 31.3.2021 and
30.6.2021.
10. It was submitted that as held by the Hon'ble
Apex Court in case of Union of India v. Rajeev
Bansal (Supra), as the notice issued under TOLA
is dated 30.6.2021, only one day was available
for issuance of notice, after giving opportunity
of filing reply to the assessee. From the date of
passing of the order by the Apex Court in case of
Union of India v. Ashish Agarwal (Supra) i.e.
21.5.2022, 14 days time was provided to the
assessee to reply to the above notice. Therefore,
the last date for filing the reply by the
assessee was 5.6.2022, which in the instant case
was submitted on 06.06.2022. Therefore, the last
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date to issue notice, as per the judgment of the
Apex Court in case of Union of India v. Rajeev
Bansal (Supra) would be 13.6.2022, whereas the
impugned notice under Section 148 is issued on
27.7.2022. It was therefore, submitted that the
notice dated 30.6.2021 which will relate to the
notice dated 27.7.2022 as per order passed by the
Apex Court in the case of Union of India v.
Rajeev Bansal (Supra), would be invalid notice.
Reliance was placed on following paragraphs of
the Hon'ble Apex Court wherein the situation is
explained in detail in paragraph Nos.92, 93 and
paragraph Nos. 110 to 114:
"92. This Court specifically mentioned that
its directions would also apply to three
categories: (i) the judgment and order passed
by the High Court of Judicature at Allahabad;
(ii) all judgments and orders passed by the
different High Court on the issue where
notices issued under Section 148 of the old
regime after 1 April 2021 were set aside; and
(iii) writ petitions pending before various
High Courts in which notices under Section
148 of the old regime issued after 1 April
2021 are under challenge Ashish Agarwal
(supra). The Court mentioned the above three
categories to clarify that the general nature
of its directions will also give a quietus to
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the matters that have already been
adjudicated or are pending adjudication
before judicial forums. The operation of the
directions cannot be limited to the above
three categories, especially when this Court
has specifically held that "the present order
shall be applicable PAN INDIA."
93. In Ashish Agarwal (supra), this Court was
aware of the fact that it could not have used
its jurisdiction under Article 142 to affect
the vested rights of the assesses by deeming
Section 148 notices under the old regime as
Section 148 notices under the new regime.
Hence, it deemed the reassessment notices
issued under the old regime as show cause
notices under Section 148A(b) of the new
regime. Further, the Court directed the
Revenue to provide all the relevant material
or information to the assesses and thereafter
allowed the assesses to respond to the show
cause notice by availing all the defences,
including those available under Section 149.
Thus, the Court balanced the equities between
the Revenue and the assesses by giving effect
to the legislative scheme of reassessment as
contained under the new regime. It
supplemented the existing legal framework of
the procedure of reassessment under the
Income Tax Act with a remedy grounded in
equitable standards. iii. Effect of the legal
fiction "
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
segments of this judgment, the period from
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the date of the issuance of the deemed
notices till the supply of relevant
information and material by the assessing
officers to the assesses in terms of the
directions 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 assesses to reply to the show cause
notices must also 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 assesses to the show causes 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 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 was 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 notices
will also come into effect from 1 May 2021.
After accounting for all the exclusions, the
assessing officer will have sixty-one days
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[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 2022 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.
113.In Ashish Agarwal(supra), this Court
allowed the assesses to avail all the
defences, including the defence of expiry of
the time limit specified under Section
149(1). In the instant appeals, the
reassessment notices pertain to the
assessment years 2013-2014, 2014-2015, 2015-
2016, 2016-2017, and 2017-2018. To assume
jurisdiction to issue notices under Section
148 with respect to the relevant assessment
years, an assessing officer has to: (i) issue
the notices within the period prescribed
under Section 149(1)of the new regime read
with TOLA; and (ii) obtain the previous
approval of the authority specified under
Section 151. A notice issued without
complying with the preconditions is invalid
as it affects the jurisdiction of the
assessing officer. Therefore, the
reassessment notices issued under Section 148
of the new regime, which are in pursuance of
the deemed notices, ought to be issued within
the time limit surviving under the Income Tax
Act read with TOLA. A reassessment notice
issued beyond the surviving time limit will
be time- barred.
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G. Conclusions
114. In view of the above discussion, we
conclude that:
a. After 1 April 2021, the Income Tax Act has
to be read along with the substituted
provisions;
b. TOLA will continue to apply to the Income
Tax Act after 1 April 2021 if any action or
proceeding specified under the substituted
provisions of the Income Tax Act falls for
completion between 20 March 2020 and 31 March
2021;
c. Section 3(1) of TOLA overrides Section 149
of the Income Tax Act only to the extent of
relaxing the time limit for issuance of a
reassessment notice under Section 148;
d. TOLA will extend the time limit for the
grant of sanction by the authority specified
under Section 151. The test to determine
whether TOLA will apply to Section 151 of the
new regime is this: if the time limit of
three years from the end of an assessment
year falls between 20 March 2020 and 31 March
PART G 2021, then the specified authority
under Section 151(i) has extended time till
30 June 2021 to grant approval;
e. In the case of Section 151 of the old
regime, the test is: if the time limit of
four years from the end of an assessment year
falls between 20 March 2020 and 31 March
2021, then the specified authority under
Section 151(2) has extended time till 31
March 2021 to grant approval;
f. The directions in Ashish Agarwal (supra)
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will extend to all the ninety thousand
reassessment notices issued under the old
regime during the period 1 April 2021 and 30
June 2021;
g. The time during which the show cause
notices were deemed to be stayed is from the
date of issuance of the deemed notice between
1 April 2021 and 30 June 2021 till the supply
of relevant information and material by the
assessing officers to the assesses in terms
of the directions issued by this Court in
Ashish Agarwal (supra), and the period of two
weeks allowed to the assesses to respond to
the show cause notices; and
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
TOLA. All notices issued beyond the surviving
period are time barred and liable to be set
aside;"
11. Learned Senior Standing Counsel Mr.Karan
Sanghani could not controvert the facts that as
per the decision of the Hon'ble Apex Court in
case of Union of India v. Rajeev Bansal (Supra),
the notice dated 27.7.2022 would be a time barred
notice and in turn the notice dated 30.6.2021
would be an invalid notice, as per aforesaid
observations made by the Apex Court.
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12. Considering the above facts, there is a
notice dated 30.6.2021, only one day time was
left for the issuance of the notice under Section
148 after granting 14 days time to the assessee
from the decision of Union of India v. Ashish
Agarwal, the date of issuance of the notice under
Section 148 would be 13.6.2022, whereas in the
facts of the case the notice under Section 148 is
issued on 27.7.2022 and as such the notice dated
30.6.2021 would be an invalid notice.
13. In the result, the petition succeeds only on
this ground.
14. The impugned notice dated 27.7.2022 as well
as notice dated 30.6.2021 are hereby quashed and
set-aside. Rule is made absolute to the aforesaid
extent. No order as to costs.
(BHARGAV D. KARIA, J)
(PRANAV TRIVEDI,J)
BIMAL
