Gujarat High Court
Sheetal Dhamreshbhai Patel vs The Income Tax Officer Ward 2 ... on 24 June, 2025
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
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C/SCA/827/2025 JUDGMENT DATED: 24/06/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 827 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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SHEETAL DHAMRESHBHAI PATEL
Versus
THE INCOME TAX OFFICER WARD 2 SURENDRANAGAR
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Appearance:
MR. TUSHAR HEMANI, SENIOR COUNSEL WITH MS VAIBHAVI K
PARIKH(3238) for the Petitioner(s) No. 1
MS MAITHILI D MEHTA, 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 with Ms.Vaibhavi Parikh, advocate for
the petitioner and learned Senior Standing
Counsel Ms.Maithili Mehta for the respondent.
2. Having regard to the controversy involved
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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 Ms.Maithili Mehta 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 29.07.2022
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 08.07.2014.
7. A notice dated 17.06.2021 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.
taxmann.com 64, the respondent issued notice
dated 26.5.2022 under Section 148A(b) of the
Act. The respondent thereafter passed an order
dated 29.07.2022 under Section 148A(d) of the
Act alleging that income to the extent of
Rs.74,97,625/- had escaped assessment.
Pursuant to the order dated 29.07.2022, notice
u/s. 148 came to be issued on 29.07.2022. This
order u/s.148A(d) as well as notice u/s.148
are challenged in the present petition.
9. Learned Senior Advocate Mr.Tushar Hemani,
at the outset, submitted that during the
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pendency of this petition, the Apex Court in
case of Union of 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.
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Therefore, the last date for filing the reply
by the assessee was 19.06.2022 and last date
to issue notice, as per the judgment of the
Apex Court in case of Union of India v. Rajeev
Bansal (Supra) would be 17.6.2022, whereas the
impugned notice under Section 148 is issued on
29.7.2022. It was therefore, submitted that
the notice dated 30.6.2021 which will relate
to the notice dated 29.7.2022 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
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
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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 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
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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 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
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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 [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
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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.
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;
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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) 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),
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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
Ms.Maithili Mehta 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 29.7.2022
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.
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
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assessee from the decision of Union of India
v. Ashish Agarwal, the date of issuance of the
notice under Section 148 would be 17.6.2022,
whereas in the facts of the case the notice
under Section 148 is issued on 29.7.2022 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 29.7.2022 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
