Reassessment Notices Invalid if Issued Beyond Surviving Period, Even If 14-Day Reply Procedure Followed: Gujarat HC [Read Order]

The Gujarat High Court quashed a reassessment notice as invalid for being issued beyond the limitation period despite following the 14-day reply process under Ashish Agarwal.In a recent ruling, the Gujarat High Court held that reassessment notices issued under Section 148 of the Income Tax Act are invalid if issued beyond the surviving limitation period, even if the 14-day reply procedure under the Supreme Court’s guidelines is followed.

Sheetal Dhamreshbhai Patel filed a writ petition challenging the reassessment notice and the assessment order passed by the Income Tax Officer for the assessment year 2013-14. The petitioner’s counsel argued that as per the Supreme Court’s judgment in Union of India v. Rajeev Bansal, the last permissible date to issue a reassessment notice was 17.06.2022, but in this case, the notice was issued on 29.07.2022, making it time-barred.

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The counsel argued that even though the department followed the 14-day reply procedure as required under Ashish Agarwal, the notice could not be sustained because it was issued after the limitation period had expired. They further argued that the initial notice issued under the TOLA framework on 30.06.2021 was also invalid for the same reason.

The income tax department’s counsel argued that the department had followed the procedure of granting 14 days for reply after the Supreme Court’s directions in Ashish Agarwal and had thereafter issued the reassessment notice. The department’s counsel could not dispute the factual timeline highlighted by the petitioner.

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The division bench comprising Justice Bhargav D. Karia and Justice Pranav Trivedi observed that under the Rajeev Bansal ruling, the limitation period for issuing the reassessment notice had expired on 17.06.2022, and the issuance of the notice on 29.07.2022 was beyond the surviving period. The court observed that following the 14-day reply procedure did not extend the limitation period under the law, and any notice issued after the cut-off date would be invalid.

The court found that the reassessment notice issued under Section 148 and the related assessment proceedings were without jurisdiction and invalid as they were time-barred under the Income Tax Act read with the TOLA provisions, interpreted in light of Rajeev Bansal and Ashish Agarwal. The court held that the reassessment notice dated 29.07.2022 and the earlier notice dated 30.06.2021 were invalid and quashed them, allowing the writ petition.

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