Fresh Section 148 Notice Issued Beyond Surviving Period Held Invalid by ITAT:

Fresh Section 148 Notice Issued Beyond Surviving Period Held Invalid by ITAT Labdhi Logical Financial Solutions LLP filed its return for AY 2013-14, declaring NIL income and claiming exempt long-term capital gains of Rs. 1.12 crore. The assessment was later reopened and completed under Sections 147 read with Sections 144 and 144B, wherein the AO treated the capital gains as unexplained cash credits under Section 68 amounting to Rs. 1.21 crore and also made an addition of Rs. 6.05 lakh under Section 69C. These additions were upheld by the CIT(A), NFAC. The assessee challenged the reassessment on jurisdictional grounds. It contended that the original notice under Section 148 stood converted into a deemed notice under Section 148A(b) pursuant to the Supreme Court ruling in Ashish Agarwal. Relying further on Rajeev Bansal, the assessee argued that only a limited “surviving period” was available to the Revenue for issuing a fresh notice under Section 148, which had already expired by the time the fresh notice was issued. Core Issue: Whether the reassessment proceedings were barred by limitation under the law laid down in Ashish Agarwal and Rajeev Bansal, rendering the fresh notice under Section 148 and the consequent reassessment without jurisdiction. ITAT's Ruling: The ITAT analysed the undisputed timeline and applied the binding Supreme Court rulings. It held that the original notice had to be treated as a deemed show-cause notice under Section 148A(b), and that exclusion of time was permissible only to the limited extent recognised in Rajeev Bansal. After accounting for the reply period granted to the assessee up to 10.06.2022, the Tribunal found that only ten days of the surviving limitation period remained with the Revenue. The last permissible date for issuing a valid notice under Section 148 was 20.06.2022. Since the fresh notice was issued on 11.07.2022, it was held to be clearly time-barred. The Tribunal therefore concluded that the assumption of jurisdiction under Section 147 was invalid and quashed both the reassessment order and the order of the CIT(A). Resultantly, the additions under Sections 68 and 69C were left unexamined. The appeal was allowed in full. To Read Full Judgment, Download PDF Given Below