Gujarat HC Quashes Reopening for AY 2015-16: Notices Issued After 01.04.2021 under TOLA Invalid

The current writ petition (R/Special Civil Application No. 5561 Of 2023) has been filed by an individual named Patel Rajni Mohanbhaipadalia (petitioner) in the Gujarat High Court before the benches comprising Honourable Mr Justice Bhargav D. Karia and Honourable Mr Justice Pranav Trivedi against the Income Tax Officer, Ward 1(2)(1), Rajkot & Anr. (respondent). Petitioner challenged notices issued under section 148 of the Income Tax Act, 1961. The notices were related to the assessment year 2015-2016 under the old regime in view of TOLA without issuing notice under section 148A(b) as required to be issued with effect from 01.04.2021.

Background of Case:

The petitioner, who escaped assessment, was issued a notice under Section 148 of the Income Tax Act, 1961, by the Income Tax Department. The department believed that the petitioner had earlier escaped assessment, hence reopened the case. However, the petitioner argued that the notice was unfair as it did not adhere to the proper procedure after the law was amended in 2021. The notice was issued taking into use the benefit of TOLA (Taxation and Other Laws [Relaxation and Amendment of Certain Provisions] Act). Under TOLA, some deadlines that were ending around 2020-2021 were extended due to the COVID-19 pandemic.

A notice under Section 148 was issued to the petitioner on 19.04.2021, claiming TOLA allowed an extension until 30.06.2021. Later, after a Supreme Court judgement in the Ashish Agarwal case (2022), such old notices were deemed to be notices under Section 148A(b), and new procedures were followed with show-cause and reply steps. A fresh notice was again issued in July/August 2022 under the new procedure.

What Happened in Court?

The petitioner challenged the notices, saying they were time-barred, meaning they were issued after the legal time limit and were procedurally incorrect.

To announce its decision, the court cited a few previous judgments related to the same issue, including Keenara Industries Pvt. Ltd. v. ITO (Gujarat HC), Rajeev Bansal v. Union of India (2024): Supreme Court, Deepak Steel & Power Ltd. (2025): Supreme Court and Ashish Agarwal (2022): Supreme Court.

In Rajeev Bansal’s case, the Supreme Court ruled that for the assessment year 2015-16, the time limit of 3 years ended on 31.03.2019, and 6 years ended on 31.03.2022. Therefore, even with TOLA, by the time the department issued notices in April 2021, the reopening window had already closed. The Supreme Court considered all notices issued after 01.04.2021 under TOLA as invalid; Therefore, it quashed all the notices.

Referring to the same SC judgement and other HCs’ judgements, ruling the same decision, the Gujarat High Court in the present case declared the notice dated 19.04.2021 (issued under old Section 148) and also the follow-up notices issued under Section 148A(b) in 2022 as invalid. The court quashed the notice issued for AY 2015-16 under Section 148, stating that since it was issued between 01.04.2021 and 30.06.2021 under TOLA, and because by then the time limit under Section 149 had already lapsed, the notice was invalid. Hence, the case was disposed of (closed), giving full relief to the petitioner.