Introduction
The intersection of statutory limitation periods and procedural reassessment under the Income Tax Act, 1961, remains a highly litigated area. The recent ruling by the Income Tax Appellate Tribunal (ITAT), Kolkata Bench, in Ellisbridge Estates Private Limited v. ITO, Ward-5(1), Kolkata (ITA No.3290/KOL/2025), provides a critical analysis of how reassessment notices issued under Section 148 are governed by the strict timelines of Section 149. The Tribunal was tasked with determining whether a notice issued on 19.07.2022 for the Assessment Year 2013-14 was valid, given the complex interplay of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA), and the Supreme Court’s directives in Union of India v. Ashish Agarwal. The decision underscores the strict adherence required by the Revenue regarding the “borrowed” limitation periods and the mandatory minimum time granted to Assessing Officers (AO) under the fourth proviso to Section 149(1).
Facts of the Case
The Assessee, Ellisbridge Estates Private Limited, filed its return of income for A.Y. 2013-14 declaring a total income of Rs. 22,120/-. The dispute arose when the Revenue sought to reopen the assessment. Originally, a notice under Section 148 of the Act was issued on 23.06.2021. However, following the Supreme Court’s judgment in Union of India v. Ashish Agarwal dated 04.05.2022, this notice was deemed to be a notice issued under Section 148A(b). Consequently, the Jurisdictional Assessing Officer (AO) provided data and documentary evidence to the Assessee, who submitted an explanation on 08.06.2022. The AO subsequently passed an order under Section 148A(d) on 19.07.2022 and issued a fresh notice under Section 148 on the very same date. This led to an Assessment Order on 24.05.2023, determining the income at Rs. 56,80,942/-. The Assessee’s appeal before the National Faceless Appeal Centre (NFAC) was dismissed on 09.10.2025, prompting the present appeal before the ITAT.
Reasoning and Legal Analysis
The core of the Tribunal’s reasoning, delivered by Judicial Member Shri Yogesh Kumar U.S., rested on the specific computation of the limitation period as mandated by the Supreme Court in Union of India v. Rajeev Bansal [2024] 167 taxmann.com 70 (SC) and the Delhi High Court’s decision in ADM Agro Industries Latur and Vizag Private Limited v. ACIT.
The TOLA Extension and the Ashish Agarwal Effect
The Tribunal noted that for A.Y. 2013-14, the standard six-year limitation period under Section 149 expired on 31.03.2020. However, due to TOLA, this period was extended to 30.06.2021. The original notice was issued on 23.06.2021, which was within this extended period. However, the Ashish Agarwal judgment altered the nature of this notice, deeming it a show-cause notice under Section 148A(b). This created a procedural limbo where the Revenue had to complete the reassessment formalities but was bound by the original limitation clock, subject to specific exclusions.
Computation of Limitation under Rajeev Bansal
The ITAT applied the formula laid down in Rajeev Bansal to determine the “deadline” for issuing the final notice under Section 148. The Tribunal analyzed the chronology as follows:
1. Original Limitation: The period of limitation under Section 149 was six years, originally expiring on 31.03.2020.
2. TOLA Extension: Extended to 30.06.2021.
3. Deemed Notice Date: The original notice issued on 23.06.2021 was treated as the starting point for the new procedure.
4. Time Surviving: The Tribunal calculated that from the date of issuance (23.06.2021) until the expiry of the TOLA extension (30.06.2021), only 8 days (or a minimum of 7 days) remained.
5. Exclusion Period: Following the Rajeev Bansal ruling, the period from the original notice (23.06.2021) to the date of the Assessee’s reply (09.06.2022) was excluded from the limitation calculation.
6. Final Calculation: The Tribunal added the surviving time (8 days) to the date of the Assessee’s reply (09.06.2022). The last date for issuing the notice under Section 148 was thus computed as 17.06.2022.
The ADM Agro Industries Precedent
The Tribunal found the case to be squarely covered by the Delhi High Court’s decision in ADM Agro Industries. In that case, the High Court observed that the period of limitation for issuing the notice under Section 148 expired on 16.06.2022, and a notice issued on 20.07.2022 was beyond the period of limitation. The ITAT applied this logic, noting that the actual notice in the present case was issued on 19.07.2022, which was well beyond the computed deadline of 17.06.2022.
The “Minimum Seven Days” Rule
A significant portion of the reasoning dealt with the fourth proviso to Section 149(1). The Tribunal relied on the Ram Balram Buildhome decision (as cited in ADM Agro) to explain that the limitation period is extended to provide the AO with a minimum of seven days to pass an order under Section 148A(d) and issue the notice under Section 148. The Tribunal emphasized that if the time available to the AO is less than seven days after excluding the period under the third proviso, the limitation period is extended to ensure this minimum window. In this case, the calculation resulted in a deadline of 17.06.2022. Since the Revenue issued the notice on 19.07.2022, it violated the mandatory timeline. The Tribunal rejected the Revenue’s reliance on the lower authorities’ orders, holding that the jurisdictional defect of time-barred notice invalidated the proceedings.
Conclusion
The ITAT allowed the Assessee’s appeal, quashing the reassessment proceedings. The judgment reinforces the principle that the power to reopen assessments under Section 148 is strictly circumscribed by the limitation periods in Section 149. The Tribunal’s reliance on the Rajeev Bansal and ADM Agro precedents clarifies that the “deemed” notice period and the mandatory minimum time for the AO cannot be interpreted loosely to the detriment of the assessee. The ruling serves as a reminder that the Revenue must meticulously calculate the limitation period, accounting for TOLA extensions and Supreme Court directives, to ensure the validity of the Assessment Order.