TOLA Cannot Breathe Life into Time-Barred Reassessment: Gujarat High Court Invalidates Notice for A.Y. 2015–16

"Procedural Compliance Under Section 148A Is Futile Where Limitation Under Section 149 Has Lapsed", Gujarat High Court firmly holding that no reassessment notice under Section 148 of the Income-tax Act, 1961, for Assessment Year 2015–2016, issued on or after 01.04.2021, can survive under law. The Division Bench comprising Justice A.S. Supehia and Justice Pranav Trivedi declared the impugned notice invalid and time-barred, stating that the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) cannot revive a proceeding already dead under the amended reassessment regime.

The judgment underscores the principle that "law of limitation is not procedural but substantive", and no amount of procedural compliance under Section 148A can override the statutory time limits prescribed under Section 149.

"When the Limitation Expires, So Does Jurisdiction"

The High Court began by recounting the background: the assessee had filed their return for A.Y. 2015–16 on 29.09.2015. A notice under Section 148A(b) was issued on 23.05.2022, referring to an earlier notice dated 23.04.2021—issued under the unamended regime—and relying on the Supreme Court’s ruling in Union of India v. Ashish Agarwal. An order under Section 148A(d) followed on 30.06.2022, along with the reassessment notice under Section 148, now under challenge.

The Revenue argued that these steps were taken pursuant to directions in Ashish Agarwal and that the TOLA extensions justified the delay. But the Court firmly rejected this view, stating:

“Even after following procedure under Section 148A, reassessment is impermissible if limitation under Section 149 has expired — procedural compliance cannot cure substantive bar of limitation.”

The Bench emphasized that once the time limit under Section 149 has passed, the jurisdiction to reopen assessments simply ceases to exist. “TOLA does not operate as a legislative resurrection clause,” the Court observed.

"Revenue’s Own Concession Before Supreme Court Seals the Issue"

The Court also highlighted the concession made by the Union of India before the Supreme Court in Union of India v. Rajeev Bansal, where it was categorically admitted that “for the assessment year 2015–16, all notices issued on or after April 1, 2021 will have to be dropped”. This was crucial in closing the door on the Revenue’s attempts to rely on TOLA.

Referring to the binding nature of the concession, the Bench noted:

“Once the Revenue has conceded before the Apex Court that reassessment for A.Y. 2015–16 cannot proceed post 01.04.2021, no authority below can resurrect the dead proceedings under the guise of procedural compliance.”

The Court quoted from the Rajeev Bansal judgment:

“Delay defeats jurisdiction. Once the limitation prescribed under Section 149 has expired, TOLA cannot extend or override the substantive bar imposed by Parliament.”

"Notice Issued Post 01.04.2021 for A.Y. 2015–16 Is a Legal Nullity"

The Court further stated that, irrespective of the fact that the original notice may have been dated 23.04.2021, once the three-year period from the end of A.Y. 2015–16 expired on 31.03.2019, and the extended six-year period ended on 31.03.2022, no notice could have been issued or revived.

“Even if cloaked in procedural compliance and issued under the shadow of Ashish Agarwal, the impugned notice issued after the cut-off date is legally non est.”

The Court held that the impugned notice dated 30.06.2022 was "issued without jurisdiction" and therefore could not be sustained in law.

"Consistency Across the Judicial Spectrum Leaves No Room for Doubt"

Reinforcing its view, the High Court cited similar decisions from across the country. It observed:

“Delhi, Punjab & Haryana, Rajasthan, Karnataka High Courts and even this Court in Mayurkumar Patel’s case have uniformly quashed reassessment notices for A.Y. 2015–16 issued after 01.04.2021 as barred by limitation.”

The Court also pointed out that the Supreme Court, in Deepak Steel and Power Ltd., Nehal Ashit Shah, and R.K. Build Creations, followed Rajeev Bansal and quashed such notices.

“There is judicial unanimity that for A.Y. 2015–16, the extended window under TOLA cannot be invoked to issue fresh notices post 01.04.2021. Parliament has drawn a line, and the Courts have consistently respected that boundary.”

“When Limitation Closes the Door, Procedural Formalities Cannot Unlock It”

Concluding the matter, the High Court allowed the petition, holding:

“For the foregoing reasons, the petition is allowed. The impugned notice issued under section 148 of the Act for Assessment Year 2015–2016 is held to be invalid as same was issued during the extended period from 01.04.2021 to 30.06.2021 under TOLA.”

No further adjudication was required, the Court held, once the time-barred nature of the notice was established.

Date of Decision: 23 December 2025