Panaji ITAT Quashes ₹17.95 Crore Reassessment as Section 148 Notice Time-Barred

Aug 09, 2026 | 06:09 PM

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Panaji ITAT quashes time-barred reassessment

The Panaji Bench of the Income Tax Appellate Tribunal has reportedly quashed a reassessment involving ₹17.95 crore after finding that the notice under Section 148 of the Income-tax Act, 1961 was issued beyond the surviving limitation period available to the Assessing Officer.

The decision is significant for reassessment proceedings arising from the unusual transition between the old and substituted reassessment regimes in 2021. That transition generated extensive litigation after tax authorities continued issuing notices under the erstwhile Section 148 between 1 April 2021 and 30 June 2021, despite the new reassessment framework having come into force.

The Supreme Court subsequently addressed those notices in Union of India v. Ashish Agarwal and later clarified the limitation consequences in Union of India v. Rajeev Bansal. The Panaji ITAT ruling, as reported, turns substantially on the limitation framework settled through those decisions.

The reassessment dispute

According to the reported case details, the dispute concerned reassessment proceedings culminating in an addition of ₹17.95 crore. The assessee challenged the validity of the proceedings on the ground that the statutory notice under Section 148 had not been issued within the limitation period that remained available to the Revenue.

That objection went to the jurisdiction of the Assessing Officer to reopen the assessment. The crucial issue was therefore not simply whether the Revenue had information suggesting escaped income, but whether a valid reassessment notice could still legally be issued when the impugned notice was eventually served.

The Tribunal reportedly accepted the limitation challenge and quashed the reassessment.

Why the surviving limitation period matters

The expression 'surviving limitation period' has assumed particular importance for reassessment notices affected by the 2021 transition.

The Finance Act, 2021 substituted the reassessment framework with effect from 1 April 2021, introducing, among other provisions, Section 148A. Nevertheless, reassessment notices continued to be issued under the old Section 148 regime between 1 April and 30 June 2021 under notifications extending time during the COVID-19 period.

The resulting controversy reached the Supreme Court in Union of India v. Ashish Agarwal.

In its judgment dated 4 May 2022, the Supreme Court used its powers under Article 142 of the Constitution to preserve those proceedings rather than invalidate the notices outright. It directed that reassessment notices issued under the unamended Section 148 between 1 April and 30 June 2021 would be deemed to have been issued as show-cause notices under Section 148A(b) of the substituted regime.

The Assessing Officers were required to provide the respective assessees with the information and material relied upon within 30 days of the judgment. The assessees were then allowed two weeks to submit their replies.

Ashish Agarwal therefore provided a mechanism for transitioning the old-regime notices into the new statutory framework. It did not, however, eliminate the limitation requirements governing the eventual issuance of a reassessment notice.

Rajeev Bansal clarified the limitation calculation

The limitation consequences of the Ashish Agarwal directions were subsequently examined by the Supreme Court in Union of India v. Rajeev Bansal, decided on 3 October 2024.

The Supreme Court explained how the legal fiction created in Ashish Agarwal interacted with the limitation periods and exclusions applicable to these transitional reassessment cases.

It held that, for computing limitation, time was to be excluded from the date of the deemed notice until the Assessing Officer supplied the information and material relied upon to the assessee. The two-week period given to the assessee to respond under the directions in Ashish Agarwal was also relevant to the exclusion.

Crucially, however, the Supreme Court did not give the Revenue an unrestricted fresh period to reopen assessments. After accounting for the permissible exclusions, the Assessing Officer was still required to complete the Section 148A process and issue the notice under the substituted Section 148 within the limitation period that survived under the Income-tax Act read with the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act framework.

Where the eventual Section 148 notice crossed that surviving period, Rajeev Bansal makes clear that it would be time-barred.

Section 149 remains central to the jurisdictional test

Section 149 prescribes the statutory time limits within which notices under Section 148 can be issued. For assessment years beginning on or before 1 April 2021, its first proviso also contains an important protection against revival of proceedings that had already become time-barred under the limitation provisions applicable before the Finance Act, 2021 amendments.

Accordingly, transitional reassessment cases cannot be tested merely by looking at the date on which the post-Ashish Agarwal proceedings were completed. The calculation requires identification of the limitation period originally available, the effect of the statutory relaxation regime, the exclusions recognised by the Supreme Court and the balance period that actually remained available for issuance of the final Section 148 notice.

This surviving-period calculation appears to have been decisive in the Panaji ITAT matter. The Tribunal reportedly found that the impugned notice was issued after the permissible period had expired and consequently treated the reassessment as without jurisdiction.

₹17.95 crore Section 69C addition

The jurisdictional finding had a substantial monetary consequence because the reassessment reportedly involved a ₹17.95 crore addition under Section 69C.

Once the foundational Section 148 notice was held to be time-barred, the reassessment proceeding itself could not survive. The dispute therefore illustrates the distinction between the substantive merits of an alleged escapement of income and the Revenue’s statutory authority to reopen the assessment in the first place.

Even a significant proposed addition does not independently extend the time available to issue a reassessment notice. The validity of reopening must satisfy the limitation requirements laid down in the Act and the binding interpretation of those requirements by the Supreme Court.

Merits observations became academic

Once the reassessment was quashed on the jurisdictional limitation ground, the observations concerning the merits of the Section 69C addition became academic. The outcome rested on the invalidity of the Section 148 notice, rather than on an independent substantive determination sustaining or deleting the addition on its merits.

Practical significance for tax professionals

The ruling is relevant to practitioners handling reassessment matters originating from notices issued during the April-June 2021 transitional window.

Such cases require a date-specific limitation analysis rather than a general reliance on the fact that Ashish Agarwal revived or converted the old notices. The Supreme Court’s subsequent ruling in Rajeev Bansal makes the surviving limitation period a critical jurisdictional checkpoint.

For each affected reassessment, professionals may therefore need to reconstruct the chronology of the original notice, the time available under the applicable limitation provisions, the period protected or extended under the relaxation legislation, the date on which material was supplied following Ashish Agarwal, the response period available to the assessee and the date on which the eventual Section 148 notice was issued.

The Panaji ITAT decision, as reported, reinforces the consequence of that exercise: the procedural transition recognised by the Supreme Court does not permit a reassessment notice to travel beyond the limitation period that legally survived after permissible exclusions are accounted for.

Key takeaway

For reassessment litigation arising from the 2021 transition, limitation is therefore not a secondary procedural objection. Where the Section 148 notice falls outside the surviving statutory period, it goes to the jurisdiction of the reassessment itself.