1.

 Introduction:

On 23-08-2022 Hon'ble P&H High Court in the case of Kulwant Singh v. Union of India [CWP 18032 of 2022] stayed the operation of
Circular dated 11-05-2022 issued by CBDT, after the decision of Hon'ble Apex Court in Union of India v. Ashish Agarwal  [2022] 138
taxmann.com 64/286 Taxman 183/444 ITR 1, empowering the AOs to reopen the assessment for the AYrs 2013-14 and 2014-15 under
new law during FY 2022-23. In the following write up the history of the litigation on the issue, the rational for issuing the impugned
Circular and infirmities in the interpretation of decision of Hon'ble Supreme Court in Ashish Agarwal's case (supra) and correct legal
proposition for reopening of assessment for these two years are highlighted.

2. Background:

The law relating to reassessment as contained in sections 147 to 151 as made applicable by Finance Act 1987 and subsequent amendments
made by Finance Acts, 1989 onwards till Finance Act 2017, was effective upto 31-03-2021. This is hereinafter referred as  old law. The
Finance Act 2021 inserted new provisions of reassessment contained in sections 147 to 151 whereunder the concept of reasons recorded
was done away with and in its place provisions of section 148A was inserted so as to provide an opportunity through a notice u/s 148A( b)
to the assessee to show cause as to why his assessment for the relevant assessment year be not reopened. If the Assessing Officer after
considering the objections filed by the assessee, considered that it is a fit case to issue notice u/s. 148, he will pass an order u/s 148A( d)
and enclose therewith the notice u/s 148 for the relevant assessment year. The other relevant conditions/limitations for reopening the
assessment are contained in section 149. These provisions hereinafter referred as new law and are made effective from 01-04-2021.
There were further amendments in the law by Finance Act 2022 which will be discussed in following paragraphs. As per section  149(1)
(b)under old law the reopening of the assessment for the AY 2013-14 could have been done upto 31-03-2020 and in respect of AY 2014-
15 it can be done upto 31-03-2021 (without the effect of TOLA). In order to provide convenience and to handle difficulties in completing
statutory work due to covid-19 the Government of India issued an ordinance (Taxation and Other Laws (Relaxation of Certain Provisions)
Ordinance, 2020, in short TOLA) on 30th March 2020. The ordinance empowered the Government to issue the notification for extending
the date of limitation for various compliances and for issue of notices under Income Tax Act. Under the Ordinance and the TOLA two
Notifications issued by the Government of India are relevant. One is Notification S.O. 1432(E) [No. 20/2021], dated 31-3-2021 extending
the timeline to issue notice upto 30-04-2021 and other is Notification S.O. 1703(E) [No. 38/2021], dated 27-4-2021 extending the time
line to issue notice upto 30-06-2021.

3.The origin of dispute:

Since old law of reassessment was effective upto 31-03-2021, extension of limitation, which were expiring earlier in respect of certain
assessment years, upto 31-03-2021 is not disputed or challenged at any forum. As a result, the limitation for issue of notice u/s 148 for the
AY 2013-14 which was expiring on 31-03-2020 was validly extended to 31-03-2021. The dispute arose when limitation was extended
beyond 31-03-2021 by Notifications no. 20 of 2021 and Notification no. 38 of 2021 whereunder the limitations, for issue of notice u/s 148
which were expiring on 31-03-2021 was extended first upto 30-04-2021 and then upto 30-06-2021. The underlying reasons for dispute
was that the Finance Act 2021 has inserted new provisions of reassessment whereunder notice u/s 148 could only be issued after issue of
notice u/s 148A(b), receiving objections from the assessee in response to this notice, and disposal of such objections by passing an order
u/s. 148A(d) to the effect that whether it would be a fit case to issue of notice u/s. 148.

4. Action by the Department and challenged by the taxpayers:

The Department issued, during the period from 01-04-2021 to 30-06-2021, more than 90,000 notices u/s 148 under old law, without
following the procedure laid down u/s 148A as per new law, as inserted by Finance Act 2021 w.e.f 01-04-2021. Several taxpayers
challenged these notices before various High Courts all over the country. The main grounds for challenge were that under section 3(1) of
TOLA Central Government was empowered to issue notification for extending the date of limitation of certain actions either by the
Assessing Officer or by the Assessee, i.e. Notification only extended timeline of the provisions contained in the existing Specified Acts, it
did not specifically extend any date of limitation u/s 149 or 151, it did not contain any reference to Finance Act 2021. Thus, by way of
Notification no. 35/2020 dated 24-06-2020 the limitations which was expiring on 31-12 2020 or earlier were extended to 31-03-2021. In
some other cases where date of limitation for compliances or issue of notices were expiring on 30-03-2021 or earlier were extended upto
31-03-2021. Similarly, by way of Notification no. 20/2021, the Government extended the date of limitation which was expiring on 31-03-
2021 to 30-04-2021 and by way of Notification no. 38/2021, the Government extended the date of limitation which was expiring on 30-
04-2021 to 30-06-2021. These limitations were extended by way of Explanations in the Notifications. It was also contended that
extension of limitation which expired under old law on 31-03-2021 could not be permitted to prevail under new law unless there were
saving clauses in the new law. It is submitted that old law is repealed when new law came into force on 01-04-2021.

5. Decision by Hon'ble Allahabad High Court in Ashok Kumar Agarwal v. Union of India [2021] 131 taxmann.com 22:

Hon'ble Allahabad High Court in the above case held that—

(i)   TOLA read with its Notifications had been enforced prior to enforcement of Finance Act, 2021 and it only provided for a general
relaxation of limitation granted on account of general hardship existing upon spread of pandemic.
(ii)   No presumption exists in TOLA that by Notification issued under TOLA operations of pre-existing provisions of Act had been
 extended and thereby provisions of section 148A and other provisions introduced by Finance Act, 2021 had been deferred.
(iii)   Thus, after enforcement of Finance Act, 2021, TOLA would apply to substituted provision (new law) and not pre-existing
provisions (old law).
(iv)   Section 3(1) of the TLA Act, 2020 does not itself speak of reassessment proceeding or of section 147 or section 148 as it existed
prior to 1-4-2021.
(v)   Since by virtue of Finance Act, 2021 provisions of sections 147 and 148 as existed upto 31-3-2021, stood substituted along with
new provisions enacted by way of section 148A and in absence of any saving clause, to save pre-existing provisions, revenue
could only initiate reassessment proceedings on or after 1-4-2021 in accordance with substituted law.
(vi)   Thus, reassessment notice issued under section 148 on or after 1-4-2021 without complying with substituted provisions of section
148A was to be quashed.
(vii)   It was declared that the said Explanations (of notifications) must be read, as applicable to reassessment proceedings as may have
been in existence on 31-3-2021 i.e. before the substitution of sections 147, 148, 148A, 149, 151 & 151A of the Act.
6. Hon'ble Delhi High Court in Mon Mohan Kohli v. Asstt. CIT [2021] 133 taxmann.com 166/441 ITR 207 made following
observations—

(i)   By virtue of section 3(1) of TOLA Central Government was empowered to issue notification for extending time limits for
completion of actions laid down in specified Acts but was not empowered to postpone applicability of provisions enacted by
legislature.
(ii)   Thus, Explanation A(a)(ii)/A(b) to Notification No. 20/2021, dated 31-3-2021 and Notification No. 38/2021, dated 27-4-2021
were beyond power to extend erstwhile sections 147 to 151 beyond 31-3-2021, defer operation of substituted provisions enacted
by Finance Act, 2021 till 30-06-2021 and same were to be declared ultra vires TOLA and consequently, null and void.
(iii)   Thus, notices issued under section 148 on or after 1-4-2021 have to comply with provisions as specifically substituted by Finance
Act, 2021 with effect from 1-4-2021 and impugned reassessment notices issued under section 148 were to be quashed.
(iv)   The Memorandum to the Finance Bill, 2021, too, clarifies that its sections 2 to 88 which included the substituted sections 147 to
151 will take effect from 1-4-2021. There is also no power with the revenue to defer/postpone the implementation of sections 2 to
88 of the Finance Act, 2021 which includes the substituted sections 147 to 151.
(v)   Had the intention of the Legislature been to keep the erstwhile provisions alive, it would have introduced the new provisions with
effect from 1-7-2021, which has not been done.
(vi)   It is important to bear in mind that section 3(1) of the TOLA does not empower the Central Government to postpone the
 applicability of any provision which has been enacted from a particular date. There is a difference between extension of time of
an action which is getting time barred and applicability of a provision which has been enacted and notified by the Legislature.
(vii)   TOLA nowhere delegates power to the Central Government to postpone the date of applicability of a new law enacted by the
Legislature.
(viii)   The impugned Explanations in the Notifications dated 31-3-2021 and 27-4-2021 are beyond the power delegated to the
Government, as the TLA Act does not give power to Government to extend the erstwhile sections 147 to 151 beyond 31-3-2021
and/or defer the operation of substituted provisions enacted by the Finance Act, 2021.
(ix)   The TOLA and notifications issued thereunder can only change the timelines applicable to the issuance of a section 148 notice,
but they cannot change the statutory provisions applicable thereto which are required to be strictly complied with.
(x)   "102. Revenue cannot rely on Covid-19 for contending that the new provisions sections 147 to 151 of the Income Tax Act, 1961
should not operate during the period 1st April, 2021 to 30th June, 2021 as Parliament was fully aware of Covid-19 Pandemic
when it passed the Finance Act, 2021. Also, the arguments of the respondents qua non obstante clause in section 3(1) of the
Relaxation Act, 'legal fiction' and 'stop the clock provision' are contrary to facts and untenable in law."
(xi)   "93. The provisions of the Finance Act, 2021 have not only repealed the erstwhile provisions of sections 147, 148, 149 and 151 of
the Income Tax Act, 1961 but also "substituted" them by new provisions. The process of 'substitution' consists of two steps: first,
the rule is made to cease and the next, the new rule is brought into existence in its place."
(xii)   "98. It is clarified that the power of reassessment that existed prior to 31st March, 2021 continued to exist till the extended
period i.e. till 30th June, 2021; however, the Finance Act, 2021 has merely changed the procedure to be followed prior to
issuance of notice with effect from 1st April, 2021."
(xiii)   "99. This Court is of the opinion that section 3(1) of Relaxation Act empowers the Government/Executive to extend only the
time limits and it does not delegate the power to legislate on provisions to be followed for initiation of reassessment
proceedings. In fact, the Relaxation Act does not give power to Government to extend the erstwhile sections 147 to 151 beyond
31st March, 2021 and/or defer the operation of substituted provisions enacted by the Finance Act, 2021."
(xiv)   Further, the impugned Explanation is not only beyond the power delegated to the Government, but also in conflict with the
provisions of the Income-tax Act, 1961 which had specifically made the new reassessment scheme applicable from 1-4-2021.
(xv)   Consequently, Explanation A(a)(ii)/A(b) to the Notifications dated 31-3-2021 and 27-4-2021 are ultra vires the TOLA and are
therefore, bad in law and null and void.
7. Decision by Hon'ble Apex Court in Ashish Agarwal's case (supra):
The Revenue filed SLP before Hon'ble Apex Court against the decision of Hon'ble Allahabad High Court in  Ashok Kumar Agarwal's case
(supra). The Hon'ble Supreme Court rendered following decisions in Ashish Agarwal's case (supra)

(i)   "7.Thus, the new provisions substituted by the Finance Act, 2021 being remedial and benevolent in nature and substituted with
a specific aim and object to protect the rights and interest of the assessee as well as and the same being in public interest, the
respective High Courts have rightly held that the benefit of new provisions shall be made available even in respect of the
proceedings relating to past assessment years, provided section 148 notice has been issued on or after 1st April, 2021. We are
in complete agreement with the view taken by the various High Courts in holding so."
(ii)   Reassessment notice if issued on or after 1-4-2021 under unamended section 148, needs to be set aside; however, same being a
bona fide mistake, notice should not be set aside, rather deemed to have been issued under substituted section 148A.
(iii)   Instead of setting aside impugned reassessment notices, same should be deemed to have been issued under section 148A as
substituted by Finance Act, 2021 and were to be treated as show cause notices in terms of section 148A(b).
(iv)   In exercise of its power under Article 142 of Constitution it was also to be held that this order would be applicable PAN INDIA on
all judgments and orders passed by different High Courts where similar notices issued after 1-4-2021 under section 148 are set
aside.
(v)   "The Explanations to the Notifications dated 31st March, 2021 and 27th April, 2021 issued under section 3 of the Relaxation
Act, 2020 also stipulated that the provisions, as they existed prior to the amendment by the Finance Act, 2021, shall apply to
the reassessment proceedings initiated thereunder."
(vi)   "12The impugned common judgments and orders passed by the High Court of Allahabad and the similar judgments and orders
passed by various High Courts, more particularly, the respective judgments and orders passed by the various High Courts
particulars of which are mentioned hereinabove, shall stand modified/substituted to the aforesaid extent only."
(vii)   Therefore, the procedure to be followed would be as under—
-   The impugned notices issued u/s 148 under old law should be deemed as notice u/s 148A(b) under new law.
-   The assessing officer shall, within thirty days from today provide to the respective assessees information and material
relied upon by the Revenue, so that the assessees can reply to the show-cause notices within two weeks thereafter.
-   The requirement of conducting any enquiry, if required, with the prior approval of specified authority under section
148A(a) is hereby dispensed with as a one-time measure.
-   The assessing officers shall thereafter pass orders in terms of section 148A(d) in respect of each of the concerned
assessees.
 -   Thereafter after following the procedure as required under section 148A may issue notice under section 148 (as
substituted).
-   All defences which may be available to the assesses including those available under section 149 of the IT Act and all
rights and contentions which may be available to the concerned assessees and Revenue under the Finance Act, 2021 and
in law shall continue to be available.
8.Applicability of Notifications no. 20/2021 & 38/2021 issued under TOLA after the decision of Hon'ble Apex Court
in Ashish Agarwal's case (supra)

(i)   The TOLA and notifications issued thereunder can extend the timeline of the proceedings initiated on or before 31-03-2021.
They cannot extend the limitation contained in the old law beyond 31-03-2021 as new law has come into effect w.e.f 01-04-2021
as introduced by Finance Act 2021. Thus, no initiation of reassessment proceedings under old law can take place on
or after 01-04-2021.
(ii)   No benefit of Notifications is available to the AO for physical issue of notices u/s 148 issued under  old law during the period
from 01-04-2021 to 30-06-2021 as held by Hon'ble Supreme Court in Ashish Agarwal's case (supra).
(iii)   Notice u/s 148 issued under old law during the period between 01-04-2021 to 30-06-2021 will be deemed to be notice u/s
148A(b) under new law, thereafter procedure as per new law and within time period as laid down by Hon'ble Apex Court, has
to be followed.
(iv)   For application of first proviso to section 149(1), a comparison is required between two situations. (i) whether at a
particularpoint of time (on or after 01-04-2021) notice u/s 148 under new law is sought to be issued and ( ii) if yes,
whether at thatpoint of time notice u/s 148 under old law can also be issued. First proviso provides only a hypothetical
situation of issue of notice u/s 148 within the limitation of section 149(1)(b) of old law, (as if new law would not have come
into effect, i.e., as if old law would have continued at that point of time) so that another bar of limitation on issuance of notice
u/s 148 under new law is considered. The principle involved is what could not have been done under old law at that point of
time can also not be done under new law at that point of time. It means, if an assessment has attained finality at a particular
point of time under old law cannot be disturbed under new law. Proceedings for reopening the assessment for assessment
years which have attained finality under existing law due to bar of limitation cannot be revived by amendment of the law which
has no express provision of retrospective effect.Varkey Jacob v. CIT [2005] 146 Taxman 665/275 ITR 146 (Ker.)
9. Instruction Dated 11-05-2022 from CBDT:
Considering the judgement of Hon'ble Apex Court, the CBDT issued Instructions on 11-05-2022. The relevant part of the notification is as
under—

(i)   Hon'ble Supreme Court has upheld the views of High Courts that the benefit of new law shall be made available even in respect of
proceedings relating to past assessment years. Decision of Hon'ble Supreme Court read with the time extension provided by
TOLA will allow extended reassessment notices to travel back in time to their original date when such notices were to be issued
and then new section 149 of the Act is to be applied at that point.
(ii)   AY 2013-14, AY 2014-15 and AY 2015-16: Fresh notice under section 148 of the Act can be issued in these cases, with the approval
of the specified authority, only if the case falls under clause (b) of sub-section (I) of section 149 as amended by the Finance Act,
2021 and reproduced in paragraph 6.1 above. Specified authority under section 151 of the new law in this case shall be the
authority prescribed under clause (ii) of that section.
(iii)   AY 16-17. AY 17-18: Fresh notice under section 148 can be issued in these cases, with the approval of the specified authority,
under clause (a) of sub-section (1) of new section 149 of the Act, since they are within the period of three years from the end of
the relevant assessment year. Specified authority under section 151 of the new law in this case shall be the authority prescribed
under clause (i) of that section.
10.Submissions in respect of Notification issued by CBDT:

(i)   Circulars are not binding on assessee and Courts:

  The Notifications or circulars issued by CBDT are not binding on the assessee or Courts. For this proposition one may rely on the
following authorities:
i.   Addl. CIT v. Mrs.Avtar Mohan Singh [1982] 9 Taxman 5/136 ITR 645 (Del): Though the circulars of the
Central Board are not binding on the court, yet general circulars are binding on the I.T. authorities. Through them the
Board cannot impose a burden on the taxpayer greater than what the statute provides but it can relax the rigour of the
law. Ellerman Lines Ltd. v. CIT [1971] 82 ITR 913 (SC) followed
ii.   CWT v. Balbhadradas Bangur [1983] 14 Taxman 177/[1984] 148 ITR 149 (Cal): Circulars issued by CBDT
are not binding on Tribunal or assessee but bind only revenue authorities.
iii.   Grindlays Bank P.L.C. v. CIT [1993] 201 ITR 148 (Cal): The circulars may be binding on the Revenue in
executing the provisions of the Act. But these are not binding either on the Tribunal or on the court.
iv.   CCE v. Ratan Melting & Wire Industries 2008 taxmann.com 1649 (SC): "6. Circulars and instructions issued
 by the Board are no doubt binding in law on the authorities under the respective statutes, but when the Supreme Court
or the High Court declares the law on the question arising for consideration, it would not be appropriate for the Court to
direct that the circular should be given effect to and not the view expressed in a decision of this Court or the High Court.
So far as the clarifications/circulars issued by the Central Government and of the State Government are concerned they
represent merely their understanding of the statutory provisions. They are not binding upon the court. It is for the Court
to declare what the particular provision of statute says and it is not for the Executive. Looked at from another angle, a
circular which is contrary to the statutory provisions has really no existence in law."
(ii)   Incorrect interpretation of decision of Supreme Court:
  It is incorrect to interpret the decision of Hon'ble Apex Court in Ashish Agarwal's case (supra) "Decision of Hon'ble Supreme
Court read with the time extension provided by TOLA will allow extended reassessment notices to travel back in time to their
original date when such notices were to be issued and then new section 149 of the Act is to be applied at that point" as there is
no such decision or observation of Hon'ble Apex Court. On the other hand, it has been clearly laid down that  notification will
only extend the timeline of actions initiated on or before 31-03-2021 under old law but cannot postpone the
applicability of new law which was effective from 01-04-2021.
(iii)   The Hon'ble Apex Court modified the order of High Courts only to this extent that that the notices u/s 148 of old law and set
aside/quashed by High Courts, will be treated as notices u/s 148A(b) under new law. In other words, all other observations/
comments/ decisions rendered by High Courts are not modified or altered.
(iv)   It appears that the Instructions no. 01/2022 dated 11-05-2022 seeks to apply old law to a relevant assessment year and extension
of time limitation thereunder through Notifications under TOLA and thereafter apply monetary conditions provided under
section 149(1)(b) under new law. Thus, for the Ays. 2013-14 & 2014-15, the Instruction no. 01/2022 seeks to apply extended
limitation of old law to new law and hold the reassessment to be validly initiated and thereafter apply monetary conditions of Rs.
50 lakhs provided under new law. It is submitted this is not a correct legal position. Since notice u/s 148 (after following the
procedure u/s 148A) is to be issued (and which can only be issued during FY 2022-23), the conditions laid down u/s 149(1)
(b) under new law has to be applied first and thereafter it has to be evaluated whether on the date when notice
u/s 148 under new law is issued, notice under old law with extended time line can be issued. Under new law, for
unrestricted monetary limit of escaped income, the provisions of section 149(1)(a) will be applicable and therefore, the
assessment for three years (i.e., AYrs 2019-20, 2020-21 and 2021-22) can be reopened during the period 01-04-2022 to 31-03-
2023. The assessment for AYrs 2012-13 to 2018-19 (being between fourth to tenth year) can be reopened between 01-04-2022 to
31-03-2023 provided escaped income is Rs. 50 lakhs or more and is in the form of asset (if provisions of Finance 2021 is
 applicable) or in the form of asset, entry or expenditure (if provisions of Finance Act 2022 are applicable).
(v)   After applying the conditions u/s 149(1)(b) under new law for a relevant assessment year one has to further apply the
restrictions, imposed u/s 149(1)(b) under old law. Thus, if an assessment cannot be reopened under old law (on the date when
notice u/s 148 is sought to be issued under new law) either under original limitation or under extended limitation, then such
assessment year also cannot be reopened under new law on that date. The extended limitation for Ays. 2013-14 and 2014-15
has expired on 30-06-2021. It means that if notice u/s 148 under new law is issued on or before 30-06-2021 then benefit of
extended limitation under old law (for applying first proviso under new law) will be available. But where notice u/s 148 under
new law is issued on or after 01-07-2021 the benefit of extended limitation for these two years will not be available for applying
first proviso. In other words, when notice u/s 148 under new law for the Ays 2013-14 & 2014-15 is issued during FY 2022-23, the
benefit of extended limitation under old law, for the purposes of first proviso to section 149(1) of new law will not be available
and therefore, reopening for these two years is barred by extended limitation on 30-06-2021 and therefore is also barred by
limitation u/s. 149(1)(b) of new law.
11.Time limit u/s. 149(1):

The time limit for issue of notice u/s 148 under new law is provided u/s. 149(1) as under:
"149. (1) No notice under section 148 shall be issued for the relevant assessment year,—

(a)   if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b);
(b)   if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing
Officer has in his possession books of account or other documents or evidence which reveal that the income chargeable to tax,
represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more
for that year :
Provided that no notice under section 148 shall be issued at any time in a case for the relevant assessment year beginning on or
before 1st day of April, 2021, if such notice could not have been issued at that time on account of being beyond the time limit specified
under the provisions of clause (b) of sub-section (1) of this section, as they stood immediately before the commencement of the Finance
Act, 2021 :
Provided further that the provisions of this sub-section shall not apply in a case, where a notice under section 153A, or section 153C
read with section 153A, is required to be issued in relation to a search initiated under section 132 or books of account, other documents
or any assets requisitioned under section 132A, on or before the 31st day of March, 2021 :
Provided also that for the purposes of computing the period of limitation as per this section, the time or extended time allowed to the
assessee, as per show-cause notice issued under clause (b) of section 148A or the period during which the proceeding under section
148A is stayed by an order or injunction of any court, shall be excluded :
Provided also that where immediately after the exclusion of the period referred to in the immediately preceding proviso, the period
of limitation available to the Assessing Officer for passing an order under clause (d) of section 148A is less than seven days, such
remaining period shall be extended to seven days and the period of limitation under this sub-section shall be deemed to be extended
accordingly.
Explanation.—For the purposes of clause (b) of this sub-section, "asset" shall include immovable property, being land or building or
both, shares and securities, loans and advances, deposits in bank account.
(2) The provisions of sub-section (1) as to the issue of notice shall be subject to the provisions of section 151."

12. Analysis of section 149(1) of new law:

Analysis of section 149(1) of new law is as under—

(i)   As per section 149(1)(a) no notice under section 148 shall be issued for the relevant assessment year, if three years have elapsed
from the end of the relevant assessment year, unless the case falls under clause (b);
(ii)   As per section 149(1)(b) no notice under section 148 shall be issued for the relevant assessment year, if three years, but not more
than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession
books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of
asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more for that year
(iii)   The 'asset' has been defined in the Explanation appended to section 149(1) according to which, "asset" shall include immovable
property, being land or building or both, shares and securities, loans and advances, deposits in bank account.
(iv)   The first proviso to section 149(1) has following ingredients—
i.   Provided that no notice under section 148 (under new law) shall be issued at any time
ii.   in a case for the relevant assessment year beginning on or before 1st day of April, 2021 (for example, Ays. 2013-14 &
2014-15)
iii.   if such notice could not have been issued at that time
iv.   on account of being beyond the time limit specified under the provisions of clause (b) of sub-section (1) of this section, as
they stood immediately before the commencement of the Finance Act, 2021.
 v.   The expression "any time" used in the first proviso refers to the time when notice u/s 148 under new law is to be
issued i.e., a time on or after 01-04-2021.
vi.   The expression "at that time" used in the first proviso refers to the time when notice u/s 148 under old law could have
been issued. The expression "any time" and "at that time" are the same point of time (i.e., the time when notice u/s
148 under new law is sought to be issued).
(v)   Thus, one has to (i) identify the point of time on or after 01-04-2021 when notice u/s 148 under  new law is to be issued (ii)
identify relevant assessment year for which notice u/s 148 under new law is to be issued (iii) then ascertain whether issuance of
notice u/s 148 under new law confirms to the conditions made u/s 149(1)(b) under new law. (iv) If yes, i.e., if issuance of
notice u/s 148 confirms to the conditions u/s 149(1)(b) under new law, then one has to further see whether notice u/s 148
under old law can be issued at that point of time for that relevant assessment year under the conditions mentioned u/s
149(1)(b) under old law. (v) If notice u/s 148 for that relevant assessment year is barred by limitation under old
law then it is also barred by limitation under new law.
(vi)   If reopening of assessment for an assessment year is barred by time limitation or because of monetary conditions under  new
law, then question of applying section 149(1)(b) of old law does not arise. Therefore, if notice u/s 148 is issued in FY 2022-23
then as per monetary conditions notice u/s 148 for the AY 2018-19 or earlier years can be issued only when escaped income is Rs.
50 lakhs or more. Once this condition is satisfied then further condition is to be applied as to whether reopening of this
assessment year is permissible under old law as per time limitations u/s 149(1)(b) of old law. If not, then notice u/s 148 for
that assessment year cannot be issued under new law as well. The monetary conditions u/s 149(1)(b) of old law are irrelevant
because for the AY 2018-19 and earlier years, the escaped income has to be necessarily Rs. 50 lakhs.
(vii)   Thus, as per the first Proviso of section 149(1), if the assessment of a relevant assessment year could not be reopened under  old
law u/s 149(1)(b), it cannot be reopened under the new law. Under old law u/s 149(1)(b) provides that notice u/s 148 cannot
be issued for a relevant assessment year, if more than six years have elapsed from the end of the relevant assessment year. Thus,
on a particular date (on or after 01-04-2021 when new law came into effect) what cannot be done under old law (i.e., if no
notice u/s 148 can be issued at any time on or after 01-04-2021 under old law), it also cannot be done under new law (i.e.,
notice u/s 148 under new law cannot also be issued even though section 149(1)(b) under new law permits issue of notice for 10
relevant assessment years).
(viii)   As per third proviso, for the purposes of computing limitation u/s 149(1), the time, or extended time allowed to the assessee
u/s 148A(b), or the time period during which proceedings u/s 148A are stayed by the Court, or order/ injunction was issued, shall
be excluded. Thus, in a case where notice u/s 148 for the relevant assessment year is issued in the FY 2022-23 but because of
 exclusion of time period (during which proceedings u/s 148A are stayed by the court or order/injunction was issued or the time
allowed to the assessee in furnishing reply to the notice u/s 148A(b)), the notice u/s 148 is deemed to be issued on or before 31-
03-2022. In that situation the provisions of Finance Act 2021 will be applicable.
(ix)   But where notice u/s 148 under new law is issued during FY 2022-23 and exclusion of time period as per third proviso does
not save limitation of 31-03-2022 then notice u/s 148 will be deemed to be issued during FY 2022-23. In that situation the
provisions of Finance Act 2022 will be applicable.
(v)   One has to now see at what point of time assessment for AY 2013-14 & 2014-15 have attained finality under  old law. As
submitted above the assessment for the AY 2013-14 attained finality on 31-03-2020 and assessment for AY 2014-15 attained
finality on 31-03-2021 under old law. The Notifications no. 20/2021 & 38/2021 extended the limitation, under old law for
these two AYrs upto 30-06-2021. In other words, the limitation for issuance of notice u/s 148, under old law, for the AY 2013-
14, which was expiring on 31-03-2020 is now extended to 30-06-2021. Thus, issue of notice u/s 148 for the AY 2013-14, (and also
for the AY 2014-15) under old law will now be barred by limitation on 30-06-2021. If therefore, such notice for the AY 2013-14
or 2014-15 is issued on or after 01-07-2021 will be barred by limitation under old law. Thus, following two situations are
envisaged-
i.   Where notice u/s 148 is issued under new law on or before 30-06-2021- For the AY 2013-14 and 2014-15
notice u/s 148 under old law could have been issued upto 30-06-2021, if new law would not have come into effect. Thus,
where notice u/s. 148 for the AY 2013-14 & 2014-15 under new law is issued on or before 30-06-2021, then notice u/s
148 for these two assessment years could also have been issued under old law upto 30-06-2021 (by virtue of extended
limitation under Notifications issued under TOLA) and therefore, issuance of notice u/s 148 under new law on or before
30-06-2021 for the AY 2013-14 & 2014-15 will be valid and will not be hit by first proviso to section 149(1).
ii.   Where notice u/s 148 is issued under new law on or after 01-07-2021- Notice u/s 148 under old law for the AY
2013-14 & 2014-15 are barred by limitation if they are issued on or after 01-07-2021. There is no notification by which
bar of limitation is extended beyond 30-06-2021. Thus, where notice u/s 148 for the Ays. 2013-14 & 2014-15 under new
law is issued on or after 01-07-2021, they will be barred by limitation under first proviso to section 149(1) of new
law, as notice u/s 148 for these two assessment years could not have been issued under old law on or after 01-07-2021
(because benefit of extended limitation under Notifications issued under TOLA is not available to the Revenue on or after
01-07-2021).
13. Therefore, a combined reading of section 149(1), the decision of Hon'ble Supreme Court in Ashish Agarwal's case (supra), decisions
of Hon'ble Delhi High Court and Allahabad High Court in the cases referred above (relating to challenges to issue of notice u/s 148 during
the period from 01-04-2021 to 30-06-2021 under old law) may lead to following inferences—

i.   Notices issued u/s 148 under old law during the period from 01-04-2021 to 30-06-2021 will be treated as notice u/s 148A(b), the
requirement of inquiries prescribed u/s 148A(a) are dispensed with as one time measure, the AO will provide all the material
which became the basis for recording reasons under law and issue of notice u/s 148 thereafter, the assessee will file objection to
such notice u/s 148A(b) and thereafter, if AO is satisfied that it is a fit case, he will issue a fresh notice u/s 148 for the concerned
assessment year.
ii.   Since, as per direction of Hon'ble Apex Court the AO is obliged to issue notice u/s 148 after completing the procedure u/s 148A,
such notices can be physically issued only during FY 2022-23.
iii.   If after applying exclusion of time period provided under third proviso to section 149(1)(b), the bar of limitation expiring on
30-06-2021 is saved i.e., even though notice u/s 148 is physically issued during FY 2022-23 but because of the effect of third
proviso to section 149(1)(b) the limitation expiring on 30-06-2021 is saved (by virtue of benefit available due to
Notifications issued under TOLA) then issue of notice for AY 2013-14 and 2014-15 will be valid.
iv.   If because of the effect of third proviso to section 149(1) the bar of limitation expiring on 31-03-2022 is saved but bar of
limitation expiring on 30-06-2021 is not saved, then notice u/s 148, under new law, physically issued on or after 01-04-2022 will
be deemed to be issued on or before 31-03-2022 but after 01-07-2022. Then the benefit of Notifications will not be available.
Therefore, notices issued for the assessment year 2013-14 & 2014-15 will not be valid (as they are barred by limitation under old
law and therefore under new law also) but notices issued u/s 148 for the AY 2015-16 onwards will be valid, provided other
conditions mentioned u/s 149(1)(b) of new law are satisfied.
v.   If because of the effect of third proviso to section 149(1) the bar of limitation expiring on 31-03-2022 is NOTsaved, then notices
physically issued in FY 2022-23 will also be deemed to be issued during FY 2022-23. If it is so then notices issued for the AYrs
2013-14, 2014-15 & 2015-16 will be barred by limitation (under old law as the benefit of extended limitation is not available on
or after 01-07-2021 and therefore is barred by limitation under new law also). The notices issued for the AYrs 2016-17 onwards
will only be valid.
vi.   Even in a case where reopening is permissible under new law for an assessment year, the assessment cannot be reopened unless
escaped income is Rs. 50 lakh or more and is represented in the form of an asset (if Finance Act 2021 is applicable) or in the form
of asset, entry or expenditure (if Finance Act 2022 is applicable) and is reflected from books of accounts documents or evidence
 in possession of the AO. There is no monetary limit or requirement of possession of books of account or documents or evidence
or escaped income representing in the form of an asset for reopening of assessment under new law where three years have not
expired from the end of the relevant assessment year.
14. The inferences from above discussion are as under—

(i)   The limitation under section 149(1) is for the issue of notice under section 148 and not for the issue of notice under section 148A.
(ii)   Notice u/s 148 after following the procedure u/s 148A as directed by Hon'ble Apex Court can be issued only in the FY 2022-23.
(iii)   If notices under section 148, for the AY 2013-14 & 2014-15 are physically issued during FY 2022-23 after the decision of the
Supreme Court, then it is legally also held to be issued in FY 2022-23 unless it is deemed that it is issued in FY 2021-22 due to
the effect of the third proviso to section 149(1).
(iv)   There is no limitation provided for the issue of notice under section 148A under the new law. Therefore, it can be issued at any
time, either in FY 2021-22 or FY 2022-23.
(v)   Where a notice under section 148 under the new law is physically issued during FY 2022-23 and also legally deemed to be issued
in FY 2022-23 (if limitation expiring on 31-03-2022 is not saved as per the third proviso to Section 149(1)) then the provisions of
Section 149(1) as per Finance Act 2022 will be applicable.
(vi)   Where a notice under section 148 under the new law is physically issued during FY 2022-23 but deemed to be issued during FY
2021-22, (after saving limitation as per the third proviso to section 149(1)), then the provisions of section 149(1) as per Finance
Act 2021 will be applicable.
(vii)   The effect of TOLA and Notifications No. 20 and 38 issued thereunder will not be applicable on or after 01-04-2021 when the
new law of re-assessment came into force; however, for the purposes of comparison under first proviso the limitation for
issue of notice u/s 148 under old law is deemed to be extended upto 30-06-2021.
(viii)   The limitation under Section 149(1) will be reckoned on the basis of the date of issue of notice under Section 148. If it is deemed
that notice under section 148 is issued on or before 31-03-2022, but on or after 01-07-2021 (after saving limitation as per the
third proviso to section 149(1)), then such notice will be valid for AY 2015-16, 2016-17 & 2017-18 (provided escaped income is Rs.
50 lakh or more).
(ix)   Where notice is deemed to be issued during FY 2021-22 after saving limitation or issued during FY 2022-23 if the limitation is
not saved, issue of notice under Section 148 will be valid, in accordance with the decision of the Supreme Court.
15.Assessment years which can be reopened under new law:
To ascertain which assessment year can be reopened under new law, following steps may be considered:

(i)   It is presumed that notice u/s 148 under new law is being issued during FY 2022-23.
(ii)   As per section 149(1)(a) of new law, the assessment for the AYrs 2019-20, 2020-21 and 2021-22 can be reopened without any
monetary limitation (limitation of 3 years).
(iii)   As per section 149(1)(b) of new law, the assessment for AYrs 2012-13 to 2018-19 (7 years) can also be reopened subject to
further conditions.
(iv)   If Finance Act 2021 is applicable, then 3 conditions should be satisfied—
i.   Escaped income is Rs. 50 lakh or more.
ii.   Escaped income is represented in the form of an asset as defined in the Explanation to section 149(1).
iii.   Such escaped income is reflected from the books of accounts, documents, or evidence in possession of the AO.
(v)   If Finance Act 2022 is applicable, then following 3 conditions of section 149(1)(b) of new law should be satisfied-
i.   Escaped income is Rs. 50 lakh or more.
ii.   Escaped income is represented in the form of an asset (as defined in the Explanation to section 149(1)), or entry or
expenditure.
iii.   Such escaped income is reflected from the books of accounts, documents, or evidence in possession of the AO.
(vi)   Once above limitations/conditions u/s 149(1)(b) of new law are crossed for an assessment year then it has to be further examined
whether it crosses limitation provided under first proviso to section 149(1)(b) of new law. If reopening of an assessment year
fails u/s 149(1)(b) of new law, then question of applying conditions u/s 149(1)(b) of old law does not arise.
(vii)   Once reopening of assessment year is permissible u/s 149(1)(b) of new law, then it has to cross first proviso to section 149(1)(b)
of new law. For applying first proviso of section 149(1)(b) it has to be ascertained whether, on the date when notice u/s 148
under new law is to be issued, notice u/s 148 under old law can also be issued. If yes, issue of notice u/s 148 under new
law will be valid. If not, issue of notice u/s 148 under new law will also not be valid.
(viii)   The benefit of extended limitation under old law by virtue of Notifications no. 20/2021 and 38/2021 is available only upto 30-
06-2021. So, what can be done under old law upto 30-06-2021 can also be done under new law. Conversely what cannot be
done under old law after 01-07-2021 can also not be done under new law.
(ix)   The provisions of Finance Act 2021 will be applicable if notice u/s 148 issued during FY 2022-23 under new law is deemed to be
issued on or before 31-03-2022, if limitation is saved by virtue of third proviso to section 149(1)(b) of new law.
 (x)   The provisions of Finance Act 2022 will be applicable if limitation expiring on 31-03-2022 is not saved by virtue of third
proviso to section 149(1)(b) of new law then notice physically issued u/s 148 during FY 2022-23 will also be deemed to be
legally issued during FY 2022-23.
16. Conclusion:

Thus, it may be seen that assessment for AY 2013-14 and 2014-15 cannot be reopened on or after 01-07-2021 under new law as
assessment for these two AYrs under old law could not have been reopened on or after 01-07-2021. It is because when notice u/s 148
under new law is issued during FY 2022-23, limitation expiring on 30-06-2021 under old law for these two years is not saved by third
proviso to section 149(1)(b) of new law. In the chart form it is shown as under—

Assessment Notice u/s 148 physically issued Notice u/s 148 physically issued Notice u/s 148 physically
Year under new law during FY 2022-23 under new law during FY 2022-23 issued under new law during
but deemed to be issued in FY 2021- but deemed to be issued in FY 2021- FY 2022-23, deemed to be also
22(between 01-04-2021 to 30-06- 22 (between 01-07-2021 to 31-03- issued in FY 2022-23
2021) 2022)

Escaped income Escaped income Escaped income Escaped income Escaped Escaped
below Rs. 50 above Rs. 50 below Rs. 50 above Rs. 50 income below income above
lakhs lakhs lakhs lakhs Rs. 50 lakhs Rs. 50 lakhs

2012-13 TB TB TB TB TB TB

2013-14 TB Valid TB TB TB TB

2014-15 TB Valid TB TB TB TB

2015-16 TB Valid TB Valid TB TB

2016-17 TB Valid TB Valid TB Valid

2017-18 TB Valid TB Valid TB Valid

2018-19 Valid Valid Valid Valid TB Valid

 2019-20 Valid Valid Valid Valid Valid Valid

2020-21 Valid Valid Valid Valid Valid Valid

(TB means Time Barred)