Reassessment Quashed by ITAT Pune: Section 148 Notice Issued Beyond Surviving Limitation Period Ruled Invalid

In a significant judicial pronouncement, the Income Tax Appellate Tribunal (ITAT), Pune, has struck down reassessment proceedings initiated against a cooperative society, ruling that the statutory notice was issued beyond the permissible legal timeframe. The ruling in the case of Vikasratna Vilasrao Deshmukh Manjara Shetkari Sah Sakhar Karkhana Limited Vs ITO underscores the critical importance of adhering to the "surviving limitation period" doctrine established by the Hon'ble Supreme Court.

The Tribunal conclusively determined that the Assessing Officer (AO) failed to issue the reassessment notice within the surviving time allowed under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA). By exceeding the strict mathematical calculation of surviving days carried over from the old reassessment regime, the entire jurisdictional assumption under Section 147 of the Income Tax Act 1961 was rendered void ab initio.

Factual Matrix of the Case

The appellant in this matter is a Co-operative Society. For the Assessment Year (AY) 2013-14, the assessee filed its original return of income on 30.09.2013, declaring a total income of Rs. 28,63,09,080.

Years later, the tax department flagged certain transactions, alleging that the assessee had deposited massive amounts of unexplained cash into its bank accounts. The sequence of events unfolded as follows:

  1. Initial Reopening: The case was selected for reassessment, and an initial notice under the old regime of Section 148 was issued on 14.06.2021.
  2. Transition to the New Regime: Following the landmark Supreme Court judgment in Ashish Agarwal, the old notices were deemed to be show-cause notices under the newly substituted Section 148A(b). Consequently, a fresh notice under Section 148A(b) was issued on 24.05.2022.
  3. Assessee's Response: The assessee submitted a detailed reply to this show-cause notice on 09.06.2022.
  4. Final Order and Notice: The AO subsequently passed an order under Section 148A(d) on 26.07.2022, concluding that an amount of Rs. 23,31,73,000 remained unexplained. On the very same date (26.07.2022), the formal notice under Section 148 was issued to the assessee.