Madras High Court
Appnell Holdings Limited vs The Deputy Commissioner Of Income-Tax on 13 July, 2026
Author: C.Saravanan
Bench: C.Saravanan
W.P.No.1513 of 2023
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved on 27.04.2026
Pronounced on 13.07.2026
CORAM :
THE HONOURABLE MR. JUSTICE C.SARAVANAN
W.P.No.1513 of 2023
and
W.M.P.No.1662 of 2023
Appnell Holdings Limited,
Represented by its Special Power of Attorney Holder,
Parthasarathy Srinivasan ... Petitioner
Vs.
1.The Deputy Commissioner of Income-tax,
International Tax,
Circle 1(1), Chennai,
Room No.8713, BSNL Building,
4th Floor, Income Tax Office,
BSNL Tower 16, Greams Road,
Chennai, Tamil Nadu – 600 005.
2.Central Board of Direct Taxes,
Ministry of Finance,
North Block, New Delhi – 110 011. ... Respondents
Prayer: Writ Petition filed under Article 226 of the Constitution of India, for
issuance of a Writ of Certiorarified Mandamus,
(a) To call for the records pertaining to the Impugned Order dated
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W.P.No.1513 of 2023
28.07.2022 passed under Section 148A(d) of the Act for the Assessment Year
2015-2016 and the consequent Impugned Notice under Section 148 of the
Act issued on 28.07.2022 on the file of the Respondent No.1 and quash the
same as arbitrary, ultra vires and unconstitutional and consequently forbear
the Respondent from proceeding with re-assessment under Sections 147 and
148 of the Income Tax Act, 1961 in respect of the Assessment Year 2015-
2016; and
(b) To call for the records pertaining to the CBDT Instruction No.01/2022
dated 11.05.2022 authorizing the Revenue Department (and accordingly
Respondent No.1) to initiate reassessment proceedings for the Assessment
Year 2015-2016 after 31.03.2022, and quash the same as arbitrary, ultra vires
and unconstitutional, bad in law and ultra vires the First Proviso to Section
149(1)(b) of the Income Tax Act, 1961.
For Petitioner : Mr.R.Sivaraman
for Mr.Allwin Godwin
For Respondents : Mr.Avinash Krishnan Ravi
Junior Standing Counsel
for Mr.B.Ramanakumar
Senior Standing Counsel
ORDER
Heard the learned counsel for the Petitioner and the learned Junior
Standing Counsel for the Respondents.
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W.P.No.1513 of 2023
2. In this Writ Petition, the Petitioner has challenged the Impugned
Instruction No.01/2022 issued by the 2nd Respondent Central Board of Direct
Taxes dated 11.05.2022 and the Impugned Order dated 28.07.2022 passed
under Section 148A(d) of the Income Tax Act, 1961 as it stood in force with
effect from 01.04.2021 and a Notice under Section 148 of the Income Tax
Act, 1961 (hereinafter referred to as “the Act”) as it stood during the
aforesaid period for the Assessment Year 2015-2016.
3. The challenge to these Impugned Instruction dated 11.05.2022,
Impugned Order passed under Section 148A(d) of the Act dated 28.07.2022
and Impugned Section 148 Notice dated 28.07.2022 are primarily on account
of the apparent concession given by the Additional Solicitor General of India
before the Hon’ble Supreme Court in Union of India and others Vs. Rajeev
Bansal, (2024) 469 ITR 46 / 2024 SCC Online SC 2693.
4. For the sake of clarity, Paragraph No.19 from the said decision
of the Hon’ble Supreme Court in Rajeev Bansal case referred to supra is
extracted below:-
“19. Mr.N.Venkataraman, learned Additional Solicitor General of India,
made the following submissions on behalf of the Revenue:
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W.P.No.1513 of 2023a. Parliament enacted TOLA as a free-standing legislation to
provide relief and relaxation to both the assesses and the
Revenue during the time of COVID-19. TOLA seeks to relax
actions and proceedings that could not be completed or
complied with within the original time limits specified under
the Income-tax Act;
b. Section 149 of the new regime provides three crucial
benefits to the assesses: (i) the four-year time limit for all
situations has been reduced to three years; (ii) the first
proviso to Section 149 ensures that re-assessment for
previous assessment years cannot be undertaken beyond
six years; and (iii) the monetary threshold of Rupees fifty
lakhs will apply to the re assessment for previous
assessment years;
c. The relaxations provided under section 3(1) of TOLA
apply “notwithstanding anything contained in the
specified Act.” Section3(1), therefore, overrides the time
limits for issuing a notice under Section 148 read with
Section 149 of the Income-tax Act;
d. TOLA does not extend the life of the old regime. It merely
provides a relaxation for the completion or compliance of
actions following the procedure laid down under the new
regime;
e. The Finance Act 2021 substituted the old regime for re-
assessment with a new regime. The first proviso to
Section 149 does not expressly bar the application of
TOLA. Section 3 of TOLA applies to the entire Income-
tax Act, including Sections 149 and 151 of the new
regime. Once the first proviso to Section 149(1)(b) is
read with TOLA, then all the notices issued between 1
April 2021 and 30 June 2021 pertaining to assessment
years 2013-2014, 2014-2015, 2015-2016, 2016-2017,
and 2017-2018 will be within the period of limitation as
explained in the tabulation below:
Assessment Within Expiry of Within six Expiry of
Three Limitation Years Limitation
Year Years read with read with
TOLA for TOLA for (4)
(2)
(1) (2) (3) (4) (5)
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W.P.No.1513 of 2023
2013-2014 31.03.2017 TOLA not 31.03.2020 30.06.2021
applicable
2014-2015 31.03.2018 TOLA not 31.03.2021 30.06.2021
applicable
2015-2016 31.03.2019 TOLA not 31.03.2022 TOLA not
applicable applicable
2016-2017 31.03.2020 30.06.2021 31.03.2023 TOLA not
applicable
2017-2018 31.03.2021 30.06.2021 31.03.2024 TOLA not
applicable
f. The Revenue concedes that for the assessment year 2015-
16, all notices issued on or after 1 April 2021 will have
to be dropped as they will not fall for completion during
the period prescribed under TOLA;
g. Section 2 of TOLA defines “specified Act” to mean and
include the Income-tax Act. The new regime, which
came into effect on 1 April 2021, is now part of the
Income-tax Act. Therefore, TOLA continues to apply to
the Income Tax Act even after 1 April 2021, and
h. Ashish Agarwal (supra) treated Section 148 notices
issued by the Revenue between 1 April 2021 and 30
June 2021 as show-cause notices in terms of Section
148A(b). Thereafter, the Revenue issued notices under
section 148 of the new regime between July and August
2022. Invalidation of the Section 148 notices issued
under the new regime on the ground that they were
issued beyond the time limit specified under the
Income-tax Act read with TOLA will completely
frustrate the judicial exercise undertaken by this
Court in Ashish Agarwal (supra).”
5. At the outset, a concession given by the learned Additional
Solicitor General before the Hon’ble Supreme Court can neither be
construed to be law declared under Article 141 of the Constitution of India
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W.P.No.1513 of 2023
nor purport of such concession can be construed to mean that the limitation
for issuance of Notice under Section 148 of the Act had expired even where
the amount involved is more than the specified limit both under the new and
the old regime. A reading of the above table from Paragraph 19 of the
decision of the Hon’ble Supreme Court in Rajeev Bansal case referred to
supra also makes it clear that the Court was not informed that where the
amount was above the specified limit, proceedings will abate even if Section
148 Notice was issued in time under the old regime.
6. That apart, it is to be remembered that the Hon’ble Supreme Court in
Union of India Vs. Ashish Agarwal, (2023) 1 SCC 617 rendered its decision
on 04.05.2022, and held that a Notice issued under Section 148 under the old
regime, will be treated as a Notice under Section 148A(b) under the new
regime as in force with effect from 01.04.2021. This has also been explained
by the Hon’ble Supreme Court in Rajeev Bansal case referred to supra, to
which I shall refer to.
7. To implement the above decision of the Hon’ble Supreme Court
in Ashish Agarwal case referred to supra, the Impugned Instruction
No.01/2022 dated 11.05.2022 was issued. Therefore, the challenge to the
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W.P.No.1513 of 2023
Impugned Instruction No.01/2022 dated 11.05.2022 implementing the
decision of the Hon’ble Supreme Court in Ashish Agarwal case referred to
supra cannot be countenanced and therefore has to be dismissed. To that
extent, prayer (b) of the Petitioner is straight away liable to be dismissed.
8. The Hon’ble Supreme Court in Rajeev Bansal case referred to
supra clarified the decision the Hon’ble Supreme Court in Ashish Agarwal
case referred to supra. The Hon’ble Supreme Court in Rajeev Bansal case
referred to supra, framed the following questions of law to be answered by
it:-
a. Whether TOLA and notifications issued under it will also
apply to reassessment notices issued after 1 April 2021;
and
b. Whether the reassessment notices issued under Section
148 of the new regime between July and September 2022
are valid.
9. In Rajeev Bansal case referred to supra, the Hon’ble Supreme
Court summarized its views in Paragraph No.114. It is reproduced below:-
“114. In view of the above discussion, we conclude that:
a. After 1 April 2021, the Income Tax Act has to be read
along with the substituted provisions;
b. TOLA will continue to apply to the Income Tax Act after 1
April 2021 if any action or proceeding specified under the
substituted provisions of the Income Tax Act falls for
completion between 20 March 2020 and 31 March 2021;
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W.P.No.1513 of 2023c. Section 3(1) of TOLA overrides Section 149 of the Income
Tax Act only to the extent of relaxing the time limit for
issuance of a reassessment notice under Section 148;
d. TOLA will extend the time limit for the grant of sanction
by the authority specified under Section 151. The test to
determine whether TOLA will apply to Section 151 of
the new regime is this: if the time limit of three years
from the end of an assessment year falls between 20
March 2020 and 31 March 2021, then the specified
authority under Section 151(i) has extended time till 30
June 2021 to grant approval;
e. In the case of Section 151 of the old regime, the test is: if
the time limit of four years from the end of an assessment
year falls between 20 March 2020 and 31 March 2021,
then the specified authority under Section 151(2) has
extended time till 31 March 2021 to grant approval;
f. The directions in Ashish Agarwal (supra) will extend to
all the ninety thousand reassessment notices issued
under the old regime during the period 1 April 2021
and 30 June 2021;
g. The time during which the show cause notices were
deemed to be stayed is from the date of issuance of the
deemed notice between 1 April 2021 and 30 June 2021
till the supply of relevant information and material by
the assessing officers to the assesses in terms of the
directions issued by this Court in Ashish Agarwal
(supra), and the period of two weeks allowed to the
assesses to respond to the show cause notices; and
h. The assessing officers were required to issue the
reassessment notice under Section 148 of the new regime
within the time limit surviving under the Income Tax Act
read with TOLA. All notices issued beyond the surviving
period are time barred and liable to be set aside.”
10. In Paragraph No.112, the Hon’ble Supreme Court in Rajeev
Bansal case referred to supra also gave an illustration. It is reproduced as
under:-
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W.P.No.1513 of 2023“112.Let us take the instance of a notice issued on 1 May
2021 under the old regime for a relevant assessment
year. Because of the legal fiction, the deemed show
cause notices will also come into effect from 1 May
2021. After accounting for all the exclusions, the
assessing officer will have sixty-one days [days between
1 May 2021 and 30 June 2021] to issue a notice under
Section 148 of the new regime. This time starts ticking
for the assessing officer after receiving the response of
the assessee. In this instance, if the assessee submits the
response on 18 June 2022, the assessing officer will
have sixty-one days from 18 June 2022 to issue a
reassessment notice under Section 148 of the new
regime. Thus, in this illustration, the time limit for
issuance of a notice under Section 148 of the new
regime will end on 18 August 2022.”
11. As per the First Proviso to Section 149 of the Act, a Notice under
Section 148 under the new regime could be issued, provided the limitation
under the old regime had not expired.
12. If the amount of income that had escaped assessment was below
Rs.1,00,000/-, it can be held that Section 148 Notice dated 30.06.2021 issued
to the Petitioner under the old regime as it stood till 31.03.2021 was time
barred and therefore barred under Proviso to Section 149 of the Act as in
force. This interpretation would be in consonance with the concession given
by the learned Additional Solicitor General of India before the Hon’ble
Supreme Court in Rajeev Bansal case referred to supra.
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W.P.No.1513 of 2023
13. The dispute in the present case pertains to the Assessment
Year 2015-2016 in respect of certain transactions of the Petitioner during
relevant Previous Year 2014-2015. The four years and six years limitation
under the old regime had expired on 31.03.2020 and 31.03.2022 for the
Assessment Year 2015-2016.
14. In the present case, a Section 148 Notice was issued to the
Petitioner on 30.06.2021 under the old regime. It was issued prior to the
expiry of limitation on 31.03.2022 under the old regime as the income
chargeable to tax that is said to have escaped assessment for the Assessment
Year 2015-2016 was Rs.27,06,46,000/-.
15. This was of course made known to the Petitioner after Section
148A(b) Notice dated 27.05.2022 was issued to the Petitioner under the new
regime after the Hon’ble Supreme Court in Ashish Agarwal case referred to
supra rendered its decision on 04.05.2022.
16. Since the income chargeable to tax that is said to have escaped
assessment for the Assessment Year 2015-2016 was Rs.27,06,46,000/-, it
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cannot therefore be held that the Impugned Section 148 Notice dated
28.07.2022 issued to the Petitioner can be said to be time barred.
17. As per the Scheme of Section 148A(b) of the Act, a Notice has to
be issued, giving time not exceeding 30 days from the date of such Notice or
such further time as may be extended on the basis of an application made in
this behalf, for furnishing a Reply under Section 148A(c) of the Act.
18. Based on such Reply, an order has to be passed under Section
148A(d) of the Act, with the approval of the specified authority, within one
month from the end of the month in which the Reply under Section 148A(c)
of the Act is received.
19. Where no such Reply is furnished, the Order shall be passed within
one month from the end of the month in which the time or the extended time
allowed for furnishing the Reply, as provided under Clause (b) expires.
20. In Paragraph No.113, the Hon’ble Supreme Court in Rajeev
Bansal case referred to supra observed as under:-
“113. In Ashish Agarwal (supra), this Court allowed the assesses
to avail all the defences, including the defence of expiry of the11/20
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W.P.No.1513 of 2023time limit specified under Section 149(1). In the instant
appeals, the reassessment notices pertain to the assessment
years 2013-2014, 2014-2015, 2015-2016, 2016-2017, and
2017-2018. To assume jurisdiction to issue notices under
Section 148 with respect to the relevant assessment years, an
assessing officer has to: (i) issue the notices within the period
prescribed under Section 149(1) of the new regime read with
TOLA; and (ii) obtain the previous approval of the authority
specified under Section 151. A notice issued without complying
with the preconditions is invalid as it affects the jurisdiction of
the assessing officer. Therefore, the reassessment notices
issued under Section 148 of the new regime, which are in
pursuance of the deemed notices, ought to be issued within
the time limit surviving under the Income Tax Act read with
TOLA. A reassessment notice issued beyond the surviving time
limit will be time barred.”
21. The Hon’ble Supreme Court in Paragraph No.114(g) in Rajeev
Bansal case referred to supra has clearly clarified that the time during which
the Show Cause Notices were deemed to be stayed from the date of issuance
of the deemed Notice between 1st April 2021 and 30th June 2021, till the
supply of relevant information and material by the Assessing Officers to the
assessees in terms of the directions issued by this Court in Ashish Agarwal
referred to supra, and the period of two weeks allowed to the assessees to
respond to the Show Cause Notices is to be excluded and thereafter the
Assessing Officer(s) was/were required to issue the Reassessment Notice
under Section 148 of the Act under the new regime within the time limit
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W.P.No.1513 of 2023
surviving under the Act read with the Taxation and Other Laws (Relaxation
and Amendment of Certain Provisions) Act, 2020.
22. Only if Section 148 Notice is issued beyond the surviving period of
limitation, such Notice can be held to be time barred and can liable to be set
aside. However, this is not the situation in the facts of the present case.
23. The time between 01.04.2021 and 27.05.2022 (being the date of
Section 148A(b) Notice) and two weeks time given thereafter to Reply under
Section 148A(b) read with the Third Proviso to Section 149 of the Act and
the time for passing Order has to be excluded in terms of the decision of the
Hon’ble Supreme Court in Ashish Agarwal case referred to supra and the
decision of the Hon’ble Supreme Court in Rajeev Bansal case referred to
supra are to be excluded.
24. As per the Third Proviso to Section 149 of the Act, (later re-
numbered as Fifth Proviso vide Finance Act No.8 of 2023 with effect from
01.04.2023), the said period stands excluded. For the sake of clarity, Section
148A(d) and Third Proviso to Section 149 of the Act is reproduced below:-
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W.P.No.1513 of 2023Section 148A(d) Third Proviso to Section 149
The Assessing Officer shall, before (1)No notice under Section 148
issuing any notice under Section shall be issued for the relevant
148,- assessment year,-
(a)... (a).....
(b).....
(b)...
Provided that……
(c) …
Provided further that….
(d) decide, on the basis of Provided also that for the
material available on record purposes of computing the period
including reply of the assessee, of limitation as per this section,
whether or not it is a fit case to
the time or extended time allowed
issue a notice under section to the assessee, as per show-cause
148, by passing an order, with notice issued under clause (b) of
the prior approval of specified section 148A or the period during
authority, within one month which the proceeding under
from the end of the month in section 148A is stayed by an order
which the reply referred to or injunction of any court, shall be
in clause (c) is received by excluded:*
him, or where no such reply is
furnished, within one month Note – * Third Proviso
from the end of the month in
which time or extended time
allowed to furnish a reply as
per clause (b) expires:
25. In the facts of the present case, a Notice dated 27.05.2022 under
Section 148A(b) of the Act was issued to the Petitioner in terms of the
decision of the Hon’ble Supreme Court in Ashish Agarwal case referred to
supra. The Petitioner should have replied to it within two weeks thereof i.e.,
on or before 10.06.2022.
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W.P.No.1513 of 2023
26. An Order under Section 148A(d) of the Act had to be passed within
one month from the end of the month in which the Reply referred to in
Clause (c) is received by the Assessing Officer or Assessing Authority. Since
no such Reply was furnished by the Petitioner to the said Notice dated
27.05.2022, an Order had to be passed under Section 148A(d) of the Act,
within one month from the end of the month in which time or extended time
allowed to furnish a Reply expired. In this case, such time would have
expired on 31.07.2022.
27. The said Section 148 Notice dated 28.07.2022 was to be issued
with the prior approval of the specified authority under Section 151 of the
Act.
28. Since Order under Section 148A(d) of the Act had to be passed
by 31.07.2022, the Impugned Order which came to be passed on 28.07.2022
under Section 148A(d) of the Act in the absence of a Reply by the Petitioner
and the Impugned Section 148 Notice dated 28.07.2022 are to be held to be in
time.
29. Therefore, the so called concession will not apply to the facts of
the present case, and the income chargeable to tax that is said to have escaped
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W.P.No.1513 of 2023
assessment for the Assessment Year 2015-2016 was Rs.27,06,46,000/- as
per Section 148A(b) Notice dated 27.05.2022 as mentioned above.
30. That apart, under the Taxation and Other Laws (Relaxation and
Amendment of Certain Provisions) Ordinance, 2020 and the Taxation and
Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020
and the Notifications issued therein and in view of the periodical extension of
time given by the Hon’ble Supreme Court independently in In Re:
Cognizance for Extenstion of Limitation in Miscellaneous Application
Nos.21 and 29 of 2022 in Miscellaneous Application No.665 of 2021 dated
10.01.2022, it cannot be said the proceedings are barred.
31. Similar issues have came before this Court on several occasions
and several orders have been passed wherein it has been clearly clarified that
the so called concession recorded in Paragraph No.19 from the decision of
the Hon’ble Supreme Court in Rajeev Bansal case referred to supra was
indeed not concessional.
32. That apart, the issue has been answered by this Court in all
these cases:-
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W.P.No.1513 of 2023
1. D.Tamilselvi Vs. The Income Tax Officer, Virudhunagar in
W.P.(MD)No.30938 of 2024 etc., batch vide order dated
15.09.2025.
2. Mrs.Thulasidass Prabavathi Vs. Income Tax Officer,
Chennai in W.P.No.19010 of 2022 vide order dated 24.01.2025.
3. Kandasamy Veluswamy Vs. The Assistant Commissioner of
Income Tax, Periyar Nagar, Erode in W.P.No.26533 of 2022
vide order dated 28.11.2025.
4. Ravi Constructions Vs. The Assistant Commissioner of
Income Tax, Race Course Road, Coimbatore in
W.P.No.11606 of 2023 vide order dated 23.02.2026.
5. M/s.Exemplarr Worldwide Limited, Represented by its
Managing Director Vs. The Central Board of Direct Taxes,
New Delhi and another in W.P.No.15322 of 2023 vide order
dated 20.04.2026.
6. S.Palani Vs. The Additional/Joint/Deputy/Assistant
Commissioner of Income Tax/Income Tax Officer, Delhi and
another in W.P.No.15325 of 2023 vide order dated 20.04.2026.
33. The ratio of these cases will apply to the facts of the present
case. The Impugned Order is dated 28.07.2022. It was passed under Section
148A(d) of the Act as it stood in force with effect from 01.04.2021.
Similarly, the Notice dated 28.07.2022 was issued under Section 148 of the
Act as it stood during the aforesaid period for the Assessment Year 2015-
2016.
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34. Therefore, this Writ Petition is liable to be dismissed. The
Respondents are therefore directed to complete the assessment. Needless to
state, the Petitioner shall be entitled to participate in the proceedings in
accordance with law in the aforesaid assessment proceedings.
35. The Respondents shall pass appropriate orders on merits as
expeditiously as possible once the Petitioner files the Reply. Since the Web
Portal would have been closed, the Petitioner is directed to keep the Reply
ready and file it before the 1 st Respondent within a period of 30 days from the
date of receipt of a copy of this order. Thereafter, the Respondents or any
other jurisdictional Assessing Officer or Assessing Authority, may pass
appropriate orders after hearing the Petitioner.
36. This Writ Petition is dismissed with the above liberty. No costs.
Connected Writ Miscellaneous Petition is closed.
13.07.2026
Neutral Citation: Yes / No
arb
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To:
1.The Deputy Commissioner of Income-tax,
International Tax,
Circle 1(1), Chennai,
Room No.8713, BSNL Building,
4th Floor, Income Tax Office,
BSNL Tower 16, Greams Road,
Chennai, Tamil Nadu – 600 005.
2.Central Board of Direct Taxes,
Ministry of Finance,
North Block, New Delhi – 110 011.
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W.P.No.1513 of 2023
C.SARAVANAN, J.
arb
Pre-delivery Order in W.P.No.1513 of 2023
13.07.2026
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