NISHITH JOGLEKAR LEGAL HEIR OF LATE CHANDRASHEKHAR MADHAV JOGLEKAR,MUMBAI vs. INCOME TAX OFFICER, WARD-1(1), THANE

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ITA 6705/MUM/2026Status: DisposedITAT Mumbai09 September 2026AY 2014-201511 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the notice for reassessment was issued beyond the period of limitation prescribed by law, considering the 'surviving period' available to the Revenue. Consequently, the assessment order was quashed.

What were the facts?

The assessee's return for AY 2014-15 was sought to be reopened based on information that the property sale consideration was significantly lower than its market value. The Assessing Officer added the difference as capital gains, which was upheld by the CIT(A).

What were the issues?

The primary issue was the validity of the reassessment notice issued under Section 148, specifically whether it was barred by limitation as per the prevailing Supreme Court judgments.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 148A,Section 149,Section 50C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “B” MUMBAI

Before: SMT BEENA PILLAI & SMT RATNA DASGUPTA

For Appellant: Shri Dharan Gandhi, Ms. Vinita
For Respondent: Ms. Neeha Jeph, CIT DR
Hearing: 25/08/2026Pronounced: 09/09/2026

PER RATNA DASGPUTA, AM

The captioned appeal is filed against order dated 16/03/2026 passed by the National Faceless Appeals Centre [hereinafter referred to as Ld. CIT(A)] under section 250 the Income-tax Act, 1961 [hereinafter referred to as "the Act"] on the following grounds:-

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i. The Ld. CIT(A) erred in confirming that the affording sufficient opportunity of being heard was given where in fact the same was not afforded by Ld. AO. ii. Ld. CIT(A) erred in confirming that reopening the assessment was valid in spite of the fact that same was barred by limitation. iii. Ld. CIT(A) erred confirming the addition of Rs. 15,43,10,500/- on account of Capital gains ignoring the facts of the case. 2. Ground No. 2 above challenges the validity of reopening the assessment by issue of notice u/s 148 of the Act and the consequent reassessment order based on an allegedly invalid notice. We will first take up this ground because it goes to the root of the matter challenging the jurisdiction per se.

3.

The assessee, Shri Chandrashekhar Madhav Joglekar, is represented by his legal heir, Shri Nishith Joglekar. Brief facts of the case are that the assessee, an individual, had not filed his return of income for A.Y 2014-15. Subsequently, based on information flagged by the Risk Management Strategy and pursuant to objection raised by Audit, the case was sought to be reopened under section 147/148 of the Act. The information was that the assessee had sold immovable property to M/s. Sai Enterprises for a consideration of Rs. 50 lakhs on 09/04/2013, whereas the market value of the property as per Stamp Duty Authority was Rs. 15,43,10,500/-. Confronted with this question during the course of assessment proceedings, the assessee made various submissions

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stating, inter alia, that although the agreement stipulated payment of Rs. 50,00,000/- by the purchaser, he had in fact received only 10,00,000/- and, therefore, the agreement for sale had not materialized. But the Ld. Assessing Officer (AO) noted that as per the submission of the purchaser, M/s Sai Enterprises, the sale deed had not been cancelled till that date. He, therefore, concluded that the assessee had indeed made capital gains which he had not offered for taxation. In the absence of any document to substantiate the cost of acquisition or cost of improvement of the impugned property, the Ld. AO added back Rs. 15,43,10,500/-to the total income of the assessee as deemed sales consideration under the head of Capital Gains. The Ld. CIT(A) upheld the addition as above, observing that the provisions of section 50C of the Act were applicable in this case, and while the purchaser confirmed that the sale deed remained valid and operative, the assessee had not produced any registered cancellation deed or any other legal evidence to prove that the transaction had been rescinded. Aggrieved with this order of the Ld. CIT(A), the assessee, through his legal heir, is in appeal before this Tribunal.

4.

So far as validity of the notice u/s 148 of the Act is concerned, the Ld. AR on behalf of the assessee has submitted before us the following sequence of events which took place in the present case:-

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Sr. Event Date/days No. Original notice under section 148 which is deemed to be 1 22.06.2021 notice under section 148A(b) of the Act Last day to issue notice under section 148 as extended by 2 30.06.2021 TOLA Therefore, surviving period left as per the decision in 3 9 days case of Rajeev Bansal (supra) Notice issued providing material after the decision in 4 26.05.2022 case of Ashish Agrawal Last day to reply as per such notice and as per the 5 13.06.2022 decision in case of Ashish Agrawal i.e., 2 weeks Therefore, last day to issue notice under section 148 of 6 23.06.2022 the Act considering the surviving period 7 Date of issue of notice under section 148 of the Act 28.07.2022 8 Impugned Assessment order passed 16.05.2023 On the basis of the above, it is submitted that the issue of notice u/s 148 on 28/07/2022 was beyond the period of limitation and therefore liable to be quashed. He relied on the decision of the Hon’ble Apex Court in U.O.I. vs. Rajeev Bansal, (2024), reported in 167 taxmann.com 70 (SC), which was followed by the Mumbai Bench of ITAT in Bhushan Vasant Parelkar v. ITO - A.Y. 2013-14 (ITA No. 6322/Mum/2025).

4.1 The Ld. CIT DR relied on the order of the Ld. CIT(A).

5.

We have heard the rival submissions of both the parties in the light of the material placed on record. Neither party has argued on the merits of the case nor made any submission to that effect.

5.1 We note that the relevant assessment year is A.Y. 2014-15, and while the original notice u/s 148 of the Act was issued on

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22/06/2021, the subsequent notice u/s 148 was issued on 28/07/2022 after following the procedural requirements of section 148A as it existed at that point of time. The contention of the Ld. AR is that the same is barred by limitation since it has been issued after the expiry of the “surviving period” that was available to Revenue in terms of the decision of the Hon’ble Apex Court in Rajeev Bansal (supra).

5.2 From the chronology of events in Para 4 above, it can be seen that:

(i) While the last day to notice u/s 148 as extended by TOLA was 30/06/2021, the original notice u/s 148 — deemed to be notice u/s 148A(b) — was issued on 22/06/2021, leaving a surviving period of 09 days. (ii) Notice issued u/s 148A(b) of the Act on 26/05/2022 required the assessee to furnish reply by 13/06/2022 — as per direction of the Hon'ble Supreme Court in U.O.I v. Ashish Agarwal (Civil Appeal No. 3005/2022). (iii) Counting from the date 13/06/2022 and considering the surviving period of 09 days, the last date for issue of notice u/s 148 works out to 23/06/2022. (iv) As against 23/06/2022, the notice u/s 148 was actually issued on 28/07/2022, i.e. beyond the period of limitation envisaged by the Hon'ble Supreme Court in Rajeev Bansal (supra). 5.3 To look deeper into the issue in hand, let us first take note of the provisions contained in section 149 under the new regime

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introduced by Finance Act, 2021, prescribing limitation on issue of notice u/s 148. The first proviso to section 149(1) provides that for an assessment year beginning on or before 01/04/2021, a notice u/s 148 cannot be issued if, at the relevant time, a notice under the old section 148/153A/153C could not have been issued because the limitation period under the old Act had already expired. Essentially this means that the new limitation law cannot be used to resurrect an assessment year which had already become time- barred under the old limitation law. So this is basically a protection and a saving clause for old assessment years, and this was necessary because the reassessment provisions were completely recast w.e.f. 01/04/2021.

5.4 The first proviso to section 149(1) of the Act was deliberated in detail in the Rajeev Bansal case (2024), reported in 167 taxmann.com 70 (SC). Relevant portions, extracted below, are self- explanatory in the given context:

"46. The ingredients of the proviso could be broken down for analysis as follows: (1) no notice under Section 148 of the new regime can be issued at any time for an assessment year beginning on or before 1 April 2021- (ii) if it is barred at the time when the notice is sought to be issued because of the time limits specified under the provisions of 149(1)(b) of the old regime. Thus, a notice could be issued under Section 148 of the new regime for assessment year 2021-2022 and before only if the time limit for issuance of such notice continued to exist under Section 149(1)(b) of the old regime.

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49.

The first proviso to Section 149(1)(b) requires the determination of whether the time limit prescribed under Section 149(1)(b) of the old regime continues to exist for the assessment year 2021-2022 and before. Resultantly, a notice under Section 148 of the new regime cannot be issued if the period of six years from the end of the relevant assessment year has expired at the time of issuance of the notice. This also ensures that the new time limit of ten years prescribed under Section 149(1)(b) of the new regime applies prospectively. For example, for the assessment year 2012-2013, the ten year period would have expired on 31 March 2023, while the six year period expired on 31 March 2019. Without the proviso to Section 149(1)(b) of the new regime, the Revenue could have had the power to reopen assessments for the year 2012-2013 if the escaped assessment amounted to Rupees fifty lakhs or more. The proviso limits the retrospective operation of Section 149(1)(b) to protect the interests of the assesses.

53.

The position of law which can be derived based on the above discussion may be summarized thus: (i) Section 149(1) of the new regime is not prospective. It also applies to past assessment years; (ii) The time limit of four years is now reduced to three years for all situations. The Revenue can issue notices under Section 148 of the new regime only if three years or less have elapsed from the end of the relevant assessment year; (iii) the proviso to Section 149(1)(b) o the new regime stipulates that the Revenue can issue reassessment notices for past assessment years only if the time limit survives according to Section 149(1)(b) of the old regime, that is, six years from the date of the relevant assessment year, and (iv) all notices issued invoking the time limit under Section 149(1)(b) of the old retime will have to be dropped if the income chargeable to tax which has escaped assessment is less than Rupees fifty lakhs.” 5.5 But given the stand taken by the assessee, even more relevant in the present context is Para 108 of the decision in Rajeev Bansal

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(supra) expounding the concept of “surviving period." It was held therein that where an old-regime section 148 notice, issued between 01/04/2021 and 30/06/2021, is deemed to be a section 148A(b) notice, the "surviving period" as on 30/06/2021 remains available to Revenue to issue notice u/s 148 of the new regime. The Para reads as follows;-

"The Income Tax Act read with TOLA extended the time limit for issuing reassessment notices under Section 148, which fell for completion from 20 March 2020 to 31 March 2021, till 30 June 2021. All the reassessment notices under challenge in the present appeals were issued from 1 April 2021 to 30 June 2021 under the old regime. Ashish Agarwal (supra) deemed these reassessment notices under the old regime as show cause notices under the new regime with effect from the date of issuance of the reassessment notices. The effect of creating the legal fiction is that this Court has to imagine as real all the consequences and incidents that will inevitably flow from the fiction. Therefore, the logical effect of the creation of legal fiction by Ashish Agarwal (supra) is that the time surviving under the Income Tax Act read with TOLA will be available to the Revenue to complete the remaining proceedings in furtherance of the deemed notices, including issuance of reassessment notices under Section 148 of the new regime. The surviving or balance time limit can be calculated by computing the number of days between the date of issuance of the deemed notice and 30 June 2021." 5.6 Hence, the critical point here is that the notice dated 22/06/2021 did not give the Department a fresh six-year period. It was issued during the TOLA window, and only the balance of the limitation period remaining unused on 30/06/2021 could be used by Revenue.

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5.7 Thus, on the facts of the case, the impugned notice u/s 148 of the Act, dated 28/07/2022, is barred by limitation under section 149 of the Act read with TOLA, and applying the decisions of the Hon'ble Apex Court in Ashish Agarwal and Rajeev Bansal (supra). In taking this view, we also respectfully follow the conclusion arrived at by the Mumbai Bench of ITAT in Bhushan Vasant Parelkar v. ITO (ITA No. 6/Mum/2026) for A.Y. 2014-15 under similar circumstances. Since the notice on the basis of which the reassessment proceedings were initiated & completed are held to be bad in law, the consequential assessment order u/s 147 r.w.s. 144B of the Act, dated 16/05/2023, also stands quashed.

6.

Before closing the matter, we may mention that in the course of hearing, it was noted that the assessee had not filed any reply to the notice dated 26/05/2022. Although this issue was not discussed at any length, we would like to quote, in this context, the relevant extract from the Bombay High Court's decision in Ravi Kumar Kailashnath vs. ACIT for A.Y. 2014-15 (in Writ Petition (L) No. 36517 of 2025, dated 19/11/2025, on similar issue where no reply is filed by the assessee in terms of decision of Ashish Agarwal (supra):-

"25. Before closing this matter, it would only be fair to deal with the contention of the Revenue that since no reply is filed to the notice dated 25th May, 2022 issued by Revenue, the concept of the “surviving period” does not apply as set out in Rajeev Bansal

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(supra). We find that this argument cannot be accepted for the simple reason that there is no such finding in the decision in the case of Rajeev Bansal (supra). In Rajeev Bansal, the Hon'ble Supreme Court has categorically held that the period from the date of the deemed notice under Section 148A(b) to a period of 4 weeks to provide material to the Assessee as directed in Ashish Agarwal, and a further period of 2 weeks to be provided to the Assessee to reply to the said material, were to be excluded. It is therefore difficult to accept that if no reply was filed by the Assessee, then there would be no time limit applicable at all. This is not what has been laid down by the Hon'ble Supreme Court in the case of Rajeev Bansal. Where no reply is filed to answer the material and/or information supplied by the Assessing Officer, then as per the decision of the Hon'ble Supreme Court in Rajeev Bansal the surviving period would start running from the last day to file the said reply, namely, from 8th June 2022. We, therefore, find this argument canvassed on behalf of the Revenue to be without merit." 7. With this, all the grounds of appeal raised by the assessee stand disposed of. 8. In the result, the assessee's appeal is allowed. Order pronounced in the open Court on 09/09/2026

Sd/- Sd/- (BEENA PILLAI) (RATNA DASGPUTA) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 09/09/2026 Z.U., P.S.

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Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file.

BY ORDER,

//True Copy// (Assistant Registrar) ITAT, Mumbai

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