INCOME TAX OFFICER, WARD-4(1)(1), AHMEDABAD, AHMEDABAD vs. SHREE VISHVAMURTE TRAD INVEST PRIVATE LIMITED, AHMEDABAD

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ITA 2527/AHD/2025Status: DisposedITAT Ahmedabad13 August 2026AY 2013-1411 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the notice issued under Section 148 of the Income Tax Act was invalid as it was issued beyond the surviving period, as per the Supreme Court's decision in Union of India vs. Rajeev Bansal. Consequently, the assessment order was quashed.

What were the facts?

The Revenue appealed against the deletion of an addition made by the Assessing Officer (AO) for AY 2013-14, which was based on information about accommodation entries. The assessee argued that the reopening proceedings under Section 147 were barred by limitation.

What were the issues?

Whether the notice issued under Section 148 for reopening the assessment was barred by limitation due to non-compliance with the 'surviving time' directions of the Supreme Court.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 148A,Section 69A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD

Before: SHRI SANJAY GARG & SHRI NARENDRA PRASAD SINHA

For Appellant: Shri Deepak R Shah, AR
For Respondent: Shri Arvind Kumar Namdeo, SR-DR
Hearing: 02.07.2026Pronounced: 13.08.2026

PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:

This appeal is filed by the Revenue against the order of National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “CIT(A)”] dated 23.10.2025 for the Assessment Year (A.Y.) 2013-14 in the proceeding u/s 147 r.w.s 144B of the Income Tax Act [hereinafter referred as “the Act”].

2.

The brief facts of the case are that the assessee had filed his return of income for A.Y. 2013-14 declaring total income of Rs. 90,615/-, which was processed u/s. 143(1)(a) of the Act. The case of the assessee was

ITA No. 2527/Ahd/2025 ITO Vs Shree Vishvamurte Trad Invest Pvt Ltd., AY- 2013-14 2

reopened on the basis of information received by the AO that it is a beneficiary of accommodation entry of Rs.1,30,25,055 by way of bogus long-term capital gain derived in trading of shares of penny stock companies. The assessment was completed u/s. 147 r.w.s. 144B of the Act on 26.05.2023 at total income of Rs. 1,31,15,670/- wherein an addition of Rs.1,30,25,055/- was made on account of accommodation entry taken by the assessee.

3.

Aggrieved with the order passed of the Assessing Officer (AO), the assessee had filed an appeal before the first appellate authority, which was decided by the Ld. CIT(A) vide the impugned order and the addition made by the AO was deleted.

4.

Now the Revenue is in second appeal before us. The following grounds have been taken in this appeal:

(a) The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 1,30,25,055/- made u/s 69A, without properly appreciating the material findings recorded by the Assessing Officer regarding the assessee's involvement in penny stock/accommodation entry transactions. (b) The Ld. CIT(A) has erred in ignoring the detailed investigation reports received through INSIGHT Portal and inputs of Investigation/DI&Cl wings, conclusively establishing that Pradeep Overseas Ltd., Stampede Capital Ltd. and Tilak Ventures Ltd. were penny stock scrips used for generating fictitious profits. (c) The Ld. CIT(A) has erred in holding that no transaction was carried out in Tilak Ventures Ltd., despite the specific information from Investigation Wing showing fictitious profits of Rs.85,90,298/- earned by the assessee in this scrip. (d) The Ld. CIT(A) has failed to appreciate that the assessee did not make full and true disclosure of the impugned transactions in the original return, leading to escapement of income clearly taxable u/s 69A. (e) The appellant craves leave to add, alter and or to amend all or any of ground before the final hearing of appeal.

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Application under Rule 27 filed by the Assessee

5.

The assessee has filed an application under Rule 27 of the Income Tax Act (Appellate Tribunals) Rules, 1963 on 08.06.2026. Shri Deepak R Shah, the Ld. AR explained that the assessee had raised a legal ground against reopening of the case u/s. 147 of the Act before the Ld. CIT(A), which was not adjudicated by him for the reason that the ground taken by the assessee on the merits of the addition was allowed. The Ld. AR submitted that the issue of jurisdiction goes to the root of the matter and, therefore, the Ld. CIT(A) should have adjudicated the grounds taken by the assessee on the reopening of the case. He submitted that the proceeding initiated by the AO u/s. 148 of the Act was barred by limitation. Since the legality of the notice issued u/s. 148 of the Act goes to the root of the matter of the jurisdiction, we deem it proper to first examine the issue raised by the assessee in the application under Rule 27 of Income Tax Act (Appellate Tribunals) Rules.

6.

Shri Deepak R Shah, the Ld. AR of the assessee submitted that the original notice u/s. 148 of the Act was issued on 07.06.2021, which was within the extended time limit as per Taxation and Other Laws Ordnance, 2020 (TOLA). As per the decision of Hon’ble Supreme Court in the case of Union of India vs. Ashish Agarwal (2023) (1 SSC 617), all the notices issued u/s 148 of the Act during the period from 01.04.2021 to 30.06.2021, were deemed to be notice issued u/s 148A(b) of the Act, as amended by the Finance Act, 2021. Further, directions were issued to supply the materials within 30 days and grant further 15 days’ time to the assessee to reply to such notice before passing the order u/s 148A(d) of the Act. The Ld. AR explained that in the present case, the assessee was supplied

ITA No. 2527/Ahd/2025 ITO Vs Shree Vishvamurte Trad Invest Pvt Ltd., AY- 2013-14 4 materials on 27.05.2022 in terms of Section 148A(b) of the Act to which the assessee had submitted reply on 23.06.2022. Thereafter, the order u/s 148A(d) of the Act was passed by the Assessing Officer on 29.08.2022. According to the assessee, this order u/s 148A(d) of the Act and the fresh notice u/s 148 of the Act issued on 29.08.2022, were barred by limitation.

7.

The Ld. AR explained that as per the decision of Hon’ble Supreme Court in the case of Union of India vs. Rajeev Bansal (2024) 167 taxmann.com 70 (SC), the order u/s 148A(d) of the Act was required to be passed and notice u/s 148 of the Act under the new regime was required to be issued within the time limit surviving under the Income Tax Act read with TOLA. He explained that since the original notice u/s 148 of the Act was issued on 07.06.2021, the Assessing Officer had only 23 days surviving limit under the Income Tax Act read with TOLA. Therefore, new notice u/s 148 of the Act was required to be issued within 23 days, from the date of response of the assessee to the notice u/s 148A(b) of the Act. The Ld. AR submitted that as the notice u/s 148 of the Act was issued in this case beyond the time limit surviving under the Income Tax Act read with TOLA, the same was barred by limitation.

8.

Per contra, Shri Arvind Kumar Namdeo, Ld. Sr. DR relied upon the orders of the lower authorities.

9.

We have carefully considered the rival submissions. It will be relevant to tabulate the chronology of the events in the present case, which is as under: -

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Event/Action taken by AO Date/Days

Original Notice issued u/s 148 issued on 07-06-2021 Last date to issue new notice u/s 148 as per TOLA extension 30-06-2021 Number of days available for issuance of new notice u/s 148 as per the 23 days judgment of the Hon’ble Supreme Court in UOI V. Rajeev Bansal Letter/notice providing information/material to the assessee as per the 27-05-2022 direction of the Hon’ble Supreme Court in UOI V. Ashish Agarwal – (2022) 444 ITR 1 (SC) Time provided to assessee to reply in the above letter/notice 20 days Last date to file reply for the assessee 17-06-2022 Date on which reply is filed by the assessee, if any 23-06-2022 Last date to issue new notice u/s 148 as per the judgment of the Hon’ble 16-07-2022 (23 Supreme Court in UOI V. Rajeev Bansal and Hon’ble Gujarat HC in days from 23- Dhanraj Kella 06-2022) Date of order u/s 148A(d) and new Notice issued u/s 148 of the Act 29-08-2022

10.

The contention of the assessee is that the Assessing Officer was required to pass order under Section 148A(d) of the Act and also issue notice under Section 148 of the Act within the surviving period of 23 days of filing its reply on 23.06.2022. Thus, the Assessing Officer had time limit till 16.07.2022 only to take these actions. However, the order under Section 148A(d) of the Act and the notice under Section 148 of the Act was issued on 29.08.2022 i.e. beyond the period of 23 days from its reply on 23.06.2022 and thus the notice was barred by limitation.

11.

The Hon’ble Supreme Court, in the case of Ashish Agarwal (supra), had directed that all the notices u/s 148 of the Act issued under the old provision shall be treated as show cause notice issued u/s 148A(b) of the Act of the new provisions. Further, the Hon’ble Court had directed the

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assessing officers to supply the assesses with the relevant material and information relied upon by the Revenue within thirty days from the date of the judgment. The effect of this direction was summarized by the Apex Court in the case of Rajeev Bansal [2024] 167 taxmann.com 70/301 Taxman 238/469 ITR 46 (SC) as under: 106. …..To summarize, the combined effect of the legal fiction and the directions issued by this Court in Ashish Agarwal (supra) is that the show cause notices that were deemed to have been issued during the period between 1 April 2021 and 30 June 2021 were stayed till the date of supply of the relevant information and material by the assessing officer to the assessee. After the supply of the relevant material and information to the assessee, time begins to run for the assesses to respond to the show cause notices. [Emphasis supplied.]

12.

The interplay of the directions in the case of Ashish Agrawal with TOLA was examined by the Hon’ble Supreme Court in the case of Rajeev Bansal (supra). The Hon’ble Court had held that only 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 such deemed notice, including issuance of notice u/s 148 of the new regime. The surviving or balance time limit was required to be calculated by computing the number of days between the date of issuance of deemed notice and 30th June, 2021. The reasoning and the relevant part of the judgement of the Court is as under: 110. The effect of the creation of the legal fiction in Ashish Agarwal (supra) was that it stopped the clock of limitation with effect from the date of issuance of Section 148 notices under the old regime [which is also the date of issuance of the deemed notices]. As discussed in the preceding segments of this judgment, the period from the date of the issuance of the deemed notices 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) has to be excluded from the computation of the period of limitation. Moreover, the period of two weeks granted to the assesses to reply to the show cause notices must also be excluded in terms of the third proviso to Section 149.

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111.

The clock started ticking for the Revenue only after it received the response of the assesses to the show causes notices. After the receipt of the reply, the assessing officer had to perform the following responsibilities: (i) consider the reply of the assessee under Section 149A(c); (ii) take a decision under Section 149A(d) based on the available material and the reply of the assessee; and (iii) issue a notice under Section 148 if it was a fit case for reassessment. Once the clock started ticking, the assessing officer was required to complete these procedures within the surviving time limit. The surviving time limit, as prescribed under the Income Tax Act read with TOLA, was available to the assessing officers to issue the reassessment notices under Section 148 of the new regime.

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.

113.

In Ashish Agarwal (supra), this Court allowed the assesses to avail all the defences, including the defence of expiry of the time 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. [Emphasis supplied.]

13.

The Hon’ble Supreme Court had thus categorically held that the assessing officers were required to issue the reassessment notice under Section 148 of the new regime within the time limit surviving under the

ITA No. 2527/Ahd/2025 ITO Vs Shree Vishvamurte Trad Invest Pvt Ltd., AY- 2013-14 8 Income Tax Act read with TOLA and that all notices issued beyond the surviving period were time barred and liable to be set aside. This time-line was also demonstrated in para 112 of the order with an illustration. In the present case, the original notice u/s 148 of the Act was issued on 07.06.2021 which was treated as deemed notice u/s 148A(b) of the Act. Since this notice was issued on 07.06.2021, the surviving time period available to the Assessing Officer to complete the further proceedings, including the issue of notice u/s 148 of the Act, was 23 days only. Accordingly, the Assessing Officer was required to pass the order a u/s 148A(d) of the Act and also to issue notice u/s 148 of the Act in this case within a period of 23 days from the date of receipt of reply of the assessee. From the order u/s 148A(d) passed by the AO, it is found that the assessee had filed reply on 23.06.2022, which is duly reproduced in the said order. No further time was sought by the assessee nor any further submission was made in this respect. As the assessee had filed its reply on 23.06.2022, the time limit available to the Assessing Officer to issue the notice u/s 148 of the Act was till 16.07.2022 only. As the notice in the present case was issued on 29.08.2022, the same is found to be beyond the limitation period. In view of the explicit direction of the Hon’ble Supreme Court to complete the remaining proceedings within the surviving or balance time period, the fresh notice issued in this case beyond the surviving period is found to be barred by limitation.

14.

It is found that identical issue was decided by the Hon’ble Gujarat High Court in the case of Dhanraj Govindram Kella [2025] 177

ITA No. 2527/Ahd/2025 ITO Vs Shree Vishvamurte Trad Invest Pvt Ltd., AY- 2013-14 9

taxmann.com 194 (Gujarat). The findings given by the Hon’ble Court on this issue are reproduced below: 65. The alternative contention of the petitioner as to whether notices would be valid notice or invalid notice considering 'surviving time' between the date of the issuance of notices under TOLA and 30th June, 2021 or not is required to be considered and for that each matter has to be considered separately on the basis of the facts of case considering the date of issuance of notices under section 148 under TOLA by the Revenue and thereafter date of supplying information to the assessee and date of passing of order under section 148A(d) and date of issuance of notice under section 148 of the Act so as to consider whether issuance of notice under section 148 of the Act is within 'surviving time' as per the direction of Hon'ble Apex Court in case of Rajeev Bansal (supra) or not. 66. So far as Assessment Years 2013-2014 and 2014-2015 are concerned, the period of three years from the end of the assessment year would be over prior to 20.03.2020 and the period of six years would be over between 20.03.2020 and 30.06.2021. Therefore, the notices issued under section 148 of the Act under old regime between 01.04.2021 and 30.06.2021 as per TOLA, will be a valid notice if the notice under section 148 of the Act under new regime is issued within the period of 'surviving time' as per the directions issued by Hon'ble Apex Court in case of Rajeev Bansal (supra). For the Assessment Years 2016-2017 and 2017-2018 are concerned, the notice issued under section 148 of the Act under old regime between 01.04.2021 and 30.06.2021 under TOLA would be considered to be issued within three years from the end of the relevant assessment year as three years would complete within the period of 20.03.2020 and 30.06.2021. 67. Therefore, in facts of these petitions, following data is required to be considered to find out 'surviving time' to decide as to whether the impugned notices under section 148 of the Act issued under the new regime as per the decision of Hon'ble Apex Court in case of Ashish Agarwal (supra) would be valid notice or not in view of the decision of the Hon'ble Apex Court in case of Rajeev Bansal (supra): SCA NO AY Date of notice under No of days of Date of providing section 148 under surviving time information under TOLA available till section 148A(b) 30.06.2021 6387/2023 2013-2014 17.06.2021 13 26.05.2022 5688/2023 2014-2015 09.06.2021 21 23.05.2022 22260/2022 2016-2017 30.06.2021 1 23.05.2022 996/2023 2017-2018 30.06.2021 1 24.05.2022 Due date of Date of reply:- Date of order Last date for issuance of notice SCA NO filing reply under section under section 148 as per 148A(d) and surviving time:- notice under section 148:-

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6387/2023 09.06.2022 04.06.2022 29.07.2022 22.06.2022 5688/2023 06.06.2022 - 27.07.2022 27.06.2022 22260/2022 07.06.2022 06.07.2022 30.07.2022 14.06.2022 996/2023 11.06.2022 10.06.2022 19.07.2022 18.06.2022 68. It is apparent from the above details that impugned notice under section 148 of the Act is issued beyond the period of 'surviving time' as per the direction of Hon'ble Apex Court in case of Rajeev Bansal (supra)and therefore, such notices would be invalid notices. 69. The impugned notices issued under section 148 of the Act are accordingly quashed and set aside being invalid having been issued beyond the 'surviving time'. Accordingly, impugned orders passed under section 148A(d) of the Act would also not survive and are accordingly, quashed and set aside. Subsequent proceedings, if any, undertaken by the respondent would not survive and are also quashed and set aside.

The Hon’ble Court held that since the notices under section 148 were issued beyond period of 'surviving time' as per direction of Supreme Court in Union of India v. Rajeev Bansal (supra), such notices were invalid.

15.

In view of the facts discussed above and the judgement of the Hon’ble Supreme Court as well as the jurisdictional High Court, the impugned notice dated 29.08.2022 issued u/s 148 of the Act is held to be invalid as the same was issued beyond the surviving period as per the decision of Hon’ble Supreme Court in the case of Rajiv Bansal (supra). Accordingly, the proceeding initiated u/s 148 of the Act is quashed being time-barred. As a consequence, the impugned assessment order dated 26.05.2023 does not survive and the same is quashed and set aside. The legal ground taken by the assessee is allowed.

16.

Since the legal ground taken by the assessee has been allowed, and the assessment order has been consequently quashed and set aside,

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the grounds taken by the Revenue have become infructuous. Accordingly, the appeal of the Revenue is dismissed.

17.

In the result, the appeal of the Revenue is dismissed.

Order pronounced in the Court on 13/08/2026 at Ahmedabad.

Sd/- Sd/- (SANJAY GARG) (NARENDRA PRASAD SINHA) Judicial Member Accountant Member Dated – 13th August, 2026 Neelesh, Sr. PS (True Copy) आदेश आदेश क� आदेश आदेश क� क� �ितिलिप क� �ितिलिप �ितिलिप अ�ेिषत �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order forwarded to : अ�ेिषत 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबंिधत आयकर आयु� / Concerned CIT 4. आयकर आयु�(अपील) / The CIT(A) 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण / DR, ITAT, 6. गाड� फाईल /Guard file. आदेशानुसार/BY ORDER, आदेशानुसार आदेशानुसार आदेशानुसार पंजीकार (Dy./Asstt.Registrar) उप उप/सहायक उप उप सहायक सहायक पंजीकार सहायक पंजीकार पंजीकार आयकर आयकर अपीलीय आयकर आयकर अपीलीय अपीलीय अिधकरण अपीलीय अिधकरण अिधकरण, अहमदाबाद अिधकरण अहमदाबाद अहमदाबाद / ITAT, Ahmedabad अहमदाबाद

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