JAGDISH RATANSHI DADHANIYA,MORBI vs. ITO, WARD-1, MORBI, RAJKOT

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ITA 545/RJT/2026Status: DisposedITAT Rajkot06 August 2026AY 2017-184 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the reassessment proceedings were void ab initio because the fresh notice under Section 148 of the Act was issued beyond the prescribed period of limitation, as per the Supreme Court's ruling in Union of India v. Ashish Agarwal.

What were the facts?

The Assessing Officer reopened the assessment of the assessee based on information that an investment of Rs. 84,54,000/- as partner's capital contribution was not commensurate with the disclosed income. The assessee failed to provide a satisfactory explanation for the source of this investment.

What were the issues?

The primary issue was whether the reassessment proceedings were valid given that the notice under Section 148 was issued beyond the limitation period prescribed after the initial notice was treated as a show cause notice under Section 148A.

Which sections of the Income-tax Act were involved?

Section 147,Section 144,Section 148,Section 148A,Section 69

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Rajkot Bench, Rajkot

Before: Dr. BRR Kumar & Shri Sonjoy Sarma

For Appellant: Shri Mehul Ranpura, Ld. AR
For Respondent: Shri Gopi Nath Chaubey, Ld. Sr. DR
Hearing: 28/07/2026Pronounced: 06/08/2026

आयकर अपीलीय अिधकरण, राजकोट �यायपीठ, राजकोट। In The Income Tax Appellate Tribunal, Rajkot Bench, Rajkot

Before Dr. BRR Kumar, Vice President And Shri Sonjoy Sarma, Judicial Member

आयकर अपील सं./ITA No. 545/RJT/2026 [ �नधा�रण वष�/Assessment Year: 2017-18 ] Shri Jagdish Ratanshi Dadhaniya The Income-tax Officer, Ward-1, At. Nashitpar, Dist. Morbi- Morbi Vs. 363650 Aayakar Bhavan, Race-Course Gujarat Ring Road, Rajkot-360001 Gujarat �थायीलेखासं./जीआइआरसं./PAN/GIR No.: AUPPD8791C (अपीलाथ�/Appellant) (��यथ�/Respondent) Appellant by : Shri Mehul Ranpura, Ld. AR Respondent by : Shri Gopi Nath Chaubey, Ld. Sr. DR

Date of Hearing : 28/07/2026 Date of Pronouncement : 06/08/2026

:: ORDER :: Per, Shri Sonjoy Sarma, JM: Captioned appeal filed by the assessee, pertaining to Assessment Year (AY) 2017-18, is directed against the order under section 250 of the Income-tax Act, 1961 [hereinafter referred to as ‘the Act’] passed by the National Faceless Appeal Centre [hereinafter referred to as ‘NFAC’], dated 09.02.2026, which in turn arises out of an order passed by assessing officer u/s. 147 r.w.s. 144 and 144B of the Act, dated 20.04.2023.

ITA No. 545/RJT/2026 Jagdish R. Dadhaniya 02. Brief facts of the case are that the assessee is an individual who filed the return of income for the assessment year under consideration declaring a total income of Rs.3,49,270/-. Information was received by the Assessing Officer that the assessee had made an investment of Rs.84,54,000/- as partner’s capital contribution in the partnership firm, M/s Bicero Tiles LLP. According to the Assessing Officer, the said investment was not commensurate with the income disclosed in the return of income. Accordingly, the assessment was reopened under section 147 of the Income-tax Act after obtaining the requisite approval, and notice under section 148 was issued on 28.06.2022. Thereafter, notice under section 142(1) of the Act was issued calling upon the assessee to explain the source of the investment. However, according to the Assessing Officer, no satisfactory explanation was furnished regarding the source of investment of Rs.84,54,000/-. Consequently, the said amount was treated as unexplained investment under section 69 of the Act, and the assessment was completed under section 147 read with section 144 of the Act on 20.04.2023, determining the total income at Rs.88,03,270/-.

3.

Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. Commissioner of Income-tax (Appeals). The Ld. CIT(A), however, dismissed the appeal by declining to condone the delay in filing the appeal, without examining the issues on merits.

4.

The assessee is now in appeal before the Tribunal. At the time of hearing, the Ld. AR submitted that the order of the Ld. CIT(A) deserves to be set aside. It was contended that the reopening proceedings themselves are invalid in law in view of the judgment of the Hon’ble Supreme Court in the case of Union of India v. Ashish Agarwal. It was submitted that the original notice under section 148 of the Act was issued on 11.06.2021, which, by virtue of the directions of the Hon’ble Supreme Court, was to be treated as a deemed show cause notice issued under section

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ITA No. 545/RJT/2026 Jagdish R. Dadhaniya 148A(b) of the Act. Pursuant thereto, the information contemplated under section 148A(b) of the Act was supplied to the assessee on 17.05.2022. The assessee submitted its reply on 01.06.2022. Thereafter, the Assessing Officer was required to pass an order under section 148A(d) of the Act and issue a fresh notice under section 148 of the Act within the period prescribed under the Act. According to the Ld. AR, the fresh notice u/s. 148 of the Act ought to have been issued on or before 21.06.2022; however, the same was issued only on 28.06.2022. Therefore, the notice issued under section 148 of the Act was barred by limitation, rendering the entire reassessment proceedings void ab initio.

5.

On the other hand, the Ld. DR supported the orders of the authorities below. However, he could not controvert the factual submissions made by the Ld. AR regarding the dates of issuance of notices and the consequential limitation.

6.

We have heard the rival submissions and perused the material available on record. We find that the original notice under section 148 of the Act was issued on 11.06.2021. In view of the judgment of the Hon’ble Supreme Court in the case of Union of India v. Ashish Agarwal [2022] 138 taxmann.com 64 (SC), the said notice was required to be treated as a show cause notice issued under section 148A(b) of the Act . Pursuant thereto, the information under section 148A(b) of the Act was supplied to the assessee on 17.05.2022, and the assessee submitted its reply on 01.06.2022. On these undisputed facts, the fresh notice under section 148 of the Act ought to have been issued within the prescribed period, i.e., on or before 21.06.2022. However, in the present case, the fresh notice under section 148 of the Act was issued only on 28.06.2022, which is admittedly beyond the prescribed period of limitation. Once the notice issued under section 148 of the Act is held to be barred by limitation, the very foundation of the reassessment proceedings fails. Consequently, the assessment framed under section 147 read with section 144 of the Act dated

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ITA No. 545/RJT/2026 Jagdish R. Dadhaniya 20.04.2023 is liable to be quashed as being void ab initio. As a necessary consequence, the addition of Rs.84,54,000/- made under section 69 of the Act cannot survive. Accordingly, we set aside the assessment order and allow the appeal of the assessee.

7.

In the result, the appeal of the assessee is allowed.

Order pronounced in the open court on this 6th day of July, 2026.

Sd/- Sd/- [ Dr. BRR Kumar] [ Shri Sonjoy Sarma ] Vice President Judicial Member राजकोट/Rajkot िदनांक/ Date: 06/08/2026 Copy of the order forwarded to : 1. The assessee 2. The Respondent 3. CIT 4. The CIT(A) 5. DR, ITAT, Rajkot 6. Guard File By order //True Copy// Sr. Private Secretary ITAT, Rajkot

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