RAJESHBHAI PAULBHAI CHAUHAN,ANAND vs. THE ITO, WARD-1, ANAND

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ITA 571/AHD/2026Status: DisposedITAT Ahmedabad29 July 2026AY 2016-1711 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 issued under Section 148 of the Income Tax Act was invalid as it was issued beyond the surviving period of limitation, as per the Supreme Court's decision in Union of India v. Rajeev Bansal. Consequently, the reassessment order was quashed.

What were the facts?

The assessee's case was reopened for AY 2016-17 based on information regarding property purchase and unsecured loans. The Assessing Officer made additions, and the CIT(A) dismissed the assessee's appeal.

What were the issues?

The primary issue was the validity of the reassessment proceedings due to the notice under Section 148 being issued beyond the prescribed limitation period. The secondary issues involved additions made under various sections of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 148A,Section 56(2)(vii),Section 68,Section 69A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH, AHMEDABAD

Before: SHRI SANJAY GARG & SHRI NARENDRA PRASAD SINHA

For Appellant: Shri Mehul Thakkar, AR
For Respondent: Shri Arvind Kumar Namdeo, SR-DR
Hearing: 22.07.2026Pronounced: 29.07.2026

PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:

This appeal is filed by the Assessee against the order of National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “CIT(A)”] dated 17.12.2025 for the Assessment Year (A.Y.) 2016-17 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. 2016-17 on 31.03.2018 at total income of Rs. 14,91,550/-. The case of the assessee was reopened on the basis of information received by the AO that the assessee along with two other

ITA No. 571/Ahd/2026 Rajeshbhai Paulbhai Chauhan Vs ITO, AY- 2016-17 2

persons had purchased an immovable property during the year for a consideration of Rs. 74,00,000/-, the stamp duty value of which was Rs. 1,01,16,326/-. The proportionate difference between the purchase consideration and stamp duty value, Rs. 8,14,900/- was considered as income of the assessee u/s. 56(2)(vii)(b) of the Act. Further, the AO had also made additions in respect of unexplained unsecured loan of Rs. 30,00,000/- and unexplained investment of Rs. 17,50,000/-. The assessment was completed u/s. 147 r.w.s. 144B of the Act on 24.05.2023 at total income of Rs. 70,56,450/-.

3.

Aggrieved with the order of the 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 appeal of the assessee was dismissed. Th

4.

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

1.

The Ld. CIT(A) has erred in law in not disposing the following grounds of appeal which go to the root of the re-opening of assessment under section 147 of the Act. (a) The Ld. A.O. has erred in law and on facts in assuming jurisdiction under section 147 of the Act as he clearly lacks jurisdiction in view of the express provisions of section 149 of the Act. (b) The Ld. A.O. has erred in law in not following the directions of Hon ble Supreme Court in case of Ashish Agrawal and others as well as the instructions of CBDT, New Delhi while issuing notice under section 148A(b) of the Act. The notice under section 148A(b) of the Act remain silent as to the nature of income escaped and the quantum of escapement. Therefore, the order passed under section 148A(d) of the Act assuming jurisdiction under section 147 of the Act is bad in law. (c) The Ld. A.O. has also erred in issuing notice under section 148A(b) of the Act without establishing the fact that the information has been flagged in the case of appellant in view of the requirement under explanation I to Section 148 of

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the Act which gives the meaning of the "Information which suggests that the income chargeable to tax escaped assessment.". Therefore, the notice issued under section 148A(b) is not in accordance with the scheme of re-assessment as amended by Finance Act, 2021. Thus, the order passed under section 148A(d) of the Act assuming jurisdiction under section 147 of the Act, based on illegal notice under section 148A(b) of the Act, is bad in law. 2. The Ld. CIT(A) A.O. has erred in law and on facts in confirming the addition of Rs. 8,14,900/- in the hands of the appellant u/s 56(2)(vii) (b) of the IT Act, 1961 for A.Y. 2016-17 without considering the totality of the facts of the case. 3. The Ld. CIT(A) has also erred in law and on facts in not referring the matter to the Departmental valuation officer to ascertain the fair market value of the property despite the fact that the appellant raised objection against fair market value since inception of the proceedings. .4. The Ld. CIT(A) has erred in law and on facts in confirming the addition of Rs. 30,00,000/- u/s 68 of the IT Act, 1961 even though the source of the such amount was satisfactorily explained to the A.O. 5. The Ld. CIT(A) erred in law and on facts in confirming the addition of Rs. 17,50,000/- u/s 69A of the IT Act, 1961 even though it was explained to A.O. that the share of the appellant is Rs. 5,84,000/- only and the source of which was duly explained. 6. The appellant craves leave to add, alter or delete any ground ither before or in the course of hearing of the appeal.

4.1 The assessee has also raised an additional ground of appeal as under:

On the facts and in the circumstances of the case and in law, the notice issued under section 148 dated 29.07.2022 is invalid and without jurisdiction as the same has been issued beyond the surviving period of limitation mandated by the Hon’ble Supreme Court in the case of Rajeev Bansal (2024) 469 ITR 46 (SC). Consequently, the reassessment order passed under section 147 deserves to be quashed as being bad in law.

5.

Shri Mehul Thakkar, the Ld. AR of the assessee requested to first adjudicate the additional ground, which is a legal ground and goes to the root of the matter. He submitted that the notice u/s. 148 of the Act, issued by the AO was barred by limitation. He explained that the initial notice u/s 148 of the Act was issued on 15.06.2021, which was within the extended

ITA No. 571/Ahd/2026 Rajeshbhai Paulbhai Chauhan Vs ITO, AY- 2016-17 4 time limit as per Taxation and Other Laws Ordnance, 2020 (TOLA). 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) (469 ITR 46) (SC), the order u/s 148A(d) of the Act was required to be passed and fresh 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 15.06.2021, the Assessing Officer had 15 days of surviving time-limit under the Income Tax Act read with TOLA. Therefore, new notice u/s 148 of the Act was required to be issued within 15 day, from the date of response of the assessee. The Ld. AR submitted that as the fresh 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. He also placed reliance on the following decisions in this regard:

1.

Narendra Maganlal Purohit & others (SCA No. 17433/2022 dated 14.07.2025) Gujarat High Court. 2. Uday Dilipbhai Shah (SCA No. 24695/2022) Gujarat High Court. 3. Deepak Steel & Power Ltd. (174 taxmann.com 144 (SC) 4. Waves Tradelink Pvt. Ltd. (ITA No. 1228-30/Ahd/2025)(Ahmedabad ITAT)

6.

Per contra, Sh. Arvind Kumar Namdeo, Ld. Sr. DR relied upon the order of the lower authorities. He submitted that as per provision of section 148A(d) of the Act, the AO was required to pass the order under that section within a period of one month from the end of the month in which the reply of the assessee to the show cause notice u/s 148A(b) of the Act, was received. The Ld. Sr. DR explained that the order u/s 148A(d) passed in this case was within the time limit as prescribed under the Act and the

ITA No. 571/Ahd/2026 Rajeshbhai Paulbhai Chauhan Vs ITO, AY- 2016-17 5 notice u/s 148 of the Act was also issued within the time period. Therefore, there was no infirmity with the notice of the AO.

7.

We have carefully considered the submissions of the assessee. Before we decide the issue of limitation, it will be relevant to tabulate the actions taken by the Assessing Officer in the present case: -

Date Action Taken 15.06.2021 Original Notice u/s 148 of the Act issued by the Assessing Officer Surviving period (between 15.06.2021 to 30.06.2021) 15 days 25.05.2022 Notice u/s 148A(b) of the Act issued by the Assessing Officer, pursuant to the decision in the case of Ashish Agarwal. 13.06.2022 Reply filed by the assessee to the notice u/s 148A(b) of the Act. 28.06.2022 Time barring date as per SC decision in Rajeev Bansal (within 15 days of filing reply) 29.07.2022 Order u/s 148A(d) of the Act passed by the Assessing Officer 29.07.2022 Notice u/s 148 of the Act issued by the Assessing Officer

8.

The crux of the issue to be decided in this case is whether the order u/s 148A(d) and the notice u/s 148 of the Act, both dated 29.07.2022, were within time. The contention of the assessee is that the Assessing Officer was required to pass order u/s 148A(d) of the Act and also to issue notice u/s 148 of the Act within the surviving period of 15 days of filing its reply on 13.06.2022, which was till 28.06.2022 only. Since the order u/s 148A(d) of the Act and notice u/s 148 was issued beyond the period of 15 days from its reply on 13.06.2022, the same was barred by limitation. On the other hand, the Revenue’s stand is that the provision of Section 148A(d)

ITA No. 571/Ahd/2026 Rajeshbhai Paulbhai Chauhan Vs ITO, AY- 2016-17 6 of the Act stipulates that the Assessing Officer can pass the order within one month from the end of the month in which the reply of the assessee was received by the Assessing Officer. According to the Ld. Sr. DR, since the reply of the assessee was received on 13.06.2022, the Assessing Officer had time available till 31.07.2022 to pass the order under Section 148A(d) of the Act, along with issue of notice under Section 148 of the Act. Thus, the notice issued in the present case on 29.07.2022 was within the limitation period.

9.

We have carefully considered the rival submissions. 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 Hon’ble Court is reproduced below for a clear understanding: 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.

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

ITA No. 571/Ahd/2026 Rajeshbhai Paulbhai Chauhan Vs ITO, AY- 2016-17 7 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.]

10.

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

ITA No. 571/Ahd/2026 Rajeshbhai Paulbhai Chauhan Vs ITO, AY- 2016-17 8 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 15.06.2021 which was treated as deemed notice u/s 148A(b) of the Act. Since this notice was issued on 15.06.2021, 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 fifteen 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 15 days from the date of receipt of reply of the assessee. As the assessee had filed its reply on 13.06.2022, the time limit available to the Assessing Officer to issue the notice u/s 148 of the Act was till 28.06.2022 only. As the notice in the present case was issued on 31.07.2022, 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 provision of section 148A(d) of the Act was overridden to that effect.

11.

The Hon’ble Supreme Court in the case of Rajeev Bansal (supra) had examined the scope of Article 142 and observed as under: 82. Article 142 empowers this Court to pass such decree or make such order as is necessary for doing complete justice in any cause or matter pending before it. The discretionary jurisdiction exercised by this Court under Article 142 is of the widest amplitude. The Constitution has left it to the judicial discretion of this Court to decide the scope and limits of its jurisdiction to render substantial justice in matters coming before it. The expression “any cause or matter” mentioned under Article 142 includes every kind of proceeding pending before this Court. Article 142 allows this Court to give precedence to equity over law, provided the exercise of the discretion is consistent with constitutional provisions and after due consideration of substantive provisions in statutory law.

ITA No. 571/Ahd/2026 Rajeshbhai Paulbhai Chauhan Vs ITO, AY- 2016-17 9 The Hon’ble Court further held that the exercise of the jurisdiction under Article 142 is meant to supplement the existing legal framework to do complete justice between the parties. Further that in a given circumstance, the Apex Court can supplement a legal framework to craft a just outcome when strict adherence to a source of law and exclusive rule-based theories creates inequitable results. Therefore, the law as declared by the Supreme Court in the case of Rajeev Bansal (supra) overrides the provisions of section 148A(d) of the Act and the Revenue had surviving time period only to complete the remaining proceedings u/s 148A(d) of the Act and to issue notice u/s 148 of the Act as per new provisions.

12.

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

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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 SCA NO Due date of Date of reply:- Date of order Last date for issuance of notice filing reply under section under section 148 as per 148A(d) and surviving time:- notice under section 148:- 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 [2024] 167 taxmann.com 70/301 Taxman 238/469 ITR 46 (SC), such notices were invalid.

ITA No. 571/Ahd/2026 Rajeshbhai Paulbhai Chauhan Vs ITO, AY- 2016-17 11

13.

In view of the facts as discussed earlier and the judgement of the jurisdictional High Court, the impugned notice dated 29.07.2022 issued under Section 148 of the Act, is held to be invalid notice as the same was issued beyond the surviving period, as per the decision of Hon’ble Apex Court in the case of Rajiv Bansal (supra). Accordingly, the ground taken by the assessee is allowed.

14.

Since the assessee succeeds on the legal ground, we do not deem it necessary to adjudicate the grounds taken on merits.

15.

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

Order pronounced in the Court on 29/07/2026 at Ahmedabad.

Sd/- Sd/- (SANJAY GARG) (NARENDRA PRASAD SINHA) Judicial Member Accountant Member Dated – 29th July, 2026 Neelesh, Sr. PS (True Copy) आदेश क� आदेश क� �ितिलिप �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order forwarded to : आदेश आदेश क� क� �ितिलिप �ितिलिप अ�ेिषत 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/सहायक उप सहायक पंजीकार उप उप सहायक 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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