BHIKHUBHAI ZINABHAI PATEL,SURAT vs. ITO, WARD 2(3)(1), SURAT

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ITA 616/SRT/2025Status: DisposedITAT Surat23 July 2026AY 2014-1513 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the notice issued under Section 148 was time-barred as it was issued beyond the 'surviving time' as per Supreme Court directions in the Rajeev Bansal case. Consequently, the assessment order and the penalty order were quashed.

What were the facts?

The assessee did not file an income tax return for AY 2014-15. The Assessing Officer (AO) reopened the assessment under Section 147 based on information from a survey action. A notice under Section 148 was issued, leading to an assessment order and a subsequent penalty order.

What were the issues?

The primary issue was the validity of the notice issued under Section 148 for reopening the assessment, specifically whether it was issued within the prescribed time limits following Supreme Court rulings on reassessment procedures.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 148A,Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, SURAT BENCH, SURAT

Before: SHRI B.M. BIYANI & SHRI PARESH M. JOSHI&

For Appellant: Shri Sapnesh Sheth, Advocate
For Respondent: Shri Om Prakash Jha, Sr. DR
Hearing: 21.07.2026Pronounced: 23.07.2026

आदेश / O R D E R Per B.M. Biyani, AM:

The captioned two (2) appeals filed by assessee involve connected/inter- related issues. Therefore, they were heard together and are being disposed of by this consolidated order for the sake of convenience, brevity and clarity.

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ITA Nos.616 & 617/SRT/2025 Bhikhubhai Zinabhai Patel ITA 616/SRT/2025 – Quantum-Appeal:

2.

This is a Quantum-Appeal directed against the order of first appeal dated 04.03.2025 passed by learned Commissioner of Income-tax (Appeals)-NFAC, Delhi [“Ld. CIT(A)”], which in turn arises out of the assessment-order dated 15.05.2023 passed by learned ITO, Ward-2(3)(1), Surat [“Ld. AO”] u/s 144 r.w.s. 147 of the Income-tax Act, 1961 [“Act”] for assessment-year [“AY”] 2014-15.

3.

The background facts leading to this appeal are as under:

(i) The assessee-individual did not file any return of income of AY 2014- 15.

(ii) Subsequently, on the basis of information in his possession emanating from a survey action undertaken by tax authorities in the case of White Wing, Althan, Surat indicating that the assessee (alongwith other co-owners) had purchased an immovable property during the relevant year, the AO issued initial notice dated 21.06.2021 u/s 148 to re-open assessee’s case u/s 147 on the strength of the time-limit extended by The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 [“TOLA”]. Since a new set of provisions for re-assessment u/s 147 was introduced in Income-tax Act w.e.f. 01.04.2021, there arose controversies with regard to the issuance of notices u/s 148 after 01.04.2021 and the litigation travelled to Hon’ble Supreme Court in Ashish Agarwal (2022 SCC

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ITA Nos.616 & 617/SRT/2025 Bhikhubhai Zinabhai Patel Online SC 543) in which the Hon’ble Supreme Court gave certain directions. Accordingly, after considering the decision of Ashish Agarwal, the Ld. AO issued a fresh notice dated 30.06.2022 u/s 148 to assessee for making assessment u/s 147 [after completing the procedure of section 148A(d)], which culminated into passing of an order of assessment dated 15.05.2023. By this order of assessment, the Ld. AO assessed assessee’s total income at Rs. 82,95,157/-.

(iii) Aggrieved by aforesaid order of assessment, the assessee carried matter in first-appeal. However, the Ld. CIT(A) did not grant any relief.

(iv) Now, the assessee has come in next appeal before us.

4.

The assessee has raised following effective grounds:

“1. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax (Appeals), NFAC has erred in confirming the action of the assessing officer in reopening assessment by issuing notice u/s 148 of the I.T. Act, 1961. 2. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax (Appeals), NFAC has erred in confirming the action of assessing officer in passing ex-parte order u/s 144 of the I.T. Act, 1961. 3. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax (Appeals), NFAC has erred in confirming the action of the assessing officer in making addition of Rs.82,95,157/- on account of undisclosed long term capital gains. 4. It is therefore prayed that above addition made by assessing officer and confirmed by Commissioner of Income-tax (Appeals) may please be deleted.” 5. We have heard learned Representatives of both sides and perused the case record.

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ITA Nos.616 & 617/SRT/2025 Bhikhubhai Zinabhai Patel 6. By means of Ground No. 1, the assessee is challenging the legality of assessment framed by Ld. AO u/s 147. The assessee is claiming that the notice issued by AO u/s 148 to frame assessment u/s 147 was time-barred.

7.

Ld. AR for assessee submitted that the Ld. AO issued initial notice u/s 148 on 21.06.2021, which was within the extended time limit as per TOLA. That, as per decision of Hon’ble Supreme Court in Ashish Agarwal (supra), all notices issued u/s 148 during the period from 01.04.2021 to 30.06.2021, were saved and deemed to be the notices in terms of section 148A(b) i.e. under the new/substituted regime of assessment u/s 147 w.e.f. 01.04.2021 through Finance Act, 2021. That, the Hon’ble Supreme Court, also issued direction that the assessing officer shall supply the information/ material available with Revenue for framing assessment u/s 147 to assessee within 30 days from date of Judgement of Hon’ble Supreme Court (i.e. from 04.05.2022) and grant two weeks’ time to assessee to file reply. Only thereafter, the assessing officer shall pass order u/s 148A(d) and after completing such procedure of section 148A, may issue a fresh notice u/s 148. It was further held that all defences which may be available to the assesses including those available u/s 149 and all rights and contentions which may be available to the concerned assessees and Revenue under the Finance Act, 2021 and in law shall continue to be available.

8.

Subsequently, in Union of India Vs. Rajeev Bansal (2024) 469 ITR 46 (SC) dated 03.10.2024, the Hon’ble Supreme Court further held that

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ITA Nos.616 & 617/SRT/2025 Bhikhubhai Zinabhai Patel the order u/s 148A(d) was required to be passed as well as the new notice u/s 148 was required to be issued within the “surviving time” available as per outer time-limit available under Income-Tax Act, 1961 read with TOLA (i.e. available upto 30.06.2021). Ld. AR explained that since the original notice u/s 148 of the Act was issued on 21.06.2021, the Ld. AO had only 9 days “surviving time” available upto 30.06.2021. Therefore, new notice u/s 148 of the Act was required to be issued within the survival period of 9 days from the last date on which the assessee was required to file reply to the notice u/s 148A(b) issued by AO. Since in present case, the AO issued notice u/s 148A(b) to assessee on 08.05.2022, the assessee was having two weeks’ time to file reply uptill 23.06.2022. Thereafter, the Ld. AO was having time period to issue notice u/s 148 uptill 01.06.2022 [23.05.2022 + 9 days]. That means, the AO could new/subsequent notice u/s 148 by 01.06.2022 only. However, the Ld. AO has issued new/subsequent notice u/s 148 dated 30.06.2022 which is barred by limitation and hence invalid. Consequently, the assessment-order passed by Ld. AO is also invalid.

9.

With these submissions, Ld. AR requested to quash the assessment framed by AO u/s 147.

10.

Per contra, Ld. DR for revenue supported the action of Ld. AO and requested to uphold the AO’s order. Alternatively, he submitted that these matters may be remanded to Ld. AO for examination/verification of assessee’s claim.

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ITA Nos.616 & 617/SRT/2025 Bhikhubhai Zinabhai Patel 11. In rejoinder, Ld. AR submitted that all notices issued by Ld. AO have been filed by him in Paper-Book. Further, he has also compiled the chart of chronology of events taking into account those notices as well as the law settled by Hon’ble Supreme Court in Ashish Agarwal (supra) and Rajeev Bansal (supra). Hence, there is no purpose in remanding this matter to AO. He requested the bench to decide this matter and quash the assessment- order passed by AO.

12.

We have carefully considered the rival submissions of both sides and perused the documents held in case file including the written-submissions filed by Ld. AR for assessee.

13.

For reference, we re-produce the Chart giving chronology of events filed by Ld. AR:

“Bhikhubhai Zinabhai Patel Α. Υ. 2014-15 Calculation of time limit for issue of notice u/s 148 of I.T Act 1961 as per example given by Supreme Court in case of Rajeev Bansal:- SC-eg. Assessee's case (para 112) Because of the legal fiction, the 01.05.2021 21.06.2021 01. deemed show cause notice will also (page No. 2- second come into effect from (notice issued para of assessment u/s 148 under old regime deemed to order) be SCN under new regime) 02. After accounting for the exclusions, 61 days 9 days the Assessing Officer will have surviving time calculated from the date of issue of notice u/s 148 till 30.06.2021

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ITA Nos.616 & 617/SRT/2025 Bhikhubhai Zinabhai Patel 03. Notice u/s 148A(b) issued by 01.06.2022 08.05.2022 Assessing Officer on (page no. 2- second para of assessment order) 04. Reply filed by assessee on 18.06.2022 none 05. Time starts ticking for the Assessing 18.06.2022 23.05.2022 Officer after receiving the response of the assessee which is on (08.05.2022 + 2 weeks' time allowed by A.O. to file reply) The assessing Officer will have to 18.08.2022 01.06.2022 06. issue notice u/s. 148 of IT Act 1961 on or before surviving time limit available as per Sr. No. 2 above after receipt of reply from assessee Notice u/s. 148 of the Act is issued on 30.06.2022 07. (page No. 2 -second para of assessment order) Issue of notice u/s 148 of the Act is 29 days 08. delayed by Status of Notice U/s 148 of the act Time barred 09. Status of Order U/s 148A(d) of the act Time barred 10. 14. We find that the identical controversy involving similar facts has already been decided by Co-ordinate Bench of ITAT, Surat in ITA 479 & 480/SRT/2025, Kanchan Devi Agarwal Vs. ITO, order dated 23.12.2025 wherein the Co-ordinate Bench has accepted assessee’s claim. We re-produce below the relevant portion of order of ITAT for an immediate reference:

“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 three days (which was extended to seven days) of filing its reply on 06.06.2022. Thus, the Assessing Officer had time limit till 14.06.2022 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 25.07.2022 i.e. beyond the period of seven days from its reply on 06.06.2022 and thus the notice was barred by limitation.

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ITA Nos.616 & 617/SRT/2025 Bhikhubhai Zinabhai Patel 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 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 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. 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

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ITA Nos.616 & 617/SRT/2025 Bhikhubhai Zinabhai Patel 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 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 28.06.2021 which was treated as deemed notice u/s 148A(b) of the Act. Since this notice was issued on 28.06.2021, 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 three days only, which was extended to seven days. 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 seven days from the date of receipt of reply of the assessee. As the assessee had filed its reply on 06.06.2022, the time limit available to the Assessing Officer to issue the notice u/s 148 of the Act was till 08.07.2022 only. As the notice in the present case was issued on 25.07.2022, the same is found to be beyond the limitation period. 14. 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

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ITA Nos.616 & 617/SRT/2025 Bhikhubhai Zinabhai Patel 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 No of days of Date of under section surviving time providing 148 under available information TOLA 30.06.2021 under section 148A(b)

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 I 23.05.2022

996/2023 2017-2018 2017-2018 I 24.05.2022

SCA NO Due date of Due date of Date of order Last date for filing reply reply:- under section issuance of 148A(d) and notice under notice under section 148 as section 148:- per surviving time:-

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ITA Nos.616 & 617/SRT/2025 Bhikhubhai Zinabhai Patel

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 19.07.2022 18.06.2022 11.06.2022 10.06.2022

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 25.07.2022 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 25.04.2023 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, other grounds on merits taken by the assessee has become infructuous. Accordingly, the appeal of the assessee is allowed.” 15. The analysis given and view taken by Co-ordinate Bench is very much applicable to present matter before us. The Revenue is not able to distinguish the same by placing any material. Respectfully following the view taken by Co-ordinate Bench and in the light of pre-existing decisions of

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ITA Nos.616 & 617/SRT/2025 Bhikhubhai Zinabhai Patel Hon’ble Supreme Court and Hon’ble Jurisdictional High Court of Gujrat referred therein, we are inclined to hold that the impugned notice dated 30.06.2022 issued by Ld. AO u/s 148 is time-barred and therefore invalid. Consequently, the impugned assessment-order passed by Ld. AO u/s 147 does not survive and the same is hereby quashed. The legal ground raised by assessee is thus allowed.

16.

As we have quashed the order of assessment itself, there is no necessity of adjudicating other grounds dealing with the merit of the addition made by AO; the same are kept open undecided.

17.

Accordingly, this Quantum-Appeal is allowed.

ITA 617/SRT/2025 – Penalty-Appeal:

18.

This is a Penalty-Appeal directed against the order of first appeal dated 24.04.2025 passed by Ld. CIT(A), which in turn arises out of the penalty-order dated 06.11.2023 passed by Ld. AO u/s 271(1)(c) of the Act for AY 2014-15.

19.

This appeal challenges the penalty of Rs. 16,67,702/- imposed by Ld. AO qua the addition of Rs. 82,95,157/- assessed by Ld. AO in aforesaid assessment-order dated 15.05.2023. Since, while adjudicating the connected Quantum-Appeal in earlier part of this order, we have already quashed the assessment-order, the foundation for levy of penalty no longer survives. Therefore, the penalty imposed u/s 271(1)(c) by Ld. AO is deleted.

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ITA Nos.616 & 617/SRT/2025 Bhikhubhai Zinabhai Patel 20. Accordingly, this Penalty-Appeal is also allowed.

21.

In result, both of the appeals are allowed.

Order pronounced in open court on 23/07/2026

Sd/- Sd/- (PARESH M. JOSHI) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER िदनांक /Dated : 23.07.2026 * Kishore, Sr. P.S. Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT- concerned 4. DR, ITAT, Surat 5. Guard File

By Order,

Sr. Private Secretary, I.T.A.T., Surat

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