PRANAV AJIT ZOTA,MUMBAI vs. COMMISSIONER OF INCOME TAX APPEALS, KAUTILYA BHAVAN

IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH MUMBAI BEFORE MS. KAVITHA RAJAGOPAL, JUDICIAL MEMBER & SHRI MAKARAND VASANT MAHADEOKAR, ACCOUNTANT MEMBER ITA No. 245/Mum/2026 (Assessment Year: 2013-14) Pranav Ajit Zota ITO Ward 34(3)(2), 302, Shivam B, Irla Kautilya Bhavan, Railway Colony, Irla Vs. BKC, Bandra East, Market, Vile Parle West, Mumbai-400 051 Mumbai-400 056. PAN/GIR No. AAGPZ4047C (Applicant) (Respondent) Assessee by Shri Himanshu Gandhi, Ld. AR Revenue by Shri Virabhadra Mahajan, Ld. DR Date of Hearing 18.05.2026 Date of Pronouncement 20.05.2026 आदेश / ORDER PER MAKARAND VASANT MAHADEOKAR, AM: The present appeal has been preferred by the assessee against the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter referred to as “the CIT(A)”] under section 250 of the Income Tax Act, 1961 dated 20.11.2025 for Assessment Year 2013-14 arising out of the assessment order passed by the Assessing Officer

2 ITA No. 245/Mum/2026 Pranav Ajit Zota under section 147 r.w.s. 143(3) r.w.s. 144B of the Income Tax Act, 1961[hereinafter referred to as "the Act"] dated 12.05.2023. Facts of the Case 2. Briefly stated, the assessee had not filed return of income for A.Y. 2013-14. Based on information available with the department, the Assessing Officer observed that during the relevant financial year there were cumulative credit and debit transactions aggregating to Rs. 90,47,812/- in the assessee’s bank account maintained with ICICI Bank Ltd. The Assessing Officer further observed that there were substantial inter-family transfers and transactions involving M/s. Unimex Pvt. Ltd./M/s. Unimex in which the assessee or his family members were interested. Initially, notice under section 148 of the Act was issued on 25.06.2021. Subsequently, pursuant to the judgment of the Hon’ble Supreme Court in the case of Union of India vs. Ashish Agarwal dated 04.05.2022, the earlier notice issued under the erstwhile provisions was treated as deemed show- cause notice under section 148A(b) of the Act. Thereafter, the Assessing Officer provided information and material relied upon to the assessee and after considering the reply and material available on record passed order under section 148A(d) dated 27.07.2022 holding that income chargeable to tax had escaped assessment for the year under consideration. Consequent thereto, notice under section 148 dated 27.07.2022 was issued and served upon the assessee through registered e-mail id/e-

3 ITA No. 245/Mum/2026 Pranav Ajit Zota filing account. In response thereto, the assessee filed return of income on 16.03.2023 declaring total income at Rs. 4,13,030/-. 3. During the course of reassessment proceedings, the Assessing Officer issued various notices under sections 142(1) and 143(2) calling upon the assessee to explain the nature and source of the transactions appearing in the ICICI Bank account. The Assessing Officer specifically required the assessee to furnish complete bank statements, narration of debit and credit entries, supporting evidences regarding gifts received, capital transactions with M/s. Unimex, and documentary evidences in support of capital gains disclosed on sale of immovable property. 4. The assessee, in response to the notices issued by the Assessing Officer, submitted that out of the major transactions appearing in the bank account, an amount of Rs. 17,00,000/- represented current capital returned from partnership firm M/s. Unimex, amount of Rs. 32,00,000/- represented gifts received from his father late Shri Ajit B. Zota, and amount of Rs. 53,71,000/- represented sale proceeds arising from sale of immovable property. The assessee further submitted before the Assessing Officer that M/s. Unimex had become inactive and dormant since F.Y. 2010 and therefore returns of income of the said concern were not filed. The assessee furnished copy of capital ledger account and confirmation from the concern and sought further time to furnish remaining documentary evidences. In relation to gifts from father, the assessee submitted that his father had expired on 27.02.2016 and therefore access to old

4 ITA No. 245/Mum/2026 Pranav Ajit Zota records, income tax portal and bank statements was not readily available. The assessee furnished death certificate, PAN details of father, passport copy evidencing relationship and subsequently filed copy of gift deed. In relation to sale of immovable property, the assessee submitted that the purchase and sale documents were in custody of his late father and sought further time for furnishing the same. Subsequently, the assessee furnished copy of final sale agreement and certain supporting documents during the course of proceedings. 5. The Assessing Officer, however, was not satisfied with the explanation furnished by the assessee. In relation to the claim of Rs. 17,00,000/- alleged to have been received from M/s. Unimex, the Assessing Officer observed that the assessee failed to furnish returns of income, audit reports, bank statements, dissolution deed, surrender of PAN communication or complete supporting evidences relating to the partnership concern. The Assessing Officer further observed that as per the audited balance sheet of A.Y. 2011-12, the assessee’s capital account in M/s. Unimex reflected negative closing balance and therefore the claim regarding return of current capital remained unsubstantiated. Accordingly, the Assessing Officer treated Rs. 17,00,000/- as unexplained money under section 69A of the Act. 6. In respect of the alleged gifts aggregating to Rs. 32,00,000/- received from father, the Assessing Officer observed that though the assessee furnished copy of gift deed and certain details, no returns of income of the donor were available on the

5 ITA No. 245/Mum/2026 Pranav Ajit Zota departmental portal and the donor was not assessed to tax. The Assessing Officer further observed that the gift deed was unregistered and no satisfactory evidence establishing financial capacity and source of funds in the hands of the donor was furnished. Accordingly, the Assessing Officer treated the amount of Rs. 32,00,000/- as unexplained money under section 69A of the Act. 7. The Assessing Officer further observed that the assessee had disclosed long-term capital gains arising from sale of residential flat being Flat No.101, 1st Floor, Shiv Kesari, Vile Parle, Mumbai, wherein the assessee’s share of sale consideration amounted to Rs. 63,00,000/-. Though indexed cost of acquisition was allowed, the Assessing Officer disallowed indexed cost of improvement of Rs. 13,54,335/- corresponding to cost of improvement of Rs. 8,25,000/- on the ground that the assessee failed to furnish complete documentary evidence in support thereof. The Assessing Officer also observed that complete purchase and sale documents were not furnished and therefore holding period and genuineness of the claim regarding improvement expenses could not be properly verified. Consequently, the Assessing Officer computed taxable long-term capital gain and brought additional amount of Rs. 15,11,014/- to tax. Ultimately, the Assessing Officer completed assessment under section 147 r.w.s. 143(3) r.w.s. 144B vide order dated 12.05.2023 determining total income at Rs. 51,24,040/-.

6 ITA No. 245/Mum/2026 Pranav Ajit Zota 8. Aggrieved by the assessment order, the assessee preferred appeal before the CIT(A). During the appellate proceedings, the assessee furnished written submissions and additional evidences. In relation to the addition under section 69A on account of gifts from father, the assessee contended before the CIT(A) that the amounts were received through banking channels from late Shri Ajit B. Zota and that the source of funds in the hands of the donor represented repayments received from M/s. Unimex. The assessee furnished bank statements of father and contended that identity of donor, genuineness of transaction and relationship stood established. It was further submitted that the gifts were exempt under section 56 of the Act being gifts received from father. 9. With regard to the disallowance of indexed cost of improvement, the assessee submitted before the CIT(A) that the renovation expenses had actually been incurred by his late father and therefore supporting bills could not be readily traced. However, the assessee managed to locate one contractor bill dated 26.06.2006 for Rs. 7,25,839/- and contended that 60% share thereof pertained to the assessee. The assessee further submitted that the flat was situated on the first floor with open road-facing terrace and substantial security and renovation work involving grills, cages, flooring, levelling and bathroom upgrades were required before the premises became habitable. 10. The CIT(A), after considering the submissions of the assessee and examining the material placed on record, partly

7 ITA No. 245/Mum/2026 Pranav Ajit Zota allowed the appeal. In relation to the gifts from father, the CIT(A) observed that the bank statement of late Shri Ajit B. Zota showed receipt of Rs. 20,00,000/- on 10.09.2012 and corresponding transfer thereof to the assessee on 11.09.2012. Accordingly, the CIT(A) accepted the source of Rs. 20,00,000/- in the hands of the donor and directed deletion of addition to that extent. However, in respect of remaining amount of Rs. 12,00,000/- transferred on 25.03.2013, the CIT(A) observed that the assessee failed to furnish complete bank statement of the donor for the entire period and failed to establish the source of such amount in the hands of the donor. The CIT(A) therefore sustained addition of Rs. 12,00,000/- under section 69A of the Act. 11. In relation to the claim of indexed cost of improvement, the CIT(A) examined the contractor bill furnished by the assessee and observed that the bill did not identify the property in question and several items mentioned therein related to repairs and works of commercial shops, sign boards, rolling shutters and compound flooring. The CIT(A) further observed that as per the sale agreement, the assessee had purchased a newly constructed flat in May 2006 and therefore the extensive demolition and structural works reflected in the contractor bill did not appear relatable to the residential flat under consideration. Accordingly, the CIT(A) held that the assessee failed to substantiate the claim of cost of improvement and therefore upheld disallowance of indexed cost of improvement and sustained addition of Rs. 15,11,014/- towards long-term capital gains.

8 ITA No. 245/Mum/2026 Pranav Ajit Zota 12. The CIT(A) also rejected the contention of the assessee regarding denial of opportunity and hasty completion of assessment proceedings by observing that multiple notices under section 142(1) had been issued by the Assessing Officer over a period of several months and video conference hearing had also been scheduled, which the assessee failed to attend. Accordingly, the CIT(A) dismissed such grounds raised by the assessee.

9 ITA No. 245/Mum/2026 Pranav Ajit Zota statement pages are now adduced to conclusively establish the source of the source. 2.4.The Appellant submits that since the identity of the donor and the genuineness of the transaction (banking channel) are established, and the partial gift (Rs. 20 Lakhs) was accepted, the remaining Rs. 12 Lakhs should also be allowed based on consistency and the now-available evidence. 3. Re: Disallowance of Cost of Improvement (Para 8.3.3 and 8.3.4 of CIT(A) Order) 3.1.The Ld. CIT(A) erred in disallowing the Cost of Improvement of Rs. 8,25,000.00 (Indexed: Rs. 13,54,335.00) by incorrectly characterizing the renovation expenses as pertaining to a commercial shop rather than the residential unit. 3.2.The Ld. CIT(A) failed to appreciate the specific location and nature of the property: 3.3.The flat is located on the 1st Floor with a road-facing Terrace. 3.4.Accessible terraces require significant security measures, necessitating the installation of heavy grills and cages as reflected in the contractor’s bill. 3.5.The Shop related expenses mentioned in the bill were incidental works carried out since the Shops below the said terrace were being asked to make changes while securing the first-floor residence above it, paid for by the Appellant. 3.6.The Ld. CIT(A) erred in assuming the property was newly constructed in a manner that required no improvement. The Appellant purchased the property from a previous owner (Mr. Govindram Oza), not the builder. The premises were in a raw state (bare shell) requiring floor levelling, filling, and security upgrades, bathroom upgrades before it was habitable. 14. The assessee has also raised the following additional grounds of appeal:

10 ITA No. 245/Mum/2026 Pranav Ajit Zota 3. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming validity of reassessment proceedings under section 148 which is bad in law and required to be quashed. 4. On the facts and circumstances of the case and in law, the Ld. CIT(A) failed to considered that reassessment proceedings under section 148 is in violation of provisions of section 149 of Income Tax Act, 1961 as the proceeding for A.Y. 2013-14 is time barred and beyond the survival period as laid down by the Hon’ble Apex Court in case of UOI V/s Rajeev Bansal [2024] 167 taxmann.com 70 (Supreme Court) 5. On the facts and circumstances of the case and law, the Ld. CIT(A) failed to considered that notice under section 148 of Income Tax Act, 1961 was issued without mentioning the DIN Number on notice itself which is violation of CBDT Circular No. 19 of 2019 dated 14.08.2019 15. At the outset, the learned Authorised Representative (“AR”) submitted that the assessee is not pressing Additional Ground No.5 relating to validity of notice issued under section 148 of the Act on account of absence of DIN number on the notice and violation of CBDT Circular No.19 of 2019 dated 14.08.2019. Accordingly, Additional Ground No.5 raised by the assessee is dismissed as not pressed.

11 ITA No. 245/Mum/2026 Pranav Ajit Zota that as per the first proviso to section 149(1), reassessment proceedings could not survive if they were already time barred under the old regime. He submitted that the controversy relating to applicability of TOLA stood settled by the judgment of the Hon’ble Supreme Court in UOI vs. Rajeev Bansal [2024] 167 taxmann.com 70 (SC), wherein the mechanism for computation of surviving limitation period was laid down.

Particulars Dates Notice issued u/s 148 (Under unamended provision) 25.06.2021 Survival Period (Notice u/s 148 to 30.06.2021) 5 Days Information provided u/s 148A(b) after decision of Ashish 26.05.2022 Agarwal Due Date of Compliance 20.06.2022

12 ITA No. 245/Mum/2026 Pranav Ajit Zota Limitation period for issuing Notice u/s 148 & Order u/s 25.06.2022 148A(d) [Due date of reply + surviving period i.e. 20.06.2022 + 5 Days] Order u/s 148A(d) actually passed on 27.07.2022 Notice u/s 148 actually issued on 28.07.2022

13 ITA No. 245/Mum/2026 Pranav Ajit Zota 23. The undisputed facts borne out from the record are that the original notice under section 148 under the unamended regime was issued on 25.06.2021. Subsequently, pursuant to the judgment of the Hon’ble Supreme Court in the case of m, the said notice was treated as deemed notice under section 148A(b) of the Act. Thereafter, information under section 148A(b) was furnished to the assessee on 26.05.2022 granting time upto 20.06.2022 for compliance. The Assessing Officer thereafter passed order under section 148A(d) on 27.07.2022 and issued notice under section 148 on 28.07.2022. 24. The principal contention of the learned AR is that after the judgment of the Hon’ble Supreme Court in the case of UOI vs. Rajeev Bansal [2024] 167 taxmann.com 70 (SC), the reassessment notice issued on 28.07.2022 is barred by limitation as the surviving limitation period expired on 25.06.2022. The learned AR submitted that since the original notice under section 148 was issued on 25.06.2021, the surviving period available under TOLA was only five days i.e. upto 30.06.2021 and therefore after excluding the period contemplated under Ashish Agarwal (supra), the notice under section 148 ought to have been issued on or before 25.06.2022. 25. We find substantial force in the contention advanced on behalf of the assessee. The Hon’ble Supreme Court in the case of Rajeev Bansal (supra) has exhaustively considered the interplay between the substituted reassessment regime introduced by Finance Act, 2021, the provisions of TOLA and the directions

14 ITA No. 245/Mum/2026 Pranav Ajit Zota issued in Ashish Agarwal (supra). The Hon’ble Apex Court categorically held that all reassessment notices issued beyond the surviving limitation period available under the Income Tax Act read with TOLA would be time barred and liable to be set aside. 26. The Hon’ble Supreme Court in para 114(h) of the judgment specifically concluded as under: “(h) 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. All notices issued beyond the surviving period are time barred and liable to be set aside.” 27. The Hon’ble Supreme Court further held that the surviving limitation period has to be computed by calculating the number of days between the original deemed notice issued under the old regime and 30.06.2021. It was further held that the period during which the deemed notices remained stayed till supply of information/material under Ashish Agarwal (supra) and the time granted to the assessee for furnishing reply under section 148A(b) are liable to be excluded while computing limitation. 28. In the present case, admittedly the original notice under section 148 was issued on 25.06.2021. Therefore, only five days of surviving limitation period remained available with the Assessing Officer upto 30.06.2021. Subsequently, after furnishing information under section 148A(b) on 26.05.2022 and granting time upto 20.06.2022 for reply, the Assessing Officer was required to complete proceedings under section 148A(d) and issue fresh notice under section 148 within the surviving period

15 ITA No. 245/Mum/2026 Pranav Ajit Zota of five days thereafter, i.e. on or before 25.06.2022. However, in the present case, the order under section 148A(d) came to be passed only on 27.07.2022 and notice under section 148 was issued on 28.07.2022, which is evidently beyond the surviving limitation period. 29. We further find that identical issue came up for consideration before the Co-ordinate Bench in the case of Raj International Ltd. vs. DCIT in ITA Nos.6285 & 6286/Mum/2024 order dated 18.08.2025, wherein the Co- ordinate Bench after considering the judgment of the Hon’ble Supreme Court in Rajeev Bansal (supra) held that reassessment notice issued beyond the surviving period was barred by limitation and consequently the reassessment proceedings were liable to be quashed. 30. Similar view has also been taken by the Co-ordinate Bench in the case of DCIT vs. Nimesh Pravinchandra Mehta in ITA No.8102/Mum/2025 dated 25.02.2026, wherein the Co-ordinate Bench upheld the order of the CIT(A) quashing reassessment proceedings on the ground that notice issued under section 148 after expiry of surviving limitation period prescribed in Rajeev Bansal (supra) was invalid in law. 31. Respectfully following the ratio laid down by the Hon’ble Supreme Court in Rajeev Bansal (supra) and the decisions of the Co-ordinate Benches referred to hereinabove, we hold that the notice issued under section 148 dated 28.07.2022 is barred by limitation and consequently the reassessment proceedings

16 ITA No. 245/Mum/2026 Pranav Ajit Zota initiated under section 147 of the Act are invalid and liable to be quashed. Accordingly, Additional Ground Nos.3 and 4 raised by the assessee are allowed.

Order pronounced in the open court on 20.05.2026.

Sd/- Sd/- (KAVITHA RAJAGOPAL) (MAKARAND VASANT MAHADEOKAR) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated 20/05/2026 Dhananjay, Sr.PS आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : अपीलाथी / The Appellant 1. प्रत्यथी / The Respondent. 2. 3. संबंधधत आयकर आयुक्त / The CIT(A) 4. आयकर आयुक्त(अपील) / Concerned CIT धिभागीय प्रधतधनधध, आयकर अपीलीय अधधकरण, मुम्बई / DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. 6. आदेशानुसार/ BY ORDER, सत्याधपत प्रधत //True Copy// 1. उि/सहायक िंजीकार ( Asst. Registrar) आयकर अिीिीय अतिकरण, मुम्बई / ITAT, Mumbai