BHAVESHBHAI KANTIBHAI MALI,SURAT vs. ITO, WARD-2(3)(1), SURAT

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ITA 17/SRT/2026Status: DisposedITAT Surat09 June 2026AY 2013-1413 pages
AI SummaryAllowed

What did the Tribunal hold?

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

What were the facts?

The assessee did not file a return for AY 2013-14. The case was reopened based on information about property sale, with a notice issued under Section 148. An addition was made under Section 50C, and the assessment was completed, which was upheld by the CIT(A).

What were the issues?

The primary issue was whether the notice for reopening the assessment under Section 148 was issued within the prescribed time limits, considering the amendments and Supreme Court directives regarding reassessment proceedings.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 148A,Section 50C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, SURAT BENCH, BENCH

Before: SHRI T.R. SENTHIL KUMAR & SHRI NARENDRA PRASAD SINHA

For Appellant: Shri Rushin Patel, A.R, Shri Ajay Uke, Sr. DR
For Respondent: Shri Ajay Uke, Sr. DR
Hearing: 29/04/2026

PER SHRI NARENDRA PRASAD SINHA, AM:

This appeal is filed by the assessee against the order of the National Faceless Appeal Centre (NFAC), Delhi, (in short ‘the CIT(A)’), dated 16.11.2025 for the Assessment Year 2013-14 in the proceedings under Section 147 read with Section 144B of the Income Tax Act, 1961 (in short ‘the Act’).

2.

The brief facts of the case are that the assessee did not file his return of income for A.Y. 2013-14. The case of the assessee

ITA No.17/SRT/2026 [Bhaveshbhai Kantibhai Mali vs. ITO] A.Y. 2013-14 - 2 – was reopened on the basis of the information that the assessee, as a co-owner, had sold immovable property during the year on 29.06.2012 for a consideration of Rs.1,52,00,000/-, the stamp duty value of which was Rs.3,07,31,250/-. On the basis of this information, the case of the assessee was reopened by issue of notice u/s.148 of the Act on 26.07.2022. In the course of assessment, an addition of Rs.30,64,316/- was made u/s.50C of the Act. The assessment was completed u/s. 147 read with Section 144B of the Act on 26.05.2023 at total income of Rs.32,50,460/-.

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.

4.

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

“1. Notice issued u/s.148 as well as assessment order passed u/s.147 pursuant thereto are bad in law, as the aforesaid notice u/s.148 is time barred. 2. The ld. CIT(A) has erred in law and on facts of the case, in sustaining the addition of Rs.30,64,316/-u/s.50C. 3. The appellant craves leave to add, amend or alter the grounds of appeal at the time of hearing, if need arise.”

5.

The first ground taken by the assessee is against the reopening u/s.147 of the Act. Shri Rushin Patel, Ld. AR of the assessee submitted that notice u/s.148 of the Act issued in this case was barred by limitation. He explained that the original

ITA No.17/SRT/2026 [Bhaveshbhai Kantibhai Mali vs. ITO] A.Y. 2013-14 - 3 – notice u/s.148 of the Act was issued on 30.06.2021, which was within the extended time limit as per Taxation and Other Laws Ordinance, 2020 (‘TOLA’). As per the decision of the Hon’ble Supreme Court in the case of Union of India vs. Ashish Agarwal, [2022] 444 ITR 1 (SC), all the notices issued u/s.148 of the Act during period from 01.04.2021 to 30.06.2021 were deemed to be notice u/s.148A(b) of the Act as amended by the Finance Act, 2021. Further, the directions were issued to supply the materials within 30 days and grant 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 materials on 26.05.2022 and the last date to file reply by the assessee as per the extended time limit allowed by the AO was 28.06.2022 and, thereafter, the AO was required to pass order u/s.148A(d) of the Act within the surviving period, which was only one day which was extended to 7 days. Accordingly, the time limit to pass order u/s.148A(d) of the Act in the present case was 04.07.2022. The AO had, however, passed the order u/s.148A(d) of the Act on 26.07.2022 and, thereafter, issued fresh notice u/s.148 of the Act on 26.07.2022, which was beyond the surviving period. The Ld. AR, therefore, contended that notice issued u/s.148 of the Act was barred by limitation.

6.

Per contra, Shri Ajay Uke, Ld. Sr. DR relied upon the orders 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

ITA No.17/SRT/2026 [Bhaveshbhai Kantibhai Mali vs. ITO] A.Y. 2013-14 - 4 – explained that the order u/s 148A(d) passed in this case was within the time limit as prescribed under the Act and the 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 rival submissions. Before we decide the issue of limitation, it will be relevant to tabulate the actions taken by the AO in the present case as under:

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 26.07.2022, 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 one day (which was extendable to

ITA No.17/SRT/2026 [Bhaveshbhai Kantibhai Mali vs. ITO] A.Y. 2013-14 - 5 – 7 days) of filing its reply on 28.06.2022, which was till 04.07.2022 only. Since the order u/s 148A(d) of the Act and notice u/s 148 was issued beyond the period of seven days from its reply on 28.06.2022, the same was barred by limitation. On the other hand, the Revenue’s stand is that the provision of Section 148A(d) 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 04.07.2022, the Assessing Officer had time available till 31.08.2022 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 26.07.2022 was within the limitation period.

9.

We have carefully considered the rival submissions. The new section 148A of the Act was introduced w.e.f. 01.04.2021 which required that before issuance of notice u/s 148 of the Act (in other than search cases), the Assessing Officer shall conduct enquiries with reference to the information of escapement of income, if required, and provide an opportunity of being heard to the assessee. After considering the reply of the assessee, the Assessing Officer shall decide, by passing an order, whether it is a fit case for issue of notice under section 148 and serve a copy of such order along with the notice on the assessee. The Assessing Officer shall, before conducting any such enquiries or providing opportunity to the assessee or passing such order, obtain the approval of specified authority. The provision of section 148A of the Act was thus applicable to the cases where

ITA No.17/SRT/2026 [Bhaveshbhai Kantibhai Mali vs. ITO] A.Y. 2013-14 - 6 – the reason for escapement of income was recorded as per the new provisions effective from 01.04.2021. Therefore, the time limit of one month from the end of the month in which the reply of the assessee was received, was available to the AO u/s 148A(d) of the Act, in respect of a regular notice initiated under this new provision w.e.f. 01.04.2021.

10.

In the present case, the original notice u/s 148 of the Act dated 30.06.2021 was issued not under the new provisions, but as per the old provisions of the Act, wherein there was no requirement of any proceeding u/s 148A of the Act. 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 between 1 April 2021 and 30 June 2021 shall be treated as show cause notice issued u/s 148A(b) of the Act of the new provision. Thus, this was a case of deemed notice u/s 148A(b) of the Act and the notice u/s 148 of the Act issued on 30.06.2021 under the old provision was deemed as notice u/s 148A(b) of the Act under the new provision. The Apex Court had thus created a legal fiction by deeming the Section 148 notices issued under the old regime as show cause notices under Section 148A(b) of the new regime. The AO, under Section 148A(b) of the Act, had to comply with two requirements: (i) issuance of a show cause notice; and (ii) supply of all the relevant information which formed the basis of the show cause notice. The Supreme Court in the case of Ashish Agrawal (supra) had directed the assessing officers to supply the assesses with the relevant material and information relied upon by the Revenue

ITA No.17/SRT/2026 [Bhaveshbhai Kantibhai Mali vs. ITO] A.Y. 2013-14 - 7 – within thirty days from the date of the judgment. The effect of this direction on the time-limit for completing the proceedings, was summarized by the Apex Court in the case of Rajeev Bansal (supra) 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.]

11.

The Court in the case of Rajeev Bansal (supra) had further held that the entire time allowed to the assessee to respond to the show cause notice had to be excluded for computing the period of limitation. As per the Hon’ble Court, the total time that was excluded for computation of limitation for the deemed notices was: (i) the time during which the show cause notices were effectively stayed, i.e., from the date of issuance of the deemed notice between 1 April 2021 and 30 June 2021 till the supply of relevant information or material by the assessing officers to the assesses in terms of the directions in Ashish Agarwal (supra); and (ii) two weeks allowed to the assesses to respond to the show cause notices.

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

ITA No.17/SRT/2026 [Bhaveshbhai Kantibhai Mali vs. ITO] A.Y. 2013-14 - 8 – 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 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

ITA No.17/SRT/2026 [Bhaveshbhai Kantibhai Mali vs. ITO] A.Y. 2013-14 - 9 – 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 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 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 30.06.2021 which was treated as deemed notice u/s 148A(b) of the Act. Since this notice was issued on 30.06.2021, 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 one day 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 28.06.2022, the time limit available to the Assessing Officer to issue the notice u/s 148 of the Act was till 04.07.2022 only. As the notice in the present case was issued on 26.07.2022, the same is found to be beyond the limitation period. In view of

ITA No.17/SRT/2026 [Bhaveshbhai Kantibhai Mali vs. ITO] A.Y. 2013-14 - 10 – 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.

14.

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.”

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.

15.

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

ITA No.17/SRT/2026 [Bhaveshbhai Kantibhai Mali vs. ITO] A.Y. 2013-14 - 11 – 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. 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):

Date of notice No of days of Date of providing SCA NO AY under section 148 surviving time information under 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

ITA No.17/SRT/2026 [Bhaveshbhai Kantibhai Mali vs. ITO] A.Y. 2013-14 - 12 – SCA NO Due date of Date of Date of order Last date for issuance of filing reply reply:- under section notice under section 148 as 148A(d) and per 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.

16.

In view of the facts as discussed earlier and the judgement of the jurisdictional High Court, the impugned notice dated 26.07.2022 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.

ITA No.17/SRT/2026 [Bhaveshbhai Kantibhai Mali vs. ITO] A.Y. 2013-14 - 13 – 17. Since the assessee succeeds on the legal ground, we do not deem it necessary to adjudicate the grounds taken on merits.

18.

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

This Order pronounced on 09/06/2026

Sd/- Sd/- (T.R. SENTHIL KUMAR) (NARENDRA PRASAD SINHA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 09/06/2026 S. K. SINHA True Copy आदेश क� �ितिल�प अ�े�षत/Copy of the Order forwarded to : अपीलाथ� / The Appellant 1. ��यथ� / The Respondent. 2. संबंिधत आयकर आयु� / Concerned CIT 3. 4. आयकर आयु�(अपील) / The CIT(A)- 5. �वभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad गाड� फाईल / Guard file. 6. आदेशानुसार/ BY ORDER,

उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / सूरत / ITAT, Ahmedabad / Surat

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