INCOME TAX OFFICER 19(1)(1), MUMBAI vs. CHANDRESH MAFATLAL GANDHI, MUMBAI

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ITA 3716/MUM/2026Status: DisposedITAT Mumbai13 October 2026AY 2013-145 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the core legal issue was whether the impugned notice under section 148 dated 20.07.2022 was barred by limitation. It referred to the Supreme Court's decision in Union of India v. Rajeev Bansal, which held that only the surviving period of limitation available as on 30.06.2021 can be utilized for issuing a fresh notice under section 148, after excluding the period consumed in compliance with section 148A(b). The first proviso to section 149(1) acts as a substantive bar preventing the revival of reassessment proceedings that were already time-barred under the old regime. Applying this ratio, the Tribunal found that the original notice was issued on 10.06.2021, leaving only 20 days of surviving limitation. After accounting for the period for compliance with section 148A(b), the outer date for issuing a fresh notice under section 148 was 04.07.2022. Since the Assessing Officer issued the notice on 20.07.2022, it was clearly barred by limitation. The Tribunal also noted that the jurisdictional High Court of Bombay in Hitesh Ramniklal Shah vs. ACIT had taken a similar view. Consequently, the CIT(A) was justified in quashing the reassessment proceedings on the ground of limitation. As the reassessment order was rendered invalid on this preliminary legal ground, all other grounds raised by the Revenue on merits became academic and required no separate adjudication.

What were the facts?

The Revenue is in appeal against the order of the CIT(A) who quashed the reassessment proceedings for Assessment Year 2013-14. The assessee had initially filed a return of income, which was processed and later assessed under section 143(3). Subsequently, a notice under section 148 was issued on 10.06.2021. Following the Supreme Court's decision in Union of India v. Ashish Agarwal, this notice was treated as a deemed show-cause notice under section 148A(b). A fresh notice under section 148 was issued on 20.07.2022, and the reassessment was completed on 23.05.2023, with an addition of ₹2,85,08,706/- as unexplained expenditure under section 69C. The CIT(A) quashed the reassessment order, holding the notice dated 20.07.2022 to be barred by limitation and vitiated by lack of jurisdiction.

What were the issues?

1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in quashing the reassessment proceedings initiated under section 147 of the Income-tax Act, 1961 by holding that the notice issued under section 148 was barred by limitation, without appreciating that the reassessment was initiated on the basis of tangible and credible information received from the Investigation Wing regarding accommodation entries provided by entities controlled by Shri Pravin Kumar Jain. 2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in applying the decision of the Hon'ble Supreme Court in the case of Union of India vs. Rajeev Bansal to hold that the reassessment notice was time- barred, without appreciating that the notice issued earlier under the old reassessment regime was subsequently treated as a deemed notice under section 148A(b) in terms of the judgment of the Hon'ble Supreme Court in Union of India vs. Ashish Agarwal and that the reassessment proceedings were validly continued thereafter. 3. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding that there was no surviving limitation for issuance of notice under section 148 after 30.06.2021, without properly appreciating the applicability of the provisions of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) and the directions of the Hon'ble Supreme Court in the case of Ashish Agarwal. 4. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in quashing the reassessment proceedings without adjudicating the merits of the addition of ₹2,85,08,706/- made by the Assessing Officer as unexplained expenditure under section 69C of the Act in respect of accommodation entries received from entities controlled by Shri Pravin Kumar Jain. 5. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) failed to appreciate that the Assessing Officer had relied upon information gathered during search and investigation conducted by the Investigation Wing in the case of the Pravin Kumar Jain group, which constituted tangible material suggesting escapement of income and was sufficient to initiate reassessment proceedings. 6. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in ignoring the evidentiary value of investigation findings indicating that the entities controlled by Shri Pravin Kumar Jain were engaged in providing accommodation entries through paper concerns, and that the transactions entered into by the assessee with such entities were not genuine. Revenue's Contentions: The reassessment proceedings were validly initiated under the directions of the Hon'ble Supreme Court in Union of India vs. Ashish Agarwal read with TOLA. The Assessing Officer relied on tangible material from the Investigation Wing regarding accommodation entries. The reassessment notice was not time-barred. Assessee's Contentions: The surviving period of limitation expired before the issuance of notice u/s 148 dated 20.07.2022. The order of the CIT(A) was supported.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 148A,Section 148A(b),Section 144B,Section 69C,Section 149(1),Section 151A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI

Before: SHRI SAKTIJIT DEY & SHRI GIRISH AGRAWAL

For Respondent: Shri Rajesh Shah, CA
Pronounced: 13.10.2026

INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI BENCH: C BEFORE SHRI SAKTIJIT DEY, VICE PRESIDENT AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA 3716/MUM/2026 (िनधा�रण वष�/Assessment Year: 2013-14) Income Tax Officer 19(1)(1) Chandresh Mafatlal Gandhi Room No. 501, 5th Floor 501 Manju Apartment, 348, Piramal Chambers, Narayan Dabholkar Road Lalbaug-Parel Napeansea Road, Vs. Mumbai-400012, Mumbai 400006, Maharashtra Maharashtra अपीलाथ� Appellant ��थ� Respondent

Permanent Account Number of Assessee: AAYPG1362R

अपीलाथ� �ारा/Appellant represented by: Shri Ajay Soneji, Sr. DR ��थ� �ारा/Respondent represented by: Shri Rajesh Shah, CA

सुनवाई की तारीख / Date of conclusion of hearing: 27.07.2026 घोषणा की तारीख / Date of pronouncement: 13.10.2026 O R D E R PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: This appeal is filed by Revenue against the order of ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi, vide Order No. ITBA/NFAC/S/250/2025-26/1084569898(1) dated 08.01.2026 passed against the assessment order by Assessment Unit of Income Tax Department, u/s. 147 r.w.s 144 read with section 144B of the Income- tax Act, 1961 (‘the Act’) dated 23.05.2023, for Assessment Year 2013- 14.

2.

Revenue has raised the following grounds of appeal:

"1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in quashing the reassessment proceedings initiated under section 147 of the Income-tax Act, 1961 by holding that the notice issued under section 148 was barred by limitation, without appreciating that the reassessment was initiated on the basis of tangible and credible information received from the Investigation Wing regarding accommodation entries provided by entities controlled by Shri Pravin Kumar Jain." "2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in applying the decision of the Hon'ble Supreme Court in the case of Union of India vs. Rajeev Bansal to hold that the reassessment notice was time- barred, without appreciating that the notice issued earlier under the old reassessment regime was subsequently treated as a deemed notice under section 148A(b) in terms of the judgment of the Hon'ble Supreme Court in Union of India vs. Ashish Agarwal and that the reassessment proceedings were validly continued thereafter." "3. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding that there was no surviving limitation for issuance of notice under section 148 after 30.06.2021, without properly appreciating the applicability of the provisions of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) and the directions of the Hon'ble Supreme Court in the case of Ashish Agarwal." "4. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in quashing the reassessment proceedings without adjudicating the merits of the addition of ₹2,85,08,706/- made by the Assessing Officer as unexplained expenditure under section 69C of the Act in respect of accommodation entries received from entities controlled by Shri Pravin Kumar Jain." "5. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) failed to appreciate that the Assessing Officer had relied upon information gathered during search and investigation conducted by the Investigation Wing in the case of the Pravin Kumar Jain group, which constituted tangible material suggesting escapement of income and was sufficient to initiate reassessment proceedings." "6. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in ignoring the evidentiary value of investigation findings indicating that the entities controlled by Shri Pravin Kumar Jain were engaged in providing accommodation entries through paper concerns, and that the transactions entered into by the assessee with such entities were not genuine."

3.

Brief facts of the case are that assessee filed return of income, reporting total income at ₹9,36,830/-. Return was initially processed u/s 143(1) and thereafter, assessment u/s 143(3) was completed on 30.12.2015, assessing total income at ₹20,78,550/-. Subsequently, a notice u/s 148 was issued on 10.06.2021 under the un-amended reassessment regime. Pursuant to the judgment of the Hon’ble Supreme Court in Union of India v. Ashish Agarwal [2022] 444 ITR 1 (SC), the said notice was treated as a deemed show-cause notice u/s 148A(b) of the Act. Thereafter, notice u/s 148A(b) was issued on 30.05.2022, order u/s 148A(d) was passed on 20.07.2022, and a fresh notice u/s 148 was issued on 20.07.2022 by ld. Assessing Officer. The reassessment was completed u/s 147 r.w.s. 144 r.w.s. 144B of the Act on 23.05.2023, adding ₹2,85,08,706/- u/s 69C as unexplained expenditure.

3.1. Aggrieved, assessee preferred an appeal before ld. CIT(A) who quashed the reassessment order holding that the notice u/s 148 dated 20.07.2022 was barred by limitation and also vitiated by lack of jurisdiction as it was issued by the Jurisdictional Assessing Officer instead of a Faceless Assessing Officer in violation of section 151A of the Act. Aggrieved, Revenue is in appeal before the Tribunal.

4.

Before us, ld. Sr. DR supported the assessment order and submitted that the reassessment proceedings were validly initiated under the directions of the Hon'ble Supreme Court in Union of India vs. Ashish Agarwal read with TOLA. On the other hand, ld. Counsel for the assessee supported the order of ld. CIT(A) and contended that the surviving period of limitation expired before the issuance of notice u/s 148 dated 20.07.2022.

5.

We have heard both sides and perused the material available on record. The core legal issue is whether the impugned notice u/s 148 dated 20.07.2022 is barred by limitation. The computation mechanism and legal principles governing transition cases under the new reassessment regime stand conclusively settled by the Hon'ble Supreme Court in Union of India v. Rajeev Bansal [2024] 469 ITR 46 (SC). The Hon'ble Supreme Court held that only the surviving period of limitation available as on 30.06.2021 can be utilized for the issuance of a fresh notice u/s 148 of the Act, after excluding the period consumed in compliance with section 148A(b) of the Act. The first proviso to section 149(1) acts as a substantive bar preventing the revival of reassessment proceedings that were already time-barred under the old regime.

5.1. Applying the binding ratio of the Hon'ble Supreme Court in Rajeev Bansal (supra) to the facts of the present case: i. The original notice u/s 148 was issued on 10.06.2021. ii. Between 10.06.2021 and 30.06.2021, only 20 days of surviving limitation period remained. iii. Following Ashish Agarwal (supra), notice u/s 148A(b) was issued on 30.05.2022 and the response time granted to assessee expired on 14.06.2022. iv. Adding the surviving balance period of 20 days from 14.06.2022, the outer date for issuance of fresh notice u/s 148 was 04.07.2022.

5.2. However, ld. Assessing Officer issued the fresh notice u/s 148 only on 20.07.2022, which is beyond the permissible surviving period. Therefore, the impugned notice u/s 148 dated 20.07.2022 is clearly barred by limitation.

6.

The facts being undisputed, the issue is directly covered against Revenue in view of Rajeev Bansal (supra) as well as the decision of the Hon’ble Jurisdictional High Court of Bombay in Hitesh Ramniklal Shah vs. ACIT [2025] 180 taxmann.com 642 (Bom). Consequently, ld. CIT(A) was fully justified in holding the reassessment notice dated 20.07.2022 time-barred and quashing the reassessment proceedings. Since the reassessment order itself has been rendered invalid on the preliminary legal ground of limitation, all other grounds raised by Revenue on merits become academic and require no separate adjudication.

7.

In the result, appeal filed by Revenue is dismissed.

Order is pronounced in the open court on 13 October, 2026

Sd/- Sd/- (Saktijit Dey) (Girish Agrawal) Vice President Accountant Member Dated: 13 October, 2026 MP, Sr.P.S. Copy to : 1 The Appellant 2 The Respondent 3 DR, ITAT, Mumbai 4 Guard File 5 CIT BY ORDER, ABHINAV ANANT Digitally signed by ABHINAV ANANT GAVANDE GAVANDE Date: 2026.10.24 12:50:41 +05'30' (Dy./Asstt.Registrar) ITAT, Mumbai

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