The reassessment notice under Section 148 is time-barred if issued beyond the surviving period calculated from the deemed notice date to 30 June 2021, after excluding the stay and response period as per Rajeev Bansal.

Headnote:(A) Income Tax Act, 1961 - Sections 69A, 148, 148A, 149, 151A, 250 - Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 - Reassessment - Limitation - Validity of notice under Section 148 - The combined effect of the legal fiction and directions of the Supreme Court in Ashish Agarwal (supra) is that show cause notices deemed issued between 1 April 2021 and 30 June 2021 were stayed till the date of supply of relevant information and material by the Assessing Officer to the assessee - The surviving balance time limit for issuing a reassessment notice under Section 148 of the new regime is calculated by computing days between the date of issuance of the deemed notice and 30 June 2021 - This time starts running after receiving the assessee's response - A notice issued after this surviving period, even with the benefit of the fourth proviso, is barred by limitation and void ab initio. (Paras 9-15, 21)

Facts of the case:
The assessee, an individual, did not file returns of income. Based on a third-party search, cash deposits were noted in his bank account. A notice under Section 148 (old regime) was issued on 30/06/2021. Following the Supreme Court's decision in Ashish Agarwal (supra), this was deemed a show-cause notice under Section 148A(b). The assessee responded on 22/06/2022. An order under Section 148A(d) was passed on 22/07/2022, and a new notice under Section 148 was issued on 25/07/2022. The Assessing Officer made additions under Section 69A, which the CIT(A) upheld. The assessee challenged the reassessment's validity on limitation grounds.

Findings of Court:
Computing the surviving balance time as per Rajeev Bansal (supra), the Revenue had only 1 day after the assessee's response (on 22/06/2022) to issue a notice under Section 148. The notice, issued on 25/07/2022, was far beyond this surviving period, even after accounting for the 7-day extension under the fourth proviso to Section 149. The reassessment notice was held to be time-barred and void.

Issues: The main issue was whether the notice under Section 148 of the Act issued on 25/07/2022 for A.Y. 2013-14 and A.Y. 2014-15 is barred by the limitation period specified under Section 149(1) of the Act.

Ratio Decidendi: The court ruled that the limitation period for issuing a reassessment notice under Section 148 is to be computed by excluding the stay period from the deemed notice date till the supply of materials, plus the two-week response period. The surviving time (days between deemed notice and 30/06/2021) is then available to the Revenue, beginning from the date of the assessee's response. Failure to issue the notice within this calculated period renders the notice and all subsequent proceedings void ab initio.

Result: Appeals allowed. The reassessment notices and consequent orders are quashed as time-barred.

ORDER

PER SANDEEP SINGH KARHAIL, J.M.

The assessee has filed the present appeals against the separate impugned order of even date 25/11/2025, passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [“learned CIT(A)”], inter- alia, for the assessment years 2013-14 and 2014-15.

2. Since in both the appeals the assessee has raised similar issues which arise out of a similar factual matrix, therefore, these appeals were heard together as a matter of convenience, and are being decided by way of this consolidated order. With the consent of the parties, the assessee’s appeal for the assessment year 2013-14 is considered as a lead case, and the decision rendered therein shall apply mutatis mutandis to the other appeal of the assessee before us.

3. In its appeal for the assessment year 2013-14, the assessee has raised the following grounds: –

“Being aggrieved by the order dated 25.11.2025 passed by the Commissioner of Income-lax (Appeals), National Faceless Appeal Centre, Delhi ("CIT(A)"), the Appellant begs to prefer the present appeal on the following grounds which are without prejudice to each other:

1. That in the facts and circumstances of the case and in law, the CIT(A) erred in upholding the addition of Rs. 58,76,810/- made by the Faceless Assessing Officer under Section 69A of the Act, on the ground that the said cash deposits made by the Appellant in its own bank account remained unexplained.

2. That in the facts and circumstances of the case and in law, the CIT(A) erred in upholding the validity of reassessment proceedings, when the same were illegal, invalid, void ab initio and without jurisdiction.

3. That in the facts and circumstances of the case and in law, the notice dated 18.05.2022 deemed to be the show-cause notice under Section 148A(b), the order dated 22.07.2022 under Section 148A(d) and the notice dated 25.07.2022 under Section 148 of the Act, have been issued/passed by the Jurisdictional Assessing Officer and are therefore without jurisdiction in view of Section 151A of the Act read with e-Assessment of Income Escaping Assessment Scheme, 2022.

4. That in the facts and circumstances of the case and in law, the CIT(A) erred in upholding the re-assessment which has been concluded pursuant to the manually issued notice under Section 148 of the Act without any DIN, as the same is contrary to CBDT Circular No. 19 dated 14.08.2019.

5. That in the facts and circumstances of the case and in law, the CIT(A) erred in holding the re-opening and the re-assessment proceedings to be within limitation, when infact the same are barred by limitation in terms of the first proviso to Section 149(1) (as amended by Finance Act, 2021] read with Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, and much after the surviving period as also held in Hitesh Ramniklal Shah (2025] 180 taxmann.com 642 (Bombay).

6. That in the facts and circumstances of the case and in law, the Jurisdictional Assessing Officer erred in issuing the notice dated 25.07.2022 under Section 148 of the Act basis the "information", being information requiring action in consequence of Ashish Agarwal (SC). which is not an information as per the definition of the same in Explanation 1 to Section 148 of the Act.

7. That in the facts and circumstances of the case and in law, the CIT(A) erred in not adjudicating the ground of appeal raised by the Appellant that the present proceedings could not have been undertaken by way of re- opening since the information was handed over to the Jurisdictional Assessing Officer prior to 01.04.2021.

8. That in the facts and circumstances of the case and in law, the CIT(A) failed to appreciate that the Jurisdictional Assessing Officer deemed the case as fit for re-opening on the ground that the certain sums were credited from society's bank account to the Appellant's bank account, however, there was no credit of funds in

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2026 Supreme(Online)(ITAT) 11467

INCOME TAX APPELLATE TRIBUNAL (MUMBAI BENCH)SHANKAR RAJARAM NEELAM MUMBAI – AppellantVersusITO 19(3)(1) MUMBAI – RespondentITA 1084/MUM/2026[2013-14]

The reassessment notice under Section 148 is time-barred if issued beyond the surviving period calculated from the deemed notice date to 30 June 2021, after excluding the stay and response period as per Rajeev Bansal.

INCOME TAX APPELLATE TRIBUNAL (MUMBAI BENCH)
SHANKAR RAJARAM NEELAM MUMBAI – Appellant
Versus
ITO 19(3)(1) MUMBAI – Respondent
ITA 1084/MUM/2026[2013-14]