Panaji ITAT Quashes ₹17.95 Crore Reassessment as Time-Barred: Section 148 Notice Must Meet Surviving Period

Sahanu Sponge and Power Private Limited Vs ITO (ITAT Panaji)

Panaji ITAT Quashes ₹17.95 Crore Reassessment as Time-Barred: Post-Rajeev Bansal, Section 148 Notice Had to Be Issued Within “Surviving Period”

The Panaji ITAT in Sahanu Sponge and Power Pvt. Ltd. v. ITO dealt with reassessment for AY 2014-15, arising from information gathered during a DGCEI investigation alleging unaccounted purchases of MS ingots/billets used for manufacture and unaccounted cash sales of TMT bars. The AO ultimately made an addition of ₹17.95 crore under section 69C towards alleged unexplained/unaccounted purchases.

The decisive issue before the Tribunal was limitation under sections 148/149 in light of the Supreme Court’s decision in Union of India v. Rajeev Bansal. The original notice under the old regime had been issued on 29 June 2021. Consequently, only two days of the limitation period survived. Thereafter, pursuant to Ashish Agarwal, notice under section 148A(b) was issued on 25 May 2022 and the assessee replied on 6 June 2022.

The ITAT held that even after giving the Revenue the benefit of extending the surviving period of two days to seven days, the order under section 148A(d) and notice under section 148 ought to have been issued on or before 13 June 2022. They were actually issued only on 29 July 2022. The notice was therefore clearly time-barred, the AO never validly assumed jurisdiction, and the entire reassessment along with the ₹17.95 crore addition was quashed.

Interestingly, despite quashing the reassessment, the Tribunal proceeded to decide the merits academically. It found that the alleged ₹1.51 crore unaccounted purchases from Mohit Steels Ltd. were wrongly computed, as the AO had apparently taken figures pertaining to another assessment year.

For the remaining alleged unaccounted purchases of ₹16.44 crore, the ITAT observed that the goods were ultimately sold through unaccounted sales. Since the same suppliers were regular suppliers and substantial accounted purchases from them had already been accepted, the entire purchases could not effectively be brought to tax; only the profit element embedded in the transactions could be taxed. The Tribunal also invoked the rule of consistency, noting that in AY 2016-17 the Department itself had taxed only the profit on similar unaccounted purchases/sales.

Accordingly, the ITAT held that, even on merits, only 4.50% of ₹16,44,09,773 = ₹73,98,440 could have been added, instead of ₹17.95 crore. However, this computation remained academic because the entire reassessment itself had already been quashed as time-barred.

Cases Discussed

• Gurpreet Singh vs. DCIT & Others (Bombay HC),order dated 08.05.2025
• Ram Balram Buildhome (P.) Ltd. v. ITO (Delhi HC),[2025] 171 taxmann.com 99 (Delhi)/2025 SCC OnLine Del 481
• Virendra Ship Recyclers LLP v. Asstt. CIT (Bombay HC),[2025] 170 com588 (Bombay)
• Income-tax Officer v. Ashish Acharatlal Varaiya (SC),[2024] 168 com588/[2025] 302 Taxman 183 (SC)
• Assistant Commissioner of Income-tax v. Sanman Trade Impex Ltd. (SC),[2025] 170 com589/303 Taxman 333 (SC)
• UOI vs. Rajeev Bansal (SC),(2024) 469 ITR 46 (SC)
• New India Assurance Company Ltd. v. Asstt. CIT (Bombay HC),[2024] 158 com367 (Bombay)
• Godrej Industries Ltd. v. Asstt. CIT (Bombay HC),[2024] 160 com13 (Bombay)
• CIT v. Hexaware Technologies Ltd. (SC),[SLP (C) No. 21188 of 2024]
• Raminder Singh v. Asstt. CIT (Delhi HC),[2023] 156 taxmann.com 148/[2024] 461 ITR 368 (Delhi)/2023 DHC 6672-DB
• Ashish Acharatlal Varaiya v. ITO (Gujarat HC),[2023] 152 com656 (Gujarat)
• Keenara Industries (P.) Ltd. v. Income-tax Officer (Gujarat HC),[2023] 147 com 585/453 ITR 51 (Gujarat)
• Rajeev Bansal v. Union of India (Allahabad HC),[2023] 147 com 549/453 ITR 153 (Allahabad)
• Union of India v. Ashish Agarwal (SC),2022 SCC Online SC 543; (2023) 1 SCC 617
• K. Industries Ltd. Vs. Deputy Commissioner of Income-tax (Gujarat HC),[2016] 72 taxmann.com 289 (Gujarat)
• State of A P v. A P Pensioners Association (SC),[2005] 13 SCC 161
• CIT Vs. ARJ Security Printers (Delhi HC),264 ITR 276
• Dhansiram Agarwalla Vs. CIT (Guwahati HC),217 ITR 4
• Taraben Ramanbhal Patel Vs. ITO (Gujrat HC),215 ITR 323
• Sardar Kehar Singh Vs. CIT (Rajasthan HC),195 ITR 769
• CIT Vs. Hindusthan Motors Ltd. (Calcutta HC),192 ITR 619
• CIT Vs. Sridev Enterprises (Karnataka HC),192 ITR 165
• CIT Vs. Godavari Corporation Ltd. (Madhya Pradesh HC),156 ITR 835
• CBI Vs. Shashi Bala (SC),206 CTR 587/ 581
• Radhasoami Satsang (SC),193 ITR 321
• Manidhari Stainless Wire (P) Ltd. V. Union of India (Andhra Pradesh HC),(2018)
• Meghna Towers (P) Ltd. (ITAT Delhi),(2017)
• Nokia India (P) Ltd. V. DDIT (ITAT Delhi),citation not provided
• Motilal Padmpat Udyog Ltd. V. CIT (Allahabad HC),citation not provided
• Vijay Proteins Ltd.,citation not provided
• M/s. Indian Woollen Carpet Factory,citation not provided
• East End Dwellings Co. Ltd. v. Finsbury Borough Council,[1952] AC 109

FULL TEXT OF THE ORDER OF ITAT PANAJI

The captioned appeal at the instance of assessee pertaining to A.Y. 2014-15 is directed against the order dated 09.12.2025 framed by National Faceless Appeal Centre, Delhi arising out of Assessment Order dated 17.05.2023 passed u/s.147 r.w.s.144B of the Income Tax Act, 1961 (in short ‘the Act’).

2. Assessee has raised following grounds of appeal :

“1) The order of the Id CIT(A) is bad in law and is void-ab-initio.

2) The Assessment Order passed by the Id AO u/s 147 r.w.s 144B of the Income Tax Act’1961, and sustained by the Id CIT(A) is without jurisdiction, misconceived and without following the principles of natural justice.

3) Re-opening of the Assessment u/s 148 of the IT Act, is bad in law, as the Show cause notice issued u/s 148A(b) & the Order passed u/s 148A(d) provided the reason for reopening the assessment as unaccounted sales & violation of the provisions of Section 40A(3) of the IT Act, whereas, the Id. AO has made addition u/s 69C of the IT Act.

4) The Hon. CIT(A) has ignored the fact that the Id AO has made an addition to the Returned Income only on the basis of Show Cause cum Demand Notice issued by the Directorate General of Goods & Services Tax Intelligence, without making any self or third party enquires. Further, it is worth to note that the said DGCEI notice has not attained any finality, nor agreed by the appellant. Also, the report has being challenged by the appellant and denied the content of the said report.

5) As per Para No. 8.1 of the order, the Id. AO has considered the purchases of Rs.17,95,33,188/- as Bogus & Non-genuine expenditure and has added the same as unexplained expenditure u/s 69C of the Act, whereas, provisions of Section 69C are not applicable to Bogus Purchases.

6) The Id. AO has not granted an opportunity of Cross-examination of the third parties whose recorded statements have been relied upon by the AO which was requested by the assessee in the reply to show cause notice dated 15.05.2023, as such, the order is passed without following the principles of natural justice.

7) The Hon. CIT(A) and Ld AO has erred in not considering the fact, that on the similar facts and issue for AY2016-17, the AO has applied profit percentage to make the addition for that year.

8) The Hon CIT(A) and Id AO has failed to appreciate the fact that sales made by the appellant and the material used for the production has been duly accounted in the books to arrive at the profit / loss for the year. Further, the books of accounts of the appellant has been duly audited under the Income Tax Act 1961.

9) The Hon. CIT(A) and Id AO has erred in adding Rs. 17,95,33,188/- to the returned income of the appellant without considering the facts and the submission made by the appellant.

10) With these and such other grounds that may be urged at the time of hearing the appellant prays for relief sought for.

2.1 Assessee has also raised following additional ground :

“1. That reassessment order passed in case of assessee for AY 201415 is illegal and not tenable as the notice u/s 148 (new regime) of the Act was issued on 29/07/2022 after lapse of surviving period, as defined by Hon’ble SC in case of UOI vs. Rajeev Bansal (2024) 167 taxmann.com 70 (SC), allowed for issue of said notice.”

3. Brief facts of the case are that the assessee is a Private Limited company engaged in the business of TMT bars used in construction as reinforcement steel. Original return of income u/s.139(1) of the Act for A.Y. 2014-15 filed on 16.09.2014 declaring loss of Rs.36,63,021/- processed 143(1)(a) of the Act. Subsequently, a search was conducted at the AD (Inv), DGCEI on 28.01.2016 at the business premises of the assessee and M/s. Ambey Metallic Ltd.Goa where it was found that there is large scale evasion of indirect tax and that the assessee has made unaccounted purchases of M.S. Ingots and M.S. Billets from local ingot/billet manufacturers/suppliers and used the same in manufacture of TMT bars for making unaccounted cash sales and these unaccounted purchases and sales kept out of direct and indirect tax net. The information also revealed that the statement of key persons were recorded where the unaccounted purchases/sales were admitted. Based on this information about unaccounted purchases along with information about Five vendors through whom the unaccounted purchases alleged to have been made by the assessee, Ld. Assessing Officer issued notice u/s.148 of the Act under the Old regime on 29.06.2021 but thereafter in compliance to the judgment of Hon’ble Apex Court in the case of Ashish Agarwal Vs. Union of India in Civil Appeal No.3005/2002 and the CBDT Directions issued in Instruction No.1/2022 dated 11.05.2022 firstly issued notice u/s.148A(b) of the Act on 25.05.2022 to which the assessee replied u/s.148A(c) on 06.06.2022. Subsequently notice u/s.148A(d) and 148 of the Act were issued on 29.07.2022. Ld. Assessing Officer during the course of assessment proceedings after examining the details came to a conclusion that unaccounted purchases has been made from the following and assessed the income at Rs.17,95,33,188/- :

S.No.	Name of the party	PAN	Transaction Amount
1	M/s. Goa Steel Ltd.	AACFG6984H	5,32,44,026
2	M/s. Prateek Alloys Pvt. Ltd.	AAACP1598D	2,97,45,843
3	M/s. Shivam Ispat Pvt. Ltd.	AAECS5956J	69,86,748
4	M/s. Goa Sponge and Power Ltd.	AAECS3612D	7,44,33,156
5	M/s. Mohit Steels Ltd.	AABCM9713G	1,51,23,415
	Total		17,95,33,188

4. Aggrieved assessee preferred appeal before ld.CIT(A) and raised legal issue challenging the reopening/reassessment proceedings and also merits it has been contested that the alleged vendors/parties appearing in the assessment order, the assessee had made regular purchases and that the purchases which have been accounted for in the books of account have been accepted by the Assessing Officer and only for the difference amount the addition for unexplained expenditure has been made u/s.69C of the Act which is not in accordance with law. It is also contended that since the unaccounted purchases have been applied for manufacturing of goods and have been subsequently sold as unaccounted sales, therefore, only the profit element on such purchases could have been added. Reference made to the assessment order for A.Y. 2016-17 passed on 28.12.2018 were also under similar facts where there were unaccounted cash purchases and unaccounted sales, the Assessing Officer has applied the profit rate of 3.51% on the total unaccounted sales. However, ld.CIT(A) did not find any merit in the contentions of the assessee and accordingly dismissed all the grounds of appeal.

5. Now the assessee is in appeal before this Tribunal raising legal issues in the main grounds of appeal, grounds raised against the impugned addition and further as regards additional grounds of appeal challenging the validity of notice issued u/s.148 of the Act is contending that it is time barred in light of the principle laid down in the judgment of Hon’ble Apex Court in the case of UOI Vs. Rajeev Bansal (2024) 469 ITR 46 (SC). Counsel for the assessee has submitted that the notice u/s.148A(d) and 148 of the Act have not been issued during the surviving period and therefore the same are time barred rendering the reassessment proceedings as illegal, bad in law and invalid.

6. Ld. Counsel for the assessee did not press Ground No.3 and the same is dismissed as ‘not pressed’.

7. On merits, ld. Counsel for the assessee submitted that in case of the alleged unaccounted purchases from M/s. Mohit Steel Industries Pvt. Ltd., the purchases booked by the assessee in the books of account at Rs.8,19,77,179/- is correct and the same is supported by the confirmation of account. It is stated that ld. Assessing Officer wrongly took the figure pertaining to A.Y. 2015-16 in place of A.Y. 2014-15 and has computed the difference in purchases at Rs.1,51,23,415/- which is incorrect.

8. So far as the remaining amount of unaccounted purchases is concerned, he submitted that firstly section 69C of the Act is not applicable on such purchases because section 69C of the Act only comes into picture where the assessee has incurred any expenditure and offers no explanation about the source of such expenditure or part thereof and since the assessee has not accounted for the alleged unaccounted purchases in the books and has not claimed as an expenditure, therefore, section 69C of the Act cannot be invoked. He however fairly admitted that following the Rule of Consistency since the assessee has made unaccounted purchases as well as unaccounted sales only the profit margin deserves to be added for the year under consideration. He also referred to the assessment order for A.Y. 2016-17 placed at pages 122 to 127 where under similar set of facts and circumstances the ld. Assessing Officer has applied net profit rate of 3.51% on the unaccounted sales.

9. So far as the contention for following “Rule of Consistency”, reliance placed on the following decisions :

Sl.No.	Case Name	Citation	Court
1	CIT Vs. ARJ Security Printers	264 ITR 276	Delhi HC
2	Dhansiram Agarwalla Vs. CIT	217 ITR 4	Guwahati HC
3	Taraben Ramanbhal Patel Vs. ITO	215 ITR 323	Gujrat HC
4	Sardar Kehar Singh Vs. CIT	195 ITR 769	Rajasthan HC
5	CIT Vs. Hindusthan Motors Ltd.	192 ITR 619	Calcutta HC
6	CIT Vs. Sridev Enterprises	192 ITR 165	Karnataka HC
7	CIT Vs. Godavari Corporation Ltd.	156 ITR 835	Madhya Pradesh HC
8	CBI Vs. Shashi Bala	206 CTR 587/ 581	SC
9	Radhasoami Satsang	193 ITR 321	SC

10. Further, ld. Counsel for the assessee also referred to various documents placed in the paper book. For sake of reference, index of the paper book is scanned below :

PAPERBOOK 2 INDEX

S. No.	Particulars	Page No.
6	Acknowledgement of ITR filed u/s 148.	17–18
7	Computation of Income	19–20
8	Notice dated 02/11/2022 issued u/s 144B of the Act.	21
9	Notice dated 10/01/2023 issued u/s 142(1) of the Act.	22–25
10	Submission dated 02/02/2023.	26–29
11	Audited Financials for FY 2013-14.	30–47
12	Tax Audit report.	48–59
13	Ledger account of parties
	– Mohit Steel Industries Pvt. Ltd.	60–64
	– Mandovi Casting Pvt. Ltd.	65–68
	– Goa Sponge and Power Ltd.	69–72
	– Goa Steels Limited	73–76
	– Prateek Alloys Pvt. Ltd.	77–78
	– Shivam Ispat Pvt. Ltd.	79
14	Sample Invoices issued by parties.	80–91
15	VAT Returns	92–115
16	Notice dated 28/03/2023 issued u/s 143(2) of the Act.	116–119
17	Submission dated 29/03/2023.	120–121
18	Assessment order passed in case of assessee for AY 2016-17	122–127
19	Show cause notice dated 09/05/2023.	128–132
20	Submission dated 15/05/2023.	133–137
21	Confirmation of account
	– Goa Steels Limited	138–145
	– Mandovi Casting Pvt. Ltd.	146–151
	– Mohit Steel Industries Pvt. Ltd.	152–156
	– Prateek Alloys Pvt. Ltd.	157–162
	– Goa Sponge and Power Ltd.	163–169
	– Shivam Ispat Pvt. Ltd.	170
22	Written submission filed before Ld. CIT(A).	171–178

Certified that documents at S. No. 6 to 21 were available before Ld. AO as well as Ld. CIT(A) during the course of proceedings before them. Document at S. No. 22 is written submission filed before Ld. CIT(A).

11. On the other hand, ld. DR vehemently argued with regard to the legal issue as well as the additional grounds of appeal. On merits of the case, he referred and relied on the finding of ld.CIT(A) which reads as follows :

“6.6 The appellant in its Ground of appeal No.5, 6 and 9 assailed that As per Para No. 8.1 of the order, the Id. AO has considered the purchases of Rs. 17,95,33,188/- as Bogus & Non-genuine expenditure and has added the same as unexplained expenditure u/s 69C of the Act, whereas, provisions of Section 69C are not applicable to Bogus Purchases. The Id. AO has failed to appreciate the fact that sales made by the appellant and the material used for the production has been duly accounted in the books to arrive at the profit / loss for the year. Further, the books of accounts of the appellant have been duly audited under the Income Tax Act’1961. The Id. AO has erred in making addition of Rs. 17,95,33,188/- without considered the submissions made by the assessee.

6.6.1 I have considered the submission made by appellant, assessment order and other materials available on records. In this case, a search was conducted on 28.01.2016 by AD(ivy) DGCEI on the premises of appellant, M/s Sahanu Sponge and Power Ltd wherein it was found that appellant made unaccounted purchases of M.S. Ingots and M.S Billets from local ingot/billet manufacturers/suppliers and used the same in manufacture of TMT bars and cleared them as Unaccounted cash sales. During the course of the said search, statements of key persons at the premises were recorded wherein it was admitted that data of total sale of M/s Sahanu Sponge and Power Pvt Ltd including unaccounted sales were not reflected in the books of accounts which was maintained separately on laptops and pen drives found and seized during the search. It was also admitted that several parties had purchased TMT bars without bill from M/s SSPL Goa and such purchase payments were made by them in cash to M/s SSPL.

6.6.2 The case was reopened based on the information that appellant had made huge accounted and unaccounted purchases from 06 suppliers who had sold ingots and billets both accounted and unaccounted. A.O. issued notice u/s 133(6) to all parties. In response thereto, compliance was made by some parties who only partly accepted transactions of purchases made by the appellant. The A.O. in the assessment order has already treated for the amount of purchases which have been confirmed by way of 3rd party enquires in compliance of notice u/s 133(6) of the Act. The appellant also failed to provide evidence such as ledger account copy of bank account, details showing receipt, details of vehicles used for transportation goods, e-way bills etc. in respect of difference amount of Rs. 17,95,33,188/- as detailed discussed in the assessment order vide para 7. Since the appellant failed to substantiate the genuineness of transaction made by the 05 parties fully, hence the A.O. was correct in making an addition of difference of amount of purchases which remained unconfirmed amounting to Rs. 17,95,33,188/- u/s 69C of the Act.

6.6.2 In the case of N.K. Industries Ltd. Vs. Deputy Commissioner of Income-tax [2016] 72 taxmann.com 289 (Gujarat), the Hon’ble Gujarat High Court had upheld the addition on account of 100% of bogus purchases. The relevant Para 6 of the said judgment is reproduced hereunder:-

“6. The Tribunal in the case of Vijay Proteins Ltd. (supra) has observed that it would be just and proper to direct the Assessing Officer to restrict the addition in respect of the undisclosed income relating to the purchases to 25% of the total purchases. The said decision was confirmed by this Court as well. On consideration of the matter, we find that the facts of the present case are identical to those of M/s. Indian Woollen Carpet Factory (supra) or Vijay Proteins Ltd. (supra) in the present case the Tribunal has categorically observed that the assessee had shown bogus purchases amounting to Rs. 2,92,93,288/- and taxing only 25% of these bogus claim goes against the principles of Sections 68 and 69C of the Income Tax Act. The entire purchases shown on the basis of fictitious invoices have been debited in the trading account since the transaction has been found to be bogus. The Tribunal having once come to a categorical finding that the amount of Rs. 2,92,93,288/-represented alleged purchases from bogus suppliers it was not incumbent on it to restrict the disallowance to only Rs. 73,23,322/-.”

6.6.3 In view of above, Ground of appeal No. 5, 6 & 9 raised by the appellant are dismissed.

6.7 The appellant in its Ground of appeal No.7 assailed that The Id. AO has not granted an opportunity of Cross-examination of the third parties whose recorded statements have been relied upon by the AO which was requested by the assessee in the reply to show cause notice dated 15.05.2023, as such, the order is passed. without following the principles of natural justice.

6.7.1 The ground related to not allowing opportunity of cross-examination is also not tenable. It is not necessary that every time opportunity of cross-examination should be given. In the case of Manidhari Stainless Wire (P) Ltd. V. Union of India (2018), it was held by Hon’ble Andhra Pradesh High Court that the right to cross-examination is not absolute. If denial of cross-examination based on sound logic no need to opportunity of cross-examination would required to be given. Further in the case of Meghna Towers (P) Ltd. (2017) and Nokia India (P) Ltd. V. DDIT, Hon’ble, ITAT, Delhi upheld the additions against the assessee who was the beneficiary of bogus entries without cross-examination. Hon’ble Allahabad High Court in the case of Motilal Padmpat Udyog Ltd. V. CIT upheld assessment without cross-examination.In light of the above legal discussion, the contention raised on this ground is rejected and Ground of appeal No. 7 raised by the appellant is dismissed.

6.8 The appellant in its Ground of appeal No.8 assailed that the Id. AO has erred in making addition of Rs. 17,95,33,188/- by merely relying on the report of DGCEI, without considering the fact that the DGCEI notice has been disputed by the assessee and the DGCEI proceedings has not attained any finality.

6.8.1 I have carefully considered the facts of the case, the assessment order, and the submissions made by the appellant. It is observed that the Assessing Officer has mad the impugned addition on the basis of the information and material received from the Directorate General of Central Excise Intelligence (DGCEI), which revealed that the assessee was involved in suppression of turnover and non-disclosure of correct income. The Assessing Officer, after providing due opportunity to the assessee, has relied upon the material evidence and statements recorded during the course of DGCEI investigation, which clearly established that the appellant had undisclosed income amounting to 17,95,33,188/-.

6.8.2 The contention of the appellant that the DGCEI proceedings have not attained finality and therefore cannot be relied upon in income tax proceedings is not tenable. The Assessing Officer is empowered under the Income-tax Act to utilize any credible material or information in his possession, including information received from other government agencies, for the purpose of assessment. The fact that the DGCEI proceedings are pending does not render such information invalid or unusable for income-tax purposes, particularly when the appellant has failed to produce any substantive evidence to disprove the findings or the material relied upon by the Assessing Officer Further, the appellant has not furnished any cogent explanation, reconciliation, or documentary evidence to rebut the findings of the Assessing Officer. Mere denial of the DGCEI report without producing contrary evidence cannot absolve the appellant of the onus to explain the nature and source of the transactions detected during the investigation. During the assessment proceedings, the A.O. issued notice u/s 133(6) to all the suppliers for which information was available with him and only the amount of difference of purchases which remained unconfirmed amounting to Rs.17,95,33,188/- was added u/s 69 C of the Act not the entire transactions reported in the report of DGCEI.

6.8.3 In view of the above discussion, I find that the Assessing Officer has rightly made the addition of 17,95,33,188/- based on the cogent material available on record. No infirmity is found in the order of the Assessing Officer. Accordingly, Ground of appeal No. 8 raised by appellant is dismissed.

6.9 The appellant in its Ground of appeal No.10 assailed that the Id. AO has failed to realize that the report of DGCEI is based only on removal of finished goods without payment of duty and not towards purchase of raw material and the AO has erred in not considering the order passed by the department u/s 143(3) of the IT Act, for AY 2016-17 were the additions made on account of Gross Profit earned @3.51% on unaccounted sales, as such, addition made towards Bogus Purchases is totally unjust and unlawful.

6.9.1 I have carefully considered the submissions of the appellant, the assessment order, and the material placed on record. It is observed that the Assessing Officer has made the impugned addition based on the findings and report of the DGCEI, which revealed large-scale suppression of production and clandestine removal of finished goods without payment of duty. The Assessing Officer, on the basis of such material, concluded that the appellant had incurred bogus purchases and inflated expenses to suppress its real income.

6.9.2 The argument of the appellant that the DGCEI report pertains only to removal of finished goods and not to purchases cannot be accepted. The DGCEI report forms a credible piece of evidence revealing manipulation of accounts and non-disclosure of true business transactions. Once such unaccounted manufacturing and sale activities are established, the corresponding inference regarding non- genuine purchases and suppressed income naturally follows. The appellant has not produced any verifiable documentary evidence such as bills, delivery challans, transport records, or confirmations from suppliers to substantiate the genuineness of the purchases. Mere assertion that purchases are genuine, without supporting proof, does not discharge the burden of proof cast upon the assessee under the law.

6.9.3 As regards the reliance placed by the appellant on the assessment order for Assessment Year 2016-17, it is pertinent to note that each assessment year is an independent unit of assessment, and findings or estimations in one year cannot automatically govern another year unless identical facts and evidences are established. In the present case, the appellant has failed to demonstrate that the facts, nature of transactions, and evidences are the same as those considered in Assessment Year 2016-17. The Assessing Officer has rightly made the addition for the year under appeal on the basis of specific information from DGCEI report and findings relevant to this assessment year.

6.9.4 In view of the above discussion, it is evident that the Assessing Officer has acted on cogent and credible material and has provided due opportunity to the assessee during the assessment proceedings. The appellant has failed to furnish any contrary evidence to rebut the findings of the Assessing Officer. Therefore, I find no infirmity in the addition of 17,95,33,188/- made by the Assessing Officer. Accordingly, the ground of appeal No. 10 raised by appellant is dismissed.

6.10 The Ground of appeal No. 11 raised by appellant is general in nature and does not required any adjudication.”

12. We have heard the rival submissions and perused the record placed before us. We will first take up the additional grounds of appeal raised by the assessee challenging the validity of reassessment proceedings alleging that the notice u/s.148 of the Act is time barred in light of the ratio laid down by the Hon’ble Apex Court in the case of UOI vs. Rajeev Bansal (supra) . We observe that in the instant case the assessment order in question is A.Y. 2014-15. Under the Old regime the impugned assessment year could be reopened within six years from the end of the assessment year. Last date to issue notice u/s.148A of the Act was 31.03.2021. However, due to covid-19 pandemic Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 has been introduced and for the year under consideration, the ld. Assessing Officer had extra three months time, i.e. from 01.04.2021 to 30.06.2021 to issue the notice u/s.148 of the Act. However, Hon’ble Apex Court in the case of Union of India v. Ashish Agarwal (2022 SCC Online SC 543) has held that after 01.04.2021, notice u/s.148 of the Act has to be issued under the New provisions, i.e. issuance of notice u/s.148A(b) followed by reply of the assessee (if any) to be considered u/s.148A(c) and then notice u/s.148A(d) and 148 of the Act and then such exercise has to be carried out from 04.05.2022 and onward. Subsequently, the Hon’ble Apex Court in the case of UOI vs. Rajeev Bansal (supra) has adjudicated various issues regarding the validity of notice u/s.148, approval u/s.151 and other connected issues and has also dealt with the validity of notices issued under the Old regime during the TOLA period and the final notices issued as per the ratio laid down by the judgment of Hon’ble Apex Court in the case of Union of India v. Ashish Agarwal (supra). Relevant portion of the judgment dealing with the issue about time limit of issuing notices u/s.148 of the Act for A.Y. 2013-14 to A.Y. 2017-18 reads as under :

“108. The Income-tax Act read with TOLA extended the time limit for issuing reassessment notices under section 148, which fell for completion from 20 March 2020 to 31 March 2021, till 30 June 2021. All the reassessment notices under challenge in the present appeals were issued from 1 April 2021 to 30 June 2021 under the old regime. Ashish Agarwal (supra) deemed these reassessment notices under the old regime as show cause notices under the new regime with effect from the date of issuance of the reassessment notices. The effect of creating the legal fiction is that this Court has to imagine as real all the consequences and incidents that will inevitably flow from the fiction. East End Dwellings Co. Ltd. v. Finsbury Borough Council [1952] AC 109. [Lord Asquith, in his concurring opinion, observed: “If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it.”) Therefore, the logical effect of the creation of the legal fiction by Ashish Agarwal (supra) is that 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 the deemed notices, including issuance of reassessment notices under section 148 of the new regime. The surviving or balance time limit can be calculated by computing the number of days between the date of issuance of the deemed notice and 30 June 2021.

109. If this Court had not created the legal fiction and the original reassessment notices were validly issued according to the provisions of the new regime, the notices under section 148 of the new regime would have to be issued within the time limits extended by TOLA. As a corollary, the reassessment notices to be issued in pursuance of the deemed notices must also be within the time limit surviving under the Income-tax Act read with TOLA. This construction gives full effect to the legal fiction created in Ashish Agarwal (supra) and enables both the assesses and the Revenue to obtain the benefit of all consequences flowing from the fiction. See State of A P v. A P Pensioners Association [2005] 13 SCC 161. [This Court observed that the “legal fiction undoubtedly is to be construed in such a manner so as to enable a person, for whose benefit such legal fiction has been created, to obtain all consequences flowing therefrom.”]

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 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. Το 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.

G. Conclusions

114. In view of the above discussion, we conclude that:

a. After 1 April 2021, the Income-tax Act has to be read along with the substituted provisions;

b. TOLA will continue to apply to the Income-tax Act after 1 April 2021 if any action or proceeding specified under the substituted provisions of the Income-tax Act falls for completion between 20 March 2020 and 31 March 2021;

c. Section 3(1) of TOLA overrides Section 149 of the Income-tax Act only to the extent of relaxing the time limit for issuance of a reassessment notice under section 148;

d. TOLA will extend the time limit for the grant of sanction by the authority specified under section 151. The test to determine whether TOLA will apply to Section 151 of the new regime is this: if the time limit of three years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under section 151(i) has extended time till 30 June 2021 to grant approval;

e. In the case of Section 151 of the old regime, the test is: if the time limit of four years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under section 151(2) has extended time till 31 March 2021 to grant approval;

f. The directions in Ashish Agarwal (supra) will extend to all the ninety thousand reassessment notices issued under the old regime during the period 1 April 2021 and 30 June 2021;

g. The time during which the show cause notices were deemed to be stayed is from the date of issuance of the deemed notice between 1 April 2021 and 30 June 2021 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 Agarwol (supra), and the period of two weeks allowed to the assesses to respond to the show cause notices; and

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;”

13. In this regard, we also want to go through the judgement passed by Hon’ble Bombay High Court in the case of Gurpreet Singh vs. DCIT & Others order dated 08.05.2025 wherein under identical facts the Writ Petition filed by the assessee was allowed since the impugned notice issued u/s 148 of the IT Act was held to be time barred being issued beyond surviving time limit. Relevant part of the judgment is reproduced below :-

“6. Although multiple grounds as mentioned above have been raised in the writ petition, the learned Advocate for Petitioner has limited his challenge to the point that the order under Section 148A(d) and the notice under Section 148 dated 29/07/2022 was time barred in view of the first proviso to substituted Section 149 as interpreted by the Hon’ble Supreme Court in Ashish Agarwal and Rajeev Bansal (supra). Reliance is also placed on the Delhi High Court judgement in Ram Balram Buildhome (P.) Ltd. v. ITO [2025] 171 taxmann.com 99 (Delhi)/2025 SCC OnLine Del 481 to contend that on identical facts and consistent with the interpretation of the Petitioner in the instant case, order under Section 148A(d) and notice under Section 148 were quashed. It is urged that the remainder period as per the ratio of the decision in Rajeev Bansal (supra) was only 2 days and that the period of 2 days expired on 23/07/2022. This conclusion could be drawn after considering all the exclusions contemplated under 3rd proviso to substituted Section 149 and the exclusions directed by the Hon’ble Supreme Court in the case of Ashish Agarwal (supra) as interpreted in case of Rajeev Bansal (supra). The notice dated 29/07/2022 was thus liable to be quashed.

7. The respondents have canvassed oral arguments and have filed a synopsis of arguments based on the petitioner’s submissions. According to the Respondents and as indicated in the written synopsis :

(i) The assessment re-opened is valid within the meaning of the provisions of Section 147 of the IT Act. Hence, the further proceedings are valid as the same are initiated within the time limitation as notified under the TOLA extending the time limit till 30/06/2021 for re-opening the assessment vide Notification No.38/2021/ F.No.370142/35/2020-TPL.

(ii) That the Government of India notified the TOLA on 29/09/2020. That in view of the TOLA, any notices and orders or compliances for which the due date falls until 31/12/2020 were extended to 31/03/2021, and further thereafter again the same was extended till 30.6.2021.

(iii) That the Central Board of Direct Taxes – CBDT Notification under the TOLA dated 31/12/2020 extended the time limit from 31/12/2020 to 31/03/2021. The CBDT’s Notification dated 31/03/2021 extended the date from 31/03/2021 to 30/04/2021. Subsequently, again, CBDT’s Notification dated 27/4/2021 extended the time barred period from 30/04/2021 to 30/06/2021.

(iv) That the time limit to re-open the proceedings in the present case within the meaning of Section 147 had been extended to 30/06/2021 and that the first notice under Section 148 of the IT Act dated 29/06/2021 was issued within the extended statutory time limit. The notice under Section 148A(b) of the IT Act was issued to the petitioner on 20/05/2022, the objections raised by the petitioner were also disposed of by passing the order under Section 148A(d) of the IT Act on 29/07/2022 which was within the permissible time limit.

(v) That accordingly, the notice under Section 148 of the IT Act was issued after getting prior approval from the Competent Authority. There was no violation of any legal or fundamental rights of the petitioner. Reassessment proceedings were well within the statutory time limit and were not time-barred in view of the first proviso to Section 149(1) of the IT Act, which was made applicable from 01/04/2021.

(vi) That the time limit to re-open the proceedings in the present case within the meaning of Section 147 had been extended to 30/06/2021. The first notice under Section 148 of the IT Act was dated 29/06/2021and that the assessment order passed under Section 147 read with 144B of the IT Act was passed under the e-Assessment of Income Escaping Assessment Scheme, 2022 where the assessment was done on automated allocation. Hence, the aspect of absence of jurisdiction was without substance.

(vii) The order dated 29/07/2022 was passed within the time stipulated under Section 148A(d) in as much as the first reply was uploaded on 03/06/2022 and the additional reply was uploaded on 28/06/2022. Going by the mandate of Section 148A(d) which contemplates that an order under Section 148A(d) was to be passed within one month from date of compliance from notice under Section 148A(b), the limitation would be till 31/07/2022. It is contended that the end of the month for compliance in respect of notice under Section 148A(b) of the IT Act would be 30/06/2022 as the replies were dated 03/06/2022 and 28/06/2022. The period of one month had to be counted from 30/06/2022, which would fall on 30/07/2022.

(viii) The Learned counsel for the Respondents has referred to judgments in :-

(a) Ashish Agarwal (supra);

(b) Rajeev Bansal v. Union of India [2023] 147 com 549/453 ITR 153 (Allahabad);

(c) Virendra Ship Recyclers LLP v. Asstt. CIT [2025] 170 com588 (Bombay);

(d) Income-tax Officer v. Ashish Acharatlal Varaiya [2024] 168
com588/[2025] 302 Taxman 183 (SC);

(e) Assistant Commissioner of Income-tax v. Sanman Trade Impex Ltd. [2025] 170 com589/303 Taxman 333 (SC);

(f) Ashish Acharatlal Varaiya v. ITO [2023] 152 com656 (Gujarat);

(g) Keenara Industries (P.) Ltd. v. Income-tax Officer [2023] 147 com 585/453 ITR 51 (Gujarat);

(h) New India Assurance Company Ltd. v. Asstt. CIT [2024] 158 com367 (Bombay);

(i) Godrej Industries Ltd. v. Asstt. CIT [2024] 160 com13 (Bombay).

8. At the outset, it needs to be clarified that although reference is made to the above judgments at para 17 of the written synopsis, the following is stated:

i. The Hon’ble Supreme Court in the case of Rajeev Bansal (supra) has set aside the decision of the Allahabad High Court which had quashed the re-opening notices for the AYs 2013-14 and other years as time barred under the Amended provisions of the IT Act (as amended from 1-4-2021).

ii. The decision of this Court in New India Assurance Company Ltd (supra) for AY 2013-14 which was followed in Virendra Ship Recyclers and Sanman Impex Ltd. (supra) were set aside by the Hon’ble Supreme Court based on Rajeev Bansal (supra).

iii. The decision of the Gujarat High Court in Ashish Acharatlal Varaiya (supra) for AY 2013-14 was also set aside by the Hon’ble Supreme Court based on Rajeev Bansal’s (supra).

iv. The decision of this Court in New India Assurance Co. Ltd. (supra) which was followed in Hexaware Technologies (supra) for the same AYs 2013-14 by this Court quashing the re-opening notices on this and other grounds were now subject matter of challenge before the Hon’ble Supreme Court in Pr. CIT v. Hexaware Technologies Ltd. [SLP (C) No. 21188 of 2024].

9. In view of the controversy involved, it is necessary to refer to the decisions in Ashish Agarwal and Rajeev Bansal (supra). Since the decision in Ashish Agarwal (supra) has been considered in Rajeev Bansal (supra), it would be advantageous to refer to its observations in this regard in paragraphs 106 and 107. It held as under :-

“106…………. To summarize, the combined effect of the legal fiction and the directions issued by this Court in Union of India v. Ashish Agarwal, (2023) 1 SCC 617 is that the showcause notices that were deemed to have been issued during the period between April 1, 2021 and June 30, 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 assessees to respond to the show-cause notices.

107. The third proviso to Section 149 allows the exclusion of time allowed for the assessees to respond to the show-cause notice under Section 149A(b) to compute the period of limitation. The third proviso excludes “the time or extended time allowed to the assessee”. Resultantly, the entire time allowed to the assessee to respond to the show-cause notice has to be excluded for computing the period of limitation. In Union of India v. Ashish Agarwal, this Court provided two weeks to the assessees to reply to the show-cause notices. This period of two weeks is also liable to be excluded from the computation of limitation given the third proviso to Section 149. Hence, the total time that is excluded for computation of limitation for the deemed notices is : (i) the time during which the show-cause notices were effectively stayed, that is, from the date of issuance of the deemed notice between April 1, 2021 and June 30, 2021 till the supply of relevant information or material by the Assessing Offices to the assessees in terms of the directions in Union of India v. Ashish Agarwal ; and (ii) two weeks allowed to the assessees to respond to the show-cause notices. “

10. It further held in paragraphs 108, 111 and 113 as under :-

“108…… Therefore, the logical effect of the creation of the legal fiction by Union of India v. Ashish Agarwal is that the time surviving under the Income-tax Act read with Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 will be available to the Revenue to complete the remaining proceedings in furtherance of the deemed notices, including issuance of reassessment notices under Section 148 of the new regime. The surviving or balance time limit can be calculated by computing the number of days between the date of issuance of the deemed notice and June 30, 2021.

111. The clock started ticking for the Revenue only after it received the response of the assessees 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 limt, as prescribed under the Income-tax Act read with Taxation and other Laws (Relaxation and Amendmnet of Certain Provisions) Act, 2020, was available to the Assessing Officers to issue the reassessment notices under Section 148 of the new regime.

113……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 Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. A reassessment notice issued beyond the surviving time limit will be time-barred. ‘”

11. Thus, the effect of the judgment in Ashish Agarwal (supra) was that whilst upholding the contention of the assesses that from 01/04/2021, the new regime applied and the issuance of notices under the old regime were contrary to law, the Hon’ble Supreme Court in exercise of powers under Article 142 of the Constitution of India directed that notices issued under Section 148 of the old regime be construed as notices under Section 148A(b) of the new regime and the enquiry contemplated under Section 148A(a) was done away with as a one-time measure. The Assessing Officers were directed to provide the information and material relied upon by the Revenue to the assesses within a period of thirty days to enable the assesses to respond to the notice within a period of two weeks after which Assessing Officer had to pass an order under Section 148A (d) of the IT Act. The Hon’ble Supreme Court expressly observed that all defences available under Section 149(a) of the IT Act would continue to be available to all the assessees. However, in the said judgment, the Hon’ble Supreme Court did not delve into the aspect whether reassessment notices were within the time stipulated under the IT Act read with TOLA and the Notifications issued thereunder.

12. The decision in Ashish Agarwal (supra) was extensively considered by the Supreme Court in Rajeev Bansal (supra). The ratio laid down in the said judgment is pivotal to the issues involved in the present case and both parties have been extensively heard on the implications of the said judgment on the case in hand. In fact, the Petitioner has conceded his case stands or falls on the basis of the interpretation on the issue whether the reassessment notices issued are time barred under the applicable provisions of the IT Act.

13. The Hon’ble Supreme Court in the case of Rajeev Bansal (supra) concluded as under :

a. After 01/04/2021, the IT Act has to be read along with substituted provisions,

b. TOLA would continue to apply to the IT Act after 01/04/2021 if any action or proceeding specified under the substituted provisions of the IT Act falls for completion between 20/03/2020 and 31/03/2021;

c. Section 3(1) of the TOLA overrides Section 149 of the IT Act only to the extent of relaxing the time limit for issuance of a reassessment notice under Section 148;

d. The TOLA would extend the time limit for the grant of sanction by the authority specified under Section 151. The test to determine whether the TOLA would apply to Section 151 of the new regime is that: if the time limit of three years from the end of an assessment year falls between 20/3/2020 and 31/03/2021, then the specified authority under Section 151(1) has extended time till 30/06/2021 to grant approval;

e. In the case of Section 151 of the old regime, the test is if the time limit of four years from the end of an assessment year falls between 20/03/2020 and 31/03/2021, then the specified authority under Section 151(2) has extended time till 31/03/2021 to grant approval;

f. The directions in Ashish Agarwal (supra) would extend to all the reassessment notices issued under the old regime during the period 1/4/2021 and 30/06/2021;

g. The time during which the show-cause notices were deemed to be stayed would be from the date of issuance of the deemed notice between 01/04/2021 and 30/06/2021 till the supply of relevant information and material by the Assessing Officers to the assessees in terms of the directions issued in Ashish Agarwal (supra), and the period of two weeks allowed to the assessees to respond to the show-cause notices, and

h. The Assessing Officer was required to issue the reassessment notice under Section 148 of the new regime within the time limit surviving under the IT Act read with TOLA. All notices issued beyond the surviving period would be time barred and liable to be set aside.

14. As stated earlier, the instant case is premised on ratio laid down in the case of Rajeev Bansal (supra) and the applicability of the principles laid down to the facts of the present case. The sequence of events in the case in hand is as under :

Sr.No.	Date	Event
1	29/06/2021	Notice under erstwhile Section 148 (deemed to be under new Section 148(b))
2	04/05/2022	Judgment of the Hon’ble Supreme Court in Ashish Agarwal (supra)
3	20/05/2022	Notice conveying reasons for reopening and relied-upon material
4	03/06/2022	Reply filed by Petitioner to notice under Section 148A(b)
5	04/06/2022	Two weeks elapsed from issuance of Notice under Section 148A(b)
6	28/06/2022	Second reply filed by Petitioner to Notice under Section 148A(b)
7	14/07/2022	Notice of change of incumbent and grant of additional one week time to file reply
8	21/07/2022	Additional one-week time elapsed
9	29/07/2022	Order passed under Section 148A(d)
10	29/07/2022	Notice issued under Section 148
11	07/05/2023	SCN Notice under Section 147
12	29/05/2023	Order under Section 147

15. In terms of the decisions in Ashish Agrawal and Rajeev Bansal (supra), the following position emerges in the context of the present case :-

(i) The period for subject reassessment in terms of Section 149 of the old regime is deemed to be extended till 30/06/2021 under the TOLA.

(ii) The notice dated 29/06/2021 would be deemed to be notice under Section 148A(b).

(iii) The surviving period by excluding the date of re-issuance of notice on 29/06/2021 would be the remainder days in the month of June 2021 (30/06/2021 – 28/06/2021), namely, two days.

(iv) On 30/06/2021, the extension in terms of the TOLA would come to an end.

(v) The period that stands excluded
is :

(a) The period up to 30/06/2021, which is covered by the provisions of the IT Act read with the TOLA.

(b) The period from 01/07/2021 to 03/05/2022 being the period before the decision of the Hon’ble Supreme Court in Ashish Agarwal (supra).

(c) The Period from 04/05/2022 till 20/05/2022, which is the date when the material was furnished and the reasons for reopening were given to the Petitioner.

(d) The period of two weeks time for reply to be filed by the Petitioner, which ended on 04/06/2022 and the extended time to file reply (additional reply was filed by the Petitioner on 28/06/2022). Further extension was given to the Petitioner in pursuance to notice dated 14/07/2021 giving additional time of one week in view of change in the incumbent to the Office, which period ended on 21/07/2022.

16. By considering all the exclusions, the remainder days for conclusion of the procedure for passing of an order in terms of Section 148A(d) and issuance of notice under Section 148 would be two days from 21/07/2022 and the same would expire of 23/07/2022. Applying the ratio of the decisions in Ashish Agarwal and Rajeev Bansal (supra) in the context of the 1st proviso to Section 149 we are therefore of the opinion that the notice under Section 148 dated 29/07/2022 is time barred. The order under Section 148A(d) as well as the notice issued under Section 148 are dated 29/07/2022 which is much after the surviving period which expired on 21/07/2022.

17. In light of the above, the contentions raised by the Revenue lack foundation in terms of law. Although the Revenue has contended that the order dated 29/07/2022 passed under Section 148A(d) and the notice issued under Section 148 were within the timelines contemplated by the decisions in Ashish Agarwal and Rajeev Bansal (supra), the same lacks substance. In the written synopsis, an attempt was made to justify the timelines by contending that in terms of Section 148A(d), the period mandated for passing of the order was within one month from the end of the month in which the reply referred to is received or where no such reply is furnished within one month from the end of the time by which the extended time allowed to furnish reply as per clause (b) expired. Relying on the said provision it was contended that the replies are dated 03/06/2022 and 28/06/2022 and going by the same, the end of the month would be 30/06/2022. Hence the expiry of time would be on 31/07/2022. It is therefore contended that the order is passed within the one month time contemplated under Section 148A(d).

18. The said contention is fundamentally misconceived. A notice under Section 148 of the IT Act accompanied by an order under Section 148A(d) is required to be issued within the time stipulated under Section 149 of the IT Act. Section 148A(d) does not govern the computation of time as contemplated in terms of Section 149 of the IT Act. The entire process under Section 148A(a) to (d) and the issuance of notice under Section 148 has to be completed within the total time available in terms of Section 149(1) of the IT Act for issuance of notice under Section 148. A notice issued under Section 148 of the IT Act which is beyond the time line stipulated under Section 149(1) is non-complaint and invalid. The timeline under Section 148A(d) is for the Assessing Officer to comply with the stipulations and the streamlining contemplated under Section 148A. This is primarily to bring in transparency and accountability into the system and is intended for the benefit of the assessees. However to suggest that Section 148A(d) extends the time limit under Section 149(1) and/or has a bearing on the time under Section 149(1) is a submission which is misconceived and lacks legal sanctity.

19. It was urged by the Revenue that the decision of this Court in Hexaware Technologies Limited (supra) was under challenge before the Hon’ble Supreme Court and hence the Court could consider awaiting its outcome. The decision in Hexaware Technologies Limited has not been stayed. Since we have proceeded on the basis of the law laid down in Ashish Agarwal and Rejeev Bansal (supra), this contention cannot be accepted. Reference to various decisions has been made. In fact, the decisions referred to are inconsistent with the case set up by the Respondents. Except for the decision in Ashish Acharatlal Varaiya (supra), other judgments are rendered prior to the decision in Rajeev Bansal (supra) and /or do not consider the said decision. Hence the said judgments do not in any manner assist us in deciding the controversy in issue especially in the context to the limited issue that is raised by the Petitioner herein.

20. At this point we deem it appropriate to note that the Delhi High Court in the case of Ram Balram Buildhome (P.) Ltd. v. ITO [2025] 171  com99 (Delhi)/2025 SCC OnLine Del 481 dealt with an identical issue. It considered the principles laid down in Ashish Agarwal and Rajeev Bansal (supra) and concluded that the notice issued under Section 148 under the IT Act was time barred. In the facts of that case as well, the AY was 2013-2014 and the notice under Section 148 issued to the assessee was dated 01/06/2021. The date of furnishing material to the Petitioner in that case was 30/05/2022. The said Petitioner furnished its response to the notice under Section 148A(b) of the IT Act on 13/06/2022. In this factual backdrop, the Delhi High Court applying the ratio of the decisions in Ashish Agarwal and Rajeev Bansal (supra) came to the conclusion that the remainder period with the Assessment Officer was twenty-nine days from 01/06/2021 when the reassessment proceedings commenced for issuing notice under Section 148 of the IT Act. The limitation for passing of the order under Section 148A(d) expired on 12/07/2022. Accordingly, the notice under Section 148A of the IT Act issued on 30/07/2022 was held to be beyond limitation and the same was quashed. The Delhi High Court also relied on the observations made in the case of Raminder Singh v. Asstt. CIT  [2023] 156 taxmann.com 148/[2024] 461 ITR 368 (Delhi)/2023 DHC 6672-DB wherein it was held that one month from the end of the month in which the time available to the assessee to respond to the notice under clause (b) of Section 148A expires is available to the Assessment Officer to pass an order under Section 148A(d) of the IT Act. It was further held that notice under Section 148 of the IT Act that is not accompanied by an order under Section 148A(d) of the Act would be non-compliant with the IT Act and no such notice could be issued beyond the period as specified under Section 149(1) of the IT Act. This decision of the Delhi High Court is consistent with our view based on the interpretation of the decisions in Ashish Agarwal and Rajeev Bansal (supra).

21. For all these reasons, we hold that the notice dated 29/07/2022, issued by Respondent no.1 under Section 148 of the IT Act is beyond the time period specified under Section 149(1) of the IT Act. It is therefore quashed. Consequently, the impugned assessment order dated 29/05/2023 passed on the basis of the impugned notice also stands quashed and set aside. Rule is made absolute in aforesaid terms with no order as to costs.”

14. In light of the above settled judicial precedents, we proceed to examine the facts of the instant case as to whether or not the notice issued u/s. 148 of the Act is time barred ?

15. We note that notice under the TOLA period for the A.Y. 2014-15 has been issued to the assessee on 29.06.2021. As per the ratio laid down by the Hon’ble Apex Court in the case of UOI vs. Rajeev Bansal (supra) the surviving period was only two days. Further, fresh notice u/s.148A(b) has been issued on 25.05.2022 to which the assessee has responded u/s.148A(c) on 06.06.2022. As per the illustration given para 112 in the case of UOI vs. Rajeev Bansal (supra) the surviving period in the case of assessee will be only two days and therefore after receiving the reply of the assessee u/s.148A(c) on 06.06.2022 and since the surviving period in the instant case is two days which is less than seven days therefore, even if the same is extended upto seven days, ld. Assessing Officer had to issue the notice u/s.148A(d) and 148 of the Act on or before 13.06.2022. However, the notice in the instant case has been issued on 29.07.2022 which is clearly time barred. Ld. DR failed to controvert this contention of ld. Counsel for the assessee and therefore in light of the judgment of Hon’ble Apex Court in the case of UOI vs. Rajeev Bansal (supra) since the impugned notice u/s.148 of the Act has not been issued by the ld.Assessing Officer within the surviving period available with him, the notice issued is time barred and bad in law and therefore ld. Assessing Officer fails to assume jurisdiction for carrying out the assessment proceedings and therefore the impugned reassessment proceedings are quashed being illegal and invalid and accordingly impugned additions stands deleted. Additional Ground of appeal raised by the assessee is allowed.

16. Though we have quashed the reassessment proceedings deciding the legal issue raised in additional grounds of appeal in favour of the assessee by holding that the notice u/s.148 of the Act is time barred, even though academic, we still proceed to deal with merits of the case also.

17. We notice that ld. Assessing Officer has made the addition for unexplained ingenuine purchases of Rs.17,95,33,188/- made from the following five parties : 

S. No.	Name of the Party	PAN	Transaction Amount
1	M/s Goa Steel Ltd	AACFG6984H	5,32,44,026
2	M/s Prateek Alloys Pvt Ltd	AAACP1598D	2,97,45,843
3	M/s Shivam Ispat Pvt Ltd	AAECS5956J	69,86,748
4	M/s Goa Sponge and Power Ltd	AAECS3612D	7,44,33,156
5	M/s Mohit Steels Ltd	AABCM9713G	1,51,23,415

18. We further notice that out of the above five parties, alleged unaccounted purchases at RS.1,51,23,415/- from M/s. Mohit Steels Ltd. is incorrect. Based on our examination of the facts of the case, we note that the ledger account placed at pages 62 to 64 and 152 to 156 of the paper book clearly demonstrates that the purchases from M/s. Mohit Steels Ltd. during the impugned assessment year is Rs.8,19,77,179/- and the same has been booked as purchases in the regular books of accounts maintained by the assessee for the year under consideration. The figure of purchase from Mohit Steels Ltd. at Rs.9,71,00,594/- referred by the ld. Assessing Officer in the assessment order is actually the purchases made from M/s. Mohit Steels Ltd. during A.Y. 2015-16 relating to F.Y. 2014-15 and not in impugned A.Y. 2014-15 therefore the addition for unexplained purchases of Rs.1,51,23,415/- being the difference of purchases made from Mohit Steels Ltd. mentioned by the ld. Assessing Officer at Rs.9,71,00,594/- and the purchases appearing in the books at Rs.8,19,77,179/- is uncalled for and disallowance of purchases at Rs.1,51,23,415/- stands deleted.

19. So far as the remaining purchases are concerned, we observe that ld. Assessing Officer in the assessment order at page 5 has prepared table where details of each of these parties along with their PAN, total purchases (accounted and unaccounted) purchases shown by the assessee in books of account and difference is shown and the same is extracted below:

//this space is intentionally left blank//

S. No.	Name of the Entity	PAN	Total Purchases (Accounted and unaccounted for) of ingots/billets by M/s Sahanu Sponge and Power Ltd during FY 2013-14	Purchases as shown by assessee	Difference
1	M/s Goa Steel Ltd	AACFG6984H	11,72,94,829	6,40,50,803	5,32,44,026
2	M/s Prateek Alloys Pvt Ltd	AAACP1598D	7,14,13,087	4,16,67,244	2,97,45,843
3	M/s Shivam Ispat Pvt Ltd	AAECS5956J	1,40,48,935	70,62,187	69,86,748

Note: Notice u/s 133(6) were issued to the entities mentioned above. However, the sales made to the assessee had not been confirmed by any of the parties mentioned above.

S. No.	Name of the Entity	PAN	Total Purchases (Accounted and unaccounted for) of ingots/billets by M/s Sahanu Sponge and Power Ltd during FY 2013-14	Purchases as shown by assessee	Difference
1	M/s Goa Sponge and Power Ltd	AAECS3612D	18,53,88,209	11,09,55,053	7,44,33,156

20. From the above chart, we notice that ld. Assessing Officer has not disputed the purchase made from the above four parties which are appearing in the books of account and they have not been held to be ingenuine or bogus and have been accepted. Only the difference pertaining to total purchases and accounted purchases have been added as bogus purchases. We fail to find any merit in this action of the Assessing Officer of treating the alleged purchases as unaccounted/bogus because the Assessing Officer has himself accepted the purchases from the very same parties accounted for in the books as genuine. Even the invocation of section 69C of the Act is also incorrect because it applies to the purchases appearing in the books for which the assessee is unable to offer any explanation to the satisfaction of the Assessing Officer. For the sake of convenience, section 69C of the Act is reproduced below :

“69C. Unexplained expenditure, etc.

Where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof, or the explanation, if any, offered by him is not, in the opinion of the [Assessing Officer), satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year:]

Provided that, notwithstanding anything contained in any other provision of this Act, such unexplained expenditure which is deemed to be the income of the assessee shall not be allowed as a deduction under any head of income.]”

21. From bare perusal of the above section 69C of the Act, we notice that it applies only in cases where the assessee has claimed certain expenditure in the books of account but then he fails to offer proper explanation for the source of such expenditure to the satisfaction of the Assessing Officer. However, in the instant case, the alleged unaccounted purchase are not appearing in the books and therefore the assessee has not claimed them as an expenditure. Therefore, prima-facie, ld. Assessing Officer erred in invoking section 69C of the Act. However, we are aware of the fact that assessee in the instant case has made unaccounted purchases as well as unaccounted sales. This information was very much available with the ld. Assessing Officer which has been used for reopening the assessment proceedings. However, ld. Assessing Officer has not resorted to make any addition referring to unaccounted sales but has only restricted the addition to unaccounted purchases. It therefore means that ld. Assessing Officer has accepted that alleged unaccounted purchased have been sold as unaccounted sales. Once the goods purchases have been sold and also the parties from whom the purchases are alleged to be bogus or ingenuine are actually regular supplier of goods to the assessee and major portion of purchases from these parties are accounted for in the regular books of account and duly accepted by the Revenue authorities, we are of the considered view that only the profit element embedded in the unaccounted sales could have been subjected to tax as the same shall take care of unaccounted purchases also. We also take note of the fact that in the case of assessee for A.Y. 2016-17 the assessment order has been framed on 28.12.2018 wherein also similar issue regarding unaccounted cash purchases of Rs.40.65 crore and odd was observed and there were unaccounted sales of Rs.57.01 crore and ld. Assessing Officer had not made any addition for unaccounted purchases but has only made the addition estimating the profit @3.5% of the unaccounted sales. In our opinion, the Revenue authorities should have adhered to the Rule of Consistency as has been considered by the Hon’ble Apex Court in the case of Radhasaomi Satsang Vs. CIT (supra) where the Hon’ble Court held that while resjudicata does not strictly apply to income-tax proceedings and each assessment year is an independent unit, but still tax authorities cannot arbitrarily change a settled, fundamental factual position accepted for past years in subsequent years without a material change in facts or law. In other words, if a core recurring factual aspect has been accepted consistently by both sides over multiple years without challenge, authorities should not alter that position arbitrarily.

22. In light of the above judgment and other decisions referred and relied on by the ld. Counsel for the assessee and also following the Rule of Consistency, we find that once the Revenue authorities for the very same assessee under similar facts and circumstances dealing with unaccounted cash purchases and unaccounted cash sales have applied profit margin, the same method should have been followed for the year under consideration also where also the alleged parties from whom the assesee has made unaccounted purchases and unaccounted sales, there are accounted purchases from the very same parties which have been accepted by the ld. Assessing Officer and therefore only the profit margin of 4.50% should have been applied on the alleged unaccounted purchases of Rs.16,44,09,773/- and applying the rate of 4.50% the estimated profit works out to Rs.73,98,440/-. Accordingly, on merits of the case, even though we have dealt it for academic purpose, the addition on merits, if any, can be made only at Rs.73,98,440/-and the remaining amount stands deleted. However, since we have quashed the reassessment order and deleted the impugned addition, there will be no effect of estimated profit worked out by us in the preceding paragraphs of this order. Grounds of appeal raised on merits are partly allowed. Remaining grounds of appeal are either infructuous, general or consequential in nature, and thus needs no adjudication.

23. In the result, the appeal of the assessee is partly allowed as per terms indicated hereinabove.

Order pronounced on this 05^th day of August, 2026.