Yogeshkumar Kasturji Prapapati Vs ITO (ITAT Ahmedabad)
Section 148: Late PCIT Approval Cannot Revive Time-Barred Reopening, Rules Ahmedabad ITAT
Reassessment Quashed for Crossing the Surviving Limitation Period
The Ahmedabad ITAT has held that the time available for passing an order under Section 148A(d) cannot extend the outer limitation prescribed under Section 149 for issuing a reassessment notice. Similarly, approval obtained from the Principal Commissioner after the limitation period has expired cannot revive an otherwise time-barred reopening.
Applying the Supreme Court’s decision in Union of India v. Rajeev Bansal, the Tribunal quashed the reassessment for Assessment Year 2017-18. It found that the consequential notice under Section 148, issued on 28 July 2022, was beyond the surviving period available to the Assessing Officer.
The assessee’s appeal was consequently allowed, without examining the merits of the ₹5,90,000 addition under Section 69A.
Background of the Dispute
The assessee had not filed an original return of income for Assessment Year 2017-18. In response to the notice under Section 148, he filed a return declaring income of ₹2,87,588.
The Assessing Officer completed the reassessment on 28 May 2023, making an addition of ₹5,90,000 as unexplained money under Section 69A. The Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, dismissed the assessee’s appeal by an order dated 26 February 2026.
Before the Tribunal, the assessee challenged both the validity of the reopening and the addition. His objections included limitation, reliance on third-party records, absence of acceptable evidence of the alleged cash payment, denial of cross-examination, and failure to consider the material furnished.
The Tribunal first examined the jurisdictional objection concerning limitation, since its determination could dispose of the appeal.
Original Notice Converted into a Section 148A(b) Notice
The original notice under Section 148 had been issued on 29 June 2021.
Following the Supreme Court’s judgment in Union of India v. Ashish Agarwal, that notice was required to be treated as a show-cause notice under Section 148A(b) of the substituted reassessment provisions.
The Assessing Officer subsequently furnished the relevant information and material through a communication dated 26 May 2022. The assessee submitted his reply on 10 June 2022.
The crucial question was how much time remained thereafter for completing the preliminary proceedings and issuing the consequential notice under Section 148.
Only the Surviving Period Was Available
The Tribunal referred to Rajeev Bansal, which considered the interaction between the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, the substituted reassessment provisions, and the directions in Ashish Agarwal.
As explained in the order, after giving effect to the permissible exclusions, the Assessing Officer was entitled only to the limitation period that survived when the original or deemed notice was issued. A consequential notice issued beyond that surviving period would be barred by limitation.
Here, the original notice was issued on 29 June 2021, against the extended terminal date of 30 June 2021. The balance period was therefore less than seven days.
Even granting the minimum seven-day period contemplated by the relevant proviso to Section 149, the Tribunal held that, after the assessee replied on 10 June 2022, the consequential notice had to be issued on or before 17 June 2022.
July Approval and Notice Were Too Late
The actual proceedings occurred substantially later. Approval from the Principal Commissioner was obtained on 26 July 2022. The order under Section 148A(d) was passed on 28 July 2022, and the consequential notice under Section 148 was issued on the same date.
The Tribunal rejected the contention that the period prescribed under Section 148A(d) permitted the Assessing Officer to pass the order during July 2022 and thereby sustain the reopening.
It held that the period for passing an order under Section 148A(d) cannot enlarge the outer jurisdictional limitation under Section 149.
Likewise, approval under Section 151, obtained after the expiry of limitation, could not restore the Assessing Officer’s jurisdiction. The Tribunal also found support for this view in the Punjab and Haryana High Court’s decision in Shashank Garg v. ITO, dated 6 February 2026.
Addition on Merits Left Undecided
Having held the notice to be time-barred, the Tribunal concluded that the assumption of jurisdiction under Section 147 was invalid and quashed the resulting reassessment.
The grounds challenging the addition became academic and required no adjudication. Accordingly, the order does not decide whether the alleged cash payment was proved, whether the third-party records were reliable, or whether Section 69A was correctly invoked.
The relief arose from the invalid reopening itself.
Author’s Comments
The decision highlights the need to distinguish between the time allowed for an intermediate procedural step and the final statutory deadline for issuing a reassessment notice. Compliance with the former cannot cure a breach of the latter.
For transitional reassessment cases, a date-wise examination of the original notice, supply of material, assessee’s response, surviving limitation, approval, and consequential notice can determine the validity of the entire assessment.
The practical point is clear: a late approval cannot cure an expired limitation period. Here, the jurisdictional defect was sufficient to quash the reassessment, making examination of the underlying addition unnecessary.
Cases Discussed
- Union of India Vs Ashish Agarwal (Supreme Court) — Applied. The original Section 148 notice dated 29 June 2021 was required to be treated as a notice under Section 148A(b) of the substituted reassessment provisions.
- Union of India Vs Rajeev Bansal (Supreme Court) — Followed. The Tribunal applied the principle that, after permissible exclusions, the Assessing Officer gets only the limitation period surviving on the date of the original/deemed notice for completing the consequential reassessment-initiation process.
- Shashank Garg Vs ITO, CWP-28020-2022, Punjab & Haryana High Court, order dated 06/02/2026 — Relied upon in support of the conclusion that the Section 148A(d) timeline cannot enlarge the outer jurisdictional limitation under Section 149 and a subsequent approval cannot revive time-barred jurisdiction.
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT AHMEDABAD
The assessee has filed the appeal against the order dated 26-02-2026 passed by Commissioner of Income Tax (Appeals), National Faceless Appeal Centre NFAC, Delhi (in short, referred to as the CIT(A)) u/s. 250 of the Income Tax Act, 1961 (herein referred to as “the Act”) relating to Assessment Year 2017-18.
2. The assessee raised the following grounds of appeal:-
“1. The learned NATIONAL FACELESS APPEAL CENTRE [NFAC] has grievously erred both in law and on facts in dismissing the grounds of appeal of the appellant challenging the legality which is illegal and without jurisdiction. It be so held that reassessment order is illegal and bad in law.
2. The learned National Faceless Appeal Centre further erred in law and on facts in not appreciating that the notice issued u/s 148 was beyond the limitation prescribed by relevant provisions of section 149(1(a) when the alleged escapement was far below Rs. 5,90,000/-.
3. Without prejudice to the above grounds, the learned NTAIONAL FACELESS APEPAL CNETRE grievously erred in law and on facts in upholding the addition of Rs. 5,90,000/-by wrongly invoking section 69A of the Income tax Act, 1961 on the alleged unexplained investment when there was no evidence acceptable in law as regards any such cash payment made.
4. The learned NATIONAL FACELESS APPEAL CENTRE further grievously erred both in law and on facts in not appreciating that the legal position is well settled that no addition could be made by invoking section 69A of the Act based on dumb document and alleged escapement of income based on such third party record which cannot be presumed to be true and reliable when it is not in appellants handwriting. It be so held now.
5. The learned NATIONAL FACELESS APPEAL CENTRE also erred in law and on facts in not properly considering the detailed submission of the appellant and following the applicable judgments as cited before him while passing the appellate order when addition was made without affording cross examination as requested. It be so held now and addition of Rs. 5,90,000/- made be deleted now.
6. Both the lower authorities erred in law and on facts in not adhering to the principles of natural justice and making/confirming addition without independent inquiry and consideration of the evidences and documents furnished.
7. On the facts and in the circumstances of the case, the appellant prays that the illegal order passed be quashed and the addition of Rs. 5,90,000/- be also directed to be deleted now.
8. The Ld NFAC ought to have allowed the appeal in toto.
9. The appellant craves leave to add, alter, modify or delete any of the grounds at the time of hearing.”
3. The assessee has not filed original return of income for the A.Y. 2017-18. In response to notice u/s. 148 of the Act, assessee filed return of income for A.Y. 2017-18 declaring income of Rs. 2,87,588/-. AO passed the reponed assessment order on 28-05-2023 after making an addition of Rs. 5,90,000/- as unexplained money u/s. 69A of the Act. Aggrieved by the order of AO, assessee filed the appeal. CIT(A) vide his order dated 26-02-2026 dismissed assessee’s appeal. Aggrieved by the order of CIT(A), assessee filed this appeal before ITAT.
4. We have heard both the parties and perused the materials available on record.
4.1 The preliminary issue arising for consideration is whether the notice issued u/s. 148 of the Act on 28-07-2022 is barred by limitation.
4.2 It is undisputed fact that original notice u/s. 148 of the Act was issued on29-06-2021. In terms of the judgment of the Hon’ble Supreme Court in Union of India vs. Ashish Agarwal, the said notice is required to be treated as notice u/s. 148A(b) of the substituted provision. The AO therefore furnished the information/material to the assessee vide communication dated 26-05-2022. The assessee furnished his reply on 10-06-2022.
4.3 The Hon’ble Supreme Court in the case of Union of India vs Rajeev Bansal, while considering the interplay between TOLA, the substituted re-assessment provisions and the directions issued Ashish Agarwal, has held that after giving effect to the permissible exclusions, the AO is entitled only to the period of limitation which survived on the date of issuance of original/deemed notice. Notices issued beyond such surviving period are barred by limitation.
4.4 In the present case, original notice having been issued on 29-06-2021 against the extended terminal date of 30-06-2021, balance period available was less than 7 days. Even granting the minimum period of 7 days contemplated by the relevant proviso to section 149, upon the assessee furnishing its response on 10-06-2022, consequent proceedings were required to be completed and notice u/s. 148 issued within the surviving period i.e. on or before 17-06-2022.
4.5 However, approval of the PCIT was obtained only on 26-07-2022, the order u/s. 148A(d) was passed on 28-07-2022 and the consequential notice u/s. 148 was also issued on 28-07-2022.
4.6 The contention that the period prescribed u/s. 148A(d) permitted the AO to pass the order during July, 2022 does not advance the case of the revenue. The period prescribed for passing an order u/s. 148A(d) cannot operate so as to enlarge the outer jurisdictional limitation prescribed u/s. 149. The approval obtained u/s. 151 after expiry of such limitation similarly cannot revive an otherwise time barred jurisdiction. The above view finds support from the decision of Hon’ble Punjab and Haryana High Court in Shashank Garg vs. ITO (CWP-28020-2022 order dated 06-02-2026).
4.7 Respectfully following the decision of Hon’ble Supreme Court in Rajeev Bansal case, we hold that notice issued u/s. 148 on 28-07-2022 is barred by limitation. Consequently, assumption of jurisdiction u/s. 147 is invalid and the reassessment order passed pursuant thereto cannot be sustained. The same is accordingly quashed.
4.8 Since, the re-assessment itself has been held to be without jurisdiction, the grounds relating to addition on merits are rendered academic and require no adjudication.
5. In the result, the appeal is allowed.
Order pronounced in the open court on 30-09-2026
