Pramila Satyanarayan Bhandari Vs DCIT (ITAT Surat)
Dated 31 March, Emailed 1 April: ITAT Quashes Reassessments for Skipping Section 148A
One Day Changed the Applicable Procedure
The reassessment notices carried the date 31 March 2021, but the evidence showed that they were emailed to the assessee on 1 April 2021 at 8:22 a.m.
That difference proved decisive. The substituted reassessment provisions introduced by the Finance Act, 2021 had come into force on 1 April 2021, bringing with them the procedure prescribed under section 148A.
The Surat Tribunal held that the reassessments could not survive because the Assessing Officer had proceeded without following that mandatory procedure, particularly without passing an order under section 148A(d).
Both reassessment orders were consequently quashed.
Investigation Information Leads to Reopening
The assessee had originally filed returns declaring income of ₹6,28,590 for AY 2013-14 and ₹3,62,460 for AY 2014-15. These returns were processed under section 143(1).
Subsequently, the Assessing Officer received information from the Investigation Wing, Kolkata, indicating that the assessee was a beneficiary of accommodation entries from a shell company associated with Shri Mukesh Banka.
The cases were reopened through notices under section 148 bearing the date 31 March 2021.
Reassessment orders were passed on 25 March 2022 under section 147 read with section 144B, determining income of ₹40,28,590 for AY 2013-14 and ₹13,63,544 for AY 2014-15.
The disputed additions included ₹34 lakh under section 68 in the first year and ₹5 lakh under section 68 plus ₹5,01,084 relating to alleged bogus long-term capital gains in the second year.
The CIT(A) upheld the assessments, prompting the assessee’s appeals before the Tribunal.
Additional Legal Ground Goes to the Root
The assessee raised an additional ground challenging the jurisdiction to reassess.
The contention was that, although the notices were dated 31 March 2021, they were actually issued through email only on 1 April 2021, after the new provisions had commenced. Nevertheless, the Assessing Officer had neither followed section 148A nor issued a fresh section 148 notice after completing that procedure.
The Tribunal admitted the additional ground, relying on National Thermal Power Co. Ltd. v. CIT, 229 ITR 383 (SC).
It noted that the ground was legal, went to the root of the matter, required no new evidence and could be decided using material already on record.
The Objection Concerned Procedure, Not Merely Limitation
The assessee’s representative expressly clarified that the challenge was not that the notices emailed on 1 April 2021 were automatically time-barred.
The submission recognised the extended timelines under TOLA and the Supreme Court’s decision in Union of India v. Ashish Agarwal.
The precise objection was that the old-law notices issued after 1 April 2021 had to be dealt with under the substituted scheme. Under the Supreme Court’s directions, such notices were to be treated as notices under section 148A(b), followed by the prescribed consideration, an order under section 148A(d) and, where warranted, a fresh notice under section 148.
The Assessing Officer had not completed those steps.
Printed Date and DIN Did Not Establish Earlier Issuance
The Revenue argued that the DIN and date of 31 March 2021 demonstrated that the notices had been generated and uploaded or delivered to the income-tax portal that day.
It therefore contended that the old reassessment provisions governed the cases and that section 148A compliance was unnecessary.
However, the Tribunal had specifically granted the Revenue an opportunity, through its order-sheet entry dated 25 June 2026, to furnish details concerning issuance and service.
The Revenue produced no further material to rebut the assessee’s evidence. The Tribunal accordingly treated the email issuance on 1 April 2021 and the absence of section 148A compliance as undisputed facts.
Precedents Support Quashing the Assessments
The Tribunal followed Ketan Natvarlal Shah v. ITO, ITA No. 894/SRT/2023, dated 3 February 2026, which dealt with a similar notice bearing a March date but issued electronically in April.
It also referred to the Gujarat High Court’s decision in Saumil Avinash Baheti v. ITO, Special Civil Application No. 3804 of 2022, dated 17 June 2025.
Applying those precedents, the Tribunal held that section 148A compliance was a condition precedent to valid issuance of the section 148 notices and assumption of reassessment jurisdiction in these cases.
Both assessments were quashed. The remaining grounds were left open without adjudication, and both appeals were allowed.
Author’s Comments
The decision highlights the importance of electronic issuance records, especially where a notice falls at the boundary between two statutory regimes. A printed date and DIN could not resolve the dispute when the email evidence remained unrebutted.
The ruling also distinguishes extension of time from compliance with the applicable procedure. The assessee accepted the relevance of extended timelines but successfully challenged the failure to follow the substituted reassessment process.
Its practical value lies in the factual combination established here: issuance on 1 April 2021, no contrary issuance evidence from the Revenue and no section 148A procedure. The Tribunal did not decide whether the underlying accommodation-entry or capital-gain allegations were correct.
Cases Discussed
- National Thermal Power Co. Ltd. v. CIT, (1998) 229 ITR 383 (SC) — Relied upon for admitting the additional legal ground.
- Union of India v. Ashish Agarwal, (2022) 444 ITR 1 (SC) — Applied regarding conversion of old-law reassessment notices into notices under section 148A(b).
- Ketan Natvarlal Shah v. ITO, ITA No. 894/SRT/2023, dated 03.02.2026 (ITAT Surat) — Followed on electronically issued reassessment notices.
- Saumil Avinash Baheti v. ITO, Special Civil Application No. 3804 of 2022, dated 17.06.2025 (Gujarat High Court) — Relied upon regarding electronic service and invalid reassessment notices.
FULL TEXT OF THE ORDER OF ITAT SURAT
The captioned two (2) appeals filed by assessee challenge two separate orders of first-appeal dated 18.11.2025 & 11.11.2025 passed by learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi [“Ld. CIT(A)”], which in turn arise out of respective assessment-orders dated 25.03.2022 passed by learned National Faceless Assessment Centre, Delhi [“Ld. AO”] u/s 147 r.w.s. 144B of the Income-tax Act, 1961 [“the Act”] for Assessment-Years [“AYs”] 2013-14 & 2014-15.
2. The background facts leading to present appeals are such that the assessee-individual filed his returns u/s 139 declaring a total income of Rs. 6,28,590/- in AY 2013-14 and Rs. 3,62,460/- in AY 2014-15. Those returns were duly processed u/s 143(1). Subsequently, taking into account certain information received from the office of DDIT (Inv.), Kolkata indicating that the assessee was beneficiary of accommodation taken from a shell company of Shri Mukesh Banka, the Ld. AO re-opened assessee’s cases u/s 147 through notices dated 31.03.2021 u/s 148, which culminated into passing impugned assessment-orders dated 25.03.2022 at a total income of Rs. 40,28,590/- in AY 2013-14 and Rs. 13,63,544/- in AY 2014-15. Aggrieved, the assessee carried matter in first-appeals but did not get success. Now, the assessee has come in present appeals before us.
3. The assessee has raised following grounds:
AY 2013-14:
“1. On the facts and circumstances of the case as well as the law on subject, the Hon’ble CIT(A) has erred in confirming the action of the assessing officer for not following the basic principle of Audi Alteram Partem which is mandatory in nature.
2. On the facts and circumstances of the case as well as the law on subject, the Hon’ble CIT(A) has erred in confirming the action of the assessing officer for not following the provision mentioned in Section 144B of the Income Tax Act, 1961.
3. On the facts and circumstances of the case as well as the law on subject, the Hon’ble CIT(A) has erred in confirming the action of the assessing officer in reopening the assessment u/s 147 by issuing notice u/s 148 of the Act.
4. On the facts and circumstances of the case as well as the law on subject, the Hon’ble CIT(A) has erred in confirming the action of the assessing officer for relying on the statement of some third party unrelated to the assessee and not providing opportunity of cross examination.
5. On the facts and circumstances of the case as well as law on the subject, the Hon’ble CIT(A) has erred in confirming the action of the assessing officer in making addition of Rs. 34,00,000/- as unexplained cash credit u/s 68 of the Income Tax Act, 1961.
6. It is therefore prayed that the above addition made by the Ld.AO and confirmed by the Hon’ble CIT(A) may please be deleted.
7. Appellant craves leave to add, alter or delete and ground (s) either before or in the course of hearing of the appeal.”
AY 2014-15:
“1. On the facts and circumstances of the case as well as the law on subject, the Hon’ble CIT(A) hat erred in confirming the action of the assessing officer for not following the basic principle of Audi Alteram Patem which is mandatory in nature.
2. On the facts and circumstances of the case as well as the law on subject, the Hon’ble CIT(A) has erred in confirming the action of the assessing officer for not following the provision mentioned in Section 144B of the Income Tax Act, 1961.
3. On the facts and circumstances of the case as well as the law on subject, the Hon’ble CIT(A) has erred in confirming the action of the assessing officer in reopening the assessment u/s 147 by issuing notice u/s 148 of the Act
4. On the facts and circumstances of the case as well as the law on subject, the Hon’ble CIT (A) has erred in confirming the action of the assessing officer for relying on the statement of some third party unrelated to the assessee and not providing opportunity of cross examination.
5. On the facts and circumstances of the case as well as law on the subject, the Hon’ble CIT(A) has erred in confirming the action of the assessing officer in making addition of Rs. 5,00,000/- as unexplained Cash Credit u/s 68 of the Income Tax Act, 1961.
6. On the facts and circumstances of the case as well as law on the subject, the Hon’ble CIT(A) has erred in confirming the action of the assessing officer in making addition of Rs. 5,01,084/- as income from bogus LTCG.
7. It is therefore prayed that the above addition made by the Ld.AO and confirmed by the Hon’ble CIT(A) may please be deleted.
8. Appellant craves leave to add, alter or delete and ground (s) either before or in the course of hearing of the appeal.
Additional Ground in both years:
“The reassessment is void ab initio, as the notice u/s 148, though dated 31.03.2021, was issued by e-mail only on 01.04.2021 at 08:22 AM, after the substituted provisions came into force, and the mandatory procedure u/s 148A to be followed by a fresh notice u/s 148 was never complied with.”
4. Since the additional ground is legal in nature; goes to the root of the matter; does not call for any new evidence; and can be decided on the basis of material already held on record, the same is admitted in view of National Thermal Power Co. Ltd. Vs. CIT (1998) 229 ITR 383 (SC) and taken up for adjudication.
5. Ld. AR for assessee, at the outset, drew our attention to the orders of lower authorities and the documents placed in the Paper-Book filed by assessee. He submitted that although the notices u/s 148 issued by Ld. AO bear the DIN & date 31.03.2021, those notices were actually sent by Ld. AO to the assessee through e-mail on 01.04.2021 at about 08:22 A.M. In support of this claim, Ld. AR referred the screenshots of e-mails placed at Pages 2 & 4 of Paper-Book, the same are scanned and re-produced below for immediate reference:
AY 2013-14:
———- Forwarded message ———-
From: <[email protected]>
Date: Thu, Apr 1, 2021, 8:22 AM
Subject: [ITBA]Notice under Section 148 of the Income Tax Act, 1961
To: <[email protected]>
Dear PRAMILA SATYANARAYAN BHANDARI,
AY 2014-15:
Harishankar Toshniwal
<[email protected]>
———- Forwarded message ———-
From: <[email protected]>
Date: Thu, Apr 1, 2021, 8:22 AM
Subject: [ITBA]Notice under Section 148 of the Income Tax Act, 1961
To: <[email protected]>
Dear PRAMILA SATYANARAYAN
BHANDARI,
Please find attached the Notice u/s 148 for PAN: ACFPB9160M and AY: 2014-15.
Please quote your PAN in all future correspondences.
Note:
– This communication is computer generated and may not contain signature.
6. Thereafter, Ld. AR submitted that he is not claiming that the notices dated 31.03.2021 issued by Ld. AO through e-mail dated 01.04.2021 were time-barred because he is very much aware that although the time-limit of 6 years from end of AY 2013-14 & 2014-15 prescribed in section 149 expired before/by 31.03.2021, the time-limit was extended uptill 30.06.2021 by THE TAXATION AND OTHER LAWS (RELAXATION AND AMENDMENT OF CERTAIN PROVISIONS) ACT, 2020 [“TOLA”] and the notices issued by department on 01.04.2021 were saved by the decision of Hon’ble Supreme Court’s in Ashish Agarwal (2022 SCC Online SC 543). However, his precise objection is that w.e.f. 01.04.2021, the scheme of assessment u/s 147 had been substituted through Finance Act, 2021. According to new scheme/ provisions, the AO was under compulsion to firstly follow the mandatory procedure of section 148A [such procedure requires issuance of a notice u/s 148A(b) to assessee and inviting assessee’s response; consideration of assessee’s response; and passing of order u/s 148A(d)] and only thereafter the AO could issue notice u/s 148. In Ashish Agarwal (supra) also, the Hon’ble Supreme Court has directed that the re-assessment notices issued under the unamended/old provisions between 01.04.2021 and 30.06.2021, shall be deemed to be the notices issued under new/substituted provisions of section 148A(b) but the AO would pass order u/s 148A(d) and thereafter issue notice u/s 148. He submitted that, in present cases, no such procedure was followed by Ld. AO and no order u/s 148A(d) was passed before framing the impugned assessments. Hence, the assessment framed by Ld. AO in present cases are against the provisions of the Act and liable to be quashed. In support, Ld. AR relied upon the order of co-ordinate Bench of ITAT, Surat in Ketan Natvarlal Shah Vs. Income-tax Officer, ITA No. 894/SRT/2023, dated 03.02.2026.
7. Per contra, Ld. DR for revenue submitted that the notices bear DIN & Date of 31.03.2021 which shows that the notices had been generated as well as uploaded/delivered to Income-tax Portal on 31.03.2021. Hence, in the situation, the notices must be treated as having been issued on 31.03.2021 and accordingly the assessee’s cases shall be governed by the unamended law of section 147 (existing prior to 01.04.2021). Since there was no procedure of section 148A in pre-amended law, the AO was not required to observe the formality of section 148A(d). Therefore, there is no infirmity or illegality in the assessments framed by AO. He prayed to reject the claim of assessee and uphold the assessments made by Ld. AO.
8. We have considered rival submissions of both sides and carefully perused the case record including the orders of lower authorities and the papers/paper-books filed. There are two undisputed facts being claimed by assessee, namely (i) the notices u/s 148 bearing date 31.03.2021 were actually sent to assessee through e-mail on 01.04.2021 at 08:22AM and (ii) the Ld. AO has not followed the procedure prescribed in section 148A. We may mention here that the Bench, vide order sheet dated 25.06.2026, granted an opportunity to the Revenue to file the details of notice u/s 148 issued and served upon assessee. However, the Revenue has not brought on record any further material. That means, the Revenue is not controverting the facts claimed by assessee. Therefore, taking into account the facts explained by assessee, we find that the present matters are directly covered by the decision of co-ordinate Bench in Ketan Natvarlal Shah (supra). We re-produce below the relevant portion of ITAT’s order:
“7. We have considered the rival submissions. The AO has mentioned in the assessment order that notice u/s 148 of the Act for AY 2013-14 was issued on 31.03.2021. However, from the evidence brought on record in the form of copy of “Notices for e-Proceedings” it is found that the said notice u/s 148 of the Act was issued by the Systems on 01.04.2021 and not on 31.03.2021. This fact has not been disputed by the Revenue. In fact we had also fixed the matter for clarification in order to ascertain whether the procedure u/s 148A(b) and section 148A(d) was followed by the AO in event of notice being issued on 01.04.2021 by the Systems. It was clarified that the notice u/s 148 was issued by the AO on 31.03.2021 under the old provisions of the Act.
8. The provision for issue of notice u/s 148 of the Act was amended with effect from 01.04.2021. Under the old provision there was no requirement to take action as provided u/s 148A of the Act. The AO did not initiate action u/s 148A of the Act, for the reason that he had issued the notice u/s 148 of the Act on 31.03.2021 under the old provision. Hon’ble Gujarat High Court had held in the case of Saumil Abhinash Baheti in Civil Application No. 3804 of 2022 dated 17.06.2025 that where the notice u/s 148 of the Act dated 31.03.2021 was served through email on 01.04.2021, the notice would be an invalid notice. In the present case the notice u/s 148 of the Act sent through email on 1st April, 2021, was not barred by limitation. Nevertheless, considering the fact that the notice was issued on 01.04.2021, the said notice was required to be treated as notice u/s 148A(b) of the Act as per the direction of Hon’ble Supreme Court in the case of Union of India and others Vs. Shri Ashish Agrawal and others (444 ITR 1)(SC). Thereafter, the AO was required to pass order u/s 148A(d) of the Act and issue a fresh notice u/s 148 of the Act. Further, these actions were required to be completed within the surviving period. In the present case neither the notice u/s 148 issued on 01.04.2021 was treated as notice u/s 148A(b) of the Act under the new provisions nor any order u/s 148A(d) was passed by the AO. Thus the notice u/s 148 of the Act issued by the AO was neither within time limit of the old provision nor in accordance with the procedure laid down under the amended provision with effect from 01.04.2021. Therefore, the notice u/s 148 of the Act issued by the AO on 31.03.2021 which was served on the assessee on 01.04.2021 is quashed and the assessment order made u/s 147 r.w.s 144 of the Act dated 17.05.2022 in pursuance thereof, is set aside.
9. Since the legal ground taken by the assessee has been allowed and the assessment order has been set aside, all other grounds taken by the assess have become academic in nature.
10. In the result, the appeal of the assessee is allowed.”
9. We may gainfully refer the decision of Hon’ble Jurisdictional High Court in Saumil Avinash Baheti Vs. ITO, Special Civil Application No. 3804 of 2022, dated 17.06.2025, the relevant paras are re-produced below:
“4. The short question which arises in this petition is as to whether the notice dated 31.03.2021 issued under Sec.148 of the Income-Tax Act, 1961 (for short “the Act”), for the Assessment Year 2017-18 to reassess the income was actually issued on 31.03.2021 or not.
5. It is the case of the petitioner that the impugned notice was served through E-mail on 01.04.2021, and therefore, the notice dated 31.03.2021 would be an invalid notice.
5.1 The contention of the petitioner is not controverted by the respondent in the affidavit-in-reply but on the contrary, it is confirmed as stated in para 7 as under:
“7 With reference to paragraph 3, the assessee has submitted that the impugned notice dated 31.03.2021 for A.Y 2017-18 for re-opening the assessment under section 148 of the Act is illegal, without jurisdiction and is required to be quashed.
In this case, notice under section 148 of the Act for A.Y. 2017-18 was issued to the assessee on 31/03/2021 having DIN and Notice ITBATBA/AST/S/148/2020-21/1032037041(1) and served through e-mail on 01.04.2021. Thereafter, in compliance to the judgement of Hon’ble Supreme Court dated 04.05.2022 in the Civil Appeal No. 3005/2002 in case of Union of India and others vs. Shri Ashish Agarwal and others and CBDT Instruction No. 01/2022 dated 11.05.2022 issued vide F.No.279/Misc./M-51/2022-ITJ, the above mentioned notice issued under Section 148 of the Act dated 31/03/2021 would be treated as notice under Section 148A(b) of the Act and re-assessment proceedings initiated by issuing fresh notice u/s 148 of the Act after following due procedure for A.Y.2017-18.”
6. On a specific query raised by the Court, learned Senior Standing Counsel Ms. Mehta appearing for the respondent submitted that no notice under Sec.148A(b) of the Act was issued as per the directions of the Hon’ble Apex Court in the case of Union of India and others vs. Shri Ashish Agarwal and others., reported in 444 ITR pg 1 SC.
In view of the above fact, admittedly, the notice dated 31.03.2021 is a time barred notice and hence the same would be invalid and without jurisdiction and only on this ground, the impugned notice is hereby quashed and set aside. Rule is made absolute to the aforesaid extent with no orders as to costs.”
10. Respectfully following the judicial precedents quoted above, we agree to the Ld. AR’s submission that when the notices u/s 148 have been issued to assessee through e-mail on 01.04.2021, the re-assessment proceedings u/s 147 are governed by the new/substituted provisions introduced by Finance Act, 2021 and hence the compliance with the mandatory procedure prescribed u/s 148A was a condition precedent for valid issuance of notice u/s 148 and assumption of jurisdiction u/s 147. In present cases, it is an admitted position that the Ld. AO has not followed the procedure of section 148A, more particularly not passed the order required u/s 148A(d). Consequently, the assessment-orders passed by Ld. AO are not sustainable and are hereby quashed. The assessee succeeds in legal grounds.
11. Since the appeals have been decided in favour of assessee on legal issue, the other grounds raised by the assessee are not adjudicated and are left open.
12. Resultantly, these appeals are allowed.
Order pronounced in open court on 06.10.2026
