Only One Surviving Day Left: Mumbai ITAT Quashes Time-Barred Reassessment Notices After Rajeev Bansal Ruling

Shankar Rajaram Neelam Vs ITO (ITAT Mumbai)

Only “1 surviving day” left to reopen – Mumbai ITAT quashes reassessment notices issued beyond limitation after Rajeev Bansal ruling

In a major ruling on the post-Ashish Agarwal reassessment regime, the Mumbai ITAT quashed reassessment proceedings for AYs 2013-14 and 2014-15 after holding that the notices issued u/s 148 on 25.07.2022 were time-barred and beyond the surviving limitation period prescribed under section 149.

The reassessment proceedings were originally triggered on the basis of information received during a third-party search, alleging unexplained cash deposits in the assessee’s bank account. Since the assessee had not filed returns for the relevant years, notices u/s 148 were initially issued on 30.06.2021 under the old reassessment regime. Following the Supreme Court decision in Union of India v. Ashish Agarwal, those notices were deemed to be show-cause notices u/s 148A(b) under the new regime.

The Tribunal extensively analysed the Supreme Court judgment in Union of India v. Rajeev Bansal, particularly the concept of “surviving/balance limitation period.” The ITAT noted that under the Supreme Court formula, the Revenue gets only the balance period available between the date of original notice and 30.06.2021 for completing fresh reassessment procedures under the new law.

In the present case, since the original notice itself was issued on 30.06.2021, the Revenue effectively had only ONE SURVIVING DAY left to issue the fresh notice u/s 148 after completion of section 148A proceedings. The assessee filed its reply to notice u/s 148A(b) on 22.06.2022, meaning the last permissible date for issuing fresh notice u/s 148 expired on 23.06.2022. Even after considering the extended 7-day benefit under the fourth proviso to section 149, the limitation expired on 29.06.2022.

However, the department issued the fresh notice u/s 148 only on 25.07.2022, nearly a month after expiry of the surviving limitation period. The ITAT therefore held that the reassessment notice was clearly barred by limitation, void ab initio, and unsustainable in law.

The Tribunal accordingly quashed the notices issued u/s 148 as well as the consequential reassessment orders passed u/s 147 r.w.s. 144B for both assessment years. Since the reassessment itself failed on jurisdictional grounds, the Tribunal left all other issues on merits open and academic.

FULL TEXT OF THE ORDER OF ITAT MUMBAI

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

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

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

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

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

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

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

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

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

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

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

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

9. That in the facts and circumstances of the case and in law, the CIT(A) erred in sustaining the addition made by the Faceless Assessing Officer despite the Appellant having established the genuineness and source of the deposits in its bank account.

10. That in the facts and circumstances of the case and in law, the CIT(A) failed to appreciate that where the Appellant has opted for presumptive taxation under Section 44AD, the Appellant is not obligated to maintain books in the same manner as a regular assessee, and therefore adverse inference merely basis alleged non-maintenance/non-acceptance of books is unwarranted and the addition is unsustainable.

11. That in the facts and circumstances of the case and in law, the CIT(A) erred in passing the impugned order in violation of the principles of natural justice to the extent that no opportunity for a hearing via video conferencing was granted to the Appellant, despite a specific request made by the Appellant in this regard.”

4. In both appeals, the assessee has challenged the validity of the reopening of the assessment under section 147 of the Act and has also raised the grounds on merits, challenging the addition made by the Assessing Officer (“AO”). Since the grounds challenging the reopening of assessment under section 147 of the Act raise a jurisdictional issue that goes to the root of the matter, the said grounds are considered at the outset.

5. During the hearing, the learned Authorised Representative (“learned AR”), at the outset, submitted that the notice issued under section 148 of the Act in the present case is beyond the limitation period specified under section 149(1) of the Act as per the decision of the Hon’ble Supreme Court in Union of India v/s Rajeev Bansal, reported in (2024) 469 ITR 46 (SC), and thus, the re-assessment order passed under section 147 r.w. section 144B of the Act is void ab initio.

6. The brief facts of the case pertaining to this issue, as emanating from the record, are: The assessee is an individual and for the year under consideration did not file his return of income. On the basis of a search conducted on a third party, it was noticed that cash was deposited in the bank account of the assessee. Since the assessee did not file his return of income for the year under consideration, and the source of cash deposit was not known, a notice under section 148 of the Act was issued on 30/06/2021.

7. Subsequently, in view of the decision of the Hon’ble Supreme Court in Union of India vs. Ashish Agarwal, reported in [2022] 444 ITR 1 (SC), the original notice issued under section 148 on 30/06/2021 was deemed to be issued under section 148A(b) of the Act. Vide show cause notice dated 18/05/2022, the information and material relied upon by the Revenue were provided to the assessee, and two weeks’ time was granted to the assessee to respond to the notice in terms of the provisions of section 148A(b) of the Act.

8. The assessee filed his response to the aforesaid show cause notice on 22/06/2022. After considering the submission of the assessee, the AO passed the order under section 148A(d) of the Act on 22/07/2022, declaring that it is a fit case for issuance of notice under section 148 of the Act. On 25/07/2022, a notice under section 148 of the Act was issued by the Jurisdictional Assessing Officer. In response to the notice issued under section 148 of the Act, the assessee filed his return of income declaring a total income Rs. 4,20,610. The AO, vide order dated 27/04/2023 passed under section 147 read with section 144B of the Act, made an addition of Rs. 58,76,810. The assessee in his appeal before the learned CIT(A), inter alia, challenged the proceedings initiated under section 147 of the Act on the basis that the notice issued under section 148 of the Act is barred by limitation. However, the learned CIT(A), vide impugned order, dismissed the ground raised by the assessee challenging the proceedings initiated under section 147 of the Act. The learned CIT(A) also upheld the addition made by the AO on merits. Being aggrieved, the assessee is in appeal before us.

9. We have considered the submissions of both sides and perused the material available on record. We find that the Hon’ble Supreme Court in paragraphs 106 and 107 of its decision in Rajeev Bansal (supra), observed as follows: –

“106. In Ashish Agarwal (supra), this Court directed the assessing officers to provide relevant information and materials relied upon by the Revenue to the assesses within thirty days from the date of the judgment. A show cause notice is effectively issued in terms of Section 148A(b) only if it is supplied along with the relevant information and material by the assessing officer. Due to the legal fiction, the assessing officers were deemed to have been inhibited from acting in pursuance of the Section 148A(b) notice till the relevant material was supplied to the assesses. Therefore, the show cause notices were deemed to have been stayed until the assessing officers provided the relevant information or material to the assesses in terms of the direction issued in Ashish Agarwal (supra). To summarize, the combined effect of the legal fiction and the directions issued by this Court in Ashish Agarwal (supra) is that the show cause notices that were deemed to have been issued during the period between 1 April 2021 and 30 June 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 assesses to respond to the show cause notices.

107. The third proviso to Section 149 allows the exclusion of time allowed for the assesses 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 Ashish Agarwal (supra), this Court provided two weeks to the assesses 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 1 April 2021 and 30 June 2021 till the supply of relevant information or material by the assessing officers to the assesses in terms of the directions in Ashish Agarwal (supra); and (ii) two weeks allowed to the assesses to respond to the show cause notices.”

10. From the perusal of the aforesaid findings of the Hon’ble Supreme Court in Rajeev Bansal (supra), it is evident that the Hon’ble Supreme Court directed that while computing the time limit for issuance of notice under section 148, the time during which the show cause notice was stayed till the supply of relevant information or material by the AO and further period of two weeks allowed to the assessee to respond to the show cause notice should be excluded. We find that while examining the validity of notices issued from 01/04/2021 to 30/06/2021 under the old regime, the Hon’ble Supreme Court in Rajeev Bansal (supra), analysing the interplay of Ashish Agarwal (supra) with the TOLA, in paragraph 108 of its judgment observed as follows: –

“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. 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.”

11. Thus, the Hon’ble Supreme Court held that the surviving time under the Act read with the TOLA will be available to the Revenue to complete the remaining proceedings in furtherance of the deemed notice, including issuance of a reassessment notice under section 148 of the Act under the new regime. While explaining the methodology for computation of the surviving or balance time limit, the Hon’ble Supreme Court in paragraph 112 of Rajeev Bansal (supra) observed as follows: –

“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.”

12. Therefore, the surviving/balance time limit can be calculated by computing the number of days between the date of issuance of the deemed notice and 30/06/2021. In the present case, in order to compute the surviving/balance time as per the decision of the Hon’ble Supreme Court in paragraph 108, it is relevant to note the following dates: –

13. Therefore, computing the surviving/balance time limit, as per the decision of the Hon’ble Supreme Court in Rajeev Bansal (supra), we find that the Revenue had only 1 day to issue notice under section 148 of the Act of the new regime in the present case, i.e. till 23/06/2022, after receipt of response from the assessee on 22/06/2022 to the show cause notice issued under section 148A(b) of the Act. However, undisputedly, in the present case, the notice under section 148 of the Act was issued on 25/07/2022, i.e., after the surviving/balance time period as per the decision of the Hon’ble Supreme Court in Rajeev Bansal (supra).

14. We find that even if the benefit of the fourth proviso to section 149 of the Act is granted to the Revenue, since the remaining period in the present case, after the exclusion of time period as provided in the third proviso to section 149, is less than 7 days, even then the notice dated 25/07/2022 under section 148 of the Act was issued much beyond the 7 days’ extension provided in the fourth proviso to section 149 of the Act.

15. Therefore, in the light of the decisions of the Hon’ble Supreme Court in Ashish Agarwal (supra) and Rajeev Bansal (supra), we are of the considered view that the notice issued under section 148 of the Act on 25/07/2022 is barred by the limitation period specified under section 149 of the Act. Accordingly, we are of the considered view that the notice issued under section 148 of the Act on 25/07/2022 for the assessment year 2013-14 is void ab initio and bad in law. Therefore, the same is quashed. Consequently, the entire reassessment proceedings and assessment order passed under section 147 r.w. section 144B of the Act are also quashed.

16. Since the relief has been granted to the assessee on the aforenoted jurisdictional aspect, the other grounds raised by the assessee in the appeal are rendered academic and, therefore, are left open.

17. In the result, the appeal by the assessee for the assessment year 2013­14 is allowed.

18. In its appeal for the assessment year 2014-15, the assessee has raised the following grounds: –

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

1. That in the facts and circumstances of the case and in law, the CIT(A) erred in upholding the addition of Rs. 83,83,026/- made by the Faceless Assessing Officer under Section 69A of the Act, on the ground that the said cash deposits made by the Appellant in its own bank account remained unexplained.

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

3. That in the facts and circumstances of the case and in law, the notice dated 19.05.2022 deemed to be the show-cause notice under Section 148A(b), the order dated 22.07.2022 under Section 148A(d) and the notice dated 25.07.2022 under Section 148 of the Act. have been issued/passed by the Jurisdictional Assessing Officer and are therefore without jurisdiction in view of Section 151A of the Act read with e-Assessment of Income Escaping Assessment Scheme, 2022.

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

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

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

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

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

9. That in the facts and circumstances of the case and in law, the CIT(A) erred in sustaining the addition made by the Faceless Assessing Officer despite the Appellant having established the genuineness and source of the deposits in its bank account.

10. That in the facts and circumstances of the case and in law, the CIT(A) failed to appreciate that where the Appellant has opted for presumptive taxation under Section 44AD. the Appellant is not obligated to maintain books in the same manner as a regular assessee. and therefore adverse inference merely basis alleged non-maintenance/non-acceptance of books is unwarranted and the addition is unsustainable.

11. That in the facts and circumstances of the case and in law, the CIT(A) erred in passing the impugned order in violation of the principles of natural justice to the extent that no opportunity for a hearing via video conferencing was granted to the Appellant. despite a specific request made by the Appellant in this regard.”

19. Since in this appeal also, the assessee has raised the ground challenging the reopening of assessment under section 147 of the Act, the same is considered at the outset.

20. In the assessment year 2014-15, in order to compute the surviving/balance time period as per the decision of the Hon’ble Supreme Court in Rajeev Bansal (supra), it is relevant to note the following dates: –

21. Therefore, computing the surviving/balance time limit, as per the decision of the Hon’ble Supreme Court in Rajeev Bansal (supra), we find that similar to the assessment year 2013-14, in this year also the Revenue had only 1 days to issue notice under section 148 of the Act of the new regime, i.e. till 23/06/2022, after receipt of the response from the assessee on 22/06/2022 to the show cause notice issued under section 148A(b) of the Act. However, undisputedly, in the present case, the notice under section 148 of the Act was issued on 25/07/2022 after the surviving/balance time period as per the decision of the Hon’ble Supreme Court in Rajeev Bansal (supra), even if the benefit of the fourth proviso to section 149 of the Act is granted to the Revenue. Therefore, we are of the considered view that our findings/conclusions as rendered in assessee’s appeal for the assessment year 2013-14 shall apply mutatis mutandis to the appeal for the assessment year 2014-15. Accordingly, we are of the considered view that the notice issued under section 148 of the Act on 25/07/2022 is barred by the limitation period specified under section 149 of the Act, and therefore is void ab initio and bad in law. Thus, the same is quashed. Consequently, the entire reassessment proceedings and assessment order passed under section 147 r.w. section 144B of the Act are also quashed.

22. Since the relief has been granted to the assessee on the aforenoted jurisdictional aspect, the other grounds raised by the assessee in the appeal are rendered academic and, therefore, are left open.

23. In the result, the appeal by the assessee for the assessment year 2014-15 is allowed.

24. To sum up, both appeals by the assessee are allowed. Order pronounced in the open Court on 04/05/2026