Ishvarbhai Bhagabhai Patel Vs ACIT (ITAT Surat)
AY 2015–16 Reopening Hits the Limitation Wall
₹55.22 Lakh Addition Falls With the Reassessment
The Surat Bench of the Income Tax Appellate Tribunal quashed a reassessment for AY 2015–16, holding that the proceedings initiated through the original section 148 notice dated 28 June 2021, followed by a fresh notice dated 24 July 2022, were barred by limitation and without jurisdiction.
The Tribunal followed Union of India v. Rajeev Bansal (2024) 469 ITR 46 (SC) and the Gujarat High Court decisions applying the Revenue’s concession concerning AY 2015–16 notices issued during the extended TOLA period.
Consequently, the reassessment containing an addition of ₹55,21,720 as short-term capital gains was quashed. The assessee’s claim that the property was rural agricultural land remained open and undecided.
The Property Transaction Behind the Dispute
The assessee filed his return declaring total income of ₹2,35,850, after claiming a deduction of ₹10,000. He also disclosed exempt income of ₹54,25,400.
The AO received information that the assessee, together with other co-owners, had sold immovable property for ₹2.60 crore during the relevant year.
In the assessment of another co-seller, Shaileshbhai Jethabhai Patel, the DVO estimated the property’s fair market value at ₹2,76,08,600. On that basis, the AO worked out the present assessee’s share at ₹55,21,720.
Since the assessee had not offered capital gains in his return, reassessment proceedings were initiated. The assessee did not respond to the fresh section 148 notice or the subsequent notices seeking details of the sale.
The AO completed the reassessment under section 147 read with sections 144 and 144B, treating ₹55,21,720 as undisclosed short-term capital gains and assessing total income at ₹57,57,570. viewOrder-6
The First Appeal Was Dismissed on Delay
The assessee approached the CIT(A), who dismissed the appeal because of delayed filing.
Before the Tribunal, the assessee raised several objections. These included the contention that the land was rural agricultural land outside the definition of “capital asset” under section 2(14), and objections to the computation and treatment of the amount as short-term capital gains.
He also questioned the reassessment on grounds relating to the earlier assessment, absence of fresh information and alleged non-application of mind.
However, the decisive challenge came through an additional legal ground asserting that the section 148 notice was barred by limitation under section 149.
The Additional Ground Went to Jurisdiction
The Tribunal admitted the additional ground because it challenged the legality of the notice and went to the root of the reassessment.
The relevant chronology was not disputed. The original notice under section 148 had been issued on 28 June 2021. Subsequently, information was supplied through a section 148A(b) communication dated 26 May 2022, and the section 148A(d) order and fresh section 148 notice were issued on 24 July 2022. viewOrder-6
The assessee argued that the AY 2015–16 transitional reopening was covered by the Revenue’s concession recorded in paragraph 19(f) of Rajeev Bansal.
That concession concerned notices issued on or after 1 April 2021 for AY 2015–16, which would have to be dropped because they did not fall within the relevant TOLA completion window.
Supreme Court and Gujarat High Court Decisions Applied
The assessee relied on Mayurkumar Babubhai Patel v. ACIT, [2025] 176 taxmann.com 25 (Gujarat) and Sorathia Mahesh Veljibhai HUF v. ITO, [2025] 179 taxmann.com 54 (Gujarat).
The reproduced discussion in Sorathia explained that, for AY 2015–16, the three-year period had expired on 31 March 2019, before the TOLA window, while the six-year period expired on 31 March 2022, after that window.
The order also referred to Deepak Steel and Power Ltd. v. CBDT, [2025] 476 ITR 369 (SC), where the Supreme Court applied the concession recorded in Rajeev Bansal.
The reproduced Gujarat High Court discussion additionally cited Siddaiah Gurappaji v. ACIT, Karnataka High Court, W.P. No. 20292 of 2023, dated 17 April 2025, as taking a similar approach.
Reassessment Quashed; Merits Left Open
The Tribunal held that the controversy was settled by the binding precedents. Applying them to the admitted notice dates, it declared the reassessment time-barred, without jurisdiction and bad in law.
The additional legal ground was allowed, and the reassessment order was quashed.
Since the assessment itself did not survive, the Tribunal found no need to decide the remaining grounds concerning the land’s character or the capital-gains addition. The appeal was allowed. viewOrder-6
Author’s Comments
The ruling highlights the importance of examining jurisdiction before debating computation. A substantial capital-gains dispute ended because the transitional reopening could not cross the limitation threshold.
Its scope must nevertheless remain precise. The decision concerns the AY 2015–16 notices issued under the old-regime/TOLA transition and their consequential fresh notices. It should not be expanded into a proposition that every conceivable reopening for that assessment year was invalid.
Equally, the Tribunal did not hold that the land was rural agricultural land, approve the exemption claim or settle the capital-gains computation. Those questions remained undecided.
For Karnataka practitioners, the reference to Siddaiah Gurappaji is particularly useful as a jurisdictional research lead. The present relief, however, rested on the Supreme Court and Gujarat High Court authorities applied by the Surat Bench.
Cases Discussed:
- Union of India v. Rajeev Bansal (2024) 469 ITR 46 (SC) — Followed. Revenue’s concession in paragraph 19(f) concerning AY 2015-16 reassessment notices was applied.
- Mayurkumar Babubhai Patel v. ACIT [2025] 176 taxmann.com 25 (Gujarat) — Followed on limitation of reassessment notices for AY 2015-16.
- Sorathia Mahesh Veljibhai HUF v. ITO [2025] 179 taxmann.com 54 (Gujarat) — Followed. Gujarat High Court applied Rajeev Bansal and Deepak Steel & Power Ltd. to AY 2015-16 reassessment notices.
- Deepak Steel and Power Ltd. v. CBDT [2025] 476 ITR 369 (SC) — Discussed through the Gujarat High Court ruling; Supreme Court applied the Revenue’s concession recorded in Rajeev Bansal.
- Siddaiah Gurappaji v. ACIT, W.P. No. 20292 of 2023, dated 17.04.2025 (Karnataka High Court) — Referred to in the reproduced Gujarat High Court discussion as taking a similar view.
FULL TEXT OF THE ORDER OF ITAT SURAT
The appeal filed by the assessee is against the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [in short “CIT(A)”] dated 25.11.2025 for the Assessment Year (in short “AY”) 2015-16.
2. The assessee has raised the following grounds of appeal:
“1) On the facts and circumstances of the case, as well as law on the subject, the learned Commissioner of Income Tax (Appeals) erred in dismissing the appeal of the appellant by refusing to condone the delay in filing the appeal, without appreciating the bona fide reasons and in gross violation of the principles of natural justice.
2) On the facts and circumstances of the case, as well as law on subject, assessment done u/s. 147 r.w.s. 144 rw.s. 144B of I.T. Act is liable to be quashed as it is done without even referring to original assessment order passed u/s. 143(3) of Income Tax Act which is against the well-established position of the law.
3) On the facts and circumstances of the case, as well as law on subject, assessment done u/s. 147 r.w.s. 144 rw.s. 144B of Income Tax Act is liable to be quashed as it is done without any new information suggesting escapement of income which is against the well-established position of the law.
4) On the facts and circumstances of the case, as well as law on subject, Assessment done u/s. 147 r.w.s. 144 r.w.s. 144B of the Income Tax Act is liable to be quashed as it is done without use of Best judgment and without application of mind on Information already available with the Learned AO.
5) On the facts and circumstances of the case, as well as law on subject, the learned Assessing officer is erred in making addition of Rs. 55,21,720/- even though the Land sold by the assessee is rural Agriculture Land and it is not falling within the definition of Capital asset as per section 2(14) of Income Tax Act.
APPEAL BEFORE ITAT SURAT BENCH-ISHVARBHAI BHAGABHAI PATEL – AY 2015-16
6) On the facts and circumstances of the case, as well as law on subject, the learned Assessing officer is erred in making addition of Rs. 55,21,720/- as short term capital gain & without deduction of Indexed Cost of Acquisition.
Your appellant further reserves his right to add, alter or to amend any of the aforesaid grounds at the time of hearing of an appeal and all the above grounds are without prejudice to each other.
Your appellant therefore prays that looking to the facts and circumstances of the case, the addition made by the A.O. and sustained by the CIT(A) to the tune of Rs. 55,21,720/- is required to be deleted and accordingly demand raised to the tune of Rs. 17,41,825/- is also required to NULLIFIED.”
Additional Ground:
“On the facts and circumstances of the case, as well as law on the subject, the notice issued under section 148 of the Income-tax Act, 1961 is invalid and without jurisdiction, being barred by limitation as prescribed under section 149 of the Act, and hence the entire reassessment proceedings are void ab initio and liable to be quashed.”
3. The assessee filed his return of income for A.Y. 2015-16, declaring total income at Rs.2,35,850/- after claiming deduction of Rs.10,000/-. The assessee also showed exempt income amounting to Rs.54,25,400/-. The Assessing Officer (in short “the AO”) observed that as per information, the assessee along with other co-owners had jointly sold immovable property for sale consideration of Rs.2,60,00,000/- during A.Y. 2015-16. In case of one of co-sellers, Shaileshbhai Jethabhai Patel, the DVO estimated the Fair Market Value of the said property at Rs.2,76,08,600/- & accordingly assessee’s share came to Rs.55,21,720/-. However, the assessee did not offer any capital gain income in his ITR. Subsequently, the case was reopened u/s. 147 of the Income Tax Act, 1961 (in short “the Act”) for the relevant assessment year and order u/s. 148A(d) was passed. Accordingly, notice u/s. 148 was issued to the assessee on 24.07.2022 after recording the reasons. But the assessee did not comply with the issued notice. Subsequently, various notices u/s. 142(1) were issued to the assessee calling for certain details regarding the sale. The assessee did not submit details. The AO completed the assessment u/s. 147 r.w.s. 144 r.w.s. 144B of the Act and assessed the total income at Rs.57,57,570/- after making addition of Rs.55,21,720/- being treated as undisclosed short term capital gain earned by the assessee during the year under consideration.
4. Being aggrieved by the assessment order, the assessee filed the appeal before CIT(A). The CIT(A) dismissed the appeal.
5. The Ld. Authorised Representative (in short “Ld. AR”) for the assessee submitted that the assessee is challenging the legality of re-assessment framed by AO u/s. 148 in the additional ground No.7 which goes to the root of the matter. The assessee is claiming that the AO issued initial notice u/s. 148 on 28.06.2021 and subsequent notice u/s. 148 was issued on 24.07.2022 for making re-assessment u/s. 147 for A.Y 2015-16 under consideration. Notice u/s. 148A(b) was issued on 26.05.2022 for providing information. Order u/s. 148A(d) was passed on 24.07.2022 for providing information. Order u/s 148A(d) was passed on 24.07.2022. But the Income-tax Department has already conceded in subsequent decision in Union of India Vs. Rajeev Bansal (2024) 469 ITR 46 (SC) that the notices issued on or after 01.04.2021 for AY 2015-16 shall have to be dropped as they will not fall for completion during the period prescribed under “TOLA”. The relevant para 19(f) of Rajeev Bansal is re-produced below for an immediate reference:
“19. (f) The Revenue concedes that for the assessment year 2015-2016, all notices issued on or after April 1, 2021 will have to be dropped as they will not fall for completion during the period prescribed under the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020.”
6. Ld. AR for assessee submitted that following the above decision of Hon’ble Supreme Court in Rajeev Bansal, the Hon’ble Gujrat High Court has also quashed the notices issued by assessing authorities u/s 148 in (i) Mayur Kumar Babubhai Patel Vs. Assistant Commissioner of Income-tax (2025) 176 taxmann.com 25 (Gujrat) and (ii) Sorathia Mahesh Veljibhai HUF Vs. Income-tax Officer (2025) 179 taxmann.com 54 (Gujrat). The relevant paras of Sorathia Mahesh Veljibhai are re-produced below:
“8. The matter was carried to Hon’ble Supreme Court. Hon’ble Supreme Court in case of Union of India v. Rajeev Bansal [2024] 167 taxmann.com 70/301 Taxman 238/469 ITR 46 (SC) decided the issues raised with regard to delay as per the provisions of section 149 of the Act which has come into operation after 01.04.2021 as well as validity of sanction granted under section 155 of the Act.
9. During the course of hearing before the Hon’ble Apex Court, Revenue conceded to the effect that so far as Assessment Year 2015-2016 is concerned, Revenue could not have issued the notices under section 3(1) of TOLA as considering the time period as prescribed under section 149 of the Act with effect from 01.04.2021, three years would be over on 31.03.2019 which is prior to coming into force of TOLA and six years would be completed on 31.03.2022 which is after operation of TOLA. In such circumstances, notices for Assessment Year 2015-2016 are held to be invalid by Hon’ble Apex Court in case of Rajeev Bansal (supra).
10. The Hon’ble Apex Court followed the decision of Rajeev Bansal(supra) in case of Deepak Steel and Power Ltd v. Central Board of Direct Taxes [2025] 174 taxmann.com 144/305 Taxman 169/476 ITR 369 (SC) and after recording the concession of the learned advocate for the department and in view of the concession given before the Apex Court by learned advocate appearing for the Revenue as recorded in para 19(f) of the judgment in case of Rajeev Bansal (supra), has quashed and set aside the notice issued after 31.03.2021 under TOLA for A.Y. 2015-16 as under:
“1. Leave granted.
2. These appeals arise from the order passed by the High Court of Orissa at Cuttack in Writ Petition (C) Nos. 2446 of 2023, 2543 of 2023 dated 1.2.2023 and 2544 of 2023 dated 10.02.2023 respectively by which the High Court disposed of the original writ petitions in the following terms:-
“1. The memo of appearance filed by Mr. S. S. Mohapatra, learned Senior Standing Counsel for Revenue Department on behalf of Opposite Parties is taken on record.
2. In view of the order passed by this Court on 1st December, 2022 in a batch of writ petitions of which W.P.(C) No.9191 of 2022 (Kailash Kedia v. Income Tax Officer) was a lead matter and the subsequent order dated 10th January, 2023 passed in W.P.(C) No.36314 of 2022 (Shiv Mettalicks Pvt. Ltd., Rourkela v. Principal Commissioner of Income Tax, Sambalpur), the Court declines to entertain the present writ petition, but leaves it open to the Petitioner to raise all grounds available to the Petitioner in accordance with law including the grounds urged in the present petition at the appropriate stage as explained by the Court in those orders.
3. The writ petition is disposed of in the above terms.”
3. We heard Mr. Saswat Kumar Acharya, the learned counsel appearing for the appellants(assessee) and Mr. Chandrashekhar, the learned counsel appearing for the revenue.
4. The learned counsel appearing for the revenue with his usual fairness invited the attention of this Court to a three judge bench decision of this Court in Union of India and Ors. v. Rajeev Bansal, reported in 2024 SCC OnLine SC 2693, more particularly, paragraph 19(f) which reads thus:-
“19. (f) The Revenue concedes that for the assessment year 2015- 2016, all notices issued on or after April 1, 2021 will have to be dropped as they will not fall for completion during the period prescribed under the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020.”
5. As the revenue made a concession in the aforesaid decision that is for the assessment year 2015-2016, all notices issued on or after 1st April, 2021 will have to be dropped as they would not fall for completion during the period prescribed under the taxation and other laws (Relaxation and Amendment of certain Provisions Act, 2020). Nothing further is required to be adjudicated in this matter as the notices so far as the present litigation is concerned is dated 25.6.2021.
6. In view of the aforesaid, in such circumstances referred to above the original writ petition nos.2446 of 2023, 2543 of 2023 and 2544 of 2023 respectively filed before the High Court of Orissa at Cuttack stands allowed.
7. The impugned notice therein stands quashed and set aside.
8. The relief in terms of prayer (a) is granted.
9. The appeals stand disposed of in the above terms.
10. Pending application(s), if any, stand disposed of.”
11. Similar orders are also passed by the Apex Court in the following cases:
1) Asstt. CIT v. Nehal Ashit Shah [Special Leave Petition (Civil) Diary No. 57209 OF 2024, dated 4-4-2025];
2) ITO v. R.K.Build Creations (P.) Limited [SLP (Civil) Diary No. 59625 OF 2024, DATED 17-1-2025].
12. The Delhi High Court has also passed the similar order in following cases:
1) Bhagwan Sahai Sharma v. Dy. CIT [2025] 174 taxmann.com 14 (Delhi)
2) Lalit Gulati v. Asstt. CIT [2025] 174 taxmann.com 273/305 Taxman 11 (Delhi);
13. The Punjab and Haryana High Court has taken similar decision in case of Jay Jay Agro Industries v. ITO [CWP No. 7405 of 2025, dated 19-3-2025]
14. Rajasthan High Court has also taken similar decision in case of Shreyansh Mehta v. ITO [Civil Writ Petition No. 3299 of 2023, dated 12-2-2025].
15. Karnataka High Court has also taken similar decision in case of Siddaiah Gurappaji v. Asstt. CIT [Writ Petition No. 20292 of 2023, dated 17-4-2025].
16. This Court also in case of Mayurkumar Babubhai Patel v. Asstt. CIT [2025] 176 taxmann.com 25 (Gujarat)/Special Civil Application No.3154 of 2022 and allied matters) has held as under:
“15. Considering the facts of the case, it is not in dispute that the respondent-Assessing Officer has issued the notice under section 148A(b) of the Act after the period of six years were over on 31.03.2022. As observed by the Hon’ble Apex Court in case of Deepak Steel and Power Ltd(supra) and in view of the concession made by the Revenue before the Apex Court for the Assessment Year 2015-16, all the notices issued on or after 01.04.2021 will have to be dropped as they would not fall for completion during the period prescribed under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 and therefore, nothing further is required to be adjudicated in the matters as the notice so far as the present petitions are concerned, though dated 31.03.2021, admittedly have been issued after 01.04.2021.
16. It is also not in dispute that the notices under section 148A(b) have been issued pursuant to the decision of the Hon’ble Apex Court in Ashish Agarwal (supra) dated 04.05.2022 admittedly after 31.03.2022. Therefore, on both counts, the notices issued under section 148 of the Act dated 27/28/29.07.2022 would be time barred.”
17. In view of above, for the foregoing reasons, the petition is allowed. The impugned notice issued under section 148 of the Act for Assessment Year 2015-2016 is held to be invalid as same was issued during the extended period from 01.04.2021 to 30.06.2021 under TOLA.
18. Petition is accordingly disposed off.”
7. The Ld. Departmental Representative (in short “Ld. DR”) relied upon the assessment order and the order of the Ld. CIT(A).
8. We have heard both the parties and perused all the relevant materials available on record. Though, the CIT(A) dismissed the appeal on ground of delay, the assessee has filed additional ground No.7 challenging the validity of notice issued u/s 148 which is the legal ground. Thus, additional ground is admitted and we find that the issue is no longer res integra. The Hon’ble Supreme Court in Rajeev Bansal (supra) has recorded the Revenue’s concession in para 19(f) that all notices issued on or after 01.04.2021 for AY 2015-16 are liable to be dropped. Further, the Hon’ble Gujarat High Court in Mayurkumar Babubhai Patel (supra) and Sorathia Mahesh Veljibhai HUF (supra), following Rajeev Bansal and Deepak Steel & Power Ltd., has held that notices issued after 01.04.2021 for AY 2015-16 are barred by limitation. Admittedly, in the present case, the original notice u/s 148 was issued on 28.06.2021 and consequential notice after the decision in Ashish Agarwal was issued on 24.07.2022. Therefore, respectfully following the aforesaid binding precedents, we hold that the impugned re-assessment proceedings are barred by limitation and without jurisdiction. Hence, the impugned re-assessment order passed by the AO in present case is hereby held to be bad in law and quashed. Additional Ground No.7 raised by assessee is thus allowed.
9. As we have quashed the order of re-assessment itself, there is no necessity of adjudicating the rest of the grounds dealing with the merit of the addition made by AO; the same is kept open undecided.
10. In result, the appeal of the assessee is allowed.
Order pronounced in the open court on 01.10.2026
