Sunil Indravadan Shah Vs ITO (ITAT Mumbai)
₹1.99 Crore Addition Falls as Reopening Misses the Limitation Deadline
Background of the Dispute
The Mumbai Tribunal quashed a reassessment for AY 2015-16 after holding that the notice issued under section 148 on 20 July 2022 was barred by limitation. Consequently, the addition of ₹1,99,62,200 under section 68 could not survive. The appeal succeeded on the jurisdictional ground itself, leaving the disputes concerning the genuineness of loans and procedural violations open.
The assessee had filed his return declaring total income of ₹9,76,870. His case was selected for scrutiny under CASS, and the original assessment under section 143(3) was completed by accepting the returned income.
Subsequently, the Assessing Officer received information from departmental sources that Amit J. Shah and Jignesh Shah allegedly operated an accommodation-entry business involving unsecured loans, bogus purchases and expenses. According to this information, the assessee had obtained an accommodation loan entry of ₹1,08,00,871 from Amit J. Shah during the relevant year.
The reassessment, however, resulted in a larger addition. The Assessing Officer treated unsecured loans aggregating to ₹1,99,62,200 as unexplained cash credits under section 68. The CIT(A)/NFAC upheld the addition.
The Assessee’s Challenge
Before the Tribunal, the assessee first challenged the very validity of the reopening. He contended that the section 148 notice dated 20 July 2022 for AY 2015-16 was time-barred in view of the Supreme Court’s decision in Union of India v. Rajeev Bansal [2024] 167 taxmann.com 70.
The assessee also raised several alternative grounds. He complained that the information and underlying material concerning the alleged escaped income had not been supplied before passing the order under section 148A(d). He relied on the directions in Ashish Agarwal and CBDT Instruction No. 01/2022 dated 11 May 2022.
He further contended that all the material referred to in the enquiry report had not been furnished even during reassessment, and that he had not been given an opportunity to cross-examine Amit Shah and Jignesh Shah.
On the merits, the assessee disputed the entire section 68 addition. He specifically pointed out that ₹27,62,200 represented loans from his daughter and sister-in-law, who allegedly had no connection with the entry operators. These were grounds raised by the assessee; the Tribunal ultimately did not adjudicate their correctness.
Limitation Decided the Appeal
The Tribunal examined the limitation ground first and held that the issue was covered in the assessee’s favour by Rajeev Bansal.
It referred to paragraph 19(f) of that judgment, recording the Revenue’s concession that notices issued on or after 1 April 2021 for AY 2015-16 were liable to be dropped. Applying that position to the notice before it, the Tribunal held that the notice dated 20 July 2022 was invalid.
The Tribunal also referred to Deepak Steel and Power Ltd. v. CBDT [2025] 174 taxmann.com 144 / 305 Taxman 169, where the Supreme Court followed Rajeev Bansal and, after recording the Revenue’s concession, quashed the notices issued after 31 March 2021 under TOLA for AY 2015-16.
Supporting decisions referred to in the order included ACIT v. Nehal Ashit Shah, ITO v. R.K. Build Creations (P.) Ltd., the Delhi High Court decisions in Bhagwan Sahai Sharma v. DCIT and Lalit Gulati v. ACIT, and the Punjab and Haryana High Court decision in Jay Jay Agro Industries v. ITO.
The Departmental Representative did not controvert the assessee’s contention or the legal position relied upon.
The Ruling
The Tribunal held that the reassessment proceedings were barred by limitation and without jurisdiction. It accordingly quashed the assessment order and allowed the assessee’s appeal.
Since the assessment itself had been quashed, the Tribunal found no necessity to decide the remaining grounds. Those grounds were expressly kept open. Thus, the order grants relief on limitation; it does not record a finding that the disputed loans were genuine, or that the objections concerning disclosure of material and cross-examination independently warranted relief.
Author’s Comments
Before debating whether an addition is justified, examine whether the Assessing Officer had jurisdiction to make it. This case illustrates the practical value of that approach. A substantial section 68 addition, supported by allegations of accommodation entries, fell because the reopening could not cross the limitation threshold.
The difference between the alleged entry of ₹1.08 crore and the eventual addition of ₹1.99 crore, particularly the inclusion of family loans, presented separate questions requiring scrutiny. However, once the Tribunal found the reassessment itself invalid, those questions became unnecessary for deciding the appeal.
The decision should be cited with precision. Its operative basis is limitation in the reopening context considered by the Tribunal, applying Rajeev Bansal and the subsequent decisions referred to in the order. It should not be presented as an authority accepting accommodation loans or dispensing with the requirements of section 68.
An allegation may justify examination, but it cannot extend a statutory deadline.
Cases Discussed
1. Union of India & Ors. v. Rajeev Bansal & Ors. — Supreme Court, [2024] 167 taxmann.com 70; (2024) 469 ITR 46; 2024 INSC 754. Followed for paragraph 19(f), recording the Revenue’s concession that reassessment notices for AY 2015-16 issued on or after 1 April 2021 were liable to be dropped.
2. Deepak Steel and Power Ltd. v. Central Board of Direct Taxes — Supreme Court, [2025] 174 taxmann.com 144; (2025) 305 Taxman 169; (2025) 476 ITR 369, decided on 2 April 2025. Followed regarding the Revenue’s concession in Rajeev Bansal and invalidity of the relevant reassessment notices issued after 31 March 2021 for AY 2015-16.
3. ITO v. R.K. Build Creations (P.) Ltd. — Supreme Court, SLP (Civil) Diary No. 59625 of 2024, order dated 17 January 2025. Referred to as a subsequent Supreme Court order supporting the position applied to reassessment proceedings for AY 2015-16.
4. Bhagwan Sahai Sharma v. Deputy Commissioner of Income Tax — Delhi High Court, [2025] 174 taxmann.com 14. Referred to as supporting the application of Rajeev Bansal to reassessment proceedings.
5. Lalit Gulati v. Assistant Commissioner of Income Tax — Delhi High Court, [2025] 174 taxmann.com 273; (2025) 305 Taxman 11. Referred to for the invalidity of reassessment proceedings affected by the limitation position settled in Rajeev Bansal.
6. Jay Jay Agro Industries v. ITO — Punjab and Haryana High Court, CWP No. 7405 of 2025, decided on 19 March 2025. Referred to as supporting the limitation challenge to reassessment notices for AY 2015-16.
7. ACIT v. Nehal Ashit Shah — Supreme Court, SLP (Civil) Diary No. 57209 of 2024, order dated 4 April 2025. Referred to among subsequent Supreme Court orders applying the relevant reassessment limitation framework.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The instant appeal emanating from the appellate order dated 30.03.2026 is preferred by the Assessee against the order passed by the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] pertaining to assessment order passed u/s. 147 r.w.s. 144B of the Income-tax Act, 1961 [hereinafter referred to as “Act”] dated 24.05.2023 for the Assessment Year [A.Y.] 2015-16.
2. The grounds of appeal are as under:-
1. On the facts and circumstances of the case and in law, notice u/s 148 of Income Tax Act, 1961 was issued for AY 2015-16 on 20.07.2022, which is barred by limitation in view of the judgment in UOI v. Rajeev Bansal [2024] 167 taxmann.com 70 (SC) and hence bad in law and liable to be quashed.
Without prejudice to the above,
2. On the facts and circumstances of the case and in law, the learned CIT(A), NFAC (In short, “the Ld. CIT(A)”) erred in ignoring the following additional ground No.2:
“On the facts and circumstances of the case and in law, the notice issued u/s 148 by the learned ITO is bad in law, as it is barred by limitation of time and hence the notice is invalid and consequently assessment order passed u/s 147 merits to be quashed.”
3. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in not appreciating the fact which is apparent from the records that the jurisdictional ITO had passed the order u/s 148A(d) arbitrarily and without providing information and materials relating to the alleged escaped income of Rs.1,08,00,871/-, which is in contravention of the express directions of the Supreme Court in the case of Ashish Agarwal and others and also CBDT Instruction No. 01/2022 dated 11.05.2022 and hence the order passed u/s 148A (d) and notice issued u/s 148 are bad in law.
4. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in not appreciating that even in re-assessment proceedings, the AO has not provided all the materials which were referred in the enquiry report.
5. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in not providing the opportunity of cross examination of Amit Shah and Jignesh Shah, and hence the re-assessment proceedings are vitiated.
6. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in sustaining the addition of Rs. 1,99,62,200/- by treating the unsecured loans of Rs.1,99,62,200/- as unexplained cash credits u/s 68 of the Income Tax Act.
7. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in ignoring the fact that out of the unsecured loans of Rs. 1,99,62,200/-, loans of Rs.27,62,200/- were obtained by the appellant from his daughter and sister-in-law, which had no connection whatsoever with the alleged entry operators and hence treating these loans as unexplained credit u/s 68 is grossly unjustified.
3. The assessee filed the return declaring total income at Rs.9,76,870/-. Thereafter, the case was selected for security under CASS and the AO had originally passed the order u/s 143(3) of the Act by accepting the returned income. Subsequently, an information was received by the AO from Departmental sources that certain persons Shri Amit J. Shah and Shri Jignesh Shah were entry operator who used to provide accommodation entries of unsecured loans and bogus purchase and expenses. The assessee was found to be one of the beneficiaries who had obtained accommodation entry of loan of Rs.1,08,00,871/- from Shri Amit J. shah during the relevant year. The AO while concluding the assessment order made addition in respect of the aforesaid loan as also similar loans aggregating to Rs. 1,99,62,200/- which treated them as Unexplained u/ s 68 of the Act. The addition made was upheld by the ld.CIT(A).
4. We take up the ground no.1 first which pertains to the validity of the notice issued u/s 148 of the Act and the consequential reassessment order. It is claimed that in this case, notice u/s 148 of the Act was issued for AY 2015-16 on 20.07.2022, which was barred by limitation in view of the judgment in Union of India v. Rajeev Bansal [2024] 167 taxmann.com 70 (SC) and hence, is bad in law and liable to be quashed.
5. We find that the notice was issued on 20.07.2022 and the relevant assessment year is AY 2015-16.We note that the issue is squarely covered in favour of the assessee by the Apex Court decision(supra) which has been consistently followed by various courts of law including the coordinate benches of ITAT in favour of respective assessees. 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 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),had quashed and set aside the notice issued after 31.03.2021 under TOLA for A.Y. 2015-16. Similar orders have also been passed by the Apex Court in the Asstt. CIT v. Nehal Ashit Shah [Special Leave Petition (Civil) Diary No. 57209 of 2024, dated 4-4-2025];ITO v. R.K.Build Creations (P.) Limited [SLP (Civil) Diary No. 59625 of 2024, DATED 17-1-2025]. The hon’ble Delhi High Court has also passed the similar order in Bhagwan Sahai Sharma v. Dy. CIT [2025] 174 taxmann.com 14 (Delhi)Lalit Gulati v. Asstt. CIT [2025] 174 taxmann.com 273/305 Taxman 11 (Delhi).The hon’ble 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]etc. The ld.DR did not controvert the contentions of the assessee and the settled legal position in this regard.
5.1 Thus, 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. In view of above, the impugned notice issued under section 148 of the Act for relevant assessment year is held to be invalid. Consequently, the impugned assessment proceeding is barred by limitation and without jurisdiction. Hence, the assessment order passed by the AO in present case is, hereby, held to be bad in law and quashed. Ground of appeal in this regard is allowed.
6. As we have quashed the order of assessment itself, there is no necessity of adjudicating other grounds of appeal on merits and the same are kept open open.
7. In the result, the appeal of the assessee stands allowed.
Order pronounced in the open court on 01/10/2026.
