Nutan Pandey Vs ACIT/DCIT (ITAT Ranchi)
Seven Clear Days Means Seven Complete Days: Defective Section 148A(b) Notice Invalidates Reassessment and Subsequent Section 263 Order—Ranchi ITAT
Summary: The Ranchi Bench of the Income Tax Appellate Tribunal has held that a notice under Section 148A(b) must provide the assessee with a minimum of seven clear days to furnish a response. Where the notice was issued on 22 March 2022 and compliance was required on or before 29 March 2022, the statutory requirement of seven clear days was not satisfied.
Consequently, the Tribunal quashed the notice under Section 148A(b), the consequential reassessment proceedings and the revisionary order subsequently passed under Section 263.
The decision was rendered in Nutan Pandey v. ACIT/DCIT, Central Circle, Jamshedpur, ITA No. 269/Ran/2026, Assessment Year 2018-19, order dated 10 September 2026.
Facts of the case
The assessee, Smt. Nutan Pandey, carried on business as the proprietor of M/s Kaushal Associates.
The case was flagged under the CBDT’s risk-management strategy through the Insight Portal under the category of “High Risk CRIU/VRU Cases.” The information suggested that the assessee had recorded bogus purchases and sales without any actual movement of goods.
Based upon this information, the Assessing Officer issued a show-cause notice under Section 148A(b). Thereafter, notice under Section 148 was issued on 6 April 2022.
The assessee filed a return in response to the Section 148 notice and objected to the reopening. The objections were disposed of by the Assessing Officer through an order dated 16 February 2024.
The reassessment was ultimately completed under Section 147 read with Section 144. The Assessing Officer made the following substantial additions:
- ₹21,63,27,663 under Section 69C towards alleged bogus purchases; and
- ₹1,58,16,611, being income estimated at 8 per cent of alleged bogus sales of ₹19,77,07,635.
The total income was assessed at ₹23,24,86,960.
Revision under Section 263
The Principal Commissioner of Income Tax subsequently invoked the revisionary jurisdiction under Section 263.
According to the PCIT, the Assessing Officer had accepted certain contentions of the assessee without undertaking proper verification. The reassessment order was therefore considered erroneous insofar as it was prejudicial to the interests of the Revenue.
By an order dated 31 March 2026, the PCIT set aside the assessment and directed the Assessing Officer to conduct a fresh assessment after undertaking detailed verification and providing the assessee with an opportunity of being heard.
The assessee challenged the Section 263 order before the Tribunal.
Additional legal ground before the Tribunal
Apart from challenging the assumption of jurisdiction under Section 263, the assessee raised an additional ground questioning the validity of the original notice issued under Section 148A(b).
The assessee pointed out that the notice was issued on 22 March 2022 and required compliance on or before 29 March 2022. It was argued that this did not provide the statutorily mandated minimum period of seven clear days.
Accordingly, the original reassessment order was itself void. If the reassessment order was invalid, the PCIT could not revise such an invalid order under Section 263.
The Department objected to the admission of this ground on the basis that it had not been raised before the lower authorities and was being raised before the Tribunal for the first time.
Pure legal ground can be raised at any stage
The Tribunal rejected the Department’s objection and admitted the additional ground by relying upon the Supreme Court’s decision in NTPC Ltd. v. CIT (1998) 229 ITR 383 (SC).
The Tribunal held that the question raised by the assessee was a pure question of law arising from undisputed facts already available on record. Such a jurisdictional ground could be raised at any stage of the proceedings, even if it had not been raised before the Assessing Officer or the PCIT.
Requirement of seven clear days not satisfied
The Tribunal relied upon the jurisdictional Jharkhand High Court’s decision in Satish Kumar v. PCIT, W.P. No. 2640 of 2023, dated 28 August 2023, wherein it was held that an assessee must be given a minimum of seven clear days to respond to a notice issued under Section 148A(b).
The same principle had also been followed by the Ranchi Tribunal in Agarwal Metcom Private Limited v. ACIT/DCIT, ITA No. 246/Ran/2026, order dated 29 July 2026.
In the present case, the notice was issued on 22 March 2022, while the response was required on or before 29 March 2022. When the date of issuance and the final date of compliance are excluded, the assessee was not given seven complete intervening days.
The Tribunal therefore held that the notice did not satisfy the mandatory statutory requirement and was invalid in law.
Consequences for reassessment and Section 263 proceedings
Once the foundational notice under Section 148A(b) was declared invalid, every proceeding based upon that notice also became legally unsustainable.
The Tribunal consequently quashed:
- the notice dated 22 March 2022 issued under Section 148A(b);
- the subsequent proceedings initiated under Section 148;
- the reassessment order passed under Section 147 read with Section 144; and
- the revisionary proceedings conducted by the PCIT under Section 263.
The assessee’s appeal was accordingly allowed.
Author’s comments
The decision highlights that the time prescribed under Section 148A(b) is not an empty procedural formality. The provision requires the assessee to be granted not less than seven days, subject to any permissible extension on an application by the assessee.
The expression “seven clear days” means seven complete days must intervene between the date of service or issuance of the notice and the deadline fixed for compliance. The day on which the notice is issued and the day fixed for compliance are ordinarily excluded while calculating clear days.
A notice issued on 22 March requiring compliance on 29 March may appear to provide seven calendar days. Legally, however, it does not provide seven clear intervening days. This seemingly small computational defect went to the root of jurisdiction and ultimately nullified additions exceeding ₹23 crore.
The other significant principle is that an invalid assessment cannot be revived or legitimised through Section 263. Revisionary jurisdiction necessarily presupposes the existence of a valid assessment order capable of being revised. When the reassessment itself is void because the jurisdictional notice is invalid, the subsequent Section 263 proceedings have no independent legs to stand upon.
The ruling also confirms that a jurisdictional objection can be raised for the first time before the Tribunal where it is based upon admitted facts and requires no fresh factual investigation. Participation in reassessment proceedings or failure to raise the defect earlier does not necessarily validate a notice that is inherently contrary to the statutory requirement.
From a practical perspective, while examining reassessment proceedings, practitioners should verify not merely whether a Section 148A(b) notice was issued, but also the date of issue, date of service, time granted for compliance, extensions sought and the precise computation of clear days. In reassessment litigation, sometimes the validity of the entire proceeding may turn on a single date.
Cases Discussed
- Satish Kumar Vs PCIT — W.P. No. 2640 of 2023, dated 28.08.2023.
- NTPC Vs CIT — (1998) 229 ITR 383 (SC).
- Agarwal Metcom Private Limited Vs ACIT/DCIT — ITA No. 246/Ran/2026, order dated 29.07.2026.
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT, RANCHI BENCH
1. This appeal by the assessee is directed against the order of the ld. PCIT (Central), Patna at Ranchi [in short, the ld. PCIT] dated 31/03/2026 for the Assessment Year (AY) 2018-19, wherein the assessee has raised following grounds of appeal:
“1. Whether, a scrutiny assessment under Section 143(3) is passed, followed by reassessment proceedings under Section 147 (read with Section 148), and the Assessing Officer (AO) specifically examines issues but makes no additions in the final reassessment order, the revision under Section 263 is not sustainable in the eyes of law and fit to be quashed?
2. Whether Revisionary proceedings are initiated under Section 263 of the Income-tax Act, 1961, and a second proceeding (reassessment or fresh assessment) results in no addition on the specific issue being reviewed, the limitation period for the section 263 order must be reckoned from the date of the original assessment order, not the subsequent (second) assessment order. It is therefore, the proceeding u/s 263 is barred by limitation hence, liable to be quashed?
3. Whether, the assessee has submitted all the required documents in assessment proceeding and in also the proceeding u/s 263 of the Act. The revision proceeding under Section 263 is considered invalid if the show-cause notice (SCN) fails to specify the exact documents or inquiries required. Without mentioning the failure part of assessee and without considering the submission made by the assessee the proceeding u/s 263 is not sustainable in the eyes of law and fit to be quashed.
4. Whether, the Ld. PCIT failed to discuss and dispose all the grounds raised by the assessee in the order u/s 263. Without disposing all the grounds, it is violation of principle of natural justice?
5. That the assessee has filed appeal before the first appellate authority therefore, the proceeding u/s 263 is not sustainable in the eyes of law and fit to be quashed.
6. That the assessee craves to raise any other ground/s at the time of hearing of the appeal.”
2. Facts of the case, in brief, are that this case was selected for scrutiny on the specific information received by the Assessing Officer that the assessee M/s. Kaushal Associates, Prop.- Smt. Nutan Pandey has booked bogus sales and purchases without any actual movement of goods during the assessment year under consideration. This information was flagged under risk management strategy formulated by the CBDT through the insight portal under the head “High Risk CRIU/VRU cases”. The Assessing Officer, therefore, on the basis of the said information received, issued notice under Section 148A(b) of the Income Tax Act, 1961 (in short, the Act) to determine the actual concealment of tax during the assessment year under consideration. Accordingly, notice under Section 148 of the Act was issued to the assessee on 06/04/2022. The assessee company filed its return of income in response to the notice issued under Section 148 of the Act and thereafter made necessary compliance to the notices issued by the Assessing Officer from time to time. The assessee raised objection against the reopening of assessment which was disposed off by the Assessing Officer by a written order dated 16/02/2024. The Assessing Officer, after providing several opportunities to the assessee, finally passed assessment order by making 100% addition towards bogus purchases under Section 69C of the Act amounting to ₹ 21,63,27,663/-. The Assessing Officer also added a sum of ₹ 1,58,16,611/- on the ground that the assessee did not file necessary details on the merits of the case and accordingly, the Assessing Officer concluded that the assessee is indulged in bogus sales to inflate gross profit to the tune of ₹ 19,77,07,635/- and thereafter, the Assessing Officer estimated the business income @ 8% on the sales of ₹ 19,77,07,635/- and added a sum of ₹ 1,58,16,611/-. The assessment was passed under Section 147 read with section 144 of the Act on a total income of ₹ 23,24,86,960/-.
3. The order of the Assessing Officer, however, was set aside by the ld. PCIT, Central, Patna vide its order dated 31/03/2026 on the ground that the Assessing Officer had accepted the contention of the assessee without making any further verification and therefore, the impugned assessment order was erroneous in so far as it is prejudicial to the interests of the revenue within the meaning of Section 263 and directed the Assessing Officer to make a fresh assessment after conducting detailed verification of the issue raised and highlighted in the order of the ld. PCIT under Section 263 of the Act after giving the assessee sufficient opportunity of being heard.
4. Aggrieved by the order of the ld. PCIT, the assessee has filed the present appeal before this Tribunal.
5. Before this Tribunal, the assessee has raised additional grounds as under:
“1. That on the facts and in the circumstances of the case and in law, assessment order passed u/s 147 r.w.s 144 dated 31.03.2024 is itself void and a such, the impugned order u/s 263 passed on such invalid order has no legs to stand before law, hence liable to be quashed.
2. That on the facts and in the circumstances of the case and in law, For that the original assessment order passed U/s 147 dated 31/03/2024 is contended to be avoid to the extent that the 148 proceedings was initiated vide notice dated 22/03/2022 U/s 148A(b) compliance to which was sought for on or before 29/03/2022, whereas, as per the provisions of law, the clear period of not less than 7 days should be allowed in the show cause notice period. Reliance on this legal issue is placed upon the decision of Hon’ble Jurisdictional High Court in the case of Satish Kumar Vs PCIT in WP 2640/2023 dated 28/08/2023. As such, the notice issued U/s 148A(b) dated 22/03/2022 was bad in law and proceedings initiated thereby is fit to be quashed.”
6. In the additional grounds of appeal raised, the assessee has submitted that the original assessment order in this case was passed under Section 147 dated 31/03/2024 is void in the eyes of law on the ground that the proceedings under Section 148 of the Act was initiated vide notice dated 22/03/2022 under Section 148A(b) of the Act, the compliance of which was sought for on or before 29/03/2022 whereas as per the provisions of law, the clear period of not less than seven days should be allowed in the show cause notice period. Reliance on this legal issue is placed upon on the decision of the Hon’ble Jurisdictional High Court in the case of Satish Kumar Vs PCIT in WP No. 2640/2023 dated 28/08/2023, as such notice issued under Section 148A(b) dated 22/03/2022 was bad in law and the proceedings initiated thereby is fit to be quashed.
7. The ld. CIT-Departmental Representative raised objection on the ground that this issue was never taken up before any revenue authority and this additional ground has been raised before this Bench for the first time and therefore, the same should not be entertained and admitted.
8. We have considered the rival submissions and after given due consideration of the Hon’ble Supreme Court’s decision in the case of NTPC Vs CIT (1998) 229 ITR 383 (SC), we admit the additional ground which is purely legal and can be raised at any point of proceedings. We have also gone through the decision of the Hon’ble Jurisdictional High court in the case of Satish Kumar Vs PCIT dated 28/08/2023 (supra). The Hon’ble High Court in the said decision has decided that minimum seven clear days be given to respond to the notice issued under Section 148A(b) of the Act which was duly followed by the Coordinate Bench of this Tribunal in the case of Agarwal Metcom Private Limited vs ACIT/DCIT in ITA No. 246/Ran/2026 order dated 29/07/2026 which reads as follows:
“8. We have considered the rival submissions. A perusal of the facts in the present case clearly shows that the notice issued under Section 148A(b) of the Act dated 22/03/2022 in respect of the reassessment proceedings itself is invalid in so far as the requisite seven days time has not been granted to the assessee. This being so, the original reassessment order passed under Section 147 read with section 143(3) dated 31/03/2024 itself is found to be invalid. This is the order which has been treated as erroneous and prejudicial to the interest of revenue. As the said reassessment order dated 31/03/2024 is found to be invalid obviously the consequential revisionary proceedings initiated by the ld. PCIT on such invalid order would become invalid. This being so, on this ground, the order passed by the ld. PCIT under Section 263 of the Act is quashed as being invalid. As we have quashed the order passed under Section 263 of the Act on account of the invalidity of the reassessment order passed under Section 147 read with section 143(3) of the Act dated 31/03/2024, we are not going into the other issues raised by the assessee.”
9. In the present case, it is found that the notice under Section 148A(b) of the Act was issued on 22/03/2022 and the assessee was asked to submit its response with supporting documents (if any) on the above mentioned issues electronically in ‘e-proceedings’ facility through your account in e-filing portal at your convenience on or before 29/03/2022. Thus, it is found that clear seven days has not been given to the assessee while issuing notice under Section 148A(b) of the Act, therefore, in view of the Hon’ble Jurisdictional High Court’s decision in the case of Satish Kumar Vs PCIT (supra), this notice is not a valid notice in the eyes of law. In view of the above facts and circumstances, this impugned notice under Section 148A(b) dated 22/03/2022 is found to be invalid and we quash the same. Therefore, the entire proceedings taken thereafter is also treated as void in the eyes of law.
10. In the result, this appeal of the assessee is allowed.
Order pronounced in open court on 10/09/2026.
