Case at a glance
Case Name: Vinod Vasant Chavan v. ITO, Ward-6(3), Pune (ITAT Pune, 2026)
- Subject
- Section 148 notice time-barred: computation of the surviving time under Rajeev Bansal for a reassessment of AY 2017-18
- Issue
- Where the original reassessment notice was issued on 17 June 2021, leaving only 13 days of surviving time, was a fresh notice issued under Section 148 on 22 July 2022 within the time allowed?
- Appeal no.
- ITA No. 2396/PUN/2026, order dated 12 October 2026
- Forum
- ITAT Pune (Shri R.K. Panda, Vice President, and Shri Vinay Bhamore, Judicial Member)
- Assessment year
- 2017-18
- Provisions
- Sections 147, 148, 148A and 149, Income-tax Act 1961; Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act 2020 (TOLA)
- Outcome
- In favour of assessee
Background
Facts of the Case
- The assessee, an individual, filed his return for AY 2017-18 declaring income of Rs.4,38,320.
- On 21 August 2017, the department searched the Laxmi Remote India Pvt. Ltd. group. Information on the Insight portal indicated that the assessee had bought goods worth Rs.34,04,860 from that company and paid in cash.
- The Assessing Officer issued a reassessment notice under the old Section 148 on 17 June 2021. Following the Supreme Court’s decision in Ashish Agarwal, that notice was treated as a show-cause notice under Section 148A(b).
- On 31 May 2022, the AO supplied the information relied on and gave the assessee two weeks, until 15 June 2022, to reply. The assessee did not reply.
- On 22 July 2022, the AO passed an order under Section 148A(d) and issued a fresh notice under Section 148.
- The reassessment was completed on 9 May 2023 at Rs.38,43,180, after adding Rs.34,04,860 under Section 69C for the alleged cash purchases. The CIT(A)/NFAC dismissed the appeal on 26 March 2026.
- Before the Tribunal, the assessee raised an additional ground that the fresh notice was issued after the surviving time allowed by the Supreme Court in Rajeev Bansal had expired.
The calculation
How the Rajeev Bansal Surviving Time Was Computed
- 31 March 2021
- Time limit for the notice under the old law
- 30 June 2021
- Time limit as extended by TOLA
- 17 June 2021
- Original notice issued under Section 148 (later treated as a Section 148A(b) show-cause notice)
- 13 days
- Surviving time: the days between 17 June 2021 and 30 June 2021
- 4 May 2022
- Supreme Court decides Ashish Agarwal
- 31 May 2022
- Information supplied to the assessee under Section 148A(b)
- 15 June 2022
- Last date for the assessee’s reply (two weeks)
- 28 June 2022
- Last date for the fresh Section 148 notice: 15 June 2022 plus the 13 surviving days
- 22 July 2022
- Fresh notice actually issued, 24 days after the time had expired
The ruling
Summary of Decision: What the Tribunal Held
Admitting the additional ground as a pure question of law and allowing the appeal, the Tribunal held:
- That, under Rajeev Bansal, the Revenue may use only the surviving time between the deemed notice and 30 June 2021, counted from the date the assessee’s reply was due. [Paras 15 and 16 of the order]
- That the 13 days of surviving time expired on 28 June 2022, so the fresh notice issued on 22 July 2022 was 24 days late. [Para 17 of the order]
- That, following Ashish Agarwal, Rajeev Bansal and Hitesh Ramniklal Shah (Bom), the notice was time-barred and void, and the reassessment founded on it was quashed. [Paras 18 and 19 of the order]
- That the remaining grounds, including the merits of the Rs.34.05 lakh addition, did not require adjudication. [Para 19 of the order]
Why
Reasoning Behind the Decision
- What Ashish Agarwal did. In Union of India v. Ashish Agarwal [2022] 444 ITR 1 (SC), the Supreme Court treated old-regime notices issued between 1 April and 30 June 2021 as show-cause notices under Section 148A(b), with two weeks for the assessee to reply. It saved those notices, but it did not give the Revenue unlimited time to issue fresh ones. [Paras 9 and 10 of the order]
- The surviving-time rule in Rajeev Bansal. In Union of India v. Rajeev Bansal (2024) 469 ITR 46 (SC), the Supreme Court explained how much time the Revenue has left. The surviving time is the number of days between the date of the original notice and 30 June 2021, the last date allowed under TOLA. That period starts to run only after the assessee replies, or after the time for replying ends. The Court’s own illustration was a notice dated 1 May 2021, which leaves 61 days; if the reply comes on 18 June 2022, the fresh notice must issue by 18 August 2022. Where fewer than seven days survive, the Assessing Officer still gets seven days. [Paras 15 and 16 of the order]
- Applying the rule to these dates. On the dates in the chart above, the 13 surviving days began on 15 June 2022 and ended on 28 June 2022, so the notice dated 22 July 2022 was 24 days late. As 13 days were available, the seven-day minimum did not apply. [Paras 16 and 17 of the order]
- The Revenue’s argument did not succeed. The Revenue argued that proceedings taken under the directions in Ashish Agarwal could not be challenged on limitation. The Tribunal did not accept this, because Rajeev Bansal fixes how much time survives and the fresh notice had to be issued within it. [Paras 13 and 19 of the order]
- High Court support. The Bombay High Court in Hitesh Ramniklal Shah v. ACIT [2025] 180 taxmann.com 642 (Bom) quashed a notice issued on 27 July 2022 where only two days had survived, agreeing with similar Delhi and Gujarat High Court rulings. The Tribunal followed it and quashed the notice and the reassessment. [Paras 18 and 19 of the order]
Practice point
Key Takeaway: Is Your Section 148 Notice Time-Barred?
- Count the surviving time first. Count the days from your original notice (issued between 1 April and 30 June 2021) to 30 June 2021. That is all the time the Assessing Officer has for the fresh notice.
- Start the clock from the reply date. The surviving time runs from the reply to the Section 148A(b) notice, or the date it fell due, and not from the date of the Supreme Court’s decision.
- Raise the point even at the Tribunal stage. The assessee here raised limitation for the first time before the Tribunal, as an additional ground, and it was admitted because it was a pure question of law.
- A time-barred notice ends the matter. The whole reassessment falls with it, and the merits are never examined.
- The order has minor drafting slips. It is headed “SMC” although two Members heard it, and the counsel’s chart reproduced in it prints “15.06.2021” where 15 June 2022 is meant. Neither affects the result.
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