ITO WD-3(1), KOLKATA V. PERFECT WAHERS & FASTENERS (P) LTD, KOLKATA

ITA 2599/KOL/2025

AI Insights

The case involves an appeal by the Revenue against the order of the National Faceless Appeal Centre, which had dismissed the reassessment proceedings against Perfect Wahers & Fasteners (P) Ltd. for the Assessment Year 2015-16. The primary contention was the validity of a notice issued under section 148 of the Income Tax Act, which the Revenue argued was correctly issued based on new information about bogus sales. However, the CIT (A) found the notice to be time-barred, referencing the Supreme Court's decision in Rajeev Bansal, which clarified the procedural requirements and time limits for issuing such notices. The Income Tax Appellate Tribunal upheld the CIT (A)'s decision, agreeing that the notice was issued beyond the allowed timeframe.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 831512 (ITAT-KOLKATA)
• Duration Of Justice: 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2026
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: misc
• Appeal Filed On: 10-11-2025
• Other Referred Cases: Union of India and others Vs. Rajeev Bansal [2024] 469 ITR 46 (SC), Union of India & Ors. Vs. Ashish Agarwal, Union of India & Others Vs. Rajeev Bansal (W.P. (C) 8629/2024)
• Laws Referred To: Income Tax Act, Taxation and Other Laws (TOLA)
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S.B. CHAKRABORTHY
• Assessee Lawyers: ROBIN MAHESWARI
• Keywords: Reassessment proceedings; Unexplained cash credit; Period of limitation; Bogus
• Section: 147; 148; 68

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRI PRADIP KUMAR CHOUBEY, JM ITA No.2599/KOL/2025 (Assessment Year: 2015-16) ITO Ward 3(1) P-7, Chowringhee Square, 4 th floor, Aaykar Bhawan, Kolkata, West Bengal-700069 Vs. Perfect Wahers& Fasteners (P) ltd. Uluberia Industrial Growth Centre, Birshibpur, Plot 71, Howrah-711316, West Bengal (Appellant) (Respondent) PAN No. AABCP4979K Assessee by : Shri Robin Maheswari, AR Revenue by : Shri S.B. Chakraborthy, DR Date of hearing: 14.01.2026 Date of pronouncement: 20.01.2026 O R D E R Per Rajesh Kumar, AM: This is an appeal preferred by the Revenue against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 17.09.2025 for the AY 2015-16. 2. The only issue raised by the Revenue is against the order of ld. CIT (A) holding that A.Y. 2015-16, being time barred by limitation in consonance with the decision of the Hon'ble Apex Court in the case of Union of India and other Vs. Rajeev Bansal [2024] 469 ITR 46 (SC), dated 03.10.2024. 3. The facts in brief are that the assessee company is engaged in the business of Manufacturing and Exporter of Industrial Fasteners. Printed from counselvise.com Page | 2 ITA No. 2599/KOL/2025 Perfect Wahers& Fasteners (P) ltd.; A.Y. 2015-16 Assessee filed its return of income on 30.09.2015, declaring total income of Rs.1,34,100/-. The case of the assessee was reopened upon credible information that assessee isbeneficiary of bogus sales amounting to Rs. 4,68,40,576/- to the alleged shell concerns M/s. TIF Castings Ltd. during the financial year 2014-15 relevant to assessment year 2015-16. After following the guidelines of Hon’ble Supreme Court order dated 04/05/2022 in the case of Union of India & Ors. Vs. Ashish Agarwalas well as the CBDT’s Instruction No. 01/2022 dated 11.05.2022, the JAO has passed the Order u/s. 148A(d) in this case. Accordingly, notice u/s 148 was issued to reopen the assessment after affording opportunity to the assessee and order u/s 148A(d) was passed on 29.07.2022. In response to the notice u/s 148 of the Act assessee filed its ITR on 10.08.2022 declaring total income of Rs.1,34,098. Accordingly, the assessment was framed u/s 147 read with section 144B of the Incometax Act, vide order dated 29.05.2023, assessed the total income at ₹ Rs.5,50,74,674/-. 4. Aggrieved assessee preferred the appeal before the ld. CIT (A), who allowed the appeal of the assessee by observing and holding as under:- “6.0 CIT’s Decision: 6.1 The grounds of appeal, assessment order and submissions of the appellant have been carefully considered and adjudicated as under: 6.2 The grounds of appeal, copy of assessment order, submission of the appellant, statement of facts and Form 35 have been carefully considered and adjudicated as under: 6.3 The appellant, is company, has filed his return of income for the Assessment Year 2015-16 on 30.09.2015 declaring total Income of Printed from counselvise.com Page | 3 ITA No. 2599/KOL/2025 Perfect Wahers& Fasteners (P) ltd.; A.Y. 2015-16 Rs.1,34,100/-. An information was received by the AO that the appellant was identified as a beneficiary from search on entry operator Sanjiv Kumar Singh. Further the appellant had taken accommodation entry of Rs.10,00,000 from Shell entity M/s.Juhi Advisory Pvt Ltd. Based on the above information, the AO has issued notice u/s. 148 for A.Y. 2017-18 on 18/06/2021. The Hon’ble Supreme Court in the case of Union of India & others Vs. Ashish Agarwal has held that notice issued u/s 148 of the Act between 01.04.2021 to 30.06.2021 may be considered as notice issued u/s 148A(b) of the Act. Thereafter, pursuant to the decision of Hon’ble Supreme Court in Ashish Agarwal, an order u/s 148A(d) of the Act was passed on 29.07.2022 culminating into the issuance of a notice u/s 148 of the Act dated 29.07.2022. In response to the Notice the appellant furnished the reply on 10.08.2022. Based on the reply and documents furnished by the appellant the assessment was completed by making the additions on Bogus sales of Rs.4,68,40,576/- u/s 68 and unexplained cash credit u/s 68 of Rs.81,00,000/-. The present appeal is filed against the addition of Rs.5,50,74,674/-. 6.4 During the course of appellate proceedings, the appellant has filed written submission, supporting documents and additional legal grounds filed on 07.08.2022 on the basis of the order of Hon’ble Supreme Court in the case of Union of India & others Vs. Rajeev Bansal (W.P. (C) 8629/2024). Further, the appellant has prayed for quashing the notice u/s 148 issued on 29.07.2022 in the light of judgment rendered by the Hon’ble Supreme Court in Union of India & Others Vs. Rajeev Bansal (W.P. (C) 8629/2024). The prayer of the appellant is perused. The appellant has raised the additional legal grounds on the basis of decision of the Hon’ble Supreme Court and the same goes to the root of the appeal matter, therefore, the additional legal grounds filed by the appellant is accepted and the same is taken up for adjudication. 6.5 The decision of the Hon’ble Supreme Court in the case of Union of India & Others Vs. Rajeev Bansal is perused. It is seen from the Apex Court decision, the paragraph 65 to 69 speaks about that the extended period of limitation as per IT Act read with Taxation and Other Laws (TOLA). The paragraph 105 to 107 speaks about that the period of deemed stay to be excluded as per third proviso to section 149 i.e. date of original 148 notice issued till date allowed to file reply to the appellant. The paragraph 108 to 113 speaks about that the surviving or balance time limit can be calculated by computing the number of days between the Printed from counselvise.com Page | 4 ITA No. 2599/KOL/2025 Perfect Wahers& Fasteners (P) ltd.; A.Y. 2015-16 deemed notice issued. For better understating and clarity, the paragraph numbers 108 to 113 of the Apex Court decision are given below: “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. 163 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. 109. If this Court had not created the legal fiction and the original reassessment notices were validly issued according to the provisions of the new regime, the notices under Section 148 of the new regime would have to be issued within the time limits extended by TOLA. As a corollary, the reassessment notices to be issued in pursuance of the deemed notices must also be within the time East End Dwellings Co. Ltd. v. Finsbury Borough Council, [1952] AC 109. [Lord Asquith, in his concurring opinion, observed: “If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it.”] PART F limit surviving under the Income Tax Act read with TOLA. This construction gives full effect to the legal fiction created in Ashish Agarwal (supra) and enables both the assesses and the Revenue to obtain the benefit of all consequences flowing from the fiction.164 Printed from counselvise.com Page | 5 ITA No. 2599/KOL/2025 Perfect Wahers& Fasteners (P) ltd.; A.Y. 2015-16 110. The effect of the creation of the legal fiction in Ashish Agarwal (supra) was that it stopped the clock of limitation with effect from the date of issuance of Section 148 notices under the old regime [which is also the date of issuance of the deemed notices]. As discussed in the preceding segments of this judgment, the period from the date of the issuance of the deemed notices till the supply of relevant information and material by the assessing officers to the assesses in terms of the directions issued by this Court in AshishAgarwal (supra) has to be excluded from the computation of the period of limitation. Moreover, the period of two weeks granted to the assesses to reply to the show cause notices must also be excluded in terms of the third proviso to Section 149. 111. The clock started ticking for the Revenue only after it received the response of the assesses to the show causes notices. After the receipt of the reply, the assessing officer had to perform the following responsibilities: (i) consider the reply of the assessee under Section 149A(c); (ii) take a decision under Section 149A(d) based on the available material and the reply of the assessee; and (iii) issue a notice under Section 148 if it was a fit case for reassessment. Once the clock started ticking, the assessing officer was See State of A P v. A P Pensioners Association, (2005) 13 SCC 161 [28]. [This Court observed that the “legal fiction undoubtedly is to be construed in such a manner so as to enable a person, for whose benefit such legal fiction has been created, to obtain all consequences flowing therefrom.”] PART F required to complete these procedures within the surviving time limit. The surviving time limit, as prescribed under the Income Tax Act read with TOLA, was available to the assessing officers to issue the reassessment notices under Section 148 of the new regime. 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 Printed from counselvise.com Page | 6 ITA No. 2599/KOL/2025 Perfect Wahers& Fasteners (P) ltd.; A.Y. 2015-16 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. 113. In Ashish Agarwal (supra), this Court allowed the assesses to avail all the defences, including the defence of expiry of the time limit specified under Section 149(1). In the instant appeals, the reassessment notices pertain to the assessment years 2013-2014, 2014-2015, 2015-2016, 2016-2017, and 2017-2018. To assume jurisdiction to issue notices under Section 148 with respect to the relevant assessment years, an assessing officer has to: (i) issue the notices within the period prescribed under Section 149(1) of the new regime read with TOLA; and (ii) obtain the previous approval of the authority PART G specified under Section 151. A notice issued without complying with the preconditions is invalid as it affects the jurisdiction of the assessing officer. Therefore, the reassessment notices issued under Section 148 of the new regime, which are in pursuance of the deemed notices, ought to be issued within the time limit surviving under the Income Tax Act read with TOLA. A reassessment notice issued beyond the surviving time limit will be time- barred”. 6.6 From the perusal of the above-mentioned paragraphs, the Apex Court has clearly established that the AO will have surviving or balance time based on the date on which notice issued u/s 148 of the Act between 01.04.2021 to 30.06.2021. The surviving time or balance time is to be extended from the time during which the show cause notices were effectively stayed i.e. from the date of issuance of the deemed notice between 01.04.2021 to 30.06.2021 till the supply of relevant information or material by the AO to the appellant and two weeks’ time allowed to the appellant to respond to the show cause notices in terms of directions in Ashish Aggarwal case. Let us take the instance that the original notice u/s 148 of the Act was issued on 01.06.2021, after accounting all exclusions, the AO will have thirty days [days between 01.06.2021 and 30.06.2021] surviving time or balance time to issue notice u/s 148 of the Act of the new regime. The surviving time or balance time starts ticking for the AO after receiving response of the assessee. In this instance, if the assessee submits response on 20.06.2022, the AO will have thirty days from 20.06.2022 to issue reassessment notice u/s 148 of the Act. Thus, in this Printed from counselvise.com Page | 7 ITA No. 2599/KOL/2025 Perfect Wahers& Fasteners (P) ltd.; A.Y. 2015-16 illustration, the time limit for issue of a notice u/s 148 of the new regime will end on 20.07.2022. 6.7 In this appellant case, original 148 notice of the Act was issued on 18.06.2021 and the surviving or balance time limit available to the AO is thirteen days. Show cause notice u/s 148A(b) of the Act was issued on 20.05.2022 and the notice u/s 148 was issued on 29.07.2022. In this case, the appellant has to file reply to show cause notice issued u/s 148A(d) on or before 03.06.2022 i.e within 14 days from receipt of information or material (the information was given to appellant on 20.05.2022) 6.8 As per the ratio of the judgment of Supreme Court in the case of Rajeev Bansal, the notice u/s 148 of the Act in the present case could have been issued till 16.06.2022 whereas the notice was issued on 29.07.2022, therefore, the notice issued u/s 148 of the Act dated 29.07.2022 is time barred. The initiation of these proceedings stems from a notice issued u/s 148 of the Act on 18.06.2021. The Hon’ble Supreme Court in the case of Rajeev Bansal has categorically settled the legal position on the validity and the limitation of such notices. Therefore, the notice u/s 148 of the Act was issued beyond the time limit of 16.06.2022, therefore, the reassessment proceedings are not valid. Hence, the appeal is decided in favor of the appellant based on the Supreme Court decision in the case of Rajeev Bansal. The appellant raised the objection on the issue of notice u/s 148 of the Act through additional legal ground no. 1, therefore additional legal ground no. 1 is decided in favor of the appellant. Therefore, appeal of the appellant is allowed. 6.9 The appeal of the appellant is decided based on decision of the Hon’ble Supreme Court in the case of Union of India & others Vs. Rajeev Bansal, therefore, the appeal filed by the appellant through ground nos. 1 to 7 are treated as infructuous in nature. 7.0 Hence, the appeal of the appellant is allowed.” Now, aggrieved Revenue is in appeal before us. 5. After hearing the rival contentions and perusing the materials available on record, we find that the notice u/s 148 of the Act in the present case could have been issued till 16.06.2022 whereas the Printed from counselvise.com Page | 8 ITA No. 2599/KOL/2025 Perfect Wahers& Fasteners (P) ltd.; A.Y. 2015-16 notice was issued on 29.07.2022, therefore, the notice issued u/s 148 of the Act dated 29.07.2022 is time barred. The initiation of these proceedings stems from a notice issued u/s 148 of the Act on 18.06.2021. The Hon’ble Supreme Court in the case of Rajeev Bansal (supra) has categorically settled the legal position on the validity and the limitation of such notices. Therefore, the notice u/s 148 of the Act was issued beyond the time limit of 16.06.2022, therefore, the reassessment proceedings are not valid. Considering the facts of the assessee’s case in the light of the aforesaid decisions, we are inclined to uphold the order of ld. CIT (A) by dismissing the appeal of the Revenue. 6. In the result, the appeal of the Revenue is dismissed. Order pronounced in the open court on 20.01.2026. Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 20.01.2026 Sudip Sarkar, Sr.PS Copy of the Order forwarded to: BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, 5. Guard file. Printed from counselvise.com "