SHOBHA ASHOK JAIN ,MUMBAI V. DCIT CIRCLE 19(3), MUMBAI

ITA 8338/MUM/2025

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The case involves Shobha Ashok Jain, the appellant, who contested the reassessment order passed by the Deputy Commissioner of Income Tax, Circle-19(3), Mumbai, concerning the assessment year 2013-14. The reassessment was based on allegations of trading in bogus penny stocks, which led to the addition of substantial amounts to the assessee's income. The primary legal contention raised by the appellant was the jurisdictional validity of the notice issued under section 148 of the Income Tax Act, 1961, arguing that it was issued beyond the permissible time limit as prescribed under section 149 of the Act, particularly in light of the amendments and judicial interpretations following the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA). The Tribunal, referencing the Supreme Court's decision in Rajeev Bansal & Ors., found that the notice was indeed time-barred, leading to the quashing of the reassessment order.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 848411 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Mumbai
• Assessment Year: misc
• Appeal Filed On: 03-12-2025
• Other Referred Cases: CIT v. NHPC Ltd., Union of India vs. Rajeev Bansal & others, Union of India vs. Ashish Agarwal, Gurpreet Singh vs. Deputy Commissioner of Income Tax &Ors., Arunkumar Mithalal Soni vs. ITO Ward 23(1)(1), Mumbai
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S. ANBUSELVAN
• Assessee Lawyers: JALAJ PRAKASH
• Keywords: Set aside; Invalid notice; Reassessment proceedings; Question of law; Period of limitation; Time period of passing order; Bogus
• Section: 147; 148; 69C; 12

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “G”, MUMBAI BEFORE SHRI ANIKESH BANERJEE, JUDICIAL MEMBER AND SHRI JAGADISH, ACCOUNTANT MEMBER ITA No.8338/Mum/2025 (Assessment year: 2015-16) Shobha Ashok Jain 45/12, 2nd Floor Rajkotwala BLDG, 1st Carpenter Stree Near CP Tank, Mumbai- 400004 PAN:ADCPJ8901G vs DCIT Circle-19(3), Mumbai Piramal Chambers, Mumbai APPELLANT RESPONDENT Assessee by : Shri Jalaj Prakash-Advocate Respondent by : Shri S. Anbuselvan (Sr.AR) Date of hearing : 09/03/2026 Date of pronouncement : 25/03/2026 O R D E R Per: Anikesh Banerjee (JM): The instant appeal of the assessee filed against the order of the NFAC, Delhi [for brevity the “Ld. CIT(A)”], order passed under section 250 of the Income Tax Act 1961 (for brevity ‘the Act’) for assessment year 2013-14, date of order 06.10.2025. The impugned order emanated from the order of the Assessment Unit Income Tax Department (for brevity the ‘Ld. AO’) order passed under section 147 r.w.s. 144B of the Act date of order 23.05.2023. Printed from counselvise.com 2 ITA No.8338/Mum/2025 Shobha Ashok Jain 2. The brief facts of the case are that the assessee is an individual and filed the return by declaring total income Rs.88,85,890/-. The assessee’s case was reopened u/sec. 147 of the Act with flagged reason, the assessee had entered into a transaction and traded in the bogus penny stock shares amounting to Rs.1,99,26,085/- related transaction of scrip of M/s. Mahavir Industries Ltd. The assessee had earned the capital gain amount to Rs.1,99,26,085/- and claimed the exemption u/sec. 10(38) of the Act. The Ld. AO framed the assessment u/sec. 147, rejected the assessee claim u/sec. 10(38) of the Act and added back the bogus penny stock transaction amount to Rs.1,99,26,085/- u/sec. 69A r.w.s. 115BBE of the Act. The Ld. AO further calculated the commission at the rate of 3% of the total transaction which comes amount to Rs.5,97,783/- was added back u/sec. 69C r.w.s. 115BBE of the Act. So the total addition comes amount to Rs.2,05,23,868/- The aggrieved assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) upheld the impugned assessment order. Being aggrieved assessee filed an appeal before us. 3. The Ld. AR contended that the assessee has filed an additional ground by challenging the jurisdiction of the Ld. AO for issuance notice u/sec. 148 of the Act. The relevant additional ground is reproduced as below: “Additional Grounds 1. That the Ld. A.O. erred in issuing the impugned notice after expiry of the prescribed limitation period under section 149 of the Act. As per recent amendments, no notice can be issued beyond the maximum period allowed, rendering the impugned notice and all proceedings thereunder without jurisdiction and liable to be quashed. Legal Reliance: Supreme Court Judgment in CIT v. NHPC Ltd. The Appellant places reliance on the judgment of the Hon'ble Supreme Court in CIT v. NHPC Ltd., wherein it has been held that legal issues can be raised at any stage of proceedings. Hon'ble Printed from counselvise.com 3 ITA No.8338/Mum/2025 Shobha Ashok Jain Tribunal has power to adjudicate pure questions of law-even if raised for the first time before it- so as to ensure substantive justice and correct application of law.” 4. The Ld. AR argued and filed a submission related to his argument. The relevant part of the argument is reproduced as below: “1. The Hon'ble Supreme Court has delivered a judgement in the case of Union of India vs. Rajeev Bansal & others in Civil Appeal No. 8629 of 2024 dated 3 October 2024, relating to applicability of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act 2020 (hereinafter referred to as 'TOLA) and the validity of notices issued u/s 148 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act) between the period of July 2022 to September 2022 in consequence to the judgement of Union of India vs. Ashish Agarwal (2023) 1 SCC 617. 2 The two main questions before the Hon'ble Supreme Court in the case of Union of India vs. Rajeev Bansal (supra) was -. 2.1. Whether TOLA and notifications issued under it will also apply to reassessment notices issued 1 April 2021; and 2.2. Whether the reassessment notices issued u/s 148 of the new regime between July and September 2022 are valid. 3. The Hon'ble Supreme Court held that TOLA and notification thereof is applicable only to those cases where the time limit for issuance of a reassessment notices which fall for completion between 20th March 2020 and 31 March 2021, has been extended till 30th June 2021. The Apex Court held that TOLA will be applicable however the Assessing Officer (AO) had to complete the proceeding within the surviving period left and considering all the excluded period mentioned in the third proviso of section 149 of the Act, on or before 30th June 2021, including the issue of notice u/s 148 of the Act as per the provisions of sections 147, 148, 148A and 149 of the Act. The operative paras of the order arc Para 67-68 and Para 72. 4. The Hon'ble Supreme Court in the case of Rajeev Bansal (supra) highlighted three critical periods in determining the reassessment process timeline: 4.1. Up to 30th June 2021, governed by the old regime and TOLA; 4.2. From 1 July 2021 to 3rd May 2022, period before the Ashish Agarwal (supra) decision; and 4.3. Post 4th May 2022, governed by the new regime and the Court's directions in Ashish Agarwal (supra). Printed from counselvise.com 4 ITA No.8338/Mum/2025 Shobha Ashok Jain 5 A key aspect in the suspension of time from the issuance of notices u/s 148 of the Act during the transition period until the relevant material is provided to the Assessee. The Court emphasized that this period, along with the two weeks allowed for filing replies, must be excluded from the computation of the limitation period, as mandated by the third proviso of Section 149 of the Act (amended provision). The Apex Court has further addressed the calculation ofthe remaining time and what needs to be excluded from such time. The operative para No. 112 is as under. \"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 cantenoticer will also come into effect from 1 May 2021. After accounting for all the excclusions, 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 officer will have tixty-ane 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,\" 6. The aforesaid ruling creates a legal fiction where deemed notices are considered to have been issued under the new regime, requiring assessing officers to complete the proceedings within the surviving time from the old regime. 7. Therefore, the combined effect of TOLA, Ashish Agarwal (supra), and Section 149 of the Act provides that the reassessment notices issued between 1 April 2021 and 30th June 2021 are deemed as show cause notices u/s 148A(b) of the Act under the new regime. As per the third proviso to Section 149 of the Act, the following periods are required to calculate the period of limitation: 7.1. The time allowed to the Assessee u/s 148A(b) of the Act; and 7.2 The period during which the proceedings u/s 148A are \"stayed by an order or injunction of any court.\" 8. The summary of the above illustration as explained by the Hon'ble Supreme Court in Para 112 of the order is tabulated here as under. Printed from counselvise.com 5 ITA No.8338/Mum/2025 Shobha Ashok Jain Sr. Event/Action Date/Period Explanation 1 Issuance of notice u/sec. 148 of the Act under old regime 01.05.2021 Deemed as a show cause notice u/sec. 148A(b) of the Act under the new regime due to the Ashish Agrawal judgment (supra) 2 Available days under TOLA 01.05.2021 to 30.06.2021 There are the days between notice issuance and the TOLA deadline of 30.06.2021 (i.e. 60 days) 3 Response received from the Assessee against SCN u/sec. 148A(b) of the Act 18.06.2022 The clock starts after Assessee submits a response to the notice 4 Surviving time remaining to issue the notice u/sec. 148 ofthe Act i.e. under new regime. 61 days The Assessing Officer has the remaining 61 days (from the original period) to issue a reassessment notice) 5 Start of the balance period 18.06.2022 The 61 day clock begins once the Assessing submits the response 6 End of the balance period 18.08.2022 The deadline for issuing the reassessment notice u/sec. 148 of the Act under new regime. 9. Based on the above facts and decision of the Hon'ble Supreme Court in the case of Rajeev Bansal (supra), the tabular representation of the various notices issued in the present case of the appellant is produced as under: Sr. No. Date of Notice Notice u/sec. Particulars Page No.in paper book 1 25.06.2021 148 Notice issued under the old provision of the Act 306 2 02.06.2022 148A(b) Show Cause Notice was issued in accordance with the decision in the case of Ashish Agrawal (supra) and the appellant was granted time of two weeks 310 Printed from counselvise.com 6 ITA No.8338/Mum/2025 Shobha Ashok Jain for furnishing reply to such notice. 3 17.06.2022 148A(c) Time allowed to reply to the show cause notice s 2 weeks from the date of issuance of notice u/sec. 148A(b) of the Act. 4 28.07.2022 148A(d) Order passed by the Ld. JAO 321 5 28.07.2022 148 Fresh notice of reopening is issued by the Ld. JAO 328 10. In the present case, the first notice was issued under the unamended provisions of Section 147 to 151 of the Act i.e. from 1 April 2021 to 30th June 2021. The Ld. AO had issued the original notice u/s 148 of the Act as per unamended provision on 25th June 2021. Subsequently, a show cause notice u/s 148A(b) of the Act was issued on 2nd June 2022 in consequences of the Hon'ble Supreme Court order in the case of Ashish Agarwal (supra). Therefore, TOLA will apply with the condition that the new notice u/s 148 of the Act (amended provision) needs to be issued after complying with the procedures of 148A(b) of the Act and should be issued within the surviving period. 11. Therefore, by considering the Supreme Court order and illustration mentioned in Para 112 of the order, the working of limitation in the appellant's case is as under: Sr. No. Event/Action Date Pg. No. in Paper Book 1 Issuance of Notice u/sec. 148 of the Act under old regime 25.06.2021 306, 1 2 Notice u/sec. 148A(b) i.e. Supply of material as per Hon'ble Supreme Court direction in the case of Ashish Agrawal (supra) 02.06.2022 310, 5 3 Time allowed to the Assessee for filing response against notice u/sec. 148A(b) 17.06.2022 4 Final reply filed by the Appellant against Show Cause notice u/sec. 148A(b) of the Act. 11.07.2022 319, 14 5 Surviving period left to issue the notice u/sec. 148 of the Act i.e. under the new regime as per Hon'ble Supreme Court’s order in the case of Rajeev Bansal (supra) 5 days (between 25.06.2021 and 30.06.2021) 6 Time in Sr. No.5 in view o the fourth proviso to section 149(1) of the Act 5 days Printed from counselvise.com 7 ITA No.8338/Mum/2025 Shobha Ashok Jain 7 The date till which a notice u/sec. 148 of the Act under new regime should have been issued as per Hon'ble Supreme Court Order in the case of Rajeev Bansal(supra) and Order of Ld. CIT(A) 16.07.2022 (11.07.2022 + 5 days) 8 Order passed u/sec. 148(d) 28.07.2022 321, 16 9 Actual date of notice issue u/sec. 148 of the Act under the new regime 28.07.2022 328, 23 12. Given the above computation, the surviving period expired 16th July 2022, but the notice u/s 148 of the Act as per new regime was issued on 28th July 2022. As the new notice issued u/s 148 of the Act is beyond the limitation period, it is time-barred under the Income Tax Act read with TOLA. 13. Further, by following the Supreme Court decision in case of Rajeer Bansal (supra), the Jurisdictional Hon'ble Bombay High Court at Goa allowed the appeal in the case of Gurpreet Singh vs. Deputy Commissioner of Income Tax &Ors. In WP No. 315 of 2023, where it was held for the A.Y. 2013-14: \"21. For all these reasons, we hold that the notice dated 29/07/2022, issued by Respondent No. 1 under Section 148 of the IT Act is beyond the time period specified under Section 149(1) of the IT Act. It is therefore quashed. Consequently, the impugned assessment order dated 29/05/2023 passed on the basis of the impugned notice also stands quashed and set aside. Rale is made absolute in aforesaid terms with no order as to costs.\" 14. Further, by following the Supreme Court decision in case of Rajeev Bansal (supra). the Hon'ble Mumbai Income Tax Appellate Tribunal has allowed the appeal in the case of Arunkumar Mithalal Soniv.s ITO Ward 23(1)(1), Mumbai in ITA No. 6687/Mum/2024 dated 5th August 2025 where for A.Y. 2014-15 it was held that the notice issued after the final notice u/s 148 of the Act was issued on 25th July 2025 was 46 days after the surviving time period, which according to the decision of the Hon'ble Supreme Court was barred by limitation: \"10. From the above, it is observed that the ld. AO bas issued the first notice u/s. 148 on 28.06.2021 along with order passed w/ s. 148.4(b) of the Act which is deemed to be the show cause notice which is 2 days prior to the expiry of limitation period extended by the TOLA (The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020) which implies that for issuance of notice u/ s. 148 after receiving the reply from the assessee, the id. AO had 2 days time to issue notice u/s. 148 which was less than 7 days as per the 4th Printed from counselvise.com 8 ITA No.8338/Mum/2025 Shobha Ashok Jain proviso to Section 149(1) of the Act i.e., 7 days to pass order / s. 148A(d), While computing the surviving time limit as per the decision of the Hon'ble Apex Court in the case of Rajeev Bansal (supra), the final notice u/s. 148 of the Act was issued on 25.07.20225 was 46 days after the surviving time period which according to the decision of the Hon'ble Supreme Court in Rajeev Bansal (supra) was barred by limitation. We therefore are of the considered view that the impugned notice u/s. 148 of the Act is time barred and hence, liable to be quashed and the resultant assessment order is held to be bad in law. We therefore allow ground no. 2 raised by the assessee. As we have already held the assessment order to be null and void, the other ground of appeal raised by the assessee requires no further adjudication and is rendered academic in nature.\" 5. The Ld. DR relied upon the orders of the revenue authorities. However, he was unable to rebut the submissions of the Ld. AR by citing any contrary judicial precedent. 6. We have heard the rival submissions and carefully perused the material available on record, including the additional ground raised by the assessee challenging the jurisdiction of the Ld. AO. The additional ground being a pure question of law goes to the root of the matter and does not require fresh investigation of facts. Accordingly, in view of the settled legal position laid down by the Hon’ble Supreme Court in CIT vs National Thermal Power Co. Ltd. reported in [1998] 97 Taxman 358 /229 ITR 383, the same is admitted for adjudication. On merits, we find that the issue relating to limitation for issuance of notice under section 148 of the Act is squarely covered by the judgment of the Hon’ble Supreme Court in Rajeev Bansal & Ors. The Apex Court has clearly laid down the manner of computation of the surviving limitation period in cases transitioning from the old regime to the new regime pursuant to Ashish Agarwal (supra). In the present case, as per the undisputed facts on record, the original notice under the old regime was issued on 25.06.2021. After following the Printed from counselvise.com 9 ITA No.8338/Mum/2025 Shobha Ashok Jain procedure under section 148A, the final notice under section 148 of the Act was required to be issued within the surviving limitation period, which expired on 16.07.2022. However, the impugned notice under section 148 was issued on 28.07.2022, which is beyond the permissible time limit. Respectfully following the ratio laid down by the Hon’ble Supreme Court in Rajeev Bansal (supra), as well as the decision of the Hon’ble Bombay High Court in Gurpreet Singh (supra) and the Coordinate Bench decision in Arunkumar Mithalal Soni (supra), we hold that the impugned notice issued under section 148 of the Act is barred by limitation and is liable to be quashed. Accordingly, the reassessment proceedings initiated pursuant to such invalid notice, as well as the consequential assessment order passed under section 147 of the Act, are held to be void ab initio and without jurisdiction. Since the assessment itself has been quashed on legal grounds, the additions made by the Ld. AO, including the addition of Rs.1,99,26,085/- under section 69A r.w.s. 115BBE of the Act and Rs.5,97,783/- under section 69C r.w.s. 115BBE of the Act, do not survive and are rendered academic. In the result, the appeal of the assessee is allowed on jurisdictional grounds. 7. In the result, the appeal of the assessee bearing ITA No.8338/Mum/2025 is allowed. Order pronounced in the open court on 25th day of March 2026. Sd/- Sd/- (JAGADISH) (ANIKESH BANERJEE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai,िदनांक/Dated: 25/03/2026 SAUMYASr.PS Printed from counselvise.com 10 ITA No.8338/Mum/2025 Shobha Ashok Jain Copy of the Order forwarded to: 1. अपीलाथŎ/The Appellant , 2. Ůितवादी/ The Respondent. 3. आयकरआयुƅ CIT 4. िवभागीयŮितिनिध, आय.अपी.अिध., मुंबई/DR, ITAT, Mumbai 5. गाडŊफाइल/Guard file. BY ORDER, //True Copy// (Asstt. Registrar), ITAT, MUMBAI Printed from counselvise.com "