WAW DIGITRADE PRIVATE LIMITED,WEST DELHI, MUNDKA V. A.O., FACELESS ASSESSMENT

ITA 6482/DEL/2025

AI Insights

The case involves WAW Digitrade Private Limited appealing against the reassessment order passed by the Assessing Officer (AO) under section 147 of the Income Tax Act, 1961, for the assessment year 2014-15. The reassessment was initiated following a notice under section 148, which was later deemed to be a show cause notice under section 148A(b) as per the Supreme Court's decision in Ashish Agarwal. The primary legal contention raised by the assessee was that the notice under section 148 was issued beyond the permissible time limit, specifically after the expiration of the 'surviving period' as defined by the Supreme Court in Rajeev Bansal. The Tribunal, referencing the Supreme Court's decisions, particularly noted that the AO had exceeded the time limit by issuing the notice after the surviving period had expired, leading to the quashing of the reassessment order.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 839245 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 13-10-2025
• Other Referred Cases: Union of India and Ors. vs. Ashish Agarwal, Union of India Vs. Rajeev Bansal, Communist Party of India (Marxist) vs. CIT Exmpt.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHILESH YADAV
• Assessee Lawyers: ANKIT AGARWAL
• Keywords: Set aside; Period of limitation; Time period of passing order
• Section: 147; 148

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: ‘A’ NEW DELHI BEFORE SHRI ANUBHAV SHARMA, JUDICIAL MEMBER AND SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No.6482/Del/2025 (ASSESSMENT YEAR: 2014-15) WAW Digitrade Private Limited, Khasra No. 58/17, West Delhi, Mundka, Delhi-110041 PAN:AAHCA7355C Vs. AO, Faceless Assessment Centre, Delhi. (Appellant) (Respondent) O R D E R PER MANISH AGARWAL, AM: The captioned appeal is filed by the assessee against the order of Commissioner of Income Tax (Appeal), [“CIT(A)”, in short] National Faceless Appeal Centre (NFAC), Delhi passed u/s 250 of the Income Tax Act, 1961 (“the Act”) dt. 03.09.2025 arising out of the assessment order passed u/s 147 of the Act, dt. 26.05.2023 for AY 2014-15. 2. Brief facts of the case are that case of the assessee was reopened u/s 147 of the Act by issue of notice u/s 148 on 28.06.2021, copy of the same is placed in before us. In terms of the decisions of Hon’ble Supreme Court in the case of Union of India and Ors. vs. Ashish Agarwal in Civil Appeal No.3005/2022 dated 04.05.2022, the said notice was deemed to Assessee by Sh. Ankit Agarwal, CA Department by Sh. Akhilesh Yadav, Sr. DR Date of hearing 11.02.2026 Date of pronouncement 18.02.2026 Printed from counselvise.com 2 IT No.6482/Del/2025 WAW Digitrade Pvt. Ltd Vs AO have been issued as show cause notice u/s 148A(b) of the Act and the AO supplied the information to the assessee vide show cause notice dt. 25.05.2022. Assessee filed the reply on 08.06.2022. Thereafter order u/s 148A(d) was passed on dated 22.07.2022 and notice u/s 148 was issued on the same day i.e. on 22.07.2022. Thereafter, the re-assessment proceedings were completed, and order was passed u/s 147 r.w.s. 144B of the Act on 26.05.2023 at a total income of Rs. 1,95,71,982/-. Against the said order an appeal was filed before the Ld. CIT(A) who dismissed the appeal of the assessee. 3. Aggrieved by the said order, assessee filed the present appeal before the Tribunal. 4. In grounds of appeal Nos. 2, assessee has challenged the reassessment order passed u/s 147 of the Act by alleging that the notice issued u/s148 is barred by limitations as it is issued after the surviving period as defined by the hon’ble Supreme court in the case of Union of India Vs. Rajeev Bansal reported in (2024) 469 ITR 46 (SC). 5. Heard both the parties at length and perused the materials available on record. The notice u/s 148 was issued on 28.06.2021 leaving 3days as surviving period with the Assessing Officer till the period of limitation i.e. 30.6.2021. Thereafter, in terms of the judgement of Hon’ble Supreme Court in the case of Ashish Agarwal (supra), notice issued u/s 148 dated 28.06.2021 was deemed to have been issued u/s 148A(b) of the Act and information was supplied to the assessee vide notice u/s 148A(b) on 25.5.2022. The said notice was duly replied by the assessee on 08.06.2022. The Printed from counselvise.com 3 IT No.6482/Del/2025 WAW Digitrade Pvt. Ltd Vs AO order u/s 148A(d) was passed on 22.7.2022 followed by the notice u/s 148 issued on the same day. Claim of the assessee was that the notice u/s 148 dt. 22.7.2022 was issued after the surviving period of 3 days available with the AO from the date of reply furnished by the assessee in response to notice issued u/s 148A(b) on 08.06.2022 thus is barred by limitations. Though as per the order of hon’ble Supreme court in the case Rajeev Bansal (supra) where surviving period was less than 7 days, time of 7 days was allowed as reasonable time. 6. Since the surviving period available with the AO was 7 days (as extended) therefore, in terms of the order of hon’ble Supreme court in the case of Rajeev Bansal (supra) the time available with the AO to pass the order u/s 148A(d) and to issue notice u/s 148 of the Act was upto 15.06.2022 i.e. 7 days from 08.06.2022 when the reply was filed by the assessee against the notice issued u/s 148A(b) of the Act. The period of limitations for issue of notice u/s 148 as per the order of Rajeev Bansal (supra) starts from the date when the assessee filed reply against the notice issued u/s 148A(b) on 08.06.2022. AO should have concluded the entire proceedings within the surviving period of 7 days from the date when reply was filed. As observed above, the AO passed the order u/s 148A(d) on 22.07.2022 and the notice u/s 148 were also issued on 22.07.2022 which is beyond the surviving period available with the AO which had expired on 15.06.2022. 7. The Hon’ble Supreme court in the case of Rajeev Bansal (supra) has held that the cases where the earlier notice issued u/s 148 is treated as notice u/s 148A(b) of the Act, the fresh notice u/s Printed from counselvise.com 4 IT No.6482/Del/2025 WAW Digitrade Pvt. Ltd Vs AO 148 could be issued after completion of due process as per amended section 148A of the Act however, a rider was imposed by the hon’ble court that the fresh notice u/s 148 could be issued only within the surviving period available. The relevant observations of the hon’ble court are as under: 105. A direction issued by this Court in the exercise of its jurisdiction under Article 142 is an order of a court. The third proviso to Section 149 of the new regime provides that the period during which the proceedings under Section 148A are stayed by an order or injunction of any court shall be excluded for computation of limitation. During the period from the date of issuance of the deemed notice under Section 148A(b) and the date of the decision of this Court in Ashish Agarwal (supra), the assessing officers were deemed to have been prohibited from passing a reassessment order. Resultantly, the show cause notices were deemed to have been stayed by order of this Court from the date of their issuance (somewhere from 1 April 2021 till 30 June 2021) till the date of decision in Ashish Agarwal (supra), that is, 4 May 2022. 106. In Ashish Agarwal (supra), this Court directed the assessing officers to provide relevant information and materials relied upon by the Revenue to the assesses within thirty days from the date of the judgment. A show cause notice is effectively issued in terms of Section 148A(b) only if it is supplied along with the relevant information and material by the assessing officer. Due to the legal fiction, the assessing officers were deemed to have been inhibited from acting in pursuance of the Section 148A(b) notice till the relevant material was supplied to the assesses. Therefore, the show cause notices were deemed to have been stayed until the assessing officers provided the relevant information or material to the assesses in terms of the direction issued in Ashish Agarwal (supra). To summarize, the combined effect of the legal fiction and the directions issued by this Court in Ashish Agarwal (supra) is that the show cause notices that were deemed to have been issued during the period between 1 April 2021 and 30 June 2021 were stayed till the date of supply of the relevant information and material by the assessing officer to the assessee. After the supply of the relevant material and information to the assessee, time begins to run for the assesses to respond to the show cause notices. 107. The third proviso to Section 149 allows the exclusion of time allowed for the assesses to respond to the show cause notice under Section 149A(b) to compute the period of limitation. The third proviso excludes “the time or extended time allowed to the Printed from counselvise.com 5 IT No.6482/Del/2025 WAW Digitrade Pvt. Ltd Vs AO assessee.” Resultantly, the entire time allowed to the assessee to respond to the show cause notice has to be excluded for computing the period of limitation. In Ashish Agarwal (supra), this Court provided two weeks to the assesses to reply to the show cause notices. This period of two weeks is also liable to be excluded from the computation of limitation given the third proviso to Section 149. Hence, the total time that is excluded for computation of limitation for the deemed notices is: (i) the time during which the show cause notices were effectively stayed, that is, from the date of issuance of the deemed notice between 1 April 2021 and 30 June 2021 till the supply of relevant information or material by the assessing officers to the assesses in terms of the directions in Ashish Agarwal (supra); and (ii) two weeks allowed to the assesses to respond to the show cause notices. b. Interplay of Ashish Agarwal with TOLA 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. 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 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. Printed from counselvise.com 6 IT No.6482/Del/2025 WAW Digitrade Pvt. Ltd Vs AO 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 Ashish Agarwal (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 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 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 Printed from counselvise.com 7 IT No.6482/Del/2025 WAW Digitrade Pvt. Ltd Vs AO Section 149(1) of the new regime read with TOLA; and (ii) obtain the previous approval of the authority 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. G. Conclusions 114. In view of the above discussion, we conclude that: a. After 1 April 2021, the Income Tax Act has to be read along with the substituted provisions; b. TOLA will continue to apply to the Income Tax Act after 1 April 2021 if any action or proceeding specified under the substituted provisions of the Income Tax Act falls for completion between 20 March 2020 and 31 March 2021; c. Section 3(1) of TOLA overrides Section 149 of the Income Tax Act only to the extent of relaxing the time limit for issuance of a reassessment notice under Section 148; d. TOLA will extend the time limit for the grant of sanction by the authority specified under Section 151. The test to determine whether TOLA will apply to Section 151 of the new regime is this: if the time limit of three years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under Section 151(i) has extended time till 30 June 2021 to grant approval; e. In the case of Section 151 of the old regime, the test is: if the time limit of four years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under Section 151(2) has extended time till 31 March 2021 to grant approval; f. The directions in Ashish Agarwal (supra) will extend to all the ninety thousand reassessment notices issued under the old regime during the period 1 April 2021 and 30 June 2021; g. The time during which the show cause notices were deemed to be stayed is from the date of issuance of the deemed notice between 1 April 2021 and 30 June 2021 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 Ashish Agarwal (supra), and the period of two weeks allowed to the assesses to respond to the show cause notices; and h. The assessing officers were required to issue the reassessment notice under Section 148 of the new regime within the time limit surviving under the Income Tax Act Printed from counselvise.com 8 IT No.6482/Del/2025 WAW Digitrade Pvt. Ltd Vs AO read with TOLA. All notices issued beyond the surviving period are time barred and liable to be set aside; 8. In the case of Communist Party of India (Marxist) vs. CIT Exmpt. reported in [2025] 174 taxmann.com 925 (Delhi), the Hon'ble Delhi High court has held as under: \"8. The AO issued a notice dated 29.07.2022 under Section 148 of the Act accompanied with the order dated 29.07.2022 passed under Section 148A(d) of the Act. It is the petitioner's case that the said notice is barred by limitation. 9. It is material to note that the original notice under Section 148 of the Act [deemed to be a show cause notice under Section 148A(b) of the Act in terms of the decision in the case of Union of India & Ors. v. Ashish Agarwal (supra)] was issued on 28.06.2021, that is, two days prior to the expiry of the limitation period as extended by virtue of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 [TOLA]. Thus, the AO had two days to issue the notice under Section 148 of the Act after receiving the reply dated 08.06.2022 filed by the petitioner. Since the said period was less than seven days, the AO had, by virtue of the fourth proviso to Section 149(1) of the Act, seven days to pass an order under Section 148A(d) of the Act (which was necessarily required to accompany a notice under Section 148 of the Act). The said period expired on 16.06.2022. Therefore, the order passed under Section 148A(d) of the Act was beyond the period of limitation. 10. The impugned notice is also liable to be set aside on the ground that it was issued without the approval of the authority specified under Section 151 of the Act. Since the impugned notice was issued beyond the period of three years from the end of the relevant assessment year, thus, in terms of Section 151(ii) of the Act, the same was required to be approved by the Principal Chief Commissioner or Principal Director General or where there is no such authority, by Chief Commissioner or Director General. The determination of the specified authority for grant of approval under Section 151 of the Act depends on whether the notice under Section 148 of the Act has been issued after the expiry of three years from the end of the relevant assessment year or within the said period.\" 9. In the instant case notice u/s 148 of the Act has been issued beyond the period of limitation i.e. after the expiry of surviving period as prescribed by the Hon'ble Supreme Court in the case of Rajeev Bansal (supra). As observed above, in the present case, the notice u/s 148 of the Act was issued on 22.07.2022 and reply in response to notice u/s 148A(b) was filed by the assessee on Printed from counselvise.com 9 IT No.6482/Del/2025 WAW Digitrade Pvt. Ltd Vs AO 08.06.2022 thus the notice u/s 148 dt. 22.07.2022 is barred by limitation as the surviving period of 7 days expired on 15.06.2022. 10. In view of these facts and by respectfully following the judgement of hon’ble Supreme court in the case of Rajeev Bansal (supra) and of hon’ble Delhi High Court as referred above, the notice issued u/s 148 on 25.07.2022 is barred by limitations and thus invalid and consequent reassessment order passed u/s 147 r.w.s.144B is quashed. Accordingly, grounds of appeal Nos. 2taken by the assessee is allowed. 11. Since we have already decided the legal grounds of appeal taken by the assessee in its favour, the other grounds of appeal are not adjudicated. 12. In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 18.02.2026. Sd/- Sd/-- /- (ANUBHAV SHARMA) (MANISH AGARWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 18.02.2026. *PK, Sr. Ps* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi Printed from counselvise.com "