Introduction
In a significant ruling reinforcing the limits of reassessment jurisdiction, the Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) in Akash Shah v. Assistant Commissioner of Income Tax, Circle-4(1)(1), Ahmedabad (ITA No. 1780/AHD/2025, A.Y. 2015-16) quashed a reassessment order passed under Section 147 read with Section 144B of the Income Tax Act. The Tribunal, comprising Shri Sanjay Garg (Judicial Member) and Shri Narendra Prasad Sinha (Accountant Member), held that the notice issued under Section 148 of the Act on 08.04.2021 for Assessment Year 2015-16 was time-barred and without jurisdiction, applying the binding principles laid down by the Hon’ble Supreme Court in Union of India v. Rajeev Bansal and Deepak Steel and Power Limited v. CBDT, as well as the jurisdictional Gujarat High Court in Narendra Maganlal Purohit v. DCIT. The decision was pronounced on 04.08.2026.
Facts of the Case
The assessee, Akash Shah, filed his return of income for A.Y. 2015-16 on 30.09.2015, declaring a total income of Rs. 5,51,520/-. The case was reopened by the Assessing Officer (AO) based on information received that the assessee had obtained an accommodation entry of Rs. 19,35,900/- through a broker, BMA Wealth Creators Ltd., and also given an unsecured loan of Rs. 62,00,000/- to an entry operator, Shri Jignesh Shah, for obtaining bogus Long-Term Capital Gains (LTCG) entry. The assessment was completed under Section 147 read with Section 144B of the Act on 28.05.2023, determining the total income at Rs. 86,87,420/-.
Aggrieved, the assessee appealed to the National Faceless Appeal Centre (NFAC), which dismissed the appeal via order dated 12.06.2025. The assessee then filed a second appeal before the ITAT. There was a delay of 23 days in filing the appeal. The Tribunal condoned the delay after considering the affidavit of the office assistant, Ms. Sapna Dashrath Rajput, who had mistakenly kept the appeal papers in the general file instead of forwarding them to the Chartered Accountant.
Legal Issue and Additional Ground
The assessee raised several grounds on merits, including the failure to provide relevant material, denial of cross-examination, and confirmation of the addition of Rs. 81,35,900/- as alleged accommodation entries. However, the most crucial ground was the additional ground challenging the validity of the reassessment notice itself. The assessee contended that the notice issued by the Jurisdictional Assessing Officer under Section 148 of the Act dated 08.04.2021 was invalid, illegal, and bad in law. The assessee argued that since the provisions of Section 144B were inserted by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) with effect from 01.04.2021, the notice issued after this date was not in accordance with Section 151A of the Act. Consequently, the assessment finalized on the basis of such invalid initiation deserved to be quashed.
Reasoning of the ITAT
The ITAT took up the additional legal ground first, as it went to the very root of the matter. The assessee’s counsel, Shri Mehul Ranpura, submitted that the reopening was barred by limitation. While the original notice under Section 148 was issued on 08.04.2021 — within the extended time limit as per TOLA — the counsel drew the Tribunal’s attention to the judgment of the Hon’ble Supreme Court in Deepak Steel and Power Limited v. CBDT (174 taxmann.com 144) (SC) and the decision of the Gujarat High Court in Narendra Maganlal Purohit & Others v. DCIT (182 taxmann.com 786) (Gujarat). The counsel contended that any assessment order passed in pursuance of such an invalid notice was ab initio null and void. The Revenue, represented by Shri Deependra Kumar, relied solely on the orders of the lower authorities without addressing the jurisdictional challenge.
Upon careful consideration, the ITAT noted that there was no dispute regarding the fact that the original notice under Section 148 of the Act for A.Y. 2015-16 was issued on 08.04.2021. The Tribunal then examined the binding precedent. In Union of India v. Rajeev Bansal, the Supreme Court recorded the Revenue’s concession in paragraph 19(f) that “for the assessment year 2015-2016, all notices issued on or after April 1, 2021 will have to be dropped as they will not fall for completion during the period prescribed under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020.” This concession was subsequently reiterated by the Supreme Court in Deepak Steel and Power Limited, where the Court held that nothing further required adjudication since the notice in that case was dated 25.06.2021, and therefore, all notices issued on or after 01.04.2021 for A.Y. 2015-16 must be dropped.
The ITAT further observed that the Delhi High Court in H.A. Share and Brokers (P.) Ltd. v. ITO and the Bombay High Court in Cherian Nallathu Abraham Annamma v. ITO had applied the same principle, holding that any notice issued under Section 148 or deemed to be issued under Section 148A(b) for A.Y. 2015-16 after 01.04.2021 is void ab initio. The jurisdictional Gujarat High Court in Narendra Maganlal Purohit also followed the ratio of Rajeev Bansal, holding that such notices are without authority of law.
Applying these principles to the facts, the Tribunal concluded that since the notice under Section 148 for A.Y. 2015-16 was issued on 08.04.2021 — i.e., after 01.04.2021 — it was time-barred and without jurisdiction. Consequently, the assessment order passed under Section 147 of the Act dated 28.05.2023, which was founded on an invalid notice, could not survive. The Tribunal quashed the assessment order passed under Section 147 read with Section 144B of the Act. The additional ground raised by the assessee was allowed.
Having allowed the appeal on the jurisdictional ground, the ITAT declined to adjudicate the other grounds raised by the assessee on the merits of the additions, as they were rendered academic. The appeal was accordingly allowed in full.
Conclusion
This ITAT Ahmedabad ruling in Akash Shah v. ACIT is a decisive authority on the scope of reassessment jurisdiction for A.Y. 2015-16. It reinforces the binding principle that any notice issued under Section 148 on or after 01.04.2021 for that assessment year is void ab initio, as it falls outside the extended timeline prescribed under TOLA. The Tribunal’s decision, grounded in the Supreme Court’s concession in Rajeev Bansal and reiterated in Deepak Steel and Power Limited, together with the jurisdictional Gujarat High Court’s ruling, provides strong protection to taxpayers against reopening of assessments for A.Y. 2015-16 where the notice was issued after the cut-off date. By quashing the assessment order on jurisdictional grounds without entertaining the merit-based grounds, the ITAT has underscored that an invalid initiation cannot be cured by the subsequent assessment proceedings. This commentary highlights the critical importance of checking the validity of the notice under Section 148 before proceeding to a full-fledged adjudication on the merits of the additions.