ITO Ward-I Mandi v Gopal Krishan Bansal: ITAT Chandigarh on Section 148/149 Time-Bar

In a February 2026 ruling, the Income Tax Appellate Tribunal, Chandigarh Bench "A" quashed a reassessment notice issued under Section 148 of the Income Tax Act, 1961 against Gopal Krishan Bansal, proprietor of M/s Aggarwal Steel Tubes, holding the notice to be without jurisdiction and barred by limitation under Section 149. The decision illustrates how the survival-period computation framework laid down by the Supreme Court governs the validity of reassessment notices issued in the post-TOLA era, and why jurisdictional defects of this kind will defeat even well-founded substantive additions at the assessment stage.

This page is a research summary of one specific Indian tax judgment, NOT legal advice. Always verify against the full judgment and consult a professional for case-specific guidance.

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The case at a glance

• Parties: Income Tax Office, Ward-I Mandi vs Gopal Krishan Bansal, Aggarwal Steel
• Bench: Income Tax Appellate Tribunal - Chandigarh
• Date: 11 February 2026
• Court level: Tribunal (ITAT)
• Sections engaged: 148, 149
• Outcome: Taxpayer succeeded — assessee's appeal allowed, Revenue's cross-appeal dismissed; Section 148 notice quashed as time-barred under Section 149.

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Facts of the case

Gopal Krishan Bansal, proprietor of M/s Aggarwal Steel Tubes, Mandi Gobindgarh, Punjab (PAN: AFMPB3588H), filed his original return of income for Assessment Year 2013-14 on 04 October 2013. The case was originally assessed under Section 143(3) on 26 November 2015, with a modest addition of Rs. 50,000 on account of low profit, bringing assessed income to Rs. 3,47,370 against returned income of Rs. 2,97,370.

The case was subsequently reopened under Section 148 on the basis of information received from the Investigation Wing alleging that the assessee had made bogus purchases aggregating Rs. 2.63 crore from three parties — M/s Shiv Bhole Kripa (Rs. 0.69 crore), M/s Kanak Overseas (Rs. 1.01 crore), and M/s Gitansh International (Rs. 0.93 crore). During reassessment proceedings, the assessee submitted invoices, account copies, proof of payment through banking channels, vehicle numbers of transporters, and pointed to accepted VAT assessments and un-rejected books of accounts. The Assessing Officer nonetheless made an addition of Rs. 2,63,00,000 as unexplained income under Section 69A.

On appeal, the CIT(A)/NFAC Delhi, by order dated 05 March 2025, directed restriction of the addition to 12.5% of the alleged bogus purchases (i.e., Rs. 56,26,047) instead of the full 100%, partly allowing the assessee's appeal. Both the assessee and the Revenue thereafter appealed to the Tribunal — the assessee in ITA No. 614/Chd/2025 and the Revenue in ITA No. 478/Chd/2025, both for Assessment Year 2013-14.

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Issues raised

• Whether the notice issued under Section 148 dated 29 July 2022 was valid, having regard to the limitation period prescribed under Section 149, particularly the computation of surviving time carried forward under the TOLA framework as settled by the Supreme Court in Union of India v. Rajeev Bansal, 340 CTR 862 (SC).
• Whether the fourth proviso to Section 149(1) — which extends the limitation period where the surviving period is less than seven days — was correctly applied in determining the last date for issuance of the Section 148 notice.
• Whether the CIT(A) erred in sustaining an addition of 12.5% of alleged bogus purchases from M/s Shiv Bhole Kripa, M/s Kanak Overseas, and M/s Gitansh International, in the face of documentary evidence including banking-channel payments and un-rejected books of accounts.
• Whether the Revenue's cross-appeal against the CIT(A)'s restriction of the addition from 100% to 12.5% was maintainable once the Tribunal found the reassessment notice itself to be without jurisdiction.

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What the court held

The Tribunal allowed the assessee's appeal and dismissed the Revenue's cross-appeal. The operative basis for the decision was the jurisdictional invalidity of the Section 148 notice dated 29 July 2022: the Tribunal found it to have been issued beyond the time limit permissible under Section 149, rendering the entire reassessment void ab initio.

The assessee had raised this as an additional ground of appeal by letter dated 12 January 2026, framing it as a pure legal issue going to the root of the Assessing Officer's assumption of jurisdiction. The Tribunal admitted the additional ground, drawing on the precedent of National Thermal Plant (229 ITR 383) cited by the assessee in support of admitting a legal ground at the appellate stage. The substantive argument on jurisdiction rested on the Supreme Court's ruling in Union of India v. Rajeev Bansal (340 CTR 862), which the assessee's counsel contended governed the survival-period computation applicable to this case. The assessee placed before the Tribunal a detailed tabular synopsis comparing the dates in its own case against the timelines analysed in Rajeev Bansal and in two other ITAT orders — including a Chandigarh Bench order in the case of Harish Chander Sharma (dated 19 May 2025) and a Bombay ITAT order in Hitesh Ramniklal Shah v. ACIT (2025) — showing that the Section 148 notice in the present case was issued on 29 July 2022, well after the last permissible date computed by applying the surviving-period and four-proviso extension framework of Section 149(1).

Because the Tribunal disposed of the appeal on the jurisdictional ground — finding the notice under Section 148 to be without jurisdiction and barred by time — the merits of the substantive additions (bogus purchases, the 12.5% disallowance sustained by CIT(A), and the Revenue's cross-appeal for restoration of the full 100% addition) became academic and were not adjudicated.

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Strategy observations

1. An additional ground of appeal was raised on a jurisdictional issue. The ground challenging the validity of the Section 148 notice under Section 149 was not part of the original grounds before the CIT(A); it was raised before the Tribunal by letter dated 12 January 2026, approximately ten days before the hearing date of 21 January 2026. The Tribunal admitted it as a legal ground, noting that all relevant facts were borne out from the Assessing Officer's order and the CIT(A) order, and that the National Thermal Plant (229 ITR 383) precedent supported admission of purely legal grounds at the appellate stage.

2. The jurisdictional challenge was supported by a structured comparative table. The assessee's counsel filed a Brief Synopsis setting out a tabular comparison of key dates — issuance of the Section 148A(b) notice, the reply deadline, actual response date, last date for issue of Section 148 notice under the surviving-time calculation, and the extended last date under the fourth proviso to Section 149(1) — across the present case and three reference cases including Rajeev Bansal. This analytical framework, drawn directly from paragraph 112 of the Rajeev Bansal judgment, formed the core of the jurisdictional argument.

3. The Tribunal disposed of the case entirely on the preliminary jurisdictional ground. Because the Section 148 notice was found void ab initio, all substantive grounds — including the CIT(A)'s 12.5% disallowance and the Revenue's cross-appeal for full addition — became academic. A jurisdictional infirmity in the notice thus rendered the entire reassessment a nullity, irrespective of the underlying merits of the bogus-purchases allegation.

4. Parallel ITAT precedent from the same bench was cited. The assessee placed reliance on a prior Chandigarh Bench order in the case of Harish Chander Sharma (dated 19 May 2025), which had treated a Section 148 notice as void ab initio on similar facts. This intra-bench citation reinforced the consistency of the legal position being urged.

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Why this case matters

This ruling is part of a growing body of ITAT decisions applying the Union of India v. Rajeev Bansal (340 CTR 862 SC) framework to invalidate reassessment notices issued in the post-TOLA transitional period where the Assessing Officer failed to correctly compute the surviving limitation period under Section 149. The four-proviso extension mechanism — which grants a minimum of seven days where the surviving period would otherwise be less than seven days — introduces a precise calendar-arithmetic exercise, and errors in that computation have repeatedly been held to be jurisdictional rather than merely procedural. The Chandigarh Bench's application of this framework in the present case, following its earlier order in Harish Chander Sharma and the Bombay ITAT's order in Hitesh Ramniklal Shah, signals consistent cross-bench application of Rajeev Bansal at the ITAT level.

The case also illustrates that where a reassessment spans multiple assessment years with separate notice dates (as visible from the comparative table in the order for AYs 2013-14, 2014-15, 2016-17, and 2017-18 in the reference cases), each year's notice must independently satisfy the Section 149 timeline. A blanket reassessment exercise covering multiple years cannot cure a limitation defect in the notice for any individual year. For tax researchers and in-house teams tracking the reassessment validity litigation wave that followed the Rajeev Bansal decision, this order is a useful data point on how ITAT Chandigarh applies the survival-period table methodology in practice.

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Source

This case is drawn from the TaxNoticeAI structured legal corpus (16,101 Indian tax judgments, CBIC circulars, ITAT rulings, AAR rulings, GSTAT rulings), sourced from indiankanoon.org and official court portals. Original document: https://indiankanoon.org/doc/49782980/