Shobha Ashok Jain v DCIT: ITAT Mumbai Quashes Time-Barred Section 148 Notice

This case — Shobha Ashok Jain, Mumbai v. DCIT Circle 19(3), Mumbai — concerns a reassessment proceeding for Assessment Year 2013-14 in which the Income Tax Appellate Tribunal, Mumbai allowed the taxpayer's appeal on a pure jurisdictional ground: the notice issued under Section 148 of the Income Tax Act, 1961 was held to be time-barred, rendering the entire assessment order void ab initio. The case is significant for its application of the Supreme Court's landmark ruling in Union of India v. Rajeev Bansal to compute the surviving limitation period available to the Assessing Officer after the TOLA-era transition to the new reassessment regime under Sections 147, 148, 148A, and 149.

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: Shobha Ashok Jain, Mumbai vs DCIT Circle 19(3), Mumbai
• Bench: Income Tax Appellate Tribunal - Mumbai
• Date: 25 March 2026
• Court level: Tribunal (ITAT)
• Sections engaged: 1, 2, 5, 10(38), 69A, 115, 144B, 147, 148, 148A, 149, 250
• Outcome: Taxpayer succeeded

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Facts of the case

The assessee, an individual, had filed a return declaring total income of Rs. 88,85,890/-. The Assessing Officer subsequently reopened the assessment under Section 147 of the Act on the ground that the assessee had entered into transactions involving alleged bogus penny stock shares of M/s. Mahavir Industries Ltd., amounting to Rs. 1,99,26,085/-. The AO's case was that the assessee had earned capital gains of Rs. 1,99,26,085/- and claimed exemption under Section 10(38) of the Act in respect of those gains.

The AO framed the reassessment under Section 147 read with Section 144B, rejected the Section 10(38) exemption claim, and treated the entire amount of Rs. 1,99,26,085/- as unexplained money under Section 69A read with Section 115BBE. The AO additionally calculated notional commission at 3% of the total transaction value, arriving at Rs. 5,97,783/-, and added that sum back as well. The total additions made came to Rs. 2,05,23,868/-. The assessee's appeal to the CIT(A)/NFAC, Delhi under Section 250 was dismissed, with the impugned order dated 06.10.2025 upholding the assessment. The assessee then appealed to the Tribunal.

Before the Tribunal, the assessee raised an additional ground challenging the very jurisdiction of the AO to issue the Section 148 notice, contending that it was issued after expiry of the prescribed limitation period under Section 149. The timeline of notices on record, as reproduced in the order, showed: (1) a notice under the old Section 148 regime issued on 25.06.2021; (2) a show cause notice under Section 148A(b) issued on 02.06.2022 in consequence of the Supreme Court's direction in Union of India v. Ashish Agarwal; (3) the Section 148A(c) response deadline of 17.06.2022; (4) an order under Section 148A(d) passed on 28.07.2022; and (5) a fresh Section 148 notice issued on 28.07.2022.

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Issues raised

• Whether the additional ground challenging the jurisdiction of the AO — raised for the first time before the Tribunal — was maintainable as a pure question of law.
• Whether the notice issued under Section 148, dated 28.07.2022, was within the limitation period prescribed under Section 149, read with the TOLA extensions and the Supreme Court's computation methodology in Union of India v. Rajeev Bansal.
• Whether, once the original Section 148 notice (issued under the old regime on 25.06.2021) was deemed a show cause notice under Section 148A(b) pursuant to Ashish Agarwal, the AO retained sufficient "surviving time" under the third proviso to Section 149 to validly issue a fresh Section 148 notice on 28.07.2022.
• Whether the assessment order passed under Section 147 read with Section 144B was void ab initio as a consequence of the jurisdictionally defective Section 148 notice.

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What the court held

The Tribunal allowed the appeal of the assessee on jurisdictional grounds, holding that the Section 148 notice was time-barred and liable to be quashed. As a corollary, the assessment order framed pursuant to that notice was held to be void ab initio. Per the outcome reasoning extracted from the source, the Tribunal did not proceed to examine the merits of the penny stock additions or the Section 10(38) exemption claim, having disposed of the matter at the threshold jurisdictional stage.

The Tribunal's reasoning, as reflected in the text preview, was grounded in the Supreme Court's decision in Union of India v. Rajeev Bansal & Others (Civil Appeal No. 8629 of 2024, dated 03.10.2024). That ruling established a framework for computing the limitation period applicable to reassessment notices issued during the TOLA transition period. The key principle applied was that the "surviving period" available to the AO after the deemed conversion of the old-regime Section 148 notice into a Section 148A(b) show cause notice — calculated as the days remaining between the date of the original notice and the TOLA deadline of 30.06.2021 — must be the outer boundary within which the fresh Section 148 notice under the new regime could be issued, commencing from the date the assessee submitted a response to the Section 148A(b) notice. Applying this computation to the present case's specific notice dates, the Tribunal found that the fresh Section 148 notice issued on 28.07.2022 fell beyond the permissible surviving period, rendering it time-barred.

The Tribunal also accepted, relying on the Supreme Court's ruling in CIT v. NHPC Ltd. (as cited by the assessee's representative), that a pure question of law — including a jurisdictional challenge to the validity of a Section 148 notice — can be raised for the first time before the Tribunal, even as an additional ground, and that the Tribunal has the power to adjudicate such questions to ensure substantive justice and correct application of law.

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Strategy observations

1. Raising a jurisdictional additional ground before the Tribunal: The assessee's representative filed an additional ground before the ITAT challenging the limitation period under Section 149, a ground not agitated before the AO or the CIT(A). Per the source preview, the Tribunal entertained this additional ground on the basis that it was a pure question of law, citing the precedent from CIT v. NHPC Ltd. This procedural approach — reserving or supplementing jurisdictional challenges at the appellate stage — was central to the outcome, per the order.

2. Anchoring the limitation argument in the Rajeev Bansal computation framework: The assessee's representative structured the Section 149 limitation argument using the tabular computation methodology explicitly endorsed by the Supreme Court in Union of India v. Rajeev Bansal (para 112), mapping the specific dates of each notice in the present case against the surviving-period framework. The source preview reproduces this tabular analysis in detail, indicating the Tribunal found it persuasive.

3. Prioritising the jurisdictional ground over merits: The assessee chose to lead with the jurisdictional/limitation ground rather than contesting the penny stock additions on merits. Per the source, the Tribunal disposed of the appeal entirely on the jurisdictional ground without reaching the Section 10(38), Section 69A, or Section 115BBE issues — a disposal that rendered the total addition of Rs. 2,05,23,868/- unsustainable.

4. Research note for users: Researchers should verify the complete text of the judgment (see source link below) to confirm the precise surviving-period arithmetic the Tribunal applied to the 25.06.2021 and 28.07.2022 notice dates, as the text preview reproduced here truncates before the Tribunal's own application of the Rajeev Bansal framework to these specific facts. Parallel CBDT instructions and any departmental appeals against this order should also be checked.

5. Research note on AY and order reference: The text preview reflects a minor internal ambiguity — the ITA number caption references Assessment Year 2015-16, while the body of the order refers to Assessment Year 2013-14 and a CIT(A) order dated 06.10.2025. Researchers consulting this judgment for citation purposes should verify the correct assessment year from the full order text.

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Why this case matters

This ruling is part of a significant and growing body of ITAT decisions applying the Supreme Court's Rajeev Bansal framework (October 2024) to invalidate reassessment notices issued during the TOLA transition window where the AO failed to issue the fresh Section 148 notice within the computed surviving period. The Tribunal's willingness to entertain the jurisdictional ground as an additional ground raised for the first time before it — bypassing both the AO and the CIT(A) stages entirely — illustrates the principle, drawn from NHPC Ltd., that limitation-based challenges to jurisdiction are not subject to the usual estoppel considerations that apply to factual grounds. For researchers tracking post-Rajeev Bansal ITAT outcomes, this case provides a concrete illustration of how the para 112 computation (surviving days between original notice date and 30.06.2021 TOLA deadline; clock restarts on assessee's response to Section 148A(b) notice) is being operationalised at the tribunal level to quash notices and void assessments in limine.

The case is also notable in the penny-stock reassessment context: despite substantial additions (Rs. 2.05 crore) resting on detailed AO findings about alleged bogus transactions in M/s. Mahavir Industries Ltd. scrip — findings upheld by the NFAC — the entire assessment collapsed on a procedural-jurisdictional ground without a merits adjudication. This pattern underscores the analytical importance, for researchers and practitioners tracking reassessment litigation, of the limitation-period compliance checkpoint as a threshold issue independent of the substantive quality of the AO's reasons to believe.

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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/109830052/