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Facts
The assessee filed an appeal against the CIT(Appeals)'s order sustaining an addition made by the AO. The AO made an addition of Rs. 72,63,188 under Section 69A of the Income Tax Act, alleging fictitious LTCG exemption. The assessee contended that the reassessment notice was issued after the period of limitation and that proper opportunity was not given.
Held
The Tribunal held that the reassessment notice issued u/s 148 dated 18.06.2021 for AY 2015-16 is barred by limitation, as per recent Supreme Court decisions regarding the applicability of TOLA. Consequently, the reassessment order is bad in law and void ab initio.
Key Issues
Whether the reassessment proceedings initiated by issuing notice u/s 148 on 18.06.2021 for AY 2015-16 are barred by limitation in light of subsequent legal pronouncements and TOLA provisions.
Sections Cited
69A, 10(38), 147, 144B, 153C, 148, 148A, 153(6), 156, 157A, 271(1)(c)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH “A” NEW DELHI
Before: SHRI CHALLA NAGENDRA PRASAD & SHRI M BALAGANESH
सुनवाईक�तारीख/ Date of hearing: 04.06.2025 23.07.2025 उ�ोषणाक�तारीख/Pronouncement on आदेश /O R D E R PER C.N. PRASAD, J.M.
This appeal is filed by the Assessee against the order of the Ld. CIT(Appeals), Delhi dated 28.07.2022 for the AY 2015-16 in sustaining the addition made in the assessment order.
2. The assessee in his appeal raised the following ground: -
“That, the Appellant craves leave to add, amend, alter and/or delete any of the above grounds of appeal
at or before the time of hearing.
2. That in view of facts and circumstances of the case and in law, the Ld. AO erred in making an addition of Rs.72,63,188/- u/s 69A of the Income Tax Act, 1961 against the Appellant, baselessly alleging the fact that, the Appellant had claimed fictitious LTCG exemption u/s 10(38) of the Act, without in possession of any concrete evidence.
3. That, the original order passed by the Ld. Assessing Officer u/s 147 r.w.s. 144B of the Income Tax Act, 1961 is incorrect and bad in law. However, the proceedings were legally bound to be commenced within section 153C, in accordance to the Income Tax Act, 1961. Furthermore, the Ld. AO failed to furnish the required satisfaction note, mandatory u/s 153C/148A of the Act and also the notices u/s 148 was issued after 31st March, 2021. Therefore, the present matter was time barred, subsequent notices issued are void ab initio.
4. That, the Assessment Order passed is against the principles of Natural Justice. The Ld. AO has erred in law and facts of the case, as Ld. AO did not avail a proper opportunity to the Appellant of being heard. Furthermore, as per the E-portal itself, the limitation period for completion of the Assessment Proceeding was March 31st 2024. Henceforth, the Ld. AO had sufficient span of time to clarify the objections raised by the Appellant. However, the Ld. AO wrongly considered the limitation date as May 31st 2023, in accordance to Section 153(6) of the Income Tax Act, 1961.
5. That, the Appellant previously requested that the Ld. AO confirm the status of the Searched Parties, as primary liability is with them, and also sought cross-examination of relevant parties. However, the Ld. AO denied these bona fide requests. The Ld. AO subsequently imposed a significant addition on the Appellant without possessing any tangible or incriminating material. During the Assessment Proceedings, the AO only provided reports compiled by the Income Tax Department, which were insufficient to justify such a substantial addition.
Without prejudice, the Appellant submitted necessary documents, including Contract Notes and Bank Statements, etc. Furthermore, if the Searched Parties have retracted their recorded statements, such retraction should be disclosed to the Appellant in the interest of justice, as any proceedings against the Appellant would be void ab initio if the Searched Parties are not found guilty.
6. That, the addition in the present case is made u/s 69A of the Act, in case the transactions are duly recorded in the books of accounts, the addition cannot sustain within the said section. A plain reading of Section 69A of the Act makes it clear that addition can only be made when a person is found to be in possession of money, bullion, jewellery etc. not recorded in his books of accounts.
7. That, the Notice u/s 148 of the Income Tax Act, 1961 was incorrectly issued by the Jurisdictional Assessing Officer instead of the NFAC, as required by CBDT Notification No.18/2022. Moreover, the Notice was issued without a Document Identification Number (DIN), which is mandatory under CBDT Circular No.19/2019 for all electronically generated notices. Additionally, the NFAC was not authorized to issue a demand notice u/s 156, as the scheme u/s 157A had not been sanctioned. If a notice is issued manually, the concerned AO must provide written reasons and obtain prior approval from the Chief Commissioner or Director General of Income Tax.
8. That, the Ld. AO has raised an incorrect demand (inclusive of interest) against the Appellant. Moreover, in view of facts and circumstances of the case and in law, the Ld. AO erred in initiating penalty u/s 271(1)(c) of the Act.”
The Ld. Counsel for the assessee, at the outset, submits that in the case of the assessee a notice u/s 148 was issued on 18.6.2021 under new law which is barred by limitation since the provisions of taxation and other laws (relaxation and amendment of certain provisions) (TOLA) are not applicable for the AY 2015-16 as held by the Hon’ble Jurisdictional High Court in the case of Make My Trip (India) Pvt. Ltd. in WP(c) 2558/2023 dated 24.03.2025. Reliance was placed on the following decisions: - • Deepak Steel & Power ltd. Vs. Central Board of Direct Taxes reported in [2025] 174 taxmann.com 144 (SC); • Makemytrip India (P) Ltd. Vs. Deputy Commissioner of Income Tax reported in [2025] 173 taxmann.com 497 (Delhi); • Bhagwan Sahai Sharma Vs. Deputy Commissioner of Income Tax reported in [2025] 174 taxmann.com 14 (Delhi); • Sheetal International (P) ltd. Vs. Chief Commissioner of Income Tax reported in [2024] 168 taxmann.com 308 (Delhi).
4. Ld. Counsel further submits that recently the Hon’ble Supreme Court in the cases of Deepak Steels & Power Ltd. Vs. CBDT and Others in Civil Appeal No.5177/2025 dated 02.04.2025 noted that the Revenue made a concession before the Hon’ble Supreme Court while disposing off the appeal in the case of Union of India & Others Vs. Rajiv Bansal (2024) (SCC) Online SC 2693, that for the AY 2015-16 notices issued on or after 01.04.2021 will have to be dropped as they would not fall for completion during the period prescribed under the TOLA. Ld. Counsel also submitted that similar view has been taken by the Hon’ble Supreme Court in the case of ACIT Vs. Nehal Rashid Shah in SLP (Civil) Diary No. (S) 57209/2024 dated 4.4.2025.
Therefore, it is submitted that in the light of these decisions the reassessment framed for the AY 2015-16 based on the notice issued u/s 148 of the Act dated 18.06.2021, is time barred and bad in law.
5. Ld. DR supported the orders of the Assessing Officer.
Heard rival contentions, perused the orders of the authorities below. Admittedly in this case notice u/s 148 was issued on 30.07.2022 under new law based on which the reassessment for the AY 2015-16 was framed by the AO on 31.5.2023. The reassessment was challenged before the Ld. CIT(Appeals) and the Ld. CIT(Appeals) dismissed the appeal for non-prosecution by the assessee.
In the case of Make My Trip (India) Pvt. Ltd. Vs. DCIT (supra) the Jurisdictional High Court considered whether reassessment completed for the AY 2015-16 based on a notice issued u/s 148 and the viz a viz the applicability of the provisions of TOLA and based on the concession of the Revenue that for the AY 2015-16 all the notices issued on or after 1.4.2021 will have to be dropped as they will not fall for completion during the period prescribed under the TOLA, held that the notice issued under 148 was beyond the period of limitation and consequently the same is liable to be set aside.
Further the Hon’ble Supreme Court in the case of Deepak Steel & Power Ltd. Vs. CBDT & Others (supra) quashed the notices issued u/s 148 observing as under: - “2. These appeals arise from 'the order passed by the High Court of Orissa at Cuttack in Writ Petition (C) Nos. 2446 of 2823, 2543 of 2023 dated 1.2.2023 and 2544 of 2023 dated 10.02.2023 respectively by which the High Court disposed of the original writ petitions in the following terms:- "1. The memo of appearance filed by Mr. S. S. Mohapatra, learned Senior Standing Counsel for Revenue Department on behalf of Opposite Parties is taken on record.
In view of the order passed by this Court on 1st December, 2022 in a batch of writ petitions of which W.P. (C) Mo.9191 of 2022 (Kailash Kedia v. Income Tax Officer) was a lead matter and the subsequent order dated 10th January, 2023 passed in W.P.(C) Mo.36314 of 2022 (Shiv Mettalicks Pvt. Ltd., Rourkela v. Principal Commissioner of Income Tax, Sambalpur), the Court declines to entertain the present writ petition, but leaves it open to the Petitioner to raise all grounds available to the Petitioner in accordance with law including the grounds urged in the present petition at the appropriate stage as explained by the Court in those orders.
3. The writ petition is disposed of in the above terms."
3. We heard Mr. Saswat Kumar Acharya, the learned counsel appearing for the appellants (assessee) and Mr. Chandrashekhar, the learned counsel appearing for the revenue.
The learned counsel appearing for the revenue with his usual fairness invited the attention of this Court to a three judge bench decision of this Court in Union of India and Ors. v. Rajeev Bansal, reported in 2024 SCC OnLine SC 2693, more particularly, paragraph 19(f) which reads thus:- "19. (f) The Revenue concedes 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."
As the revenue made a concession in the aforesaid decision that is for the assessment year 2015-2016, all notices issued on or after 1st April, 2021 will have to be dropped as they would not fall for completion during the period prescribed under the taxation and other laws (Relaxation and Amendment of certain Provisions Act, 2020). Nothing further is required to be adjudicated in this matter as the notices so far as the present litigation is concerned is dated 25.6.2021.
6. In view of the aforesaid, in such circumstances referred to above the original writ petition nos.2446 of 2023, 2543 of 2023 and 2544 of 2023 respectively filed before the High Court of Orissa at cuttack stands allowed.
7. The impugned notice therein stands quashed and set aside.”
Above decisions squarely applies to the fact situation of the assessee and therefore respectfully following the above decisions, we hold that the notices issued u/s 148 on or after 1.4.2021 for reopening the assessment for the AY 2015-16 are barred by limitation and consequently the reassessment made based on such notices are bad in law and void ab initio. Thus, the impugned reassessment order having been made pursuant to notice issued u/s 148 dated 18.06.2021 the reassessment order is hereby held to be bad in law and the same is quashed. Ground No.3 of grounds of appeal of the assessee is allowed.
10. As we have quashed the reassessment on one of the legal issues raised in ground no.3 all other grounds are not adjudicated as they become only academic at this stage.
In the result, appeal of the assessee is partly allowed as indicated above.
Order pronounced in the open court on 23.07.2025