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Facts
The Revenue filed an appeal against the CIT(A) order that deleted additions made by the AO related to penny stock transactions of M/s Risa International Ltd. The assessee filed cross objections challenging the legality and limitation of reassessment proceedings initiated under Section 147.
Held
The Tribunal held that the notice issued under Section 148 for Assessment Year 2015-16 was barred by limitation, as it was issued after the period prescribed by the law and considering the concession made by the Revenue before the Supreme Court. Therefore, the notice was quashed.
Key Issues
Whether the reassessment proceedings initiated by issuing notice u/s 148 were barred by limitation, considering the applicable provisions and Supreme Court pronouncements.
Sections Cited
147, 148, 148A, 139(1), 68, 69C, 10(38), 149, 142(1), 144
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘B’: NEW DELHI
Before: SHRI SATBEER SINGH GODARA & SHRI MANISH AGARWAL
(ASSESSMENT YEAR 2015-16) Girish Kumar Gupta, Income Tax Officer, Room No.2007, 20th Floor, Ward-62(1), E-2 Block, Civic Centre, New Delhi. Vs. DR SP Mukharjee Building, J.L. Nehru Marg, Minto Road, New Delhi. PAN-AAHPG1974A (Cross Objector) (Respondent) Assessee by Shri Ruchesh Sinha, Adv. and Ms. Monalisa Maity, Adv. Department by Shri Rajesh Kumar Dhanesta, Sr. DR Date of Hearing 27/05/2025 Date of Pronouncement 27/05/2025 O R D E R
PER MANISH AGARWAL, AM:
The present appeal is filed by the Revenue against the orders of the Ld. Commissioner of Income Tax (Appeals) [‘CIT(A)’ in short), National Faceless Appeal Centre (NFAC), Delhi in Appeal No. NFAC/2014-15/10259769 dated C.O. No.43/Del/2025 ITO vs. Girish Kumar Gupta 25.09.2024 for Assessment Year 2015-16. The assessee also filed Cross Objections against the said order.
2. The following grounds of appeal taken by the Revenue are as under:-
1. Learned CIT(A) has erred in facts and law in deleting addition of Rs.56.35,311/- u/s 68 and of Rs. 1,69,059/- u/s 69-C relating to penny stock M/s Risa International Ltd.
2. Ld. CIT(A) has grossły erred in deleting the additions ignoring, 2.1 the findings which emanated after carrying out of search uis 132 on 20.10.2016 in the case of M/s Risa International Limited. 2.2 sound & detailed report of Directorate of Investigation (Income Tax), from which it is clearly evident that prices have beun 1 manipulated to launder unaccounted money by beneficiaries (read assessee niso) by accepting cash, 2.3 that during reassessment proceedings, assessee has not mentioned even mode of transaction as to purchase of scrips of M/s Risa International Ltd, not to speak of adducing any evidence as to payment of consideration for said purchase. During appellate proceedings, it is conceded that the same was purchased through cash. This very fact speaks volumes about the ungenuine transactions. 2. that transfer of physical scrips in the name of assessee is of no relevance, when as per findings, it was a racket involving M/s Risa Imernational Ltd and therefore it was easy to physically transfer the shares on backdates. 2.5.) that many incongruities as pointed out by AO in assessment order remained to be controverted as from contract note in respect of purchase of said scrip, it is noticed that trade numbers are same for four trading options. 3. that assessee has shown to purchase 30,000 equity share of M/s Risa International Ltd. @ Rs. 2/-on 12.06.2012 but on perusal of BSE data it is noticed that share was listed on BSE on 25.06.2012 at Rs. 11.35/- and no data with respect to share price of Rs. 0.34 all points towards fabricated documents that scrips of penny stock.
4. The Ld. CIT(A) has erred in eyes of law in not considering the judgment of the Hon'ble Supreme Court in the case of Sumati Dayal vs. CIT, [1995] Supp. (2) SCC 453 and CIT v. Durga Prasad More, [1971] 82 ITR 540 (SC) wherein it was held that taxing authorities are entitled to look into the surrounding circumstances to find out the reality and the matter has to be considered by applying the test of human probabilities.
4. The LJ. CITIA) has erred in eyes of law by not making reliance on die decision of Hon'ble Bombay High Court dated 16.12.2017 in the case of Sanjay Bimalchand Jain wherein it is held that there is no explanation as to how the shares of an unknown company wonh Rs.5 jumped to Rs.485 in no time and also on the case of Hon'ble Delhi High Court dated 3.04.2019 in the case of Udit Kalra. These case laws are more relevant as prices were manipulated from Rs. 2 to more than Rs. 1100 in the case under hands.
5. The Ld. CIT(A) has erred in eyes of law by not considering judgment of Hon'ble High Court in the case of Suman Poddar VITO [2020] 423 ITR 480 Delhi) which has been achieved its finality as Hon'ble Supreme Court vide order dated 22.11.2019 reported in [2019] 112 Taxmann com 330 (SC) has also affirmed the addition.
6. The Ld. CIT(A) has erred in not exercising its power to investigate the matter thoroughly in case, if he is of the view of any lacking on the part of AO rather than placing relying on judgments wherein the Hon'ble Courts have mentioned deficiency in the enquiry conducted by the AO.
6. The appellant craves leave of your Honor to add, alter, modify or delete any of the above questions of law.”
C.O. No.43/Del/2025 ITO vs. Girish Kumar Gupta 3. The following Cross Objections are taken by the assessee. “1. The present reassessment proceedings initiated U/s 148 for the A.Y. 2015-16 in the case of the present assessee/respondent is time barred.
2. That the Hon'ble Supreme Court in the cases of "Deepak Steel and Power Limited vs. CBDT in Civil Appeal No.5177 Of 2025 and further in the case of "ACIT Vs. Nehal Ashit Shah" in SLP No. 57209/2024, have clearly held that the reassessment proceedings initiated post the judgement of the "UOI Vs. Ashish Agarwal in Civil Appeal No. 3005/2023 for the A.Y. 2015-16 is clearly time barred.
That the jurisprudence developed after the judgment of the Hon'ble Supreme Court in the case of UOI vs. Rajeev Bansal, in Civil Appeal No.8629 of 2024, by various other cases is that the reassessment proceedings initiated post the judgement of the "UOI Vs. Ashish Agarwal' in Civil Appeal No. 3005/2023 for the A.Y. 2015-16 is time barred
4. That the CIT (A) has erred in law in dismissing the ground, wherein the assessee/respondent has asked for an opportunity of cross examination.”
2. The assessee in its Cross Objections has challenged the legality of the proceedings initiated u/s 147 of the Act, therefore, they are decided first.
3. Brief facts of the case are that the assessee is an individual and filed his return of income u/s 139(1) of the Income Tax Act, 1961 on 25.09.2015 declaring total income at Rs.15,93,210/-. The AO on the basis of information that assessee has a suspicious transactions related to long term gain of Rs.56,69,950/- through M/s Risa International Limited, penny stock company engaged in facilitating bogus LTCG and, therefore, reassessment proceedings u/s 147 of the Act were initiated and notice u/s 148 was issued on 13.04.2021. Thereafter, the following judgment of Hon’ble Supreme Court in the case of Union of India vs. Ashish Agarwal reported in (2002) SCC Online SC 543), the notice issued u/s 148 dated 13.04.2021 was treated as notice u/s 148A(a) of the Act and information was supplied u/s 148A(b) of the Act. After considering the submissions of assessee, order u/s 148A(d) was passed and, thereafter, notice 148 of the Act was issued on 18.07.2022. Notices u/s 142(1) were issued from time to time which were duly complied by the assessee and finally the reassessment order was passed u/s 147 r.w.s 144 of the Act dated 23.05.2023 by making addition of Rs.56,35,311/- as unexplained cash credit u/s 68 by C.O. No.43/Del/2025 ITO vs. Girish Kumar Gupta holding the long term capita gain claimed exemption u/s 10(38) of the Act by the assessee as bogus and further addition of Rs.1,69,059/- was made u/s 69C of the Act on account of unexplained expenditure incurred to obtain such bogus long term capital gain.
4. Against such order, the assessee preferred the appeal before the CIT(A) who vide impugned order dated 25.09.2024 has allowed the appeal of the assessee against which the Revenue is in appeal before us. The assessee has taken cross objection on limitation issue of initiation of proceedings u/s 147 of the Act.
5. During the course of hearing, the Ld. AR of the assessee submitted that the impugned year is Asst. Year 2015-16, for which notice u/s 148 of the Ace was originally issued on 13/04/2021 and, thereafter, following the judgment of Hon’ble Supreme Court in the case of Union of India vs. Ashish Agarwal, the fresh notice u/s 148 of the Ace was issued on 18/07/2022. As per Ld. AR of the assessee, the notice so issued u/s 148 of the Act dated 18/07/2022 is barred by limitation. According to the time limit provided in the old provisions of section 149 of the Act, notice u/s 148 of the Act could be issued within a period of six years from the end of relevant assessment year which limitation expired on 31/03/2022. In the instant case, the notice u/s 148 of the Act was issued on 18/07/2022, however, the time limit available as per erstwhile section 149 of the Act expired on 31/03/2022 thus is beyond the period of limitation and provisions of TOLA are not applicable. Ld. AR further submits that during the course of hearing in the case of Union of India & Ors. vs. Rajiv Bansal in Civil Appeal No.8629 of 2024, the Learned Additional Solicitor General of India, Mr. N. Venkataraman has made a statement at a Bar that the Revenue will drop all the notices issued on or after 1st April, 2021 related to Assessment Year 2015- 16. It is, thus, prayed by the Ld. AR that the notices issued in the instant case for Asst. Year 2015-16 u/s 148 being after 1st April, 2021, therefore, the same deserves to be dropped and consequently the re-assessment order be quashed.
6. On the other hand, the Ld. Sr. DR vehemently supported the orders of the lower authorities and submitted that the matter be decided in terms of the judgment of Hon’ble Supreme Court in the case of Rajiv Bansal in Civil Appeal No.8629/24 (supra).
We have heard the rival submissions and perused the materials available on record. In the instant case, the appeal of the assessee was partly allowed by Ld. CIT(A) against which the Revenue vide an appeal, however, since, the legal issue is raised with regard to the limitation of procedure initiated u/s 147 of the Act in Cross Objection filed by assessee, therefore, we proceed to decide the cross objections of assessee first.
8. It is an admitted fact that earlier, the notice u/s 148 in the case of assessee was issued on 18/04/2021 which was dropped and proceedings u/s 148A of the Act were initiated in terms of order of Hon’ble Supreme Court in the case of Union of India vs. Ashish Agarwal and finally the notice u/s 148 was issued on 18/07/2022. The Ld. Additional Solicitor General of India in the case of Rajiv Bansal (supra) has made categorical statement at Bar before the Hon’ble Supreme Court that all the notices issued for Asst. Year 2015-16 on or after 1st April 2021 will be dropped, however, in the instant case, no such action was taken and re-assessment order was framed in the case of the assessee on the basis of the notice issued u/s 148 of the Act on 18/07/2022. The relevant extract of the assertion made by the Ld. Additional Solicitor General of India before the Hon’ble Supreme Court as contained in para 19(f) of the said order are reproduced as under: “19. Mr. N. Venkataraman, learned Additional Solicitor General of India, made the following submissions on behalf of the Revenue: a. Parliament enacted TOLA as a free-standing legislation to provide relief and relaxation to both the assesses and the Revenue during the time of COVID-19. TOLA seeks to relax C.O. No.43/Del/2025 ITO vs. Girish Kumar Gupta actions and proceedings that could not be completed or complied with within the original time limits specified under the Income Tax Act; b. Section 149 of the new regime provides three crucial be nefits to the assesses: (i) the four- year time limit for all situations has been reduced to three years; (ii) the first proviso to Section 149 ensures that re-assessment for previous assessment years cannot be undertaken beyond six years; and (iii) the monetary threshold of Rupees fifty lakhs will apply to the re-assessment for previous assessment years; c. The relaxations provided under Section 3(1) of TOLA apply "notwithstanding anything contained in the specified Act." Section 3(1), therefore, overrides the time limits for issuing a notice under Section 148 read with Section 149 of the Income Tax Act; d. TOLA does not extend the life of the old regime. It merely provides a relaxation for the completion or compliance of actions following the procedure laid down under the new regime; e. The Finance Act 2021 substituted the old regime for re-assessment with a new regime. The first proviso to Section 149 does not expressly bar the application of TOLA. Section 3 of TOLA applies to the entire Income Tax Act, Including Sections 149 and 151 of the new regime. Once the first proviso to Section 149(1)(b) is read with TOLA, then all the notices issued between 1 April 2021 and 30 June 2021 pertaining to assessment years 2013- 2014, 2014-2015, 2015-2016, 2016-2017, and 2017-2018 will be within the period of limitation as explained in the tabulation below:
Assessment Within 3 Years Expiry of Within six Expiry of year (2) Limitation Years Limitation (1) read with (4) read with TOLA for (2) TOLA for (4) (3) (5) 2013-2014 31.03.2017 31.03.2020 30.06.2021 TOLA not applicable 2014-2015 31.03.2018 31.03.2021 30.06.2021 TOLA not applicable 2015-2016 31.03.2019 31.03.2022 TOLA not TOLA not applicable applicable 2016-2017 31.03.2020 30.06.2021 31.03.2023 TOLA not applicable 2017-2018 31.03.2021 30.06.2021 31.03.2024 TOLA not applicable f. The Revenue concedes that for the assessment year 2015-16, all notices issued on or after 1 April 2021 will have to be dropped as they will not fall for completion during the period prescribed under TOLA; g. Section 2 of TOLA defines "specified Act" to mean and include the Income Tax Act. The new regime, which came into effect on 1 April 2021, is now part of the Income Tax Act. Therefore, TOLA continues to apply to the Income Tax Act even after 1 April 2021; and C.O. No.43/Del/2025 ITO vs. Girish Kumar Gupta h. Ashish Agarwal (supra) treated Section 148 notices issued by the Revenue between 1 April 2021 and 30 June 2021 as show-cause notices in terms of Section 148A(b). Thereafter, the Revenue issued notices under Section 148 of the new regime between July and August 2022. Invalidation of the Section 148 notices issued under the new regime on the ground that they were issued beyond the time limit specified under the Income Tax Act read with TOLA will completely frustrate the judicial exercise undertaken by this Court in Ashish Agarwal (supra).
Looking to the facts and considering the assessment year involved is 2015- 16, notice issued in the case of originally on 13/04/2021 and later on 18/07/2022 which both the dates have fallen on or after 1st April, 2021, therefore, both the notice deserves to be dropped in view of the admission made by the Revenue before the Hon’ble Supreme Court. Further, for Assessment Year 2015-16, no notice u/s 148 of the Act could be issued after the expiring of six years from the end of the relevant assessment year which limitation expired on 31st March, 2022. Further, the Hon’ble Supreme Court in the case of Rajiv Bansal (supra) has observed that Tola is not applicable for Asst. Year 2015-16, therefore, even otherwise under the old provisions of section 149 of the Act, the notice issued u/s 148 of the Act for Asst. Year 2015-16 on 18/07/2022 is barred by limitation.
This view is supported by the order of Hon’ble Jurisdictional High Court in the case of Ibibo Group Pvt. Ltd. vs. ACIT, Circle 10(1), W.P.(C) 17639/2022 wherein vide order dated 13.12.2024, the Hon’ble Jurisdictional High Court after relying upon the decision of Hon’ble Supreme Court in the case of Rajiv Bansal (supra) has quashed the notice issued u/s 148 of the Act. Further, the Hon’ble Jurisdictional High Court in the case of Pratishtha Garg vs. ACIT in W.P.(C)- 16878/2024 vide order dated 19/12/2024 has expressed the same view. Further, the Hon’ble Jurisdictional High Court in the case of Makemytrip India Pvt. Ltd. vs. DCIT, in W.P.(C) 2557/2023 vide order dated 24.03.2025 has also expressed the same view.
C.O. No.43/Del/2025 ITO vs. Girish Kumar Gupta 10. It is also relevant to mention that the Hon’ble Supreme Court in Civil Appeal No. 5177/2025 vide its order dated 2nd April, 2025 in the case of Deepak Steel & Power Ltd. vs. CBDT & Ors. in identical fact has allowed by SLP field by the Revenue and disposed of the appeal by making following observations: “2. These appeals arise from the order passed by the High Court of Orissa at Cuttack in Writ Petition (C) Nos. 2446 of 2023, 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) No.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) No.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 1" 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.
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.”
Further, the Hon’ble Supreme Court has dismissed the SLP filed by the Revenue in SLP (Civil) Diary No(s).57209/2024, dated 57209/2024 vide its order dated 04.04.2025 has dismissed the application filed by the Revenue by relying upon the paragraph 19E and 19F of Hon’ble Supreme Court in the case of Union of India vs. Rajiv Bansal (supra).
In view of the above facts and by respectfully following the judgments of the Hon’ble Supreme Court in the case of Rajiv Bansal (supra) and in the case of Deepak Steel & Power Limited vs. CBDT & Ors., (SC, 2025), and ACIT, Circle- 19(1) & Ors. vs. Nehal Ashit Shah, (SC, 2025), we hold that the notice issued u/s 148 on 18.07.2022 is barred by limitation and, therefore, the same is quashed. The Cross Objections taken by taken by the assesse are allowed.
Since the cross objection filed by the assessee is allowed and the appeal of the Revenue taken on the merits of the additions deleted by Ld. CIT(A) become infructuous, thus, not adjudicated.
In the result, the appeal of the Revenue is dismissed and cross objections filed by the assessee is allowed. Order pronounced in open Court on 27.05. 2025.