Loading judgment…
Facts
The assessee filed a return for AY 2013-14, which was later reopened for reassessment under Section 147/148 due to an undeclared cash payment of Rs. 22.50 lakhs for land purchase. The return filed by the assessee in response to the notice was treated as 'nonest', leading to an addition of Rs. 22.50 lakhs in an assessment order passed under Section 147 read with Section 144B.
Held
The Tribunal quashed the reassessment notice and the subsequent assessment order, finding 'latches and anomalies'. It noted that while TOLA extended the limitation period, the escaped income was less than Rs. 50 lakhs, and sanction for the notice was improperly obtained from the PCIT instead of the Pr. CCIT, contrary to TOLA provisions and Apex Court judgments.
Key Issues
The key legal issues concerned the validity of the reassessment notice issued under Section 148 of the Income Tax Act, 1961, specifically regarding the time limitation, the applicability of The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA), the quantum of escaped income, and the competence of the authority granting sanction for the notice.
Sections Cited
147, 148, 149, 149(1)(b), 144, 144B, 250, 148A(b), 148A(d), 151, The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, 3(1) of TOLA
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI “SMC” BENCH : MUMBAI
Before: SHRI NARENDER KUMAR CHOUDHRY
Assessment Year: 2013-14 Jasaram K. Rathod, Income Tax Officer, Shop No.1, Plot No.391, Ward-28(1)(1), Saidham Building, vs. IT Office, Sector 19, Opp: Jimmy Tower, Vashi Railway Station Building, Kopar Khairne, Navi Mumbai-400703. Navi Mumbai-400709. PAN : AACPC3348K (Appellant) (Respondent) For Assessee : Shri Pritam Kulapkar, Ld. AR For Revenue : Shri A.M.K. Mahadevan, Ld. Sr.DR Date of Hearing : 20-11-2025 Date of Pronouncement : 30-12-2025 O R D E R This appeal has been preferred by the assessee against the order dated 23-07-2025 impugned herein passed by National Faceless Appeal Centre (NFAC), Delhi (in short „NFAC‟)/Ld. Commissioner of Income Tax (in short „Ld. Commissioner‟) u/s. 250 of the Income Tax Act 1961 (in short „the Act‟) for the AY. 2013-14.
In the instant case, the assessee had declared his total income of Rs. 16,97,210/-by filing his return of income for the year under consideration on dt. 01-11-2013, which was subsequently reopened for re-assessment u/s. 147 of the Act by issuing notice dt. 30-03-2021 u/s. 148 of the Act, mainly on the reason that the assessee though made cash payment of Rs. 22,50,000/-for purchase of land with Shri Mahesh M. Munde and 11 others, but has not offered the same for taxation for the AY. 2013-14.
The assessee in response filed his return of income on 05-01-2022, declaring total income at Rs. 16,97,210/-as declared originally. The said return filed by the assessee was declared/considered as belated and/or filed after the stipulated time given in the notice dt. 30-03-2021 u/s. 148 of the Act i.e., within thirty days and, therefore, the same was treated as „nonest’ and accordingly the case of the assessee was finalized u/s. 144 of the Act making the addition of the aforesaid amount of Rs. 22,50,000/- by passing the assessment order dt. 29-03-2022 u/s. 147 r.w.s. 144B of the Act.
The assessee challenged the said addition as well, as the assessment order by filing first appeal and raising various grounds, including challenging the validity of the notice u/s. 148 of the Act, beyond the time limit prescribed u/s. 149 of the Act.
The Ld. Commissioner though considered the challenge to the notice u/s. 148 of the Act, however, by referring to the provisions of The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA), whereby the extension of time limit expiring between 20th March, 2020 to 31st December, 2020has been provided held the additional ground, challenging the validity of notice u/s. 148 of the Act on the ground of limitation, as without merit and rejected the same by more or less holding as under:-
“That six years’ time limit for AY. 2013-14 u/s. 149(1)(b) of the Act, would have expired on 31-03-2020, which falls within the COVID-19 relaxation period covered by TOLA, which can utilize such time limits, till 31st March, 2021. Therefore, even if the normal six years’ time limit had expired on 31-03-2020, TOLA would extend it till 31-03-2021. The notice dt. 30-03-2021 is therefore, within the extended time limit provided by TOLA. Therefore, the additional ground, challenging the validity of notice u/s. 148 of the Act on the ground of limitation, is without merit and is hereby rejected”.
The assessee before this court reiterated his grounds, specifically the challenge to the notice u/s. 148 of the Act.
Heard the parties and perused the material available on record. Admittedly in the instant case six years from the end of the relevant assessment year i.e., AY. 2013-14, expired on 31-03-2020 and, therefore, the AO by taking refuge of TOLA, issued notice dt. 31-03-2021 u/s. 148 of the Act. But thereafter admittedly no notice or order either under section 148A(b) or 148A(d) or 148 of the Act, has ever been passed/issued by the AO. Further escaped income, which was taken into consideration for reopening of assessment under section 147 of the Act, was Rs.22,50,000/- only, which was less than Rs. 50 lakhsand the sanction for issuing the notice u/s 148 of the Act has been taken from the Ld. PCIT but not from the Pr. CCIT.
Thus, on the aforesaid latches and anomalies, the notice dated 30-03- 2021 alongwith assessment order dated 29/03/2022 is liable to quashed, in view of the relevant provisions of TOLA, judgment of Hon'ble Apex Court in Union of India v. Ashish Agarwal (2022 SCC Online SC 543) and CBDT instruction no, 1/2022 Dated: 11" May. 2022 and judgement in Union of India Vs. Rajiv Bansal, Civil Appeal No. 8629 of 2024, dt. 03-10-2024, specifically,wherein the Hon'ble Apex Court has also laid down as under:
a. After 1 April 2021, the Income Tax Act has to be read along with the substituted provisions; b. TOLA will continue to apply to the Income Tax Act after 1 April 2021 if any action or proceeding specified under the substituted provisions of the Income Tax Act falls for completion between 20 March 2020 and 31 March 2021; c. Section 3(1) of TOLA overrides Section 149 of the Income Tax Act only to the extent of relaxing the time limit for issuance of a reassessment notice under Section 148; d. TOLA will extend the time limit for the grant of sanction by the authority specified under Section 151. The test to determine whether TOLA will apply to Section 151 of the new regime is this: if the time limit of three years from the end of an assessment year falls between 20 March 2020 and 31 March 2021 to grant approval;
Thus, on the aforesaid analyzations, the notice dated 30-03-2021 alongwith assessment order dated 29/03/2022, is accordingly quashed.
In the result, the Assessee‟s appeal is allowed. Order pronounced in the open court on 30-12-2025