CEMFIL ENTERPRISES LIMITED,KOLKATA vs. ITO, WARD 6(1), KOLKATA

Per Rajesh Kumar, AM:

These are appeals preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated even 10.02.2026 for the AYs 2015-16 & 2018-19.

For A.Y. 2015-16 ITA No. 972/KOL/2026 2. The issue raised in Ground No. 1 of the appeal is against the order of ld. CIT(A) upholding the validity of the order passed u/s148A(d) and notice u/s 148 of the Act on several counts.

2.1. Brief facts of the case of the assessee are that, the assessee filed its return of income for the A.Y 2015-16 on 29.09.2015 declaring total income of Rs.10,034/-. The said

ITA Nos. 972 & 885/KOL/2026 Cemfil Enterprises Limited; A.Ys. 2015-16 & 2018-19 return was processed u/s 143(1) of the Act. The AO thereafter was in receipt of information that the assessee had received sum of Rs.1,63,00,000/- from M/s Strongwell Commodeal Pvt Ltd [in short ‘SCPL’] which was a struck -off company and therefore, he issued notice u/s 148A(b) of the Act. Not being satisfied with the explanation of the assessee, the AO issued order u/s 148A(d) of the Act dated 05.04.2022 along with notice u/s 148 of the Act dated 08.04.2022. In the reassessment proceedings it was observed that, the assessee had advanced Rs.61,00,000/- to M/s SCPL which was later on refunded back to the assessee during the same year. The assessee further submitted that the balance sum of Rs.1,02,00,000/- was received upon sale of its investments to M/s SCPL. The assessee also brought to the notice of the AO that, M/s SCPL was very much in existence during the relevant year and that the said company had suo moto voluntarily wound itself up by filing STK-2 on 23.07.2018 and therefore the AO had acted on an erroneous information that it was a case of receipt of monies from a strike-off company. The AO partially accepted the submissions of the assessee and made addition to the extent of Rs.1,02,00,000/- by way of unexplained cash credit u/s 68 of the Act.

2.2. Aggrieved by the said order, the assessee preferred appeal before the ld. CIT(A) wherein the appeal of the assessee was dismissed.

2.3. The ld. AR pointed out that, notice u/s 148 of the Act dated 08.04.2022 has been issued by the ld. AO for AY 2015-16 Page 2 of 12

ITA Nos. 972 & 885/KOL/2026 Cemfil Enterprises Limited; A.Ys. 2015-16 & 2018-19 beyond the period of limitation of 31.03.2022, in view of the decision passed by the Hon’ble Apex Court in Union of India v. Rajeev Bansal[2024] 167 taxmann.com 70 (SC) and therefore urged that the impugned reassessment order cannot be sustained and is liable to be quashed. He also relied on the decisions of Hon’ble Karnataka High Court in the case of Mohammed Yaseen vs ITO (175 taxmann.com 280) and Hon’ble Bombay High Court in the cases of Cherian Nallathu Abraham Annamm vs ITO (179 taxmann.com 433) & Selvakumar Vethamonickam Nadar vs ITO (WP(L) No. 41554 of 2025).

2.4. The Ld. DR appearing for the Revenue was unable to bring any contrary judgment on this issue but supported the action of the AO.

2.5. After hearing the rival contentions and perusing the materials available on record, we find that the assessee has challenged the validity of the notice issued u/s 148 of the Act dated 08.04.2022. In this case, as it pertains to Assessment Year 2018-19, the period of limitation expired on 31.03.2022, as held by the Hon’ble Apex Court in Union of India v. Rajeev Bansal (supra). We have gone through the decision of the Hon’ble Karnataka High Court in the case of Mohammed Yaseen vs ITO (supra) wherein the notice issued u/s 148 of the Act dated 01.04.2022 for AY 2015-16 was quashed by holding as under:-

“2. Heard learned counsel for the petitioner and learned counsel for the respondents and perused the material on record. Page 3 of 12

ITA Nos. 972 & 885/KOL/2026 Cemfil Enterprises Limited; A.Ys. 2015-16 & 2018-19 3. In addition to reiterating various contentions urged in the petition and referring to the material on record, learned counsel for the petitioner invited my attention to the impugned orders and notices in order to point out that the proceedings relating to the assessment year 2015-16, the notice under Section 148 of the I.T .Act ought to have been issued on or before 31.03.2021 and any notice issued after the aforesaid date including the instant notice issued on 01.04.2022 was barred by limitation as held by the Apex Court in the case of Union of India v. Rajeev Bansal [2024] 167 taxmann.com 70/301 Taxman 238/469 ITR 46 and subsequently followed by the Apex Court in the case of Asstt. CIT v. Nehal Ashit Shah [SLP (Civil) Diary No.(S) - 57209/2024, dated 4-4-2025]. It is therefore submitted that the impugned orders/ Notices deserve to be quashed. 4. Per contra, learned counsel for the respondents -Revenue submits that there is no merit in the petition and that the same is liable to be set aside. 5. As rightly contended by the learned counsel for the petitioner, the material on record discloses that the impugned proceedings is relating to the Assessment Year 2015-16 in respect of the petitioner; however, it is an undisputed fact that the respondents issued impugned notice at Annexure-A2 under Section 148 of the I.T. Act on 01.04.2022, beyond the period of limitation and the same has already been held not to be permissible by the Apex Court in Rajeev Bansal's case (supra), which reads as under:- "19(e). The Finance Act, ([2021]) 431 ITR (St.) 52) substituted the old regime for reassessment with a new regime. The first proviso to Section 149 does not expressly bar the application of Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. Section 3 of Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 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 Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, then all the notices issued between April 1, 2021 and June 30, 2021 pertaining to assessment years 2013-14, 2014-15, 2015-16, 2016-17, and 2017-18 will be within the period of limitation as explained in the tabulation below: Assessment Within 3 Expiry of limitation Within six Expiry of year (1) years (2) read with TOLA for years (4) limitation read (3) with TOLA for (4) (5) 2013-2014 31-3-2017 TOLA not applicable 31-3-2020 30-6-2021 2014-2015 31-3-2018 TOLA not applicable 31-3-2021 30-6-2021 2015-2016 31-3-2019 TOLA not applicable 31-3-2022 TOLA not applicable

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ITA Nos. 972 & 885/KOL/2026 Cemfil Enterprises Limited; A.Ys. 2015-16 & 2018-19 2016-2017 31-3-2020 30-06-2021 31-3-2023 TOLA not applicable 2017-2018 31-3-2021 30-06-2021 31-3-2024 TOLA not applicable 19(f). The Revenue concedes that for the assessment year 2015-16, 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; 49. The first proviso to Section 149(1)(b) requires the determination of whether the time limit prescribed under Section 149(1)(b) of the old regime continues to exist for the assessment year 2021-22 and before. Resultantly, a notice under Section 148 of the new regime cannot be issued if the period of six years from the end of the relevant assessment year has expired at the time of issuance of the notice. This also ensures that the new time limit of ten-years prescribed under Section 149(1)(b) of the new regime applies prospectively. For example, for the assessment year 2012-13, the ten-year period would have expired on March 31, 2023, while the six-year period expired on March 31, 2019. Without the proviso to Section 149(1)(b) of the new regime, the Revenue could have had the power to reopen assessments for the year 2012-13 if the escaped assessment amounted to Rupees fifty lakhs or more. The proviso limits the retrospective operation of Section 149(1)(b) to protect the interests of the assesses. 6. Subsequently, in Nehal Ashit's case (supra) also, the Apex Court reiterated the very same position and dismissed the appeal filed by the Revenue on the ground that the notice issued after 01.04.2022 was barred by limitation and the impugned proceedings are not permissible beyond period of limitation. In the instant case, it is an undisputed fact that the impugned proceedings is relating to the Assessment Year 2015-16, while the impugned notice under Section 148 of the Act dated 01.04.2022 was issued beyond/after 01.04.2021 which is impermissible in law and barred by limitation and consequently, the impugned orders/notices etc., deserve to be quashed. 7. In the result, I pass the following:- (i) Petition is hereby allowed. (ii) The impugned orders/Notices at Annexures-A1, A2, B, C1, D1 and E1 dated 01.04.2022, 01.04.2022, 15.03.2022, 09.03.2022, 27.08.2024 and 27.08.2024 respectively and subsequent orders/notices issued by the 1st respondent are hereby quashed.” 2.5.1. Similarly, we find that on similar factual position, the Hon’ble Bombay High Court in the cases of Cherian Nallathu Page 5 of 12

ITA Nos. 972 & 885/KOL/2026 Cemfil Enterprises Limited; A.Ys. 2015-16 & 2018-19 Abraham Annamm vs ITO (supra) & Selvakumar Vethamonickam Nadar vs ITO (supra) has also quashed the notice(s) dated 05.04.2022 & 23.04.2022 issued in the matters of AY 2015-16 holding that it was beyond the period of limitation i.e. 31.03.2022, as held in the case of UOI Vs Rajeev Bansal (supra).

2.5.2. Keeping in view the above decisions (supra), we hold that the order u/s. 148A(d) dated 05.04.2022 and the notice u/s 148 of the Act dated 08.04.2022 were issued beyond the period of limitation and consequently, the assessment framed vide order dated 21.03.2024, is held to be invalid and, is hereby quashed.

2.6. Since, we have allowed the appeal on legal issue, other grounds raised on merit are not being adjudicated at this stage and are left open to be decided if need arises for the same in future.

2.7. The appeal of the assessee is allowed.

A.Y. 2018-19 ITA No. 885/KOL/2026 3. In Ground No. 1 of the appeal the assessee has challenged the validity of the order passed u/s148A(d) as well as notice u/s 148 of the Act on several fronts.

3.1. Brief facts of the case of the assessee are that the assessee filed its return of income for the A.Y 2018-19 on 27.09.2018 declaring total income of Rs.4,580/-. The said return was

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ITA Nos. 972 & 885/KOL/2026 Cemfil Enterprises Limited; A.Ys. 2015-16 & 2018-19 processed u/s 143(1) of the Act. Thereafter, assessee was issued a show cause notice u/s 148A(b) of the Act dated 19.03.2022 by the ld. AO with the prior approval of PCIT-1, Kolkata stating therein the information that income has escaped assessment of Rs.10,00,000/- and requiring the assessee to furnish reply on or before 30.03.2022. The ld. AO passed the order u/s 148A(d) of the Act on 06.04.2022 and issued notice u/s 148 of the Act dated 08.04.2022, both with the approval of PCIT-2, Kolkata. Subsequently, statutory notices u/s 143(2) and 142(1) were issued to the assessee and in compliance to such notices, the assessee made time to time compliances and submitted details and explanations as called for. The ld. AO completed the assessment u/s 147/143(3) of the Act vide order dated 21.03.2024 at total income of Rs.59,54,580/-.

3.2. Aggrieved by the said order, the assessee preferred appeal before the ld. CIT(A) which was dismissed. Being aggrieved with the appellate order , the assessee is in appeal before us.

3.3. The ld. AR pointed out that, notice u/s 148 of the Act dated 08.04.2022 has been issued by the ld. AO beyond a period of three years from the end of the relevant assessment year, viz., beyond 31.03.2022, and, therefore, as per the mandate of Section 151 of the Act, as was made available on the statute vide the Finance Act, 2021 w.e.f. 01.04.2021, the said notice could have been issued only after obtaining the prior approval of CCIT or PCCIT u/s 151(ii) of the Act. The ld. AR submitted that the consequent assessment order is invalid and cannot be Page 7 of 12

ITA Nos. 972 & 885/KOL/2026 Cemfil Enterprises Limited; A.Ys. 2015-16 & 2018-19 sustained and is liable to be quashed. The ld. AR further submitted that the proviso to Section 151 of the Act, which, provides for exclusion of the time period provided in the fifth proviso of Section 149 of the Act for computing the period of three years had been made available on the statute by the Finance Act, 2023, w.e.f. 01.04.2023 and thus, cannot be applied retroactively to the subject year involved in the present appeal, i.e., AY 2018-19. For this, he relied on the following decisions :-

i. Deloittee Consulting India (P.) Ltd. vs Assessment Unit, NFAC (481 ITR 175) (Telangana HC)

ii. Vodafone Idea Limited vs DCIT (WP No. 2768 of 2022) (Bom HC)

iii. Skypak Travels (P) Ltd. vs ITO (185 taxmann.com 963) (Bom HC)

iv. Prakash Pandurang Patil vs ITO (481 ITR 325) (Bom HC), SLP dismissed by Supreme Court in 481 ITR 332.

3.4. The ld. DR appearing for the Revenue submitted that, the ld. AO had sought to issue notice in terms of the Section 149(1)(a) of the Act and therefore, the sanction obtained from PCIT u/s 151 of the Act was saved by the fifth proviso to Section 149(1)read with proviso to Section 151 of the Act, for reckoning the period of three years from the end of the relevant assessment year as envisaged in Section 149(1)(a) of the Act. Page 8 of 12

ITA Nos. 972 & 885/KOL/2026 Cemfil Enterprises Limited; A.Ys. 2015-16 & 2018-19 He thus contended that, the reopening of the assessment was done in accordance with law.

3.5. After hearing the rival contentions and perusing the materials available on record, we find that the assessee has challenged the validity of the notice issued u/s 148 of the Act dated 08.04.2022. In this case, as it pertains to Assessment Year 2018-19, three years period in terms of Section 149(1)(a) would have expired on 31.03.2022. In the present case, that, the order u/s 148A(d) and the notice u/s 148 of the Act came to be issued on 11.04.2022 which is beyond the prescribed period of three years i.e. after the end of 31.03.2022. The approval before passing of the order has been obtained from the PCIT, which is permissible only where less than three years have elapsed from the end of the relevant assessment year. In the present case, the period of three years ended on 31.03.2022. Hence, the order u/s 148A(d) and notice u/s 148 of the Act was required to be issued after obtaining sanction from CCIT or PCCIT. The ld. DR however argued that the ld. AO had initially issued notice u/s 148A(b) of the Act within the period of three years and therefore, he had rightly sought approval of PCIT for passing order u/s 148A(d) & issuing notice u/s 148 of the Act u/s 151(i) beyond three years, as it was saved in terms of proviso to Section 151 of the Act. We however are unable to agree with the ld. DR, as it is seen that, on exact same set of facts and circumstances, the Hon’ble Telangana High Court in the case of Deloittee Consulting India (P.) Ltd. v. Assessment Unit (supra) had quashed the reopening of Page 9 of 12

ITA Nos. 972 & 885/KOL/2026 Cemfil Enterprises Limited; A.Ys. 2015-16 & 2018-19 assessment, by holding that the proviso inserted in Section 151 of the Act by the Finance Act, 2023 cannot be applied for notices issued prior to 01.04.2023. The relevant operative portion of the decision is as under:-

"49. In the present case, the order under Section 148A(d) and notice under Section 148 have been issued on 07.04.2022 relatable to the relevant Assessment Year 2018-19 i.e., after more than three years from the end of the relevant assessment year. The approval before passing the order under Section 148A(d) of the Act and before issuing of notice under Section 148 of the Act has been taken from the Principal Commissioner of Income Tax by the respondent No.1, which is permissible only if three years or less than three years have lapsed from the end of the relevant assessment year. In the present case, the relevant three years lapsed on 31.03.2022. Therefore, the prior approval of the Principal Chief Commissioner or Principal Director General or the Chief Commissioner or the Director General was required to be obtained before passing of the order under Section 148A(d) or before issuance of the notice under Section 148 of the Act. 50. Learned counsel for the respondent has relied upon the proviso to Section 151 of the Act inserted by the Finance Act, 2023 with effect from 01.04.2023 quoted above to contend that the period of seven days furnished to the assessee to submit reply to the notice under Section 148A(b) issued on 23.03.2022 has to be excluded for counting the period of three years. It is submitted that the proviso is clarificatory in nature and as such, it would operate from the date when the amended Section 151 was brought into force i.e., 01.04.2021. However, such a contention is fit to be rejected since the proviso to Section 151 has been inserted by the Finance Act, 2023 only with effect from 01.04.2023. It, therefore, cannot be applied retrospectively to exclude the period of seven days in furnishing the reply to the notice under Section 148A(b) of the Act by the assessee. The Assessing Officer could not have assumed exclusion of such a period while passing the order under Section 148A(d) of the Act or issuing notice under Section 148 of the Act on 07.04.2022 that such a proviso excluding the period consumed in furnishing the reply is going to be brought into the statute book by amendment by the Finance Act, 2023 with effect from 01.04.2023. In taxing statutes, intendment cannot be assumed unless specifically expressed in the provision enacted by the legislature. Therefore, the reopening of assessment without sanction/approval of the specified authority in accordance with Section 151 of the Act was bad in law. Consequently, reassessment order dated 16.01.2024 also is bad in law. 51. In this regard, learned Senior Counsel for the petitioner has relied upon the decision of the Bombay High Court in the case of Vodafone Idea Limited (supra) relating to the same assessment year. In fact, perusal of the judgment shows Page 10 of 12

ITA Nos. 972 & 885/KOL/2026 Cemfil Enterprises Limited; A.Ys. 2015-16 & 2018-19 that the order passed under Section 148A(d) of the Act and 07.04.2022 relating to the assessment year 2018-19. The date of order under Section 148A(d) and the notice under Section 148 of the Act i.e., 07.04.2022 are exactly similar to the case of the petitioner and the Assessment Year 2018-19. The relevant paragraph of the said decision is profitably quoted hereunder: 3. The impugned order and the impugned notice both dated 7th April 2022 state that the Authority that has accorded the sanction is the PCIT, Mumbai-5. The matter pertains to Assessment Year (AY) 2018-19 and since the impugned order as well as the notice are issued, both have been issued beyond a period of three years. Therefore, the sanctioning authority has to be the PCCIT as provided under Section 151(ii) of the Act. The proviso to Section 151 has been inserted only with effect from 1st April 2023 and, therefore, shall not be applicable to the matter at hand. 4. In this circumstances, as held by this Court in Siemens Financial Services Private Limited v. Deputy Commissioner Income Tax and others [(2023) 457 ITR 647. (Bom)], the sanction is invalid and consequently, the impugned order and impugned notice both dated 7th April 2022 under Section 148A(d) and 148 of the Act are hereby quashed and set aside. Therefore, it is held that the reopening of the assessment and the consequent reassessment order suffer from jurisdictional error." 3.5.1. Also, we find that recently, the Hon’ble Supreme Court in its order passed in ACIT v. Linked In Singapore Pte. Ltd [2025] 180 taxmann.com 158 (SC) and ACIT Vs Prakash Pandurang Patil (supra) on similar facts, has dismissed the SLP against the orders of the Bombay High Court wherein the impugned order passed under section 148A(d) and impugned notice issued under section 148 were quashed, as the approval for initiation of reassessment proceedings after expiry of 3 years from the end of relevant assessment year, was granted by CIT instead of CCIT.

3.5.2. Therefore, respectfully following the decisions (supra), we hold that , the order u/s. 148A(d) was passed and notice u/s 148 of the Act was issued beyond three years from

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ITA Nos. 972 & 885/KOL/2026 Cemfil Enterprises Limited; A.Ys. 2015-16 & 2018-19 the relevant AY 2018-19 are invalid as the approval was obtained from PCIT instead of CCIT. Consequently, the notice issued u/s 148 of the Act as well as the assessment framed vide order dated 21.03.2024, are invalid and, are hereby quashed.

3.6. Since, we have allowed the appeal on legal issue, other grounds raised on merit are not being adjudicated at this stage and are left open to be decided if need arises for the same in future.

3.7. The appeal of the assessee is allowed.

Order pronounced on 11.09.2026.

Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 11.09.2026 Sudip Sarkar, Sr.PS Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT DR, ITAT, 4. 5. Guard file. BY ORDER, True Copy// (Manish Bhoi) Dy. Registrar Income Tax Appellate Tribunal, Kolkata Page 12 of 12