PIYALI TRADING COMPANY PRIVATE LIMITED,MUMBAI vs. ITO -7(3)(1), MUMBAI, MUMBAI

PER SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER:

ITA 2526, 2527 and 2528/Mum/2026 Piyali Trading Company Private Limited AYs 2013-14, 2014-15 and 2015-16 These three appeals filed by assessee are against the separare orders of ld. Commissioner of Income-tax (Appeals), NFAC-Delhi, vide order nos. ITBA/NFAC/S/250/2025-26/1084137508(1), ITBA/NFAC/S/250/2025-26/1084429727(1) and ITBA/NFAC/S/250/2025-26/1084137557(1) respectively, of different dates passed against the reassessment orders by the Income Tax Officer Mumbai, u/s 147 r.w.s. 144B of the Income-tax Act (hereinafter referred to as the “Act”), dated 19.05.2023, 18.05.2023 and 11.05.2023 for the Assessment Years 2013-14, 2014-15 and 2015-16, respectively.

A. ITA No. 2526/Mum/2026 for AY 2013-14

ITA 2526, 2527 and 2528/Mum/2026 Piyali Trading Company Private Limited AYs 2013-14, 2014-15 and 2015-16 1. On the facts and circumstances of the case and applicable law, Ld. CIT(A) erred in sustaining the assessment order passed by Ld. AO under section 147 rws 144B which is contrary to the material on records and provisions of the Act, unjust and bad in law. 2. On the facts and circumstances of the case and applicable law, the approval granted u/s 151 by Ld. Pr. CIT is mechanical without application of mind. 3. On the facts and circumstances of the case and applicable law, the impugned assessment order is without jurisdiction in view of the provisions of section 151A 4. On the facts and circumstances of the case and applicable law, Ld. CIT(A) erred in sustaining the disallowance made by Ld. AO of Rs. 15,83,61,397 which is the amount of unsecured loan and advances and treating it as income from other sources. 5. On the facts and circumstances of the case and applicable law, Ld. CIT(A) erred in sustaining the disallowance made by Ld. AO of Rs. 15,83,61,397 more particularly when no loans and advances were given in the year under consideration 6. On the facts and circumstances of the case and applicable law, Ld. CIT(A) erred in sustaining the disallowance made by Ld. AO of Rs. 15,83,61,397 which is the entire amount of unsecured loan and advances and treating it as income from other sources without giving a reasonable opportunity of being heard. 7. The appellant craves leave to add, amend, alter or otherwise raise any other ground of appeal. C. ITA No. 2528/Mum/2026 for AY 2015-16

ITA 2526, 2527 and 2528/Mum/2026 Piyali Trading Company Private Limited AYs 2013-14, 2014-15 and 2015-16 is the amount of unsecured loan and advances given by treating it as unexplained cash credit without giving a reasonable opportunity of being heard 6. The appellant craves leave to add, amend, alter or otherwise raise any other ground of appeal.” 2.1. The issue involved in the present set of three appeals for three different reassessment orders is common except for variation in the quantum of addition made by the ld. AO. Accordingly, all the three appeals are taken up together for adjudication by passing this consolidated order. For the purpose of drawing basic facts for our observations and giving finding thereupon, we take up appeal for AY 2013-14 as the lead year. Our observations and finding in this appeal shall apply mutatis mutandis in other two appeals.

2.2. Assessee has also raised additional ground in all the three years, contesting on the jurisdictional issue of reassessment proceeding and the impugned reassessment order passed u/s 147. According to the assessee, the material which formed the basis of reopening has emanated from a search operation conducted in the case of a company namely, NICG Company Pvt. Ltd. wherein one of the directors of the assessee is a common director in the searched entity and the assessee. Thus, according to the assessee, any material found and seized in the course of search operation of a person need to be used against the other person in accordance with the provision of section 153C and not by issuing notice u/s 148. The additional ground so raised is reproduced as under;

"That, on the facts and in the circumstances of the case, and in law, the impugned assessment framed under section 147 r.w.s. 144B of the Income-tax Act, 1961 is without jurisdiction and bad in law, inasmuch as the very material forming the basis of reopening is stated to have emanated from a search operation conducted in the case of company namely M/s. NICG Combines Pvt. Ltd., being a searched person other than the appellant, wherein one of the directors of the appellant company is common, therefore, if any material from such search needs to be used against the appellant, the only permissible course in law was to proceed under section 153C of the Act and not by issuance of notice under section 148 under the general provisions of reassessment."

ITA 2526, 2527 and 2528/Mum/2026 Piyali Trading Company Private Limited AYs 2013-14, 2014-15 and 2015-16 2.3. The additional ground raised by the assessee is a legal issue which goes to the root of the matter for which the relevant facts are already on record. There being no objection from the other side on its admission, the same is admitted for its adjudication.

3.1. Thereafter, provisions of section 148A(d) were complied with by passing an order, dated 27.07.2022 and issuing a notice u/s.148 of the same date under the new regime. Assessee has contested that the notice so issued is bad in law, liable to be quashed. Ld. Counsel strongly submitted that it is barred by limitation making the impugned reassessment proceedings and resultant reassessment order bad in law.

ITA 2526, 2527 and 2528/Mum/2026 Piyali Trading Company Private Limited AYs 2013-14, 2014-15 and 2015-16 4. At the outset, we find that this issue which relates to AY 2015-16 has been settled in the judgement of the Hon'ble Supreme Court in the case of Rajeev Bansal (supra) wherein reference is made to the submissions made on behalf of the Revenue vide para 19 which is relevant and the same is reproduced hereunder: -

“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 assessees and the Revenue during the time of COVID- 19. TOLA seeks to relax 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 benefits 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 reassessment 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 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 Expiry of Limitation Within six Years Expiry of Year Years read with TOLA for (4) Limitation read (1) (2) (2) with TOLA for (3) (4) (5) 2013-2014 31.03.2017 TOLA not applicable 31.03.2020 30.06.2021 2014-2015 31.03.2018 TOLA not applicable 31.03.2021 30.06.2021 2015-2016 31.03.2019 TOLA not applicable 31.03.2022 TOLA not applicable 2016-2017 31.03.2020 30.06.2021 31.03.2023 TOLA not applicable

ITA 2526, 2527 and 2528/Mum/2026 Piyali Trading Company Private Limited AYs 2013-14, 2014-15 and 2015-16 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 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 pletely frustra frustrate the judicial exercise undertaken by this Court in Ashish Agarwal (supra). 4.1. From the above, it can be seen that Revenue conceded before the Hon'ble Supreme Court in para 19(f) for dropping all the notices issued on or after 01.04.2021 for A.Y. 2015-16 as they will not fall for completion during the period prescribed under TOLA.

4.2. This issue had come up before the Hon'ble High Court of Delhi in the case of IBIBO Group Pvt. Ltd. vs. ACIT, WP(C)17639 of 2022, dated 13.12.2024 wherein re-assessment action for Assessment Year 2015- 16 was held to be not sustainable. Hon'ble Court quashed the notice issued u/s.148 as well as order passed u/s. 148A(d), dated 23.07.2022 for Assessment Year 2015-16 by following the decision in the case of Rajeev Bansal (supra).

4.3. In the case of present assessee, period of six years expired on 31.03.2022. Since the notice issued u/s.148 is dated 27.07.2022, it is thus, barred by limitation. Accordingly, notice so issued and re- assessment completed thereafter u/s. 147 is liable to be quashed, in

ITA 2526, 2527 and 2528/Mum/2026 Piyali Trading Company Private Limited AYs 2013-14, 2014-15 and 2015-16 view of the decision of Hon'ble Supreme Court in the case of Rajeev Bansal (supra) which was followed by Hon'ble High Court of Delhi in the case of IBIBO (supra).

"5. In this regard, reference could also be made to paragraph 19(e) and (f) in the case of Union of India vs. Rajeev Bansal, Civil Appeal No.8629 of 2024 on 03.10.2024 (2024 SCC ONLINE 754) under which the learned Additional Solicitor General for India has made a concession insofar as the assessment year 2015-16 is concerned." 6. In view of above stated deliberation, both on facts and law including the applicable jurisprudence, we hold that notice for AY 2015-16 issued on 27.07.2022 u/s 148 of the new regime is barred by limitation and hence bad in law, liable to be quashed, resulting in the impugned well as impugned reassessment proceedings as reassessment order bad in law. Accordingly, ground raised by the assessee in its appeal in this regard is allowed. Other grounds in the appeal memo are thus, rendered academic.

ITA 2526, 2527 and 2528/Mum/2026 Piyali Trading Company Private Limited AYs 2013-14, 2014-15 and 2015-16 parties as recorded to by it in its balance sheet which does not commensurate with the return of income filed by the assessee.

8.1. In the course of impugned reassessment proceedings, ld. AO observed from the perusal of the balance sheet of the assessee as on 31.03.2013 that total loans and advances given by the assessee as reported in its balance sheet is at Rs. 16,76,78,198/-, out of which assessee has shown long term borrowings for the following five parties. In this regard, it furnished the ledger accounts but did not furnish their confirmation letter along with the bank statements to show the receipt of money. The five parties are as under: a) Inu Exports Private Limited - Rs. 6,29,59,500/- b) Afro Asia Industries Limited - Rs. 9,44,75,203/- c) Pet World - Rs. 7,44,546/- d) RSAL Steel Private Limited - Rs. 2,18,49,973/- e) Swastik Worldwide P Ltd - Rs. 21,94,500/- 8.2. In absence of the details as alleged by the ld. AO, addition was made of Rs. 16,76,78,198/-. Aggrieved, assessee went in appeal before the ld. CIT(A) who confirmed the addition so made. Aggrieved, assessee in appeal before the Tribunal.

9.1. Further, it was strongly asserted that the additions made in all the three assessment years are based on debit balances of loan and 9

ITA 2526, 2527 and 2528/Mum/2026 Piyali Trading Company Private Limited AYs 2013-14, 2014-15 and 2015-16 advances given by the assessee, duly reported in its audited balance sheet. These are reported on the asset side which represents year-end closing balances of loan and advances given by it. Furthermore, it was pointed out that these loans and advances given by the assessee are opening balances and no fresh loan has been given during the assessment year 2013-14 and 2014-15. It is only in assessment year 2015-16, certain fresh advances were received.

9.2. Assessee furnished a chart in respect of long-term borrowings given by the assessee reported in its balance sheet for all the parties including the five for consideration in the present appeal, to demonstrate their opening balances. The said table is reproduced for ready reference:

9.3. From the above table, it was submitted that parties at serial no. 2, 3 and 4 have the same balance running through all the years from

ITA 2526, 2527 and 2528/Mum/2026 Piyali Trading Company Private Limited AYs 2013-14, 2014-15 and 2015-16 financial year 2011-12 to financial year 2015-16. For parties at serial no. 7 and 8, their balances have kept on reducing year-on-year basis which demonstrates receipts of money back to the assessee against the long-term borrowings given by it to the said two parties. Thus, the loan and advances given by the assessee and reported by it in its balance sheets are historical advances and the stand taken by the ld. AO for making the addition is not sustainable.

9.4. It was also submitted in respect of appeal for AY 2014-15 that in respect of parties at serial no. 2, 3 and 4, since their closing balance for each of the year remained same, ld. AO has made the addition by taking the total of the group under the head ‘loan and advances given’ from the balance sheet. This has led to addition of the same amount twice since for these three parties, same amount has already been added in the immediately preceding year i.e. AY 2013-14 which is also in appeal before the us.

9.5. From the assessment order for appeal in AY 2015-16, it was categorically pointed out on the observation made by the ld. AO in para 4.3 whereby it is acknowledged by him that the loans and advances given by the assessee are opening balances except for the two parties noted by him. Relevant para in this regard is extracted below for ready reference:

“Further, the assessee has shown Loans and Advances given of Rs.15,52,25,326/- in the Balance Sheet as on 31.03.2015. further, on perusal of the Ledger account furnished by the assessee on Loans and Advances given, it is observed that all the Loans and Advances given are Opening Balances and except in the cases of M/s. Ahalya Trading P Ltd. and M/s. Saturn Overseas P Ltd. to whom the assessee had given fresh loan of Rs.2,00,000/- and Rs.2,75,000/- respectively during the FY 2014- 15.” 10. On the strength of the above factual matrix as emanating from the material placed on record, it was strongly contended that the

ITA 2526, 2527 and 2528/Mum/2026 Piyali Trading Company Private Limited AYs 2013-14, 2014-15 and 2015-16 addition made by the ld. AO in all the three assessment years is not sustainable and is not in accordance with the provisions of the Act.

12.1. Further, addition made in assessment year 2014-15 leads to addition of the same amount twice in respect of the three parties at serial no. 2,3 and 4 tabled above as their balances remained same even in the immediately preceding assessment year i.e. AY 2013-14 wherein also ld. AO has made addition. We note from the details tabulated above that balances for all the five parties are opening balances which has been brought forward from the preceding year i.e. AY 2011-12, fact of which has not been controverted or disputed by the other side before us. Thus, in the given set of facts, when there is no fresh transaction undertaken by the assessee in the year under

ITA 2526, 2527 and 2528/Mum/2026 Piyali Trading Company Private Limited AYs 2013-14, 2014-15 and 2015-16 consideration and the amounts being brought forward from the preceding years, there is no occasion for the ld. AO to make the addition in the impugned years before us.

12.2. Furthermore, despite this being the factual position, assessee has evidently demonstrated the genuineness of the balances appearing in its balance sheet by furnishing corroborative documentary evidence placed in the paper book which were also furnished in the course of impugned reassessment proceedings. Accordingly, addition made by the ld. AO is not tenable, both under the provisions of the Act and in the given set of facts. The addition so made is deleted. Grounds raised by the assessee in this regard are allowed.

12.3. In the result, appeal for AY 2013-14 is allowed.

13.1. In the result, appeal for AY 2014-15 is allowed.

ITA 2526, 2527 and 2528/Mum/2026 Piyali Trading Company Private Limited AYs 2013-14, 2014-15 and 2015-16 adjudicated upon, being rendered academic in the facts and circumstances of the present case.

Order pronounced in the open court on 10th September, 2026.

Sd/- Sd/- SAKTIJIT DEY GIRISH AGRAWAL VICE PRESIDENT ACCOUNTANT MEMBER Mumbai Dated: 10.09.2026 Kunal Kr. P.S. Copy to: PIYALI TRADING COMPANY PRIVATE LIMITED 7A, GIRIAJ BUILDING, GROUND FLOOR -73, SANT TUKARAM ROAD, 1 IRON MARKET, CHINCHBUNDER, MUMBAI-400009, MAHARASHTRA

ITO -7(3)(1), MUMBAI AAYKAR BHAWAN 2 MUMBAI-400009, MAHARASHTRA

3 THE PCIT / CIT, 4 THE D.R., ITAT, MUMBAIBENCH 5 GUARD FILE