NEEPA VIPUL PAREKH,MUMBAI vs. INCOME TAX OFFICE WARD 42(1)3, MUMBAI

Brief facts relevant for adjudication of the instant appeal are that the case of the Assessee was reopened u/s 147 of the Act, more or less on the basis of a search and seizure operation dated 07.09.2022 conducted in the case of RUPPs Group of Ahmedabad, wherein a total of 23 registered un- recognized political parties, more than 25 bogus intermediary entities and three major exit providers were covered, collectively referred to as “RUPPs Group of Ahmedabad”. Consequently, a notice dated 19.04.2023 was issued to the Assessee, in response to which she filed her ITR on 17.05.2023. Thereafter, various statutory notices were issued to the Assessee, in response to which the Assessee, from time to time, filed submissions/replies and relevant documents before the Assessing Officer (AO) during the assessment proceedings. The AO ultimately, vide assessment order dated 10.02.2025 passed u/s 147 r.w.s. 144B of the Act, made an addition of Rs.6,00,000/- being the amount of donation paid. Thus, the Assessee being aggrieved, preferred a first appeal before the Ld. Commissioner, who, vide the impugned order, affirmed the aforesaid addition. Therefore, the Assessee, being aggrieved, has preferred the instant appeal.

The Ld. Counsel for the Assessee emphasized that vide ground no.1 originally raised and additional ground nos.1 and 2, the Assessee has raised certain legal grounds before the Tribunal and, therefore, relying upon the judgment of the Hon’ble Apex Court in the case of National Thermal Power Co. Ltd. vs. Commissioner of Income-tax, (1998) 229 ITR 383 (SC), submitted that the same deserve to be admitted and adjudicated. The grounds originally raised and the additional grounds raised by the Assessee read as under:

We have given thoughtful consideration to the peculiar facts and circumstances of the case qua the aforesaid grounds, by way of which the Assessee has challenged the legality of the proceedings initiated u/s 147 of the Act by issuance of notice u/s 148 of the Act, being without jurisdiction, bad in law and invalid. As the aforesaid grounds are purely legal in nature and emanate from the material available on record, therefore, respectfully following the judgment of the Hon’ble Apex Court in the case of National Thermal Power Co. Ltd. vs. CIT, (1998) 229 ITR 383 (SC), we deem it appropriate to admit the same for adjudication.

Coming to the merits qua the aforesaid grounds, admittedly, in the instant case, the alleged escaped income was Rs.6,00,000/-, i.e., less than Rs.50,00,000/-, and the notice u/s 148 of the Act dated 19.04.2023 was issued after expiry of three years from the end of the relevant A.Y. 2019- 20. Therefore, in view of the provisions of section 149(1)(b) of the Act, the notice issued u/s 148 of the Act and the consequential proceedings, including the assessment order dated 10.02.2025 passed u/s 147 r.w.s. 144B of the Act, are liable to be quashed being barred by limitation and void ab initio.

Further, the benefit of exclusion of the period prescribed in the proviso to section 149 of the Act would not be available in the peculiar facts of the instant case as the reason being that the information forming the basis of reopening emanated from the search and seizure operation conducted u/s 132 of the Act on 07.09.2022, i.e., after 01.04.2021. Consequently, in view of the first proviso to section 148A of the Act, the procedure contemplated u/s 148A was not applicable to the case in hand.

Thus, when the procedure u/s 148A itself was not applicable, the period commencing from issuance of notice u/s 148A(b) till passing of the order u/s 148A(d) could not be excluded for the purpose of extending the limitation available for issuance of notice u/s 148 of the Act. Consequently, the notice dated 19.04.2023 issued for A.Y. 2019-20, the alleged escaped income being only Rs.6,00,000/- and below the statutory threshold of Rs.50,00,000/-, is barred by limitation.

We further observe that the Co-ordinate Bench of the Tribunal in Amit Pahuja vs. DCIT, Circle-1, Thane, ITA No.868/Mum/2026, order dated 23.06.2026, involving A.Y. 2019-20 and reassessment arising from the search conducted on 07.09.2022 in respect of political donations claimed u/s 80GGC, has dealt with an identical issue and quashed the reassessment proceedings on jurisdictional and limitation grounds.

Similarly, in Nimish Maheshkumar Bhavsar vs. ACIT, ITA No.32/Ahd/2026, order dated 27.03.2026, the Ahmedabad Bench of the Tribunal, for A.Y. 2019-20, held that where the escaped income was Rs.5,00,000/- and the notice u/s 148 was issued beyond the period prescribed u/s 149(1)(b), the notice was invalid and the proceedings were void ab initio.

Thus, considering the peculiar facts and circumstances of the instant case and respectfully following the aforesaid decisions, we hold that the notice dated 19.04.2023 issued u/s 148 of the Act is barred by limitation and void ab initio. Consequently, the assessment order dated 10.02.2025 passed u/s 147 r.w.s. 144B of the Act in pursuance thereof cannot survive and is, accordingly, quashed.

In the result, the Assessee’s appeal is allowed.