MURLIDHAR GOVINDRAM & COMPANY,SANGLI vs. INCOME TAX OFFICER, WARD 5, SANGLI

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ITA 813/PUN/2026Status: DisposedITAT Pune17 August 2026AY 2015-167 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the reassessment proceedings were initiated on a time-barred notice under Section 148. Following Supreme Court and High Court judgments, the Tribunal quashed the reassessment proceedings as invalid.

What were the facts?

The assessee, a partnership firm, failed to file its return of income for AY 2015-16. The Assessing Officer (AO) reopened the assessment under Section 147 due to unexplained cash deposits and issued a notice under Section 148 on April 4, 2022. The assessee did not comply, and the AO made an ex-parte addition. The CIT(A) set aside the assessment to the AO without deciding the legal ground challenging the reassessment notice.

What were the issues?

The primary issue was the validity of reassessment proceedings initiated by a notice under Section 148 issued beyond the prescribed limitation period for AY 2015-16.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 149,Section 251(1)(a)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE

Before: SHRI RAMA KANTA PANDA & Ms. ASTHA CHANDRA

For Appellant: Shri Rajendra Agiwal
For Respondent: Shri Avinash Karpe

PER ASTHA CHANDRA, J.M.:

The appeal filed by the assessee is directed against the order dated 30-01-2026 of the Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi [“CIT(A)/NFAC”], u/s. 250 of the Income Tax Act, 1961 (the “Act”), pertaining to Assessment Year (“AY”) 2015-16. 2. Briefly stated, the facts of the case are that the assessee is a partnership firm and engaged in the business of sale of petroleum products. For AY. 2015-16, the assessee did not file its original return of income u/s. 139(1) of the Act. The case of the assessee was reopened u/s. 147 of the Act for the reason that the assessee made cash deposits to the tune of Rs. 1,49,17,440/- in its bank account during the FY. 2014-15 relevant to AY. 2015-16, the source of which remained unexplained on account of non-filing of return of income for the AY. 2015-16. Notice u/s. 148 of the Act was issued on 04-04-2022 in response to which, the assessee failed to furnish its return of income. All the subsequent

2 statutory notices u/s. 142(1) of the Act as well as show cause notice(s)/letters issued by the Ld. Assessing Officer (“AO”) remained un- complied by the assessee. The Ld.AO, therefore, proceeded to complete the assessment ex-parte and made an addition of Rs. 19,76,306/- to the income of the assessee, applying the Net Profit rate of 8% on estimated basis on total turnover of Rs. 2,47,03,837/-, vide his order dt. 24-01-2024 passed u/s. 147 r.w.s. 144 r.w.s. 144B of the Act.

3.

Before the Ld.CIT(A)/NFAC, apart from challenging the above addition made by the Ld.AO, the assessee also challenged the validity of re-assessment proceedings being bad in law on the ground the same were initiated on the time barred notice issued u/s. 148 of the Act. However, the Ld.CIT(A)/NFAC has not dealt with the various grounds of appeal and issues raised before him including the legal ground raised by the assessee and set aside the assessment and restored the matter back to the file of the Ld.AO for making a fresh assessment as per the provisions of newly inserted section 251(1)(a) of the Act which grants explicit power to the Ld.CIT(A)/NFAC to set aside the matter to the file of the Ld.AO in case of assessment framed u/s. 144 of the Act.

4.

Aggrieved, the assessee is in appeal before the Tribunal, challenging the validity of the re-assessment proceedings being bad in law due to issue of time barred notice u/s. 148 of the Act, dt. 04-04-2022. 5. We have heard the Ld. Representatives of the Parties and perused the material available on record. We find that the Ld.AO has completed the assessment ex-parte assessing the total income of the assessee at Rs. 19,76,306/- for the relevant AY. 2015-16, vide his order dt. 24-01-2024 passed u/s. 147 r.w.s. 144 r.w.s. 144B of the Act. On appeal, the Ld.CIT(A)/NFAC has set aside the assessment and restored the matter to 3 the file of the Ld.AO for fresh adjudication in terms of section 251(1)(a) of the Act. The assessee is aggrieved as the Ld.CIT(A)/NFAC has not dealt with the legal issue raised by the assessee before him, challenging the validity of the re-assessment proceedings itself being bad in law. Before the Tribunal as well, the assessee has raised this legal issue and contended that the same be adjudicated as the assessee can raise the legal ground at any stage during the appellate proceedings and in light of the fact that the impugned issue is squarely covered in favour of the assessee. Perusal of the assessment order shows that it is an ex-parte order passed u/s. 147 r.w.s.144 of the Act. Under these circumstances, the Ld.CIT(A)/NFAC is empowered to set aside the assessment and restore the matter back to the file of the Ld.AO for fresh adjudication. However, it is also an admitted fact that a legal ground was raised by the assessee challenging the validity of re-assessment proceedings (as per Ground No.8). Therefore, the Ld.CIT(A)/NFAC was supposed to decide the legal ground raised before him. However, instead of deciding the said legal ground, he has simply restored the matter to the file of the Ld.AO. This action on the part of the Ld.CIT(A)/NFAC, in our opinion, is not justified especially when the legal ground is squarely covered in favour of the assessee by plethora of decisions of the Hon‟ble Supreme Court and the Hon‟ble Bombay High Court. Under these peculiar facts and circumstances of the instant case, we proceed to decide the legal ground raised before the Tribunal, challenging the validity of re-assessment proceedings on the ground of the same being initiated on time barred notice issued u/s. 148 of the Act, which was also raised before the Ld.CIT(A)/NFAC, but not adjudicated by him.

6.

We find in the instant case the assessment year involved is assessment year 2015-16 and undisputedly, the notice u/s 148 has been issued on 04-04-2022, a copy of which is placed on record on the paper book. Under the old provisions of section 149, which is applicable for the assessment year under consideration i.e. AY 2015-16, the notice u/s 148 would not have been issued beyond the period of 6 years from end of the relevant assessment year. The period of 6 years from the AY 2015-16 lapses on 31-03-2022. As stated earlier, in the instant case, notice u/s 148 was issued to the assessee on 04-04-2022 which is clearly beyond the time limit prescribed under the said provisions of the Act. We find that the Revenue has also conceded before the Hon‟ble Supreme Court in the case of Union of India vs. Rajeev Bansal [2024] 167 taxmann.com 70 (SC) that the provisions of Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) is not applicable to the notices issued for AY 2015-16. The relevant para of the judgment is reproduced below :

“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 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 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, PART C 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:

5 Assessment Within 3 Expiry of Within six Expiry of Year Years Limitation Years Limitation read read with with TOLA for TOLA (or (2) (4) (1) (2) (3) (4) (5) 2013-2014 31-3-2017 TOLA not 31-3-2020 30-6-2021 applicable 2014-2015 31-3-2018 TOLA not 31-3-2021 30-6-2021 applicable 2015-2016 31-3-2019 TOLA not 31-3-2022 TOLA not applicable applicable 2016-2017 31-3-2020 30-6-2021 31-3-2023 TOLA not applicable 2017-2018 31-3-2021 30-6-2021 31-3-2024 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 frustrate the judicial exercise undertaken by this Court in Ashish Agarwal (supra).

7.

Similarly, at para 46 of the order the Hon'ble Supreme Court has observed as under:

“46. The ingredients of the proviso could be broken down for analysis as follows: (i) no notice under Section 148 of the new regime can be issued at any time for an assessment year beginning on or before 1 April 2021; (ii) if it is barred at the time when the notice is sought to be issued because of the “time limits specified under the provisions of” 149(1)(b) of the old regime. Thus, a notice could be issued under Section 148 of the new regime for assessment year 2021-2022 and before only if the time limit for issuance of such notice continued to exist under Section 149(1)(b) of the old regime.”

8.

Finally, the Hon'ble Supreme Court at para 114 of the order has observed as under: “G. Conclusions

114.

In view of the above discussion, we conclude that: 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;

6 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, then the specified authority under Section 151(i) has extended time till 30 June 2021 to grant approval; e. In the case of Section 151 of the old regime, the test is: if the time limit of four years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under Section 151(2) has extended time till 31 March 2021 to grant approval; f. The directions in Ashish Agarwal (supra) will extend to all the ninety thousand reassessment notices issued under the old regime during the period 1 April 2021 and 30 June 2021; g. The time during which the show cause notices were deemed to be stayed is from the date of issuance of the deemed notice between 1 April 2021 and 30 June 2021 till the supply of relevant information and material by the assessing officers to the assesses in terms of the directions issued by this Court in Ashish Agarwal (supra), and the period of two weeks allowed to the assesses to respond to the show cause notices; and h. The assessing officers were required to issue the reassessment notice under Section 148 of the new regime within the time limit surviving under the Income Tax Act read with TOLA. All notices issued beyond the surviving period are time barred and liable to be set aside;”

9.

We find Hon‟ble Supreme Court in the recent case of ITO vs. Sri Sai Kumar Mateti and batch of appeals, Civil Appeal arising out of SLP (Civil) No. 8682 of 2024, dt. 04-05-2026, has held that if a notice for AY. 2015-16 is issued after 31-03-2022, the ratio laid down in the case of Union of India vs. Rajeev Bansal (supra) is squarely applicable and such notices issued for re-assessment stand barred by limitation.

10.

We further find the Hon‟ble Bombay High Court once again in the case of Devendra Jaswantrai vs. ITO in WP No. 1122 of 2026, dt. 18-03- 2026, following the ratio laid down by the Hon‟ble Supreme Court in the case of Union of India vs. Rajeev Bansal (supra) has quashed the re-assessment proceedings initiated pursuant to a notice u/s 148 dated 04-04-2022 for AY. 2015-16. 7

11.

We find the Coordinate Bench of the Tribunal in the case of Mazaharhussain Abdulrahuf Bagwan vs. ITO in ITA No. 2329/PUN/2025, order dt. 25-05-2026 for AY. 2015-16, while applying the ratio of Hon‟ble

12.

Respectfully following the decisions cited (supra), we, quash the re- assessment proceedings initiated by the Ld.AO on the ground that the same were initiated on the time barred notice issued u/s 148 of the Act. The Ground No.4 raised by the assessee in the appeal is accordingly allowed. The other grounds of appeal are not adjudicated being rendered academic in nature.

13.

In the result, the appeal filed by the assessee is partly allowed.

Order pronounced in the open Court on 17-08-2026 (RAMA KANTA PANDA) (ASTHA CHANDRA) VICE PRESIDENT JUDICIAL MEMBER Tadepalli Naga पुणे/Pune; Naga Murali Mohan Murali Mohan Date: 2026.08.17 14:19:46 दिन ांक/Dated : 17-08-2026 +05'30' TNMM

आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपील र्थी / The Appellant 2. प्रत्यर्थी / The Respondent

3.

The concerned Pr.CIT, Pune

4.

DR, ITAT, „SMC‟ Bench, Pune 5. ग र्ड फ ईल / Guard file. आदेशानुसार/ BY ORDER, ////

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